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

                                    FORM 10-K

(Mark One)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 or 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 For the fiscal year ended March 31, 2000.

     or

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934 For the transition period from ____________________ to
     ____________________.

     Commission file number: 0-24360


                              SPECTRIAN CORPORATION
             (Exact name of registrant as specified in its charter)


            Delaware                                            77-0023003
 (State or other jurisdiction                               (I.R.S. Employer
of incorporation or organization)                         Identification Number)


         350 West Java Drive,                                     94089
         Sunnyvale, California                                  (Zip Code)
(Address of principal executive office)

       Registrant's telephone number, including area code: (408) 745-5400

           Securities registered pursuant to Section 12(b) of the Act:

                                                           Name of each exchange
         Title of each class                                on which registered
         -------------------                                -------------------
               None                                               None

           Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.001 par value
             Series A Participating Preferred Stock, $.001 par value

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

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

         The aggregate  market value of the voting stock held by  non-affiliates
of the registrant, based upon the closing sale price of the Common Stock on June
23,  2000  as  reported  on  the  Nasdaq  National  Market,   was  approximately
$112,000,000. Shares of Common Stock held by each executive officer and director
and by each person who owns 5% or more of the outstanding Common Stock have been
excluded in that such persons may be deemed to be affiliates. This determination
of affiliate  status is not  necessarily  a conclusive  determination  for other
purposes.

         As of June 23, 2000,  registrant had outstanding  10,943,103  shares of
Common Stock.


                       DOCUMENTS INCORPORATED BY REFERENCE

The Registrant has incorporated by reference into Part III of this Annual Report
on Form 10-K  portions of its Proxy  Statement  for the 2000  Annual  Meeting of
Stockholders.


<PAGE>


                              SPECTRIAN CORPORATION

                                    INDEX TO

                           ANNUAL REPORT ON FORM 10-K

                          FOR YEAR ENDED MARCH 31, 2000

                                                                            Page
                                                                            ----

                                     PART I

Item 1.  Business............................................................  3
Item 2.  Properties.......................................................... 17
Item 3.  Legal Proceedings................................................... 17
Item 4.  Submission of Matters to a Vote of Security Holders................. 17


                                     PART II

Item 5.  Market for the Registrant's Common Equity and Related
           Stockholder Matters............................................... 18
Item 6.  Selected Consolidated Financial Data................................ 19
Item 7.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations......................................... 20
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.......... 38
Item 8.  Financial Statements and Supplementary Data......................... 38
Item 9.  Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure.......................................... 38


                                    PART III

Item 10. Directors and Executive Officers of the Registrant.................. 40
Item 11. Executive Compensation.............................................. 40
Item 12. Security Ownership of Certain Beneficial Owners and Management...... 40
Item 13. Certain Relationships and Related Transactions...................... 40


                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.... 41

         Signatures.......................................................... 45

                                       2

<PAGE>


                                     PART I

ITEM 1.  BUSINESS

         The  statements  contained in this Annual  Report on Form 10-K that are
not purely  historical  are  forward-looking  statements  within the  meaning of
Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E
of  the  Securities  Exchange  Act  of  1934  (the  "Exchange  Act"),  including
statements  regarding  Spectrian  Corporation's  ("the  Company")  expectations,
hopes,  intentions or strategies  regarding  the future.  When used herein,  the
words "may," "will," "expect," "anticipate,"  "continue," "estimate," "project,"
"intend"  and similar  expressions  are  intended  to  identify  forward-looking
statements  within  the  meaning of the  Securities  Act and the  Exchange  Act.
Forward-looking statements include:  statements regarding events, conditions and
financial  trends  that may affect the  Company's  future  plans of  operations,
business   strategy,   results  of  operations  and  financial   position.   All
forward-looking  statements  included in this document are based on  information
available  to the  Company  on the  date  hereof,  and the  Company  assumes  no
obligation  to  update  any  such  forward-looking  statements.   Investors  are
cautioned  that any  forward-looking  statements  are not  guarantees  of future
performance and are subject to risks and  uncertainties  and that actual results
may differ materially from those included within the forward-looking  statements
as a result of various  factors.  These  forward-looking  statements are made in
reliance  upon the safe harbor  provision of The Private  Securities  Litigation
Reform Act of 1995.  Factors that could cause or contribute to such  differences
include, but are not limited to, those described in "Management's Discussion and
Analysis of Financial  Condition and Results of  Operations",  under the heading
"Factors Affecting Future Operating Results" and elsewhere in this Annual Report
on Form 10-K.

General

         Spectrian   Corporation   ("Spectrian"   or  "the  Company")   designs,
manufacturers  and markets  high-power  radio  frequency  ("RF")  amplifiers and
semiconductor  devices,  through its division that operates under the trade name
UltraRF, for the global wireless  communications  industry.  The Company's power
amplifiers support a broad range of transmission  standards,  including Advanced
Mobile Phone Services  ("AMPS"),  Time Division  Multiple Access ("TDMA"),  Code
Division  Multiple  Access  ("CDMA"),  Personal  Communications  System ("PCS"),
Global System for Mobil Communications ("GSM"), Wireless Local Loop ("WLL"), and
IMT-2000.   Spectrian's   power   amplifiers   are   utilized  as  part  of  the
infrastructure  for both wireless voice and data networks.  The Company's  power
amplifiers  boost the power of a signal so that it can reach a wireless phone or
other device within a designated geography.  The Company's semiconductor devices
are key components of a power amplifier.

         UltraRF  operates  its own wafer  fabrication  facility  that  utilizes
bipolar and laterally diffused metal oxide semiconductor ("LDMOS") technologies.
This facility is capable of processing metal oxide semiconductor ("MOS") devices
with gold  metallization.  Using this  fabrication  facility,  UltraRF  produces
high-power,  high-performance  LDMOS  RF  power  semiconductors,  which  are one
critical  enabling  component in the design and  manufacture of second and third
generation  wireless  infrastructure  equipment.  In  addition to its own unique
designs,  UltraRF also produces functional  equivalents to some devices provided
by other manufacturers.

Industry Background

         The  market  for  cellular,   PCS  and  WLL   communications   services
(collectively known as "wireless"  services) has grown significantly  during the
past  decade,  due  to  decreasing  prices  for  wireless  handsets,  increasing
competition among service  providers and a greater  availability of high quality
services  and  RF  spectrum.  In  addition,  several  developing  countries  are
installing   wireless  telephone  networks  as  an  alternative  to  installing,
expanding or upgrading  traditional wireline networks.  Emerging  bi-directional
wireless data  applications  have the potential to further expand the market for

                                       3

<PAGE>


wireless    communications   by   allowing   service   providers   to   increase
revenue-generating traffic on their networks.

         A typical wireless  communications system comprises a geographic region
containing  a number  of  cells,  each of which  contains  a cell site (or "base
station"),  which are networked to form a service provider's coverage area. Each
base  station  houses the  equipment  that sends  telephone  calls  to/from  the
switching  office of the local  wireline  telephone  company and  transmits  and
receives calls to the wireless users within the cell. A base station  contains a
fixed number of RF channels;  in a single carrier system,  each separate channel
requires a separate  transceiver,  single  channel  power  amplifier and tunable
cavity  filter,  feeding an  antenna  to  transmit  the  outgoing  signal to the
wireless  telephone user. The power amplifier  receives a low-level  signal from
the transceiver and significantly boosts the power of that signal so that it can
be broadcast throughout the cell, which typically covers a geographic area up to
five miles in radius.  The RF power levels necessary to transmit the signal over
the  required  range  must  be  achieved   without   distorting  the  modulation
characteristics of the signal.

         Traditional  cellular systems based on analog technology operate in the
frequency range of 800 MHz to 1000 MHz and are capable of carrying only one call
per  "channel" in the  allocated  spectrum.  Analog  cellular  systems are being
supplanted by digital systems,  which convert voice  transmissions  into bits of
electronic  information and thereby more  efficiently use the finite RF spectrum
allocated to wireless  transmissions to serve growing demand. The three dominant
digital transmission modulation formats for cellular and PCS networks (GSM, TDMA
and CDMA)  allow a digital  network  to have a call  capacity  of three to eight
times that of an analog network.  In addition to the growth in digital  cellular
networks, the new digital PCS networks continue to grow. PCS networks operate in
the 1800 MHz to 2000 MHz frequency  range and typically have a smaller  coverage
area per  base  station  than  their  digital  cellular  counterparts.  Thus PCS
networks need two to three times as many base stations (and power amplifiers) as
digital cellular networks.  The implementation of these digital and PCS networks
has resulted in an increased demand for network infrastructure equipment.

         Wireless  carriers are also increasing  system capacity by implementing
dynamic channel  allocation,  which allows the service provider to automatically
move available unused channels from less active base stations to busier adjacent
base  stations  as the demand load moves,  such as during  commuter  rush hours.
Systems with dynamic channel allocation  require  multicarrier power amplifiers,
which can simultaneously broadcast signals using multiple transmission standards
over a  variable  number of  channels.  The need to  increase  system  capacity,
combined with the development of  multicarrier  power  amplifiers,  has also led
many wireless  carriers to transition  from  "macrocell"  base  stations,  which
typically have a five mile radius, to microcells. When the number of subscribers
within the  macrocell  exceeds the  capacity of its  equipment,  the cell can be
split into several  smaller  microcells to avoid a degradation  in service.  The
geographic  range of these  microcells  is smaller;  hence more  microcells  are
required in order to increase  the  capacity of the overall  system.  Microcells
also  require  equipment  that  consumes  less power and is less  expensive  per
channel at each base station than macrocells.

         Wireless  carriers'  ability  to more  effectively  manage  the  scarce
spectrum  resources and  accommodate a larger number of subscribers is dependent
on their ability to broadcast  signals with high  "linearity."  Linearity is the
degree to which  amplified  signals remain within their  prescribed  band of the
spectrum with low distortion or interference from adjacent channels. In the base
station  network,  RF power  amplification  is generally the greatest  source of
signal  distortion.  Consequently,  obtaining  RF  power  amplifiers  with  high
linearity  is critical to a service  provider's  ability to reduce  interference
levels and thereby increase system capacity.  Not  surprisingly,  higher network
linearity  is  required  as the  industry  transitions  from  analog to  digital
technologies  to  prevent  interference  between  adjacent  frequency  channels.
Multicarrier power amplifiers,  which are critical to the use of dynamic channel
allocation and microcells, require leading edge linearity technology to function
properly.  Substantial investment and technical expertise are required to design
and manufacture single and multicarrier RF power amplifiers with high linearity,
low cost, high efficiency and high reliability; all of which are critical to the
network and the service.

                                       4

<PAGE>


         An  emerging  trend  in the  wireless  communications  industry  is the
convergence  of  Internet  high speed  access  with  mobile  and fixed  wireless
systems.  Cellular  and PCS  systems are  currently  adopting  limited  Internet
capability,  and many traditional  mobile  communications  systems providers are
attempting to provide high Internet access speeds which,  Spectrian anticipates,
will create  opportunities for new systems to gain market  acceptance.  However,
few wireless  systems  which allow greater than 14 kbps data  transmission  have
been deployed for commercial systems.

         The growth of infrastructure equipment purchases is, however,  impacted
by the industry's  focus on price  reductions.  J.D. Power and Associates  notes
that even  though  minutes of use have  nearly  doubled  from 1998 to 1999,  the
average  household  wireless  charges  have been flat or  declined.  Competition
between  network  operators for  subscribers  is  significant  and influenced by
subscriber  plans that include a single  rate,  free  long-distance,  no roaming
charges and free minutes of use. This pricing  pressure extends to the equipment
manufacturers, including suppliers of amplifiers and components

Amplifier Division

The Spectrian Solution - Amplifier Division

         Spectrian's   Amplifier  Division   ("Amplifier   Division")   designs,
manufactures  and markets highly linear RF power amplifiers that seek to address
the needs of wireless  infrastructure  original equipment manufacturers ("OEMs")
and their  service  provider  customers.  The  Amplifier  Division's  amplifiers
provide significant advantages to its customers, including:

         High  Linearity.  The  Amplifier  Division has  developed  the multiple
technological competencies and disciplines required to achieve high linearity in
its  amplifiers.   These  competencies  and  disciplines   include  thermal  and
mechanical  packaging  design,   advanced  circuit  design,   linear  correction
technologies,   advanced  signal  processing  techniques,  control  systems  and
computer aided design and modeling.  Spectrian  believes that the high degree of
linearity of the Amplifier  Division's power amplifiers enables its customers to
furnish  wireless  services  with high  capacity  base station  equipment at low
capital cost per subscriber.

         Time to Market  and  Volume  Manufacturing.  The  Amplifier  Division's
design  processes  aid  it  in  addressing  wireless  infrastructure   equipment
suppliers'  quantity  and time to market  requirements  for power  amplification
products.  The Amplifier  Division  designs its amplifiers to be manufactured in
high volumes at low cost. Power amplifiers have  historically  been difficult to
manufacture  in  high  volumes  due  to  the  labor  intensive   nature  of  the
manufacturing process and the complexities of RF power technology. The Amplifier
Division's  experience  with  automated  testing,  which is faster  than  manual
testing with  replicable  results,  enables the  Amplifier  Division to transfer
manufacturing  to  outsource  partners  in lower  cost areas of the world and to
achieve high volume at low cost with a variable cost model.

          Standards Independence.  The Amplifier Division's technologies support
every major wireless modulation standard,  and its multicarrier power amplifiers
support several standards  simultaneously.  Certain of the Amplifier  Division's
single carrier products support both analog and digital standards in a dual mode
format.   The  Amplifier   Division   believes  that  this  breadth  of  product
functionality is important to wireless  service  providers as they upgrade their
cellular   infrastructure   equipment  and  implement   digital  systems  in  an
environment  characterized  by  evolving  industry  standards  and new  spectrum
allocation.

         Quality and Reliability.  The Amplifier  Division strives to design its
power  amplifiers  to  be  reliable  in  the  field.  The  Amplifier  Division's
integrated design and manufacturing processes are important factors contributing
to its ability to develop and produce  reliable  power  amplifiers.  In order to
further  address  customer   requirements   for  power  amplifier   quality  and
reliability and to ensure process quality  control,  the Amplifier  Division has
implemented a continuous process  improvement  program throughout its operations
and the Company is ISO 9001 certified.

                                       5

<PAGE>


         Multicarrier   Functionality.   The  Amplifier  Division  develops  and
supplies multicarrier amplifiers that integrate the functions of multiple single
carrier  power  amplifiers  into a  single  smaller  unit  while  simultaneously
eliminating the need for certain filters.  The Amplifier  Division  believes the
ability of its  multicarrier  products  to combine  multiple  digital and analog
channel schemes enables carriers to maintain backward  compatibility as they add
digital  transmission and implement  dynamic channel  allocation  solutions.  In
addition, multicarrier units can potentially reduce service providers' equipment
and  maintenance  costs  and  space  requirements,   thereby   facilitating  the
implementation of microcells.

Spectrian Strategy - Amplifier Division

         The Amplifier  Division's  objective in fiscal 2000 was to focus on the
multicarrier  power  amplifier  market,  to diversify its customer  base, and to
maintain the Amplifier  Division's  position in  single-carrier  power amplifier
markets.

         Focus on the multicarrier  power amplifier market.  With a new suite of
multicarrier  power  amplifiers,  the  Amplifier  Division  has enabled  network
operators to address some of the challenges of deploying high power digital base
stations,  including  those  operators  which are adding  digital  signals to an
existing analog network,  without  decreasing the analog cell site coverage.  In
addition  during fiscal 2000, the Amplifier  Division  shipped a  full-bandwidth
multicarrier   amplifier  for   high-volume   PCS   applications   using  a  new
architecture.

         Diversify  the customer  base. In fiscal 2000,  the Amplifier  Division
diversified its customer base by adding multicarrier and wideband CDMA customers
such as Metricom.

         Maintain its market  position in single  carrier power  amplifiers.  In
fiscal 2000, the Amplifier  Division  maintained  its market  position in single
carrier power amplifiers  through volume  manufacturing  with outsource partners
and  with  periodic  redesigns  for cost  reductions.  From  time to  time,  the
Amplifier  Division will pursue new opportunities with single carrier designs if
the  return  on  investment  is  competitive   with   multicarrier  or  wideband
opportunities.

         Outsource power amplifier manufacturing.  During fiscal 1999 and fiscal
2000, the Amplifier  Division  transferred the  manufacturing of its high-volume
single carrier power  amplifiers to a contract  manufacturer  in Thailand.  This
transition  allowed the Amplifier  Division to lower overhead spending through a
reduction  in fixed costs and labor rates while  maintaining  its  manufacturing
standards.

Markets - Amplifier Division

         Wireless  systems  have  historically   employed  analog   transmission
formats,  certain of which have been adopted as industry standards.  The need to
accommodate a growing wireless  customer base within a finite amount of spectrum
has, however, encouraged a worldwide transition from analog standards to various
digital  technologies  which are  significantly  more efficient.  Current analog
standards include AMPS, Total Access  Communications  System ("TACS") and Nordic
Mobile Telephone ("NMT").  Current digital standards include TDMA, GSM and EDGE,
CDMA (1595ARB), CDMA 2000 (1595C) and Personal Digital Cellular ("PDC").

<TABLE>
         The following chart illustrates these existing and developing standards
for wireless  communications,  and the shaded  areas  represent  markets  and/or
regions  served and  standards  supported by the  Amplifier  Division's  current
product offerings.

                                       6

<PAGE>


<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                               Major Wireless Standards by Region (frequencies in MHZ)

--------------------------------------------------------------------------------------------------------------------
                               Americas                Europe               Asia Pacific              Japan
                                 (MHZ)                  (MHZ)                  (MHZ)                  (MHZ)
------------------------ ---------------------- ---------------------- ----------------------- ---------------------
<S>                       <C>                    <C>                    <C>                      <C>
        Analog                AMPS (800)           NMT (450, 900)          NMT (450, 900)           NTT (800)
       Cellular                                      TACS (900)              TACS (900)            JTACS (800)
                                                     AMPS (800)              AMPS (800)
------------------------ ---------------------- ---------------------- ----------------------- ---------------------
        Digital               CDMA (800)              GSM (900)           CDMA (800, 900)           PDC (1500)
       Cellular               TDMA (800)                                    CDMA (2000)             JDC (800)
                               GSM (800)                                     GSM (900)              CDMA (800)
                                 EDGE                   EDGE                    EDGE                    HDR
                                                                          TDMA (450, 800)
------------------------ ---------------------- ---------------------- ----------------------- ---------------------
          PCS                 CDMA (1900)            GSM (1800)          CDMA(1900)&(1800)          PHS (1900)
                              CDMA (2000)               EDGE                CDMA (2000)
                              TDMA (1900)                                    GSM (1800)
                               GSM (1900)                                      EDGE
                                 EDGE

------------------------ ---------------------- ---------------------- ----------------------- ---------------------
       Wideband           IMT-2000 (2.1 GHz)     IMT-2000 (2.1 GHz)      IMT-2000 (2.1 GHz)      IMT-2000 (2.1 GHz)
      3G & WCDMA             WCS (2.3 GHz)                              Korean WLL (2.4 GHz)
------------------------ ---------------------- ---------------------- ----------------------- ---------------------
</TABLE>


         The  Amplifier  Division  believes  that  the  potential  for  wireless
communications in countries  without reliable or extensive  wireline systems may
be  significant.  The cost of building  and  maintaining  a wireless  network is
generally less than the cost of building and  maintaining a comparable  wireline
network.  Thus,  in many  less  developed  countries,  wireless  service  may be
providing   the   primary   service   platform   for  both   mobile   and  fixed
telecommunications.  In addition, if technological  advances and price decreases
continue to occur, a market in the United States and other  developed  countries
for wireless data service may emerge.

Products - Amplifier Division

         The Amplifier  Division  designs  highly linear power  amplifiers  that
address  the  specific  requirements  of its OEM  customers  and the  market  in
general.  The  Amplifier  Division's  product  strategy  is to support  multiple
wireless systems and standards.

           Most existing  wireless  systems use lower cost single  carrier power
amplifiers.  The  following  table  provides a list of  standards  for which The
Amplifier Division currently provides in its single carrier amplifiers:

                                        7

<PAGE>


-----------------------------------------------------------------------------
                Spectrian Single Carrier Amplifier Configurations

-----------------------------------------------------------------------------
Standard                                   Frequency            Power
                                             (MHZ)             (Watts)
--------------------------------------------------------- -------------------
Analog Cellular:
   AMPS, CDPD                               869-894             45,65
   TACS                                     917-950               65
--------------------------------------------------------- -------------------
Digital Cellular:
   TDMA                                     485-495               50
   TDMA                                     869-894             25,50
   CDMA                                     869-894               25
   GSM                                      925-960               30
--------------------------------------------------------- -------------------
PCS:
   GSM 1800                                1805-1880              30
   CDMA                                    1930-1990            20,25
   GSM 1900                                1930-1990              30
   CDMA                                    1805-1870              25
--------------------------------------------------------- -------------------
WCS:
   32-QAM                                  2305-2360              63
--------------------------------------------------------- -------------------
WLL:
   Wideband CDMA                           2370-2400           10,20,40
--------------------------------------------------------- -------------------
IMT 2000:
   W-CDMA                                  2110-2170              25
--------------------------------------------------------- -------------------


         While  many  existing   wireless   systems  use  single  carrier  power
amplifiers,  the Amplifier Division believes that more wireless systems will use
multicarrier  power  amplifiers in the future.  To meet this market  trend,  the
Amplifier  Division  also  offers  multicarrier   amplification   products.  The
following  table  provides a list of the standards for  multicarrier  amplifiers
offered by the Amplifier Division:


--------------------------------------------------------------------------------
                 Spectrian Multicarrier Amplifier Configurations

--------------------------------------------------------------------------------
Standard                           Frequency        Power           Typical
                                     (MHZ)         (Watts)         Linearity
                                                                     (dBc)*
------------------------------------------------ ------------- -----------------
AMPS
TDMA
CDMA                                869-894         60-350            -65
CDPD
CDMA 2000
------------------------------------------------ ------------- -----------------
CDMA
TDMA                               1805-1990        25-100            -55
CDMA 2000
------------------------------------------------ ------------- -----------------
IMT-2000                           2110-2170        30-60             -60
------------------------------------------------ ------------- -----------------


*Carrier to Intermodulation Distortion Ratio.

         The  Amplifier  Division's  amplifiers  can  be  configured  as  either
separate  plug-in  amplifier  units or integrated  subsystems and range in price
from  approximately $500 to $30,000. A plug-in amplifier unit consists of a cast
housing,  which provides thermal management,  and contains a RF amplifier pallet
combined with a digital control  interface  module. A power amplifier  subsystem
consists  of  multiple  cast  housings  and adds  signal  processing  to enhance
linearity.  The Amplifier  Division's  products are integrated into base station
systems designed and/or manufactured by its OEM customers, and therefore must be
engineered  to be  compatible  with  industry  standards,  as well  as  customer
specifications including frequency, power and linearity.

                                       8

<PAGE>


OEM Customers, Sales and Marketing - Amplifier Division

         Network  operators obtain their equipment from a concentrated  group of
large wireless  infrastructure OEMs. The Amplifier Division believes that Lucent
Technologies,  Inc. ("Lucent"),  Ericsson, Motorola Corporation ("Motorola"), LG
Information and Communications Limited ("LGIC"), Siemens AG ("Siemens"), Nortel,
and  Nokia  OY  ("Nokia")  supplied  over  80%  of the  wireless  infrastructure
equipment  installed  worldwide in 1999. Many of these OEMs  manufacture most of
their base station  components,  including the power amplifier,  internally.  In
response  to  competition  and  as  the  performance   requirements  of  certain
components increase,  many of these OEMs have begun to outsource power amplifier
manufacturing  to companies like Spectrian.  To succeed in capturing orders from
these OEMs,  independent power amplifier  suppliers must rapidly bring to market
products  that are highly  linear,  can be produced in volume  cost-effectively,
support multiple standards and are reliable in the field.

         Other  current  customers  include  worldwide   operators  of  wireless
networks such as AT&T Wireless Services ("AT&T  Wireless"),  BellSouth  Cellular
Corp.  ("Bellsouth") and GTE Wireless Services Corporation ("GTE Wireless").  As
these  operators   upgrade  their  networks,   they  often  work  directly  with
independent power amplifier  manufacturers to ensure new products are compatible
with their existing network,  support increased coverage areas, and provide high
linearity.

         The Amplifier  Division  sells power  amplifiers to a limited number of
OEMs in North  America,  Europe and Asia  principally  through its direct  sales
organization.  During the year ended  March 31,  2000  ("fiscal  2000"),  Nortel
accounted for approximately 72% of net revenues. During the year ended March 31,
1999 ("fiscal 1999"), Nortel and LGIC accounted for approximately 76% and 11% of
net  revenues,  respectively.  During the year  ended  March 31,  1998  ("fiscal
1998"), Nortel and LGIC accounted for approximately 79% and 14% of net revenues,
respectively.

         Furthermore,  a substantial portion of revenues from Nortel in the past
has  resulted  from  sales  of a  limited  number  of the  Amplifier  Division's
products. The Amplifier Division's business,  financial condition and results of
operations  have been materially  adversely  affected in the past by anticipated
orders failing to materialize and by deferrals or  cancellations  of orders as a
result of changes in OEM requirements.  The Amplifier Division and Nortel have a
demand-pull supply agreement,  renegotiated  annually,  pursuant to which Nortel
commits to purchase a certain volume of its annual power amplifier  requirements
for specified prices from the Amplifier  Division.  This agreement allows Nortel
to change the  product  mix  requirements,  which can  significantly  affect the
Amplifier  Division's  gross  margins,  and to change  requested  delivery dates
without significant financial consequences to Nortel, which adversely affect the
Amplifier  Division's  ability to efficiently  manage  production  schedules and
inventory levels and to accurately forecast product sales.

         In September  1999,  the Amplifier  Division  announced that it was not
developing products for new Nortel platforms but that it will continue to supply
Nortel with existing  products.  There can be no assurance that the Company will
be able to design  additional  new  products  for  Nortel in the  future or that
Nortel will purchase existing products from the Amplifier Division in the future
or otherwise agree to purchase the same or similar levels of its power amplifier
requirements  from the  Amplifier  Division  or  purchase  its  power  amplifier
requirements  at the same or  similar  pricing.  Any  reduction  in the level of
purchases of the  Amplifier  Division's  amplifiers  by Nortel,  or any material
reduction in pricing without significant offsets,  would have a material adverse
effect on the Amplifier Division's business,  financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations  ("MD&A") - Factors  Affecting Future Operating  Results -
Customer Concentration, Dependence on Nortel."

         If the  Amplifier  Division's  current or new customers do not generate
sufficient  demand for the Amplifier  Division's  new products  replacing  prior
demand from Nortel, the Amplifier  Division's  business financial  condition and
results of operations could be materially  adversely  affected.  Further, if the

                                       9

<PAGE>


Amplifier  Division were to lose Nortel or any other major OEM  customer,  or if
orders by Nortel or any other major OEM customer  were to  otherwise  materially
decrease, the Amplifier Division's business,  financial condition and results of
operations  would  be  materially  adversely  affected.  In  addition,  wireless
infrastructure  equipment  OEMs have come under  increasing  price pressure from
wireless  service  providers,  which in turn has  resulted in  downward  pricing
pressure on the Amplifier Division's products. The Amplifier Division expects to
incur increasing  pricing pressures from Nortel and other major OEM customers in
future periods,  which could result in declining  average sales prices and gross
margins for the Amplifier  Division's  products.  See "MD&A - Factors  Affecting
Future Operating Results - Customer Concentration, Dependence on Nortel."

Sales and Marketing - Amplifier Division

         The Amplifier  Division employs a customer  focused,  team based direct
sales approach to satisfy the power amplification needs of its customers.  Sales
to large OEM customers require close account management by Company personnel and
relationships  at multiple  levels of its  customers'  organizations,  including
management,  engineering and purchasing  personnel.  In addition,  the Amplifier
Division's application specific amplification products require experienced sales
personnel to match the customer's  amplification  requirements  to the Amplifier
Division's  product  capabilities.  The Amplifier  Division  believes that close
technical  collaboration  with  the  customer  during  the  design  phase of new
wireless  infrastructure  equipment  is  critical  to  the  integration  of  its
amplification  products  into  the new  equipment.  This  allows  the  Amplifier
Division's  engineering personnel to work closely with their counterparts at the
OEM customer to assure  compliance  of the Spectrian  product to the  customer's
specification.

         As part of the effort to  diversify  its product  base,  the  Amplifier
Division began to sell  multicarrier  amplifier systems  (including  filters and
combiners)  directly to service providers in fiscal 1997. The Amplifier Division
recognizes  that these sales may be in conflict  with  potential  or current OEM
sales  and is  willing  to work  with its OEM  equipment  suppliers  so that the
service provider receives a Spectrian power amplifier system directly or through
the OEM. There can be no assurance that the Amplifier Division's direct sales to
service providers will not cause its OEM equipment suppliers to reduce orders or
terminate their relationship with the Amplifier Division.  Any such reduction or
termination  could have a material  adverse  effect on the Amplifier  Division's
business, financial condition and results of operations.

         The Amplifier Division also markets its products with the assistance of
independent sales  representatives  in various parts of the world. The Amplifier
Division has one independent sales  representative  in the United States;  three
sales  representatives  in Europe covering Austria,  Finland,  France,  Germany,
Italy,  Sweden and Switzerland;  one sales  representative  dedicated to each of
Japan and Israel and a sales supports organization in South Korea. The Amplifier
Division  continuously  evaluates whether to establish direct sales forces or to
utilize  independent  representatives  in a  particular  region  or for a  given
potential  customer  depending upon the scope of potential sales  opportunities.
The Amplifier Division's direct sales staff provides sales direction and support
to its international sales  representatives.  Sales outside of the United States
represented  87%, 84% and 95% of net  revenues in fiscal  2000,  fiscal 1999 and
fiscal 1998, respectively. Sales outside of the United States are denominated in
U.S.  dollars in order to reduce the risks  associated with the  fluctuations of
foreign   currency   exchange  rates.   The  Amplifier   Division  expects  that
international  sales will continue to account for a  significant  portion of its
revenues.

Manufacturing - Amplifier Division

         In Sunnyvale, California, the Amplifier Division currently manufactures
low-volume  single  carrier  and  multicarrier  power  amplifier  products,  and
services  all of its power  amplifier  products.  During  fiscal 1999 and fiscal
2000, the Amplifier  Division  transitioned  the assembly and test of its higher
volume  single  carrier  power  amplifier  products  to a contract  manufacturer
located in Thailand on a turnkey basis.  In fiscal 2001, the Amplifier  Division
intends to transfer the remaining power amplifier production in Sunnyvale to the
contract manufacturer.  The Amplifier Division's strategy is to utilize contract

                                       10

<PAGE>


manufacturing to decrease the Amplifier  Division's  manufacturing  overhead and
the costs of its products,  increase  flexibility to respond to  fluctuations in
product  demand and to leverage the  strengths  of the  contract  manufacturer's
focus on high volume, high quality manufacturing.

         Demands of its  customers  drive the  Amplifier  Division to frequently
introduce and rapidly expand volume of the manufacture of new products. This has
caused the Amplifier  Division to experience  high  materials and  manufacturing
costs,   including  high  scrap  and  material   waste,   significant   material
obsolescence,  labor inefficiencies and overtime expenses,  inefficient material
procurement  and  an  inability  to  realize  economies  of  scale.  These  high
manufacturing  costs and production  interruptions have had an adverse effect on
the  Amplifier  Division's  results of  operations.  In addition,  the Amplifier
Division  has made and expects to continue to make  pricing  commitments  to OEM
customers in anticipation of achieving manufacturing cost reductions.

         The Amplifier Division's operation of its own manufacturing  facilities
in  Sunnyvale  entails a number of risks,  including  a high  level of fixed and
variable  costs,  the  management of complex  processes,  dependence on a single
source  of supply  and a strict  regulatory  environment.  Fixed  costs  consist
primarily of occupancy  costs,  investment in manufacturing  equipment,  repair,
maintenance  and  depreciation  costs related to equipment and fixed labor costs
related to manufacturing and process  engineering.  During periods of low demand
such as evidenced in fiscal 1999, high fixed costs are likely to have a material
adverse effect on the Amplifier Division's results of operations.  The Company's
outsourcing  strategy is designed to address some of these  issues.  See "MD&A -
Factors  Affecting Future Op. Results - Risks Associated with Internal Wafer and
Device Fabrication."

         The  Amplifier  Division  expects that its  customers  will continue to
establish demanding specifications for quality, performance and reliability that
must be met by the Amplifier Division's  products.  Products as complex as those
offered by the Amplifier  Division often  encounter  development  delays and may
contain   undetected   defects  or  failures  when  first  introduced  or  after
commencement of commercial  shipments.  The Amplifier  Division has from time to
time  in the  past  experienced  product  quality,  performance  or  reliability
problems.  In addition,  multicarrier power amplifiers have a higher probability
of  malfunction  than single carrier power  amplifiers  because of their greater
complexity. See "MD&A - Factors - Product Quality, Performance and Reliability."

         Amplifier  Assembly  and  Test.  The  Amplifier   Division's  amplifier
manufacturing  activities  consist  of  purchasing  components,  assembling  and
testing  components  and  subassemblies,   and  integrating  subassemblies  into
finished  products  for its  lower  volume  amplifier  products.  The  Amplifier
Division's amplifiers are comprised of a variety of subassemblies and components
designed or specified by the Amplifier Division, including housings,  harnesses,
cables,  packaged  RF  semiconductors,  semiconductor  integrated  circuits  and
printed circuit boards. Except for most RF semiconductors,  these components and
subassemblies  are manufactured by third parties.  Beginning in fiscal 1999, the
Amplifier  Division  began  utilizing  the services of a turnkey  contractor  to
assemble its high volume amplifier products. Regardless of whether the Amplifier
Division assembles an amplifier in house or relies on a turnkey contractor, each
of the Amplifier  Division's  products  receives  extensive in process and final
quality inspections and tests.

         The  Amplifier   Division   attempts  to  utilize  standard  parts  and
components that are available from multiple vendors. However, certain components
used in the  Amplifier  Division's  products are currently  available  only from
single sources, and other components are available from only a limited number of
sources.  Despite the risks  associated with  purchasing  components from single
sources or from a limited number of sources, the Amplifier Division has made the
strategic  decision to select single source or limited source suppliers in order
to obtain  lower  pricing,  receive more timely  delivery  and maintain  quality
control.  If the Amplifier Division were unable to obtain sufficient  quantities
of components, delays or reductions in product shipments could occur which would
have a material adverse effect on the Amplifier Division's  business,  financial
condition  and  results  of  operations.  See "MD&A - Factors  Affecting  Future
Operations - Sole or Limited Sources of Materials and Services."

                                       11

<PAGE>


Research and Development - Amplifier Division

         The Amplifier Division's research and development  organization designs
high performance low cost, highly manufacturable power amplifiers. The Amplifier
Division and UltraRF maintain separate research and development  ("R&D") groups.
The Amplifier  Division's  R&D group focuses on rapid  development  of new power
amplifiers  that are  manufacturable  in large  volumes at low cost.  This group
creates new product  platforms  and leverages  existing  ones,  reuses  existing
circuit  topologies and introduces into  production new correction,  control and
amplification  concepts  created by the group.  The  Amplifier  Division uses an
automated  design  environment  to model  amplifiers.  This design  environment,
together  with  the  Amplifier   Division's  modular  product  architecture  and
configurable core technologies,  allow it to rapidly define, develop and deliver
on a timely basis the new and enhanced products demanded by its OEM customers.

         The Amplifier Division  historically has devoted a significant  portion
of its resources to research and development programs and expects to continue to
do so.

Competition - Amplifier Division

         The  Amplifier  Division's  principal  competitors  in the  market  for
wireless amplification products provided by merchant suppliers currently include
AML Communications,  Inc., Amplidyne,  Inc., Microwave Power Devices,  Inc., NEC
Corporation,  Paradigm and Powerwave Technologies.  Certain of these competitors
have,  and  potential  future  competitors  could  have,  substantially  greater
technical,  financial,  marketing,  distribution  and other  resources  than the
Amplifier  Division and have, or could have, greater name recognition and market
acceptance of their  products and  technologies.  No assurance can be given that
the  Amplifier  Division's  competitors  will not  develop new  technologies  or
enhancements  to existing  products or introduce  new  products  that will offer
superior  price or  performance  features  compared to the Amplifier  Division's
products.  To the extent that OEMs increase their  reliance on external  sources
for their power amplification  needs, more competitors could be attracted to the
market. The Amplifier Division expects its competitors to offer new and existing
products at prices  necessary  to gain or retain  market  share.  The  Amplifier
Division has experienced  significant price  competition,  which has in the past
affected gross margins.  Certain of the Amplifier  Division's  competitors  have
substantial  financial  resources  which may enable them to withstand  sustained
price competition or downturns in the power amplification  market.  There can be
no assurance that the Amplifier  Division will not be subject to increased price
competition or that the Amplifier Division will be able to compete  successfully
in the  future.  See "MD&A - Factors  Affecting  Future  Operations  -  Internal
Amplifier  Design  and  Production  Capabilities  of OEMs" and  "Market  for the
Company's Products is Highly Competitive."

         The  markets  in which the  Amplifier  Division  and its OEM  customers
compete are  characterized by rapidly  changing  technology,  evolving  industry
standards and continuous  improvements in products and services.  In particular,
because the Amplifier Division's strategy of rapidly bringing to market products
customized for numerous and evolving  modulation  standards requires  developing
and  achieving  volume  production of a large number of distinct  products,  the
Amplifier  Division's ability to rapidly design and produce individual  products
for  which  there  is  significant  OEM  customer  demand  will  be  a  critical
determinant of the Amplifier Division's future success. A softening of demand in
the  markets  served by the  Amplifier  Division  or a failure  of a  modulation
standard in which the Amplifier  Division has invested  substantial  development
resources  may  have  a  material  adverse  effect  on the  Company's  business,
financial  condition and results of  operations.  No assurance can be given that
the Amplifier  Division's product development  efforts will be successful,  that
its new products will meet customer requirements and be accepted or that its OEM
customers' product offerings will achieve customer acceptance.  If a significant
number  of  development   projects,   including  the  Amplifier  Division's  new
multicarrier  products,  do not result in  substantial  volume  production or if
technologies  or  standards  supported  by  the  Amplifier   Division's  or  its
customers'  products  become  obsolete  or fail to  gain

                                       12

<PAGE>


widespread  commercial  acceptance,  the  Company's  business may be  materially
adversely  affected.  See "MD&A - Factors Affecting Future Operations - Internal
Amplifier  Design  and  Production  Capabilities  of OEMs" and  "Market  for the
Company's Products is Highly Competitive."

UltraRF Division

         In November 1999, the Company announced that its semiconductor division
would begin to operate as an  autonomous  business unit within  Spectrian  named
UltraRF.  UltraRF is a developer,  manufacturer and supplier of customizable and
cost-effective RF power devices.  These devices are a necessary component in the
manufacture  of  wireless  power   amplifiers  for  mobile  and  fixed  wireless
infrastructure.  Prior  to  November  1999,  UltraRF  sold its  products  almost
exclusively to the Amplifier Division. Since that time, UltraRF also has focused
on building its sales to other customers.

Spectrian Strategy - UltraRF Division

         UltraRF's  objective  is to expand its product  offerings,  develop and
enhance  key  strategic  alliances,  expand and  upgrade  its fab  capacity  and
selectively target key markets.

         Expand UltraRF Product Offerings. UltraRF intends to expand its product
offerings  in  order  to  take  advantage  of  the  rapidly  evolving   wireless
infrastructure  market.  In addition to increasing the range of discrete die and
packaged  devices that UltraRF offers to some of its customers,  it also intends
to offer increasingly integrated module solutions to these customers in order to
satisfy their  time-to-market  requirements.  In addition,  UltraRF believes its
module  products  will  allow  it  to  target  customers  with  less  RF  device
integration expertise.

         Expand  Fab  Capacity.  UltraRF  intends  to expand  its  semiconductor
manufacturing  ("fab")  capacity  over the next 12  months.  The  fab's  current
capacity is 1000 four-inch wafers per month,  which equates to approximately 2.0
million gross die of average size. During the next 12 months, UltraRF intends to
convert its fab to produce six-inch wafers, which UltraRF believes will increase
its gross  wafer  capacity.  The primary  motivation  for the change to six-inch
processing is to assure the  availability  of starting  silicon  wafers from top
tier vendors,  thus increasing  quality and therefore  yield.  UltraRF  believes
increased fab capacity will better enable it to assure customers a steady supply
of RF power  devices and allow  UltraRF to continue  to fully  supply  customers
should they demand a higher volume of products.

         Selectively  Target Key  Markets.  UltraRF  believes a component of its
future  success  will  be  targeting   individual   customers  with  appropriate
technology  solutions at appropriate prices. To target customers with greater RF
device integration  experience,  UltraRF will primarily market discrete RF power
devices and die. With  customers  that require more  integration  technology and
subsystem  expertise,  UltraRF  intends to supply  them with  integrated  module
products.  UltraRF  believes  that by  developing  a range  of RF  devices  from
discrete die to integrated  modules,  it can offer target customers  appropriate
product  solutions,  regardless  of whether they  possess RF device  integration
experience.

Products - UltraRF Division

<TABLE>
         RF  products  are  available  in a  wide  variety  of  frequencies  and
wattages,  allowing  customers to  determine  the most  appropriate  product for
varying   applications.   UltraRF   currently  offers  the  following   discrete
semiconductors for sale:

                                       13

<PAGE>


<CAPTION>
          Device                         Frequency (MHz)             Pout (watts)               Gain (dB)
          ------                         ---------------             ------------               ---------
<S>                                        <C>                    <C>                           <C>
   LDMOS - FET to 1GHz                        1,000                      10-80                  13.5 - 10.5
   LDMOS - FET to 2GHz                        2,000                     10-120                  11.5 - 7.5
   LDMOS - FET to 2.4GHz                   2,200-2,400                   25-45                    8.0-6.0
   Pulse Radar                               400-450              1000 watts (pulse)               11.0
   Bipolar Transistors                      450-2,000              1-60 (1000 pulse)             14.5-7.0
</TABLE>


Manufacturing - UltraRF

         UltraRF  manufactures  semiconductor die entirely in its fab located in
Sunnyvale,  California.  Final device assembly for discrete  transistors is also
completed in its Sunnyvale  facility.  Final functional  testing and reliability
engineering  is performed in UltraRF's  Sunnyvale  facility.  The  semiconductor
manufacturing  plant  comprises  50,000  square feet,  with 8,500 square feet of
class 100 clean  room  space with  class 10 cells  under  clean  hoods and 5,000
square  feet  of  assembly  area.  The  fab is one of the  few  facilities  that
processes  silicon for high power RF LDMOS and RF bipolar  transistors with gold
interconnect. UltraRF is certified as an ISO 9001 facility.

Sales and Marketing - UltraRF

         In  November  1999,  UltraRF  launched  a brand  recognition  campaign,
starting  with a  national  press tour  followed  by press  releases,  technical
articles  and  a  customer   presentation   tour.   UltraRF  has  established  a
representative network covering North America, Europe and the Pacific Rim.

Competition - UltraRF

         UltraRF  competes against several well  established  manufacturers  who
produce  semiconductor  products  for their own internal  use, or their  captive
manufacturers,  in the RF  device  market.  Primary  competitors  are  Motorola,
Philips and Ericsson.

Research and Development - UltraRF

         The UltraRF research and development resources have been focused on the
design of RF  semiconductors  and LDMOS  power  amplification  modules  ("PAM").
UltraRF also performs  advanced  research in device  modeling and  semiconductor
process development.

Patents and Proprietary Technology

         The  Company's  ability  to compete  successfully  and  achieve  future
revenue growth will depend,  in part, on its ability to protect its  proprietary
technology and operate without  infringing the rights of others. The Company has
a policy of seeking  patents on inventions  resulting from its ongoing  research
and development activities. There can be no assurance that the Company's pending
patent  applications  will be allowed or that the issued or pending patents will
not be challenged or circumvented by competitors.  Notwithstanding the Company's
active pursuit of patent  protection,  the Company  believes that the success of
its   business   depends   more  on  the   collective   value  of  its  patents,
specifications,  computer aided design and modeling tools,  technical  processes
and employee  expertise.  The Company has been awarded 37 United States  patents
and 4 foreign  patents,  has 6 patents  that have been allowed and has 18 United
States patent applications  pending and 28 foreign patent applications  pending.
See "MD&A - Factors... - Uncertain Protection of Intellectual Property."

         The Company  generally enters into  confidentiality  and  nondisclosure
agreements with its employees, suppliers, OEM customers, and potential customers
and limits access to and  distribution of its proprietary  technology.  However,
there can be no assurance  that such measures will provide  adequate

                                       14

<PAGE>


protection for the Company's trade secrets or other proprietary information,  or
that the Company's  trade secrets or proprietary  technology  will not otherwise
become known or be  independently  developed by competitors.  The failure of the
Company to protect  its  proprietary  technology  could have a material  adverse
effect on its business, financial condition and results of operations. See "MD&A
- Factors... - Uncertain Protection of Intellectual Property."

         The  communications  equipment  industry is  characterized  by vigorous
protection and pursuit of intellectual property rights or positions,  which have
resulted in significant and often protracted and expensive litigation.  Although
there is  currently  no pending  intellectual  property  litigation  against the
Company,  the  Company or its  suppliers  may from time to time be  notified  of
claims that the Company may be infringing patents or other intellectual property
rights owned by third parties. If it is necessary or desirable,  the Company may
seek licenses under such patents or other intellectual property rights. However,
there can be no assurance that licenses will be offered or that the terms of any
offered  licenses  will be  acceptable  to the Company.  The failure to obtain a
license  from a third  party for  technology  used by the  Company or  otherwise
secure  rights  to  use  such  technology  could  cause  the  Company  to  incur
substantial  liabilities,  to suspend  the  manufacture  of  products  or expend
significant  resources  to  develop  noninfringing  technology.  There can be no
assurance that the Company would be successful in such  development or that such
licenses  would be available on reasonable  terms,  if at all. In the event that
any third party makes a successful  claim  against the Company or its  customers
and  either a license  is not made  available  to the  Company  on  commercially
reasonable terms or a "design around" is not  practicable,  the Company could be
required  to  pay  substantial  damages,  indemnify  its  customers,  cease  the
manufacture,  use and sale of infringing products,  expend significant resources
to develop noninfringing technology, discontinue the use of certain processes or
obtain licenses to the infringing  technology.  See "MD&A - Factors... - Risk of
Third Party Claims of Infringement."

         Furthermore,  the Company may  initiate  claims or  litigation  against
third  parties  for  infringement  of the  Company's  proprietary  rights  or to
establish the validity of the  Company's  proprietary  rights.  Litigation by or
against  the  Company  could  result in  significant  expense to the Company and
divert the efforts of the Company's technical and management personnel,  whether
or not such litigation results in a favorable  determination for the Company. In
the event of an adverse result in any such litigation,  the Company's  business,
financial  condition  and results of operations  would be  materially  adversely
affected.  See  "MD&A  -  Factors...  -  Uncertain  Protection  of  Intellectual
Property."

Backlog

         The Company does not believe that its backlog as of any particular date
is  representative  of actual sales for any  succeeding  period.  As part of the
Company's close working  relationships with its major customers,  such customers
expect  the  Company to  respond  quickly to changes in the volume and  delivery
schedule of their power amplifiers,  and if necessary,  to inventory products at
the  Company's  facilities  for  just-in-time  delivery.   Therefore,   although
contracts  with such customers  typically  specify  aggregate  dollar volumes of
products to be purchased  over an extended  time  period,  such  contracts  also
provide  that  scheduled  shipment  dates of  particular  volumes are  generally
released  to the Company  only a few days or weeks prior to the actual  required
delivery  dates.  In addition,  these  delivery  schedules  are shorter than the
Company's  manufacturing  cycle time,  which have required the Company to commit
working capital to build and hold inventory and to take  significant  excess and
obsolete  inventory  risks.  The  Company's  customers  may also cancel or defer
orders without significant penalty.

Employees

         As of  March  31,  2000,  the  Company  had a total  of 479  employees.
However, as a result of the Company's decision to use contract manufacturing for
the remaining power  amplifier  production in Sunnyvale,  California,  and other
organizational  restructuring,  the number of  employees  is  anticipated  to be
reduced by  approximately 90 employees by the end of the third quarter of fiscal
2001.  The  Company's  future  success will depend,  in part,  on its ability to
continue  to  attract,  retain  and  motivate

                                       15

<PAGE>


highly  qualified  technical  and  management  personnel.  None of the Company's
employees is  represented  by a  collective  bargaining  agreement,  nor has the
Company experienced any work stoppage.  The Company considers its relations with
its employees to be good.

Management

         The executive officers of the Company are and certain information about
them as of June 1, 2000 is as follows:

                   Name           Age                Position
                   ----           ---                --------
        Thomas H. Waechter......  47   President and Chief Executive Officer
        Michael D. Angel........  44   Executive Vice President, Finance and
                                       Administration, Chief Financial Officer
                                       and Secretary
        Christopher J. Tubis....  51   President, UltraRF Division
        Richard A. Johanson.....  57   Vice President of Human Resources



         Mr.  Waechter joined the Company on March 31, 2000 as its President and
Chief  Executive  Officer.  From January  2000 until he joined the Company,  Mr.
Waechter was employed by Asyst  Technologies,  Inc. as its Senior Vice President
of Global  Business  Operations.  From  September  1986 until January 2000,  Mr.
Waechter was employed by Schlumberger Ltd. in various management positions, most
recently as its Vice President of Global Operations. Mr. Waechter holds a B.B.A.
in Business Management from the College of William and Mary.

         Mr. Angel joined the Company in September  1999 as its  Executive  Vice
President,  Finance and  Administration,  Chief Financial Officer and Secretary.
From April 1994 until he joined  Spectrian,  Mr.  Angel was employed by National
Semiconductor  Corporation in various management positions, most recently as its
Director of Finance - Worldwide Manufacturing and Central Technology Operations.
Mr.  Angel has also  held  various  positions  with  Hitachi  Data  Systems  and
PricewaterhouseCoopers   LLP.  Mr.  Angel  holds  a  B.S.   degree  in  Business
Administration   with  a  concentration  in  Accounting  from  California  State
University, Chico.

         Mr.  Tubis,  joined the  Company in July 1999 as its  President  of the
UltraRF division.  From November 1993 until he joined  Spectrian,  Mr. Tubis was
employed  by  National  Semiconductor  Corporation  as  its  Vice  President  of
Wireless.  Mr.  Tubis was  educated  in  England  and holds a OND/HNC  Degree in
Electronics from Lowestoft.

         Mr.  Johanson  joined the Company in June 1999 as its Vice President of
Human Resources.  From August 1979 until he joined  Spectrian,  Mr. Johanson was
employed by Schlumberger Ltd. in various management positions,  most recently as
its Director of Human  Resources.  Mr. Johanson holds a B.A. degree in Education
and an M.A. degree in Administration and Finance from San Jose State University.

                                       16

<PAGE>


ITEM 2. PROPERTIES

         The Company's principal  administrative,  engineering and manufacturing
facilities are located in two buildings of approximately  141,000 square feet in
Sunnyvale,  California.  In November  1996,  the Company  entered  into  several
agreements in connection  with a transaction  with respect to these  properties.
Pursuant to these agreements, the Company sold these properties to SPEC (CA) QRS
12-20,  Inc.  ("SPEC"),  and  pursuant to the terms of a lease  agreement,  SPEC
agreed to lease these properties to the Company for a term of 15 years (with two
options  to extend  the lease for up to an  additional  ten  years).  This lease
agreement  also  provides that the Company shall have the right of first refusal
to purchase the properties from SPEC upon the occurrence of certain conditions.

         During the second  quarter of fiscal 2000,  the Company  subleased  its
ancillary 40,000 square foot  manufacturing  facility in Rocklin,  California to
GPS Management Services, Inc. ("GPS"). GPS subsequently assigned the sublease to
The Gap,  Inc.  for the  remainder  of the  Company's  lease  term.  The Rocklin
facility has a sixty month term and expires in June 2003.  In the first  quarter
of fiscal 2001,  the Company  entered  into an agreement to lease 12,000  square
feet of development and manufacturing space for its engineering design center in
Quincy, Illinois.  Pursuant to the terms of the lease agreement, the Company has
agreed to lease  this  property  for a term of two years  (with two  options  to
extend the lease for up to an additional four years) that expires in April 2002.

         In March 1997,  through means of a limited  liability  company of which
the Company owns 91.5%, the Company purchased a building of approximately 39,000
square feet in Sunnyvale,  California located between the Company's two occupied
buildings.  In December  1999, the Company sold the building for net proceeds of
approximately $3.3 million.

         In the fourth quarter of fiscal 2000, the Company leased  approximately
21,500 square feet of a facility in Seoul, Korea for a one-year term expiring in
February 2001. Administrative,  development,  manufacturing and repair functions
for the Asia Pacific region are located in the facility.


ITEM 3. LEGAL PROCEEDINGS

         On May 19, 2000, the Company announced that it had reached a settlement
in principle of the  shareholder  class action  lawsuits which were filed in the
United States  District  Court for the Northern  District of California  and the
Superior Court of the State of California  for Santa Clara County.  The terms of
the  settlement  will  not  have a  material  adverse  effect  on the  Company's
financial position or results from operations. The final settlement agreement is
subject to Court approval and class notice provisions.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.

                                       17

<PAGE>


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a)      Market Information

         The  Company's  Common  Stock has been  traded on the  Nasdaq  National
Market tier of the Nasdaq  Stock Market  under the trading  symbol  "SPCT" since
August 4, 1994. The following table sets forth for the period indicated the high
and low sale prices for the Common  Stock,  as  reported by the Nasdaq  National
Market.

     Fiscal Year Ended March 31, 2000                    High            Low
                                                     -----------     -----------
         Fourth Quarter                              $    30.000     $    16.250
         Third Quarter                               $    35.250     $    21.266
         Second Quarter                              $    25.625     $    11.188
         First Quarter                               $    15.500     $     8.875


     Fiscal Year Ended March 31, 1999                    High            Low
                                                     -----------     -----------
         Fourth Quarter                              $    19.750     $     9.250
         Third Quarter                               $    14.500     $     8.375
         Second Quarter                              $    16.750     $    12.125
         First Quarter                               $    18.938     $    13.813


     The reported  last sale price of the  Company's  Common Stock on the Nasdaq
National Market on June 23, 2000 was $17.44.  The approximate  number of holders
of record of the  shares of the  Company's  Common  Stock was 240 as of June 23,
2000. This number does not include  stockholders  whose shares are held in trust
by other entities. The actual number of stockholders is greater than this number
of  holders  of  record.  Based on the  number of annual  reports  requested  by
brokers, the Company estimates that it has approximately 5,000 beneficial owners
of its Common Stock.

         The Company has never paid any cash  dividends  on its Common Stock and
does not anticipate paying cash dividends in the foreseeable future. The Company
has entered  into a bank line of credit and the  Company's  agreement  with such
lender prohibits the payment of cash dividends without the prior written consent
of the lender.

(b)      Report of offering securities and use of proceeds therefrom

         Not applicable.

                                       18

<PAGE>


<TABLE>
ITEM 6: SELECTED CONSOLIDATED FINANCIAL DATA

<CAPTION>
                                                                                Fiscal Year Ended March 31,
                                                            ------------------------------------------------------------------------
                                                              2000              1999           1998           1997           1996
                                                            ---------         ---------      ---------      ---------      ---------
                                                                            (in thousands, except per share data)
<S>                                                         <C>               <C>            <C>            <C>            <C>
Statement of Operations Data:

NET Revenues ..........................................     $ 163,567         $  99,331      $ 168,798      $  88,252      $  72,113
                                                            ---------         ---------      ---------      ---------      ---------

Costs and expenses:
  Cost of revenues ....................................       129,998            96,880        132,684         65,322         45,355
  Research and development ............................        22,488            26,735         18,644         17,230         14,548
  Selling, general and administrative .................        19,337            16,315         13,014          9,299          7,450
  Restructuring costs .................................         1,032(3)           --             --             --             --
                                                            ---------         ---------      ---------      ---------      ---------

     Total costs and expenses .........................       172,855           139,930        164,342         91,851         67,353
                                                            ---------         ---------      ---------      ---------      ---------

Operating income (loss) ...............................        (9,288)          (40,599)         4,456         (3,599)         4,760

Interest income .......................................         3,344             4,540          4,045            210            889
Interest expense ......................................          (473)             (853)          (710)          (602)          --
Other income, net .....................................           624              --            1,530           --             --
                                                            ---------         ---------      ---------      ---------      ---------

Income (loss) before income taxes .....................        (5,793)          (36,912)         9,321         (3,991)         5,649

Income taxes ..........................................            30                59            399           --              169
                                                            ---------         ---------      ---------      ---------      ---------

Net income (loss) .....................................     $  (5,823)        $ (36,971)     $   8,922      $  (3,991)     $   5,480
                                                            =========         =========      =========      =========      =========

Net income (loss) per share:(1)

    Basic .............................................     $   (0.56)        $   (3.50)     $    0.90      $   (0.49)     $    0.71
                                                            =========         =========      =========      =========      =========
    Diluted ...........................................     $   (0.56)        $   (3.50)     $    0.83      $   (0.49)     $    0.66
                                                            =========         =========      =========      =========      =========

Shares used in computing per share amounts:(1)
    Basic .............................................        10,426            10,568          9,881          8,150          7,684
                                                            =========         =========      =========      =========      =========
    Diluted ...........................................        10,426            10,568         10,701          8,150          8,363
                                                            =========         =========      =========      =========      =========


                                                                                            March 31,
                                                            ------------------------------------------------------------------------
                                                              2000              1999           1998           1997           1996
                                                            ---------         ---------      ---------      ---------      ---------
                                                                            (in thousands, except per share data)
Balance Sheet Data:
Working capital .......................................     $  80,668         $  72,399      $ 117,478      $  24,062      $  12,710
Total assets ..........................................       131,275           128,412        175,051         66,633         55,922
Debt and capital lease obligations, net of
current portion(2) ....................................         1,351             4,899          5,912          7,057           --
Total stockholders' equity ............................     $  98,985         $  95,968      $ 144,342      $  42,466      $  44,838

<FN>
------------------
(1)  See  Note 1 of  Notes  to  Consolidated  Financial  Statements  herein  for
     information concerning the per share computations.

(2)  See Note 4 of Notes  to  Consolidated  Financial  Statements  herein  for a
     description of the Company's debt and lease obligations.

(3)  See  Note 11 of Notes  to  Consolidated  Financial  Statements  herein  for
     details of the restructuring.
</FN>
</TABLE>

                                                                 19

<PAGE>


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

         The  statements  contained in this Annual  Report on Form 10-K that are
not purely  historical  are  forward-looking  statements  within the  meaning of
Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E
of  the  Securities  Exchange  Act  of  1934  (the  "Exchange  Act"),  including
statements  regarding  Spectrian  Corporation's  ("the  Company")  expectations,
hopes,  intentions or strategies  regarding  the future.  When used herein,  the
words "may," "will," "expect," "anticipate,"  "continue," "estimate," "project,"
"intend"  and similar  expressions  are  intended  to  identify  forward-looking
statements  within  the  meaning of the  Securities  Act and the  Exchange  Act.
Forward-looking statements include:  statements regarding events, conditions and
financial  trends  that may affect the  Company's  future  plans of  operations,
business   strategy,   results  of  operations  and  financial   position.   All
forward-looking  statements  included in this document are based on  information
available  to the  Company  on the  date  hereof,  and the  Company  assumes  no
obligation  to  update  any  such  forward-looking  statements.   Investors  are
cautioned  that any  forward-looking  statements  are not  guarantees  of future
performance and are subject to risks and  uncertainties  and that actual results
may differ materially from those included within the forward-looking  statements
as a result of various  factors.  These  forward-looking  statements are made in
reliance  upon the safe harbor  provision of The Private  Securities  Litigation
Reform Act of 1995.  Factors that could cause or contribute to such  differences
include,  but are not  limited  to,  those  described  below,  under the heading
"Factors Affecting Future Operating Results" and elsewhere in this Annual Report
on Form 10-K.

Overview

         Spectrian  designs,  manufacturers and markets high-power RF amplifiers
and semiconductor devices, for the global wireless communications  industry. The
Company's  power  amplifiers  support a broad range of  transmission  standards,
including  AMPS,  TDMA,  CDMA,  PCS, GSM, WLL, and IMT-2000.  Spectrian's  power
amplifiers  are utilized as part of the  infrastructure  for both wireless voice
and data networks. The Company's power amplifiers boost the power of a signal so
that  it can  reach a  wireless  phone  or  other  device  within  a  designated
geography.  The Company's  semiconductor  devices are key  components of a power
amplifier.

         UltraRF,  the  tradename  for  the  Company's  semiconductor  division,
operates its own wafer  fabrication  facility  that  utilizes  bipolar and LDMOS
technologies.  This  facility is capable of  processing  MOS  devices  with gold
metallization.  Using this fabrication  facility,  UltraRF produces  high-power,
high-performance LDMOS RF power semiconductors,  which are one critical enabling
component in the design and manufacture of second and third generation  wireless
infrastructure  equipment.  In addition to its own unique designs,  UltraRF also
produces functional equivalents to some devices provided by other manufacturers.

         For the year ended March 31, 2000 ("fiscal 2000"), Nortel accounted for
approximately  72% of net  revenues.  For the year ended March 31, 1999 ("fiscal
1999"), Nortel and LGIC accounted for approximately 76% and 11% of net revenues,
respectively.  During the year ended March 31, 1998 ("fiscal 1998"),  Nortel and
LGIC accounted for approximately 79% and 14% of net revenues,  respectively. The
Company's  business,  financial  condition and results of  operations  have been
materially  adversely  affected  in the past by  anticipated  orders  failing to
materialize and by deferrals or  cancellations  of orders as a result of changes
in OEM requirements. In the fourth quarter of fiscal 1998, the fiscal year ended
March 31, 1999, and the first and fourth quarters of fiscal 2000, product orders
fell sharply resulting in substantial losses in those fiscal periods.  There can
be no assurance that the Company will not experience  such  fluctuations  in the
future.  In September 1999, the Company announced that it expected that it would
not be  developing  new products for Nortel but would  continue to supply Nortel

                                       20

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

with  existing  products.  If the Company is unable to find other  customers  to
generate demand for its new products,  the Company's  revenues may be materially
adversely  affected.  If the Company  were to lose Nortel or any other major OEM
customer,  or if  orders by Nortel  or any  other  major  OEM  customer  were to
otherwise materially decrease either in unit quantity or in price, the Company's
business,  financial  condition  and results of  operations  would be materially
adversely affected.

         During fiscal 2000,  1999 and 1998,  sales outside of the United States
were 87%, 84% and 95%,  respectively.  The Company  expects  that  international
sales will continue to account for a significant percentage of the Company's net
revenues  for  the  foreseeable  future.  Financial  market  turmoil,   economic
downturn,  consolidation  or merger of customers,  and other changes in business
conditions in any of the Company's current or future markets,  such as Korea and
France,  may  have a  material  adverse  effect  on the  Company's  sales of its
products.  Furthermore,  because  the  Company's  products  are  priced  in U.S.
dollars, currency fluctuations and instability in the financial markets that are
served by the Company may have the effect of making the Company's  products more
expensive  than those of other  manufacturers  whose  products are priced in the
local  currency  of the  customer  and may  result in reduced  revenues  for the
Company.

         In Sunnyvale,  California,  the Company manufactures  low-volume single
carrier and multicarrier power amplifier products, and services all of its power
amplifier products. In addition, the Company operates a four-inch  semiconductor
wafer fabrication  facility and semiconductor  assembly and testing operation in
Sunnyvale, California. During fiscal 1999, the Company transitioned the assembly
and test of its higher  volume  single  carrier  power  amplifier  products to a
contract  manufacturer  located in Thailand on a turnkey basis.  In fiscal 2001,
the Company  plans to transfer  the  remaining  power  amplifier  production  in
Sunnyvale  to  the  contract   manufacturer.   The  Company  utilizes   contract
manufacturing to decrease the Company's  manufacturing overhead and costs of its
products,  to increase  flexibility to respond to fluctuations in product demand
and to leverage  the  strengths  of the  contract  manufacturer's  focus on high
volume,  high quality  manufacturing.  The cost of  transitioning  manufacturing
activities  to the  contract  manufacturer  in fiscal  1999 were higher than the
savings from costs of products,  which  adversely  affected the Company's  gross
margin for fiscal 1999.  The Company  anticipates  that its gross margin will be
adversely  affected in fiscal 2001 during the transition of the remaining  power
amplifier  production  to the  contract  manufacturer.  As a result of its wafer
fabrication facility and other manufacturing and development infrastructure, the
Company  has a high  level of fixed  costs  and is  dependent  upon  substantial
revenue to maintain profitability.

         The Company's semiconductor  fabrication facilities entails a number of
risks,  including a high level of fixed and variable  costs,  the  management of
complex  processes,  dependence  on  a  single  source  of  supply  for  certain
components and services, and a strict regulatory environment.  During periods of
low  demand,  high fixed wafer  fabrication  costs are likely to have a material
adverse effect on the Company's operations.  In addition, the Company's strategy
of frequently  introducing and rapidly expanding the manufacture of new products
to meet evolving OEM customer and wireless service provider needs has caused the
Company to experience  high materials and  manufacturing  costs,  including high
scrap   and   material   waste,   significant   material   obsolescence,   labor
inefficiencies,  high overtime hours,  inefficient  material  procurement and an
inability to realize economies of scale.

Results of Operations

<TABLE>
         The  following  table  sets  forth for the  periods  indicated  certain
statement of operations  data of the Company  expressed as a percentage of total
revenues and gross margin on revenues.

                                       21

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

<CAPTION>
                                                                          Fiscal Year Ended March 31,
                                                                     -------------------------------------
                                                                     2000            1999             1998
                                                                     -----           -----           -----
<S>                                                                  <C>             <C>             <C>
     NET REVENUES.........................................           100.0%          100.0%          100.0%
                                                                     -----           -----           -----

     COSTS AND EXPENSES:
        Cost of revenues..................................            79.5            97.6            78.6
        Research and development..........................            13.7            26.9            11.0
        Selling, general and administrative...............            11.8            16.4             7.8
        Restructuring costs ..............................             0.6              --              --
                                                                     -----           -----           -----
          Total costs and expenses........................           105.6           140.9            97.4
                                                                     -----           -----           -----

     Operating income (loss)..............................            (5.6)          (40.9)            2.6

     INTEREST INCOME......................................             2.0             4.6             2.4
     INTEREST EXPENSE.....................................            (0.3)           (0.9)           (0.4)
     OTHER INCOME (EXPENSE)...............................             0.4              --             0.9
                                                                     -----           -----           -----


     INCOME (LOSS) BEFORE INCOME TAXES....................            (3.5)          (37.2)            5.5

     INCOME TAXES.........................................              --              --             0.2
                                                                     -----           -----           -----

     NET INCOME (LOSS)....................................            (3.5)%         (37.2)%           5.3%
                                                                     =====           =====           =====

     Gross margin on REVENUES.............................            20.5%            2.4%           21.4%
                                                                     =====           =====           =====
</TABLE>


Years Ended March 31, 2000 and 1999

         Net  Revenues.  The  Company's  net  revenues  increased  65% to $163.6
million for fiscal 2000 from $99.3  million for fiscal  1999.  The growth in net
revenue was primarily due to higher demand in the single carrier power amplifier
("SCPA")  product  line from Nortel and  achieving  volume  shipments of the new
multi-channel power amplifier ("MCPA") product line. SCPA revenues increased 41%
to $126.4  million for fiscal  2000 from $89.4  million  for fiscal  1999.  MCPA
revenues  increased  710% to $32.2 million for fiscal 2000 from $4.0 million for
fiscal 1999. UltraRF revenues from external customers increased to $880,000 from
none for fiscal 2000 and fiscal 1999, respectively.

         Cost of  Revenues.  Cost of  revenues  consists  primarily  of  turnkey
amplifier costs for the Company's  higher volume  products,  internal  amplifier
assembly and test costs for its lower volume and new products,  RF semiconductor
fabrication, assembly and test costs, raw materials,  manufacturing overhead and
warranty  costs.  The  Company's  cost of  revenues  increased  by 34% to $130.0
million for fiscal 2000 from $96.9  million for fiscal  1999.  The increase on a
dollar basis for fiscal year 2000 was due primarily to higher production volumes
associated with the increased revenues.

         Gross  margin on sales was 20% for fiscal  2000 as  compared  to 2% for
fiscal 1999. The increase in gross margin reflected lower per unit manufacturing
costs driven by higher production volumes,  product cost reduction  initiatives,
the increased use of contract  manufacturing,  and product mix.  However,  these
cost  improvements  were partially  offset by declining  average sales prices in
certain volume products.

         Research and  Development.  Research and development  ("R&D")  expenses
include the cost of designing,  developing or reducing the manufacturing cost of
amplifiers and RF semiconductors. The Company's R&D expenses decreased by 16% to
$22.5  million in fiscal 2000 from $26.7 million in fiscal 1999. As a percentage
of net revenues, R&D expenses represented 14% of net revenues for

                                       22

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

fiscal 2000 as compared to 27% of net revenues for fiscal 1999.  The decrease in
R&D expenses on both a dollar and  percentage  of net revenues  basis  reflected
substantially higher revenue levels on a year-to-year basis and reduced expenses
associated with completion of the initial  products in the new MCPA product line
in early fiscal 2000.

         Selling,    General   and   Administrative.    Selling,   general   and
administrative  ("SG&A")  expenses include  compensation and benefits for sales,
marketing,  senior management and administrative personnel,  commissions paid to
independent sales  representatives,  professional  fees and other expenses.  The
Company's  SG&A  expenses  increased by 59% to $19.3 million in fiscal 2000 from
$16.3 million in fiscal 1999.  As a percentage  of net  revenues,  SG&A expenses
represented  12% of net  revenues  for  fiscal  2000 as  compared  to 16% of net
revenues  for fiscal 1999.  The increase in SG&A  expenses on a dollar basis for
fiscal 2000 was in principal due to increased  commissions and added maintenance
and  support  for the new  enterprise  resource  planning  ("ERP")  system.  The
decrease in SG&A  expenses as a percentage  of revenue was due  primarily to the
increased revenue levels.

         Restructuring  Costs. During fiscal 1999, the Company  transitioned the
assembly and test of its higher volume single carrier power  amplifier  products
to a contract  manufacturer  located in Thailand on a turnkey basis.  During the
fourth  quarter of fiscal 2000,  the Company  decided to transfer the  remaining
power   amplifier   production  in  Sunnyvale,   California,   to  the  contract
manufacturer  to utilize lower labor costs than  available  domestically  and to
reduce fixed overheads.  In connection with the decision, the Company recognized
in fiscal 2000 an approximately $1.0 million  restructuring charge for estimated
severance  costs related to  organizational  changes and a planned  reduction in
work force.  Approximately 90 employees  engaged in manufacturing and production
related  functions  are  anticipated  to  be  terminated  as  a  result  of  the
restructuring.  The  transfer  of  production  to  Thailand  is  expected  to be
completed during the third quarter of fiscal 2001.

         Interest  Income.  Interest income  decreased to $3.3 million in fiscal
2000 from $4.5 million in fiscal 1999.  The decrease in interest  income for the
year was a result of lower interest-bearing  investment balances associated with
the reduced average cash and cash equivalent balances.

         Interest Expense.  Interest expense decreased to $0.5 million in fiscal
2000 from $0.9 million in fiscal 1999. The decrease in interest  expense for the
year was a result of  substantially  reduced  average  borrowings  levels due to
repayments made at the time of the sale of property.

         Other  Income.  Other  income  increased to $0.6 million in fiscal 2000
from none in fiscal 1999. The increase in other income resulted from the sale of
a light  industrial  building in December  1999 by the Company for $3.3 million,
net of selling expenses.  A gain, net of selling  expenses,  of $0.6 million was
recognized  on the sale.  The related bank debt of $2.8 million that was secured
by the building was retired upon the closing of the building sale.

         Income Taxes.  Due to the losses incurred by the Company in the current
and prior years and the related net operating  loss  carryforwards  available to
the  Company,  the  Company  did not record  income tax  expense  except for the
minimum state income tax expense for fiscal 2000 and fiscal 1999.

                                       23

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

Years Ended March 31, 1999 and 1998

         Net  Revenues.  The  Company's  net revenues  decreased by 41% to $99.3
million for fiscal 1999 from $168.8 million for fiscal 1998. The decrease in net
revenues for fiscal 1999 reflected a significant  decrease in demand,  primarily
by Nortel, for the Company's TDMA, GSM and PCS CDMA products.

         Cost of Sales.  The Company's  cost of sales  decreased by 27% to $96.9
million for fiscal 1999 from $132.7  million for fiscal  1998.  Gross  margin on
sales was 2% for fiscal 1999 as compared to 21% for fiscal 1998.  The decline in
gross margin for fiscal 1999 reflects  reduced average selling prices on some of
the Company's amplifier products,  transition costs associated with transferring
the Company's higher volume amplifier products to a contract manufacturer, costs
associated with the underutilization of the Company's wafer fabrication facility
due to reduced shipment volume levels in fiscal 1999,  warranty costs associated
with some of the  Company's  older  products  and costs  associated  with higher
excess and obsolete inventory levels due to reduced shipment demand.

         Research and Development.  The Company's R&D expenses  increased by 44%
to $26.7 million in fiscal 1999 from $18.6 million in fiscal 1998.  The increase
in R&D spending in fiscal 1999  reflected  increased  spending in both amplifier
and semiconductor R&D for personnel expenses and project  development  expenses.
R&D  expenses as a percentage  of net  revenues  increased to 27% in fiscal 1999
from 11% in fiscal 1998 due to an increase in costs and a decrease in revenues.

         Selling,  General  and  Administrative.  The  Company's  SG&A  expenses
increased by 25% to $16.3  million for fiscal 1999 from $13.0 million for fiscal
1998. SG&A expenses as a percentage of net revenues  increased to 16% for fiscal
1999 from 8% for fiscal 1998. The increase in SG&A expenses was primarily due to
costs associated with the  implementation of a new enterprise  resource planning
system  and  a  new  product  data  management  system  and  additional  ongoing
infrastructure support and depreciation costs associated with these new systems.
These costs were offset slightly by reduced outside sales commissions due to the
decline in revenue in fiscal 1999.

         Interest Income (Expense),  net.  Interest income,  net for fiscal 1999
was $3.7  million  compared to net  interest  income of $3.3  million for fiscal
1998, reflecting slightly higher average cash and short-term investment balances
in fiscal 1999 as compared to fiscal 1998.

         Other Income, net. In fiscal 1999, no other expense or other income was
recorded.  Other  income of $1.5  million was  recorded in the first  quarter of
fiscal  1998  representing  the net gain  realized  from  the  cash  sale of the
Company's wholly owned subsidiary,  American Microwave Technology, Inc. ("AMT"),
to the management group and employees of AMT.

         Income Taxes.  The Company  recorded income tax expense of $0.1 million
and $0.4 million for fiscal 1999 and 1998,  respectively.  In fiscal  1999,  the
Company did not record  income tax expense  except for the minimum  state income
tax expense.  In fiscal 1998, the Company's  combined effective tax rate of 4.3%
reflected the use of net operating loss  carryforwards  ("NOLs").  The Company's
ability to use its NOLs against  taxable  income may be subject to  restrictions
and  limitations  under  Section 382 of the Internal  Revenue  Code of 1986,  as
amended,  in the  event of a change  in  ownership  of the  Company  as  defined
therein.

Segment Information

         Under the management approach, the Company has broken down its business
into two divisions based upon product type: Amplifier Division and Semiconductor
Division,  which  operates  under the  tradename  of  UltraRF.  UltraRF  derives
virtually  all of its net revenues  from sales to the  Amplifier  Division.  The
Company  allocates  operating  expenses to these

                                       24

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

segments but does not allocate interest income and expense.  Corporate  expenses
are allocated to the operating segments based on predetermined annual allocation
methods.  Appropriate intersegment eliminations are made in the consolidation of
the Company's consolidated financial statements.

         The Company  operated  and reported its  financial  information  as one
vertical  integrated unit in the fiscal year ending March 31, 1999 and therefore
did not  identify or report  separate  segment  information.  The Company  began
reporting its operations by segment as of the fiscal period  beginning  April 1,
1999.  Segment  information  for the year ended March 31, 2000 is as follows (in
thousands):

<TABLE>
Consolidated Statement of Operations Data - Fiscal 2000:

<CAPTION>
                                                                                  Year Ended March 31, 2000
                                                               --------------------------------------------------------------------
                                                               Amplifier            UltraRF             Other               Total
                                                               ---------           ---------          ---------           ---------
<S>                                                            <C>                 <C>                <C>                 <C>
Net revenues, external ..............................          $ 162,687           $     880          $    --             $ 163,567
Net revenues, intersegment ..........................               --                27,050            (27,050)               --
Amortization and depreciation .......................              5,797               2,546              4,912              13,255
Income (loss) before income taxes ...................             (9,906)              4,113               --                (5,793)
</TABLE>


Recent Accounting Pronouncements

         In June 1998, the Financial Accounting Standards Board issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments  and Hedging  Activities"  ("SFAS 133").  SFAS 133 established a new
model for accounting for derivative and hedging  activities.  In July,  1999 the
Financial  Accounting  Standards  Board  issued  SFAS No.  137  "Accounting  for
Derivative  Instruments and Hedging  Activities - Deferral of the Effective Date
of FASB Statement No. 133" ("SFAS 137"). SFAS 137 deferred the effective date of
SFAS 133 until the first fiscal quarter  beginning after June 15, 2000. SFAS 133
is not  expected  to have any  material  impact  on the  Company's  consolidated
financial statements.

         In December 1999, the Securities and Exchange  Commission  issued Staff
Accounting  Bulletin:  No. 101 "Revenue  Recognition  in  Financial  Statements"
("SAB101").  SAB  101  summarizes  certain  of the  Staff's  views  in  applying
generally  accepted  accounting  principles to revenue  recognition in financial
statements  and is effective for the Company  beginning  fiscal 2001. SAB 101 is
not expected to have any material impact on the Company's consolidated financial
statements.

         In  March  2000,  the  Financial   Accounting  Standards  Board  issued
Interpretation No. 44 ("FIN 44") "Accounting for Certain Transactions  involving
Stock  Compensation" an  interpretation  of APB Opinion No. 25. FIN 44 clarifies
the application of Opinion 25 for (a) the definition of employee for purposes of
applying  Opinion 25, (b) the criteria for determining  whether a plan qualifies
as  a  non  compensatory  plan,  (c)  the  accounting   consequence  of  various
modifications  to the terms of a previously fixed stock option or award, and (d)
the  accounting  for an  exchange  of stock  compensation  awards in a  business
combination.  FIN 44 is effective  July 1, 2000, but certain  conclusions  cover
specific  events that occur after either December 15, 1998, or January 12, 2000.
The  Company  believes  that  FIN 44 will  not  have a  material  effect  on its
financial position or results of operations.

Liquidity and Capital Resources

         The Company has  financed  its growth  through  sales of common  stock,
private sales of equity securities and divisions, capital equipment leases, bank
lines of credit and cash flows from operations.  Principal  sources of liquidity
at March 31, 2000 consisted of cash, cash equivalents and short-term investments
of $47.6 million and bank borrowing arrangements.

                                       25
<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

         The Company has a revolving line of credit of $10.0 million with a bank
collateralized  by the  majority  of the  Company's  assets.  The line of credit
expires on June 30, 2001. Under the terms of the master agreement governing this
credit  instrument,  the Company is required to maintain certain minimum working
capital,  net worth,  profitability  and other specific  financial  ratios.  The
master  agreement also has certain  restrictions on other  indebtedness  and the
payment of dividends. The Company was in default of certain of the covenants and
the bank has granted a waiver of the default  effective  through  June 30, 2000.
The  Company  expects to be in  default  of a  covenant  at the end of the first
quarter of fiscal  2001.  The amount  available  to borrow at March 31, 2000 was
$10.0 million. The Company can borrow at either (i) a variable rate equal to the
prime rate or (ii) a fixed rate equal to 200 basis  points above the LIBOR rate,
which at March 31,  2000 was 9% and  8.29%,  respectively.  The  Company  had no
borrowings under the line of credit at March 31, 2000.

         In April 1998, the Company  announced a repurchase  program pursuant to
which it could  acquire up to one million  shares of Common Stock in open market
purchases.  The Company  repurchased  a total of one million  shares  during the
third and fourth quarters of fiscal 1999 on the open market for a total purchase
price of $14.8 million.

         In January  1997,  the Company  borrowed $6.0 million under a term loan
secured by certain capital  equipment.  The loan, which expires in January 2002,
requires  the  payment  of monthly  principal  plus  interest  and is subject to
certain minimum working capital,  net worth and other specific financial ratios.
The Company was in compliance with these covenants as of March 31, 2000.

         In April  1998,  the Company  entered  into an  operating  lease for an
ancillary 2,750 square foot engineering design center in Quincy,  Illinois.  The
lease was  subsequently  renewed for another 2 years lease term that  expires in
April 2002.

         The  Company's  working  capital  increased  by $8.3  million  to $80.7
million as of March 31, 2000 from $72.4  million as of March 31, 1999.  However,
cash,  cash  equivalents and short-term  investments  decreased by $15.1 million
during the same period.  The Company's  short-term  investments were principally
invested in investment grade, interest-bearing securities.

         Cash used by  operations  was $14.9 million for fiscal 2000 compared to
$12.3  million  for fiscal  1999.  Cash used by  operations  in fiscal  2000 was
principally  the  result of a $13.7  million  increase  in  inventory,  which is
partially a result of the timing difference  between Nortel's requested delivery
dates and the Company's  vendor  purchase  commitments to support the customer's
delivery  requirements,  a $10.8 million increase in accounts receivable,  which
increased  proportionately  with  revenue  growth and also  reflects  the longer
standard  payment terms in Europe,  partially offset by an $8.4 million increase
in accounts payable, which increased  proportionately with production levels. In
addition,  accrued  liabilities  decreased by $5.1 million due  primarily to the
reduction  of  warranty  reserves  based  upon  repairing   defective   products
previously  accrued  for and the  timing of the  payment  of  certain  expenses,
primarily payroll related.

         The Company's  investing  activities  used cash of  approximately  $4.6
million during fiscal 2000 as compared to providing $20.9 million of cash during
fiscal 1999.  Cash used for  investing  activities  during  fiscal 2000 resulted
primarily  from $7.7  million  additions to property  and  equipment,  partially
offset by $3.3 million in proceeds from the sale of a light industrial  building
by the Company.  Capital expenditures during fiscal 2000 included  manufacturing
test and production  equipment required to support new products,  test equipment
to support various research and development projects, and the ERP system.

         The Company's financing  activities provided cash of approximately $4.8
million  during  fiscal 2000 as compared  to cash used of $13.8  million  during
fiscal 1999.  Cash provided by financing  activities  during fiscal 2000 was the
result of $9.2 million in proceeds  from the issuance of common  stock,  through
the  exercise of  employee  stock  options  and  employee  stock  purchase  plan
activity,  which was partially  offset by $4.4 million in repayments of debt and
capital lease obligations.

                                       26

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

     The Company  anticipates  spending  approximately $15 million over the next
twelve  months  for  capital  additions   primarily  to  support   manufacturing
production and test requirements, development projects and facilities expansion.
The  Company  currently  believes  that its cash  and  equivalents,  its line of
credit, and funds from current and anticipated operations, will be sufficient to
meet working capital and capital  expenditure  requirements  for the next twelve
months.  If the Company  acquires one or more  businesses or products or divests
existing  businesses or product lines, the Company's capital  requirements could
increase or decrease substantially. To raise additional capital, the Company may
issue equity securities that could dilute existing investors.

                                       27

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

Factors Affecting Future Operating Results

         Customer   Concentration;    Dependence   on   Nortel.   The   wireless
infrastructure  equipment  market is  dominated by a small number of large OEMs,
including Ericsson, Lucent, Motorola, Nortel and Siemens. The Company's revenues
are  derived  primarily  from  sales  to a  limited  number  of these  OEMs,  in
particular,  Nortel.  Furthermore, a substantial portion of revenues from Nortel
in the  past has  resulted  from  sales of a  limited  number  of the  Company's
products. The Company's business,  financial condition and results of operations
have  been  materially  adversely  affected  in the past by  anticipated  orders
failing to materialize and by deferrals or  cancellations  of orders as a result
of changes in OEM requirements.  The Company and Nortel have a supply agreement,
renegotiated  annually,  pursuant to which Nortel  commits to purchase a certain
volume of its annual power amplifier  requirements for specified prices from the
Company.  This agreement  allows Nortel to change the product mix  requirements,
which can  significantly  affect  the  Company's  gross  margins,  and to change
requested delivery dates without significant  financial  consequences to Nortel,
which affect the Company's ability to efficiently  manage  production  schedules
and inventory  levels and to accurately  forecast  product  sales.  In September
1999,  the Company  announced  that it expected  that it would not be developing
products  for Nortel but that it will  continue to supply  Nortel with  existing
products.  There can be no assurance that Nortel will purchase existing products
from the  Company  in the  future or  otherwise  agree to  purchase  the same or
similar levels of its power amplifier  requirements from the Company or purchase
its power amplifier  requirements at the same or similar pricing.  Any reduction
in the level of purchases of the Company's amplifiers by Nortel, or any material
reduction in pricing without significant offsets,  would have a material adverse
effect on the Company's business, financial condition and results of operations.
If the Company's current or new customers do not generate  sufficient demand for
the Company's  new products  replacing  prior demand from Nortel,  the Company's
business  financial  condition  and results of  operations  could be  materially
adversely  affected.  Further,  if the Company  were to lose Nortel or any other
major OEM customer,  or if orders by Nortel or any other major OEM customer were
to otherwise  materially decrease,  the Company's business,  financial condition
and results of operations would be materially  adversely affected.  In addition,
wireless infrastructure equipment OEMs have come under increasing price pressure
from wireless service providers,  which in turn has resulted in downward pricing
pressure on the  Company's  products.  The Company  expects to incur  increasing
pricing  pressures from Nortel and other major OEM customers in future  periods,
which could result in declining  average  sales prices and gross margins for the
Company's products.

                                       28

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

         Capacity  Constraints.  UltraRF's  facilities  have a level of capacity
beyond which it cannot cost effectively  produce its products.  Although UltraRF
is not  currently  approaching  those  constraints,  it may be unable to further
expand its business if it fails to plan and build sufficient  capacity.  UltraRF
may attempt to increase its  capacity by  converting  its  existing  facility to
accommodate  equipment  that uses  six-inch  wafers.  UltraRF  does not have any
experience  processing  six-inch  wafers in  UltraRF's  fabrication  facilities.
UltraRF may be required to redesign its processes and  procedures  substantially
to accommodate the larger wafers. As a result,  implementing additional capacity
for six-inch  wafers may take longer than  planned,  which could harm  UltraRF's
results of operations.  The process of converting to six-inch  wafers must begin
substantially  prior to receiving  actual customer  demand for products.  If the
customer demand for products is not realized or implementation takes longer than
planned,  the  results  will have a  material  adverse  effect on the  Company's
business, financial condition and results of operations.

         Fluctuations in Operating Results.  The Company's  quarterly and annual
results have in the past been,  and will continue to be,  subject to significant
fluctuations  due to a number of  factors,  any of which  could  have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.  In  particular,  the Company's  results of operations are likely to
vary due to the timing,  cancellation,  delay or  rescheduling  of OEM  customer
orders  and  shipments;  the timing of  announcements  or  introductions  of new
products by the Company, its competitors or their respective OEM customers;  the
acceptance  of such  products by wireless  equipment  OEMs and their  customers;
relative variations in manufacturing efficiencies, yields and costs; competitive
factors  such  as  the   pricing,   availability,   and  demand  for   competing
amplification  products;  changes in average  sales  prices  and  related  gross
margins  which  vary  significantly   based  upon  product  mix;   subcontractor
performance; variations in operating expenses; changes in manufacturing capacity
and variations in the  utilization of this capacity;  shortages of key supplies;
the long sales cycles associated with the Company's  customer specific products;
the  timing and level of  product  and  process  development  costs;  changes in
inventory  levels;  and the  relative  strength  or  weakness  of  international
financial  markets.  Anticipated orders from the Company's OEM customers have in
the past failed to  materialize  and delivery  schedules  have been  deferred or
canceled  as a result of changes in OEM  customer  requirements  and the Company
expects this pattern to continue as customer requirements continue to change and
industry   standards   continue   to  evolve.   Reduced   demand  for   wireless
infrastructure  equipment in the past has caused significant fluctuations in the
Company's  product  sales.  There can be no assurance  that the Company will not
experience such fluctuations in the future. The Company does not believe that it
will have the  annual  revenue  growth it  experienced  in fiscal  2000,  in the
future,  if at all. The Company  establishes its expenditure  levels for product
development and other  operating  expenses based on its expected  revenues,  and
expenses are  relatively  fixed in the short term.  As a result,  variations  in
timing of revenues can cause  significant  variations  in  quarterly  results of
operations.  There can be no assurance  that

                                       29

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

the Company will be profitable on a quarter to quarter basis in the future.  The
Company believes that period to period  comparisons of its financial results are
not  necessarily  meaningful  and should not be relied upon as an  indication of
future performance.  Due to all the foregoing factors, it is likely that in some
future quarter or quarters the Company's  revenues or operating results will not
meet the  expectations  of public stock market  analysts or  investors.  In such
event,  the market  price of the  Company's  Common  Stock  would be  materially
adversely affected.

         Declining  Average  Sales  Prices.  The  Company has  experienced,  and
expects to  continue  to  experience,  declining  average  sales  prices for its
products.  Wireless  infrastructure  equipment  manufacturers  have  come  under
increasing  price pressure from wireless  service  providers,  which in turn has
resulted in downward  pricing pressure on the Company's  products.  In addition,
competition  has  increased  the  downward  pricing  pressure  on the  Company's
products.  Since  wireless  infrastructure  equipment  manufacturers  frequently
negotiate  supply  arrangements  far in advance of delivery  dates,  the Company
often must commit to price  reductions  for its  products  before it is aware of
how, or if, cost reductions can be obtained.  To offset declining  average sales
prices, the Company believes that it must achieve manufacturing cost reductions.
If the Company is unable to achieve such cost  reductions,  the Company's  gross
margins will decline,  and such decline will have a material  adverse  effect on
the Company's business, financial condition and results of operations.

         Product Quality,  Performance and Reliability. The Company expects that
its customers will continue to establish  demanding  specifications for quality,
performance and reliability  that must be met by the Company's  products.  Power
amplifiers  as  complex  as  those  offered  by  the  Company  often   encounter
development delays and may contain  undetected defects or failures.  The Company
has from time to time in the past experienced  product  quality,  performance or
reliability problems.  In addition,  multicarrier power amplifiers have a higher
probability of malfunction than single carrier power amplifiers because of their
greater complexity.  There can be no assurance that defects or failures relating
to the Company's product quality,  performance and reliability will not occur in
the future that may have a material  adverse  effect on the Company's  business,
financial condition and results of operations.

         Internal  Amplifier  Design and  Production  Capabilities  of OEMs. The
Company  believes that a majority of the present  worldwide  production of power
amplifiers is captive within the manufacturing  operations of wireless equipment
OEMs,  many of  which  have  chosen  not to  purchase  amplifiers  from  outside
suppliers.  In addition,  these manufacturers could decide to sell amplifiers to
other wireless  equipment OEMs. If this should occur,  the competition for power
amplifiers would significantly increase and could have a material adverse effect
on the Company's business, financial condition and results of operations.

         The Company  also  believes  that those OEMs that  purchase  from third
party  amplifier  vendors are reluctant to switch once committed to a particular
merchant  vendor.  Consequently,  the Company has only limited  opportunities to
increase revenues by replacing  internal OEM amplifier  production or displacing
other merchant amplifier suppliers.  Moreover,  given the limited  opportunities
for  merchant  power  amplifier  suppliers,  any  decision by an OEM to employ a
second  source  merchant  supplier  for a  product  currently  purchased  from a
merchant  supplier  may  reduce  the  existing  merchant  supplier's  ability to
maintain a given level of product sales to such OEM or, possibly,  to retain the
OEM as a  customer  due to price  competition  from the second  source  merchant
supplier.  There can be no assurance that the Company's major OEM customers will
continue to rely,  or  increase  their  reliance,  on the Company as an external
source of supply for their power  amplifiers,  or that other wireless  equipment
OEMs will become customers of the Company. If the major wireless  infrastructure
equipment  suppliers  do not  purchase  or  continue  to  purchase  their  power
amplifiers  from  merchant  suppliers,   the  Company's  business,   results  of
operations and financial condition will be materially adversely affected.

                                       30

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

         Rapid Technological Change; Evolving Industry Standards;  Dependence on
New Products. The markets in which the Company and its OEM customers compete are
characterized by rapidly changing  technology,  evolving industry  standards and
continuous  improvements  in products and services.  In particular,  because the
Company's  strategy  of  rapidly  bringing  to market  products  customized  for
numerous and evolving  modulation  standards  requires  developing and achieving
volume production of a large number of distinct products,  the Company's ability
to rapidly design and produce individual products for which there is significant
OEM  customer  demand will be a critical  determinant  of the  Company's  future
success. A softening of demand in the markets served by the Company or a failure
of modulation standard in which the Company has invested substantial development
resources  may  have  a  material  adverse  effect  on the  Company's  business,
financial  condition and results of  operations.  No assurance can be given that
the  Company's  product  development  efforts will be  successful,  that its new
products  will  meet  customer  requirements  and be  accepted  or that  its OEM
customers' product offerings will achieve customer acceptance.  If a significant
number  of  development  projects,  including  the  Company's  new  multicarrier
products,  do not result in substantial  volume production or if technologies or
standards  supported by the Company's or its customers' products become obsolete
or fail to gain widespread commercial acceptance,  the Company's business may be
materially adversely affected.

         Risks  Associated  with  Internal  Wafer and  Device  Fabrication.  The
Company's  operation of its wafer and device  fabrication  facilities  entails a
number  of  risks,  including  a high  level of fixed and  variable  costs,  the
management  of complex  processes,  dependence  on a single source of supply for
certain  components and services,  and a strict regulatory  environment.  During
periods of low demand,  high fixed wafer  fabrication costs are likely to have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of  operations.  The design and  fabrication of RF  semiconductors  is a
complex and precise process.  Such  manufacturing is sensitive to a wide variety
of factors,  including  variations and impurities in the raw materials,  quality
control of the packages, difficulties in the fabrication process, performance of
the  manufacturing  equipment,  defects in the masks used to print circuits on a
wafer and the  level of  contaminants  in the  manufacturing  environment.  As a
result of these and other factors,  semiconductor manufacturing yields from time
to time in the past  have  suffered,  and  there  can be no  assurance  that the
Company will be able to achieve  acceptable  production yields in the future. In
addition,  the  Company's  wafer and device  fabrication  facility  represents a
single  point of failure in its  manufacturing  process that would be costly and
time consuming to replace if its operation were interrupted. The interruption of
wafer fabrication  operations,  the loss of key employees dedicated to the wafer
and device fabrication  facilities,  or any failure to maintain acceptable wafer
and  device  production  levels  could  have a  material  adverse  effect on the
Company's business, financial condition and results of operations.

         UltraRF's  business  could be  adversely  affected  by its  failure  to
develop  and market  its LDMOS RF power  transistors  competitively.  UltraRF is
developing  and refining  its LDMOS RF power  transistor  technology  to address
current and emerging  wireless voice and data air interface  standards.  UltraRF
sells its products in an industry  characterized by rapid technological changes,
frequent new product and service  introductions and evolving industry standards.
UltraRF can provide no  assurance  that its  development  efforts will result in
commercially  successful LDMOS products in a timely or cost-effective manner, if
at all.  UltraRF's  competitors  are also  expected to develop and sell  devices
suitable for these markets and may produce devices with superior  performance to
UltraRF's  planned  developments.  Failure by  UltraRF  to  develop  competitive
devices could adversely affect its business.

         UltraRF's  close  relationship  with  Spectrian  could limit  UltraRF's
potential to do business with Spectrian's  competitors.  Spectrian  currently is
UltraRF's  largest  customer,  and UltraRF  expects to have a variety of ongoing
contractual  relationships  with  Spectrian.   UltraRF  cannot  predict  whether
existing  or  potential  customers  who are  competitors  of  Spectrian  will be
deterred by the existence of such a

                                       31

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

relationship  between  Spectrian and UltraRF.  If they are  deterred,  UltraRF's
future growth could be hindered.

         Sole  or  Limited  Sources  of  Materials  and  Services.  The  Company
currently  procures from single sources certain  components and services for its
products  including,  but not  limited  to,  turnkey  amplifier  assemblies  and
specialized  components.  The Company  purchases these products,  components and
services on a purchase order basis,  does not carry  significant  inventories of
these  components and does not have any long-term supply contracts with its sole
source vendors.  Furthermore,  the Company began outsourcing assembly of some of
its higher volume power  amplifiers  during the third fiscal quarter of 1999 and
will transfer the remaining power amplifier  production  during fiscal 2001 to a
contract manufacturer.  The Company issues non-cancelable purchase orders to the
contract  manufacturer 60 days in advance of requested delivery which is greater
than the committed  delivery schedule of some of its customers,  such as Nortel.
The Company's  reliance on sole sources for certain components and its migration
to an outsourced,  turnkey manufacturing strategy entail certain risks including
reduced control over the price, timely delivery,  reliability and quality of the
components.  If the  Company  were to change any of its sole  source  vendors or
contract  manufacturers,   the  Company  would  be  required  to  requalify  the
components  with each new vendor or  contract  manufacturer,  respectively.  Any
inability of the Company to obtain timely  deliveries of components or assembled
amplifiers  of  acceptable  quality  in  required  quantities  or a  significant
increase  in the  prices  of  components  for which  the  Company  does not have
alternative   sources  could  materially  and  adversely  affect  the  Company's
business,  financial  condition  and  results of  operations.  The  Company  has
occasionally  experienced  difficulties  in obtaining  some  components,  and no
assurance can be given that shortages will not occur in the future.

         Risks of International  Sales. The Company operates in an international
market and  expects  that  international  sales will  continue  to account for a
significant  percentage  of the  Company's  total  revenues for the  foreseeable
future. These sales involve a number of inherent risks,  including imposition of
government  controls,  currency exchange  fluctuations,  potential insolvency of
international distributors, representatives and customers, reduced protection of
intellectual  property  rights in some  countries,  the  impact of  recessionary
environments in economies outside the United States,  political  instability and
generally longer receivables  collection  periods,  as well as tariffs and other
trade barriers. In addition,  because substantially all of the Company's foreign
sales are  denominated  in U.S.  dollars,  increases  in the value of the dollar
relative  to the  local  currency  would  increase  the  price of the  Company's
products in foreign  markets and make the  Company's  products  relatively  more
expensive and less price competitive than competitors'  products that are priced
in local currencies.  There can be no assurance that these factors will not have
a material  adverse  effect on the  Company's  future  international  sales and,
consequently,  on the  Company's  business,  financial  condition and results of
operations.

         The  Company  anticipates  that  turmoil in  financial  markets and the
deterioration of the underlying  economic  conditions in certain countries where
the Company has significant  sales,  such as South Korea,  may have an impact on
its sales to customers located in or whose projects are based in those countries
due to  the  impact  of  currency  fluctuations  on the  relative  price  of the
Company's  products  and  restrictions  on  government  spending  imposed by the
International  Monetary Fund (the "IMF") on those countries  receiving the IMF's
assistance. In addition, customers in those countries may face reduced access to
working capital to fund component purchases, such as the Company's products, due
to higher interest rates, reduced funding of wireless infrastructure by domestic
governments, reduced bank lending due to contractions in the money supply or the
deterioration  in  the  customer's  or its  bank's  financial  condition  or the
inability to access equity  financing.  A substantial  majority of the Company's
products are sold to OEMs who  incorporate  the Company's  products into systems
sold and  installed  to  end-user  customers.  These  OEMs are not  required  by
contract and do not typically provide the Company with information regarding the
location and identity of their end-user customers,  and, therefore,  the Company
is not able to determine  what portion of its product  sales have been or future
orders  will  be   incorporated   into  OEM

                                       32

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

sales to end-users in countries  experiencing  financial  market  turmoil and/or
deterioration  of  economic  conditions.  Furthermore,  a large  portion  of the
Company's  existing  customers  and  potential  new  customers are servicing new
markets in developing  countries that the Company's customers expect will deploy
wireless  communication  networks as an  alternative  to the  construction  of a
wireline  infrastructure.  If  such  countries  decline  to  construct  wireless
communication  systems,  or  construction  of such  systems is  delayed  for any
reason,  including  business  and  economic  conditions  and changes in economic
stability due to factors such as increased inflation and political turmoil, such
delays could have a material adverse effect on the Company's business, financial
condition and results of operations.

         Reliance upon Growth of Wireless Services. Sales of power amplifiers to
wireless infrastructure  equipment suppliers have in the past accounted, and are
expected  in the  future to  account,  for  substantially  all of the  Company's
product sales. Demand for wireless infrastructure  equipment is driven by demand
for wireless  service.  Although demand for power amplifiers has grown in recent
years,  if demand for  wireless  services  fails to increase or  increases  more
slowly than the Company or its OEM customers currently anticipate, the Company's
business,  financial condition and results of operations would be materially and
adversely affected.

         Market for the Company's Products Is Highly  Competitive.  The wireless
communications  equipment industry is extremely competitive and is characterized
by rapid technological change, new product development and product obsolescence,
evolving  industry  standards and  significant  price erosion over the life of a
product.  The  ability  of the  Company  to  compete  successfully  and  sustain
profitability  depends in part upon the rates at which  wireless  equipment OEMs
incorporate the Company's  products into their systems and the Company  captures
market share from other merchant suppliers.

         The Company's  major OEM  customers  continuously  evaluate  whether to
manufacture  their own  amplification  products  or purchase  them from  outside
sources. There can be no assurance that these OEM customers will incorporate the
Company's  products  into their systems or that in general they will continue to
rely, or expand their  reliance,  on external  sources of supply for their power
amplifiers.   These  customers  and  other  large   manufacturers   of  wireless
communications  equipment  could  also  elect to enter the  merchant  market and
compete  directly with the Company,  and at least one OEM, NEC, has already done
so. Such increased  competition could materially  adversely affect the Company's
business, financial condition and results of operations.

         The  Company's  principal   competitors  in  the  market  for  wireless
amplification  products  provided by merchant  suppliers  currently  include AML
Communications,   Amplidyne,   Microwave   Power  Devices,   NEC  and  Powerwave
Technologies.  No assurance can be given that the Company's competitors will not
develop new  technologies or enhancements to existing  products or introduce new
products that will offer superior price or performance  features compared to the
Company's products.

         Uncertain Protection of Intellectual Property. The Company's ability to
compete  successfully and achieve future revenue growth will depend, in part, on
its ability to protect its proprietary technology and operate without infringing
the rights of others.  The Company has a policy of seeking patents on inventions
resulting from its ongoing research and development activities.  There can be no
assurance that the Company's pending patent applications will be allowed or that
the  issued  or  pending  patents  will not be  challenged  or  circumvented  by
competitors.  Notwithstanding the Company's active pursuit of patent protection,
the  Company  believes  that the  success of its  business  depends  more on the
collective  value of its  patents,  specifications,  computer  aided  design and
modeling  tools,  technical  processes  and  employee  expertise.   The  Company
generally  enters into  confidentiality  and  nondisclosure  agreements with its
employees,  suppliers,  OEM customers, and potential customers and limits access
to and  distribution of its  proprietary  technology.  However,  there can be no
assurance that such measures will provide adequate  protection for the Company's
trade secrets or other  proprietary  information,  or that the  Company's  trade

                                       33

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

secrets  or  proprietary  technology  will  not  otherwise  become  known  or be
independently  developed by  competitors.  The failure of the Company to protect
its proprietary technology could have a material adverse effect on its business,
financial condition and results of operations.

         Risk  of  Third  Party  Claims  of  Infringement.   The  communications
equipment  industry  is  characterized  by  vigorous  protection  and pursuit of
intellectual  property  rights or positions,  which have resulted in significant
and often  protracted and expensive  litigation.  Although there is currently no
pending intellectual property litigation against the Company, the Company or its
suppliers  may from time to time be  notified  of claims that the Company may be
infringing patents or other intellectual property rights owned by third parties.
If it is  necessary  or  desirable,  the  Company may seek  licenses  under such
patents  or  other  intellectual  property  rights.  However,  there  can  be no
assurance  that  licenses  will be  offered  or that the  terms  of any  offered
licenses will be acceptable to the Company. The failure to obtain a license from
a third party for technology  used by the Company or otherwise  secure rights to
use such technology could cause the Company to incur substantial liabilities, to
suspend the manufacture of products or expend  significant  resources to develop
noninfringing  technology.  There can be no assurance  that the Company would be
successful  in such  development  or that such  licenses  would be  available on
reasonable  terms,  if at  all.  In the  event  that  any  third  party  makes a
successful  claim  against the Company or its  customers and either a license is
not made available to the Company on commercially  reasonable terms or a "design
around" is not  practicable,  the Company's  business,  financial  condition and
results of operations would be materially adversely affected.

         Furthermore,  the Company may  initiate  claims or  litigation  against
third  parties  for  infringement  of the  Company's  proprietary  rights  or to
establish the validity of the  Company's  proprietary  rights.  Litigation by or
against  the  Company  could  result in  significant  expense to the Company and
divert the efforts of the Company's technical and management personnel,  whether
or not such litigation results in a favorable  determination for the Company. In
the event of an adverse  result in any such  litigation,  the  Company  could be
required  to  pay  substantial  damages,  indemnify  its  customers,  cease  the
manufacture,  use and sale of infringing products,  expend significant resources
to develop noninfringing technology, discontinue the use of certain processes or
obtain licenses to the infringing technology.

         Government  Regulation  of  Communications  Industry.  Radio  frequency
transmissions and emissions,  and certain equipment used in connection therewith
are regulated in the United States, Canada and throughout the rest of the world.
Regulatory  approvals  generally  must be obtained by the Company in  connection
with the manufacture and sale of its products, and by wireless service providers
to operate the  Company's  products.  The United States  Federal  Communications
Commission (the "FCC") and regulatory  authorities  abroad  constantly review RF
emission  issues  and  promulgate  standards  based  on  such  reviews.  If more
stringent RF emission regulations are adopted, the Company and its OEM customers
may be required to alter the manner in which radio  signals are  transmitted  or
otherwise alter the equipment  transmitting such signals, which could materially
adversely affect the Company's  products and markets.  The enactment by federal,
state, local or international governments of new laws or regulations or a change
in the  interpretation of existing  regulations could also materially  adversely
affect  the  market  for  the  Company's  products.   Although  deregulation  of
international  communications  industries  along with radio  frequency  spectrum
allocations  made  by the  FCC  have  increased  the  potential  demand  for the
Company's  products by providing users of those products with  opportunities  to
establish  new  wireless  personal  communications  services,  there  can  be no
assurance that the trend toward deregulation and current regulatory developments
favorable to the promotion of new and expanded personal  communications services
will  continue  or that other  future  regulatory  changes  will have a positive
impact on the Company.  The increasing  demand for wireless  communications  has
exerted pressure on regulatory  bodies worldwide to adopt new standards for such
products,  generally following extensive  investigation of and deliberation over
competing  technologies.  The  delays  inherent  in this  governmental  approval
process have in the past caused,  and may in the future cause, the cancellation,

                                       34

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

postponement or rescheduling of the  installation of  communications  systems by
the  Company's  OEM  customers.  These  delays have had in the past,  and in the
future  may have,  a  material  adverse  effect on the sale of  products  by the
Company to such OEM customers.

         Environmental  Regulations.  The  Company  is  subject  to a variety of
local,  state and federal  governmental  regulations  relating  to the  storage,
discharge, handling, emission, generation,  manufacture and disposal of toxic or
other  hazardous  substances  used to manufacture  the Company's  products.  The
Company  believes that it is currently in  compliance  in all material  respects
with such  regulations  and that it has  obtained  all  necessary  environmental
permits  to conduct  its  business.  Nevertheless,  the  failure to comply  with
current or future  regulations  could result in the  imposition  of  substantial
fines on the Company, suspension of production,  alteration of its manufacturing
processes or cessation of operations.  Compliance  with such  regulations  could
require  the  Company to acquire  expensive  remediation  equipment  or to incur
substantial  expenses.  Any failure by the Company to control the use, disposal,
removal or storage of, or to adequately  restrict the discharge of, or assist in
the cleanup of,  hazardous  or toxic  substances,  could  subject the Company to
significant  liabilities,  including joint and several liabilities under certain
statutes.  The imposition of such liabilities could materially  adversely affect
the Company's business, financial condition and results of operations.

         Management  of  Growth;  Dependence  on Key  Personnel.  The  Company's
business  and growth  has  placed,  and is  expected  to  continue  to place,  a
significant strain on the Company's  personnel,  management and other resources.
The Company's ability to manage any future growth effectively will require it to
attract,  motivate, manage and retain new employees successfully,  especially in
the  highly  competitive  northern  California  job  market,  to  integrate  new
employees into its overall operations and to retain the continued service of its
key technical,  marketing and management  personnel,  and to continue to improve
its  operational,  financial and management  information  systems.  Although the
Company has employment  contracts with several of its executive officers,  these
agreements do not obligate such  individuals  to remain in the employment of the
Company.  The Company does not maintain key person life  insurance on any of its
key technical  personnel.  The  competition  for such personnel is intense.  The
Company  has  experienced  loss of key  employees  in the past and  could in the
future.  Such losses could have a material  adverse  effect on the  Company.  On
March 31, 2000, the Company employed Mr. Thomas H. Waechter as its President and
Chief  Executive  Officer.  There can be no  assurance  that Mr.  Waechter  will
operate  effectively with existing management nor that he will be able to retain
or attract  additional  executive officers as needed. As a result of the plan to
discontinue manufacturing operations in Sunnyvale,  California,  and the related
restructuring, several key executives will cease to be employees of the Company.

     The  Company's  ability to manage its growth will require it to continue to
invest  in  its  operational,  financial  and  management  information  systems,
procedures and controls.  We can give no assurance that the Company will be able
to manage its growth  effectively.  Failure to manage growth  effectively  would
have a material adverse effect on the Company's  business,  financial  condition
and  results of  operations.  The  Company  may,  from time to time,  pursue the
acquisition  of other  companies,  assets or product  lines that  complement  or
expand its existing  business.  The Company may also, from time to time,  pursue
divestitures of existing  operations.  Acquisitions and  divestitures  involve a
number of risks that could  adversely  affect the Company's  operating  results.
These risks  include the diversion of  management's  attention  from  day-to-day
business,  the  difficulty  of combining and  assimilating  the  operations  and
personnel  of the acquired  companies,  charges to the  Company's  earnings as a
result of the  purchase of  intangible  assets,  and the  potential  loss of key
employees as a result of an acquisition.  Should any acquisition  take place, we
can give no assurance  that this  acquisition  will not materially and adversely
affect the  Company or that any such  acquisition  will  enhance  the  Company's
business.

                                       35

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

         Volatility  of Stock  Price.  The market  price of the shares of Common
Stock has been and is likely to continue to be highly volatile,  and is affected
significantly  by factors such as  fluctuations  in the Company's  quarterly and
annual operating results, customer concentration,  the timing difference between
Nortel's requested delivery dates and its vendor purchase commitments to support
the customer's delivery  requirements,  reliance on international  markets,  the
absence  of the  economies  of  scale  achieved  by  some  of  its  competitors,
announcements  of  technological  innovations,  new  customer  contracts  or new
products  by the  Company or its  competitors,  announcements  by the  Company's
customers   regarding   their  business  or  prospects,   changes  in  analysts'
expectations, estimates and recommendations, news reports regarding the Company,
its competitors and its markets,  governmental  regulatory action,  developments
with respect to patents or  proprietary  rights,  announcements  of  significant
acquisitions  or  strategic  partnerships  by the  Company  or its  competitors,
announcements  of  significant  divestitures  of existing  businesses or product
lines,  general  market  conditions and other  factors.  In addition,  the stock
market in general,  and the market prices for power amplifier  manufacturers  in
particular,  have experienced  extreme volatility that is often unrelated to the
operating  performance  of these  companies.  These  broad  market and  industry
fluctuations  may  adversely  affect the price of the  Company's  common  stock,
regardless of actual  operating  performance.  The market price of the Company's
Common Stock has fluctuated significantly in the past.

         Legal  Proceedings.  On May 19, 2000, the Company announced that it had
reached a settlement in principle of the shareholder class action lawsuits which
were filed in the United  States  District  Court for the  Northern  District of
California  and the Superior  Court of the State of  California  for Santa Clara
County.  The terms of the settlement will not have a material  adverse effect on
the  Company's  financial  position  or  results  from  operations.   The  final
settlement agreement is subject to Court approval and class notice provisions.

         Shareholder  Rights  Plan;  Issuance of Preferred  Stock.  The Board of
Directors of the Company adopted a Shareholder  Rights Plan in October 1996 (the
"Rights  Plan").  Pursuant to the Rights Plan,  the Board declared a dividend of
one Preferred  Stock Purchase Right per share of Common Stock (the "Rights") and
each such Right has an exercise price of $126.00.  The Rights become exercisable
upon the occurrence of certain  events,  including the  announcement of a tender
offer or exchange offer for the Company's  Common Stock or the  acquisition of a
specified  percentage  of the  Company's  Common  Stock  by a third  party.  The
exercise  of the  Rights  could  have  the  effect  of  delaying,  deferring  or
preventing a change in control of the Company,  including,  without  limitation,
discouraging  a proxy  contest or making more  difficult  the  acquisition  of a
substantial  block of the Company's  Common Stock.  These  provisions could also
limit the price that investors  might be willing to pay in the future for shares
of the Company's Common Stock. The Board of Directors has the authority to issue
up to 5,000,000  shares of  undesignated  Preferred  Stock and to determine  the
powers,   preferences  and  rights  and  the   qualifications,   limitations  or

                                       36

<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

restrictions   granted  to  or  imposed  upon  any  wholly  unissued  shares  of
undesignated  Preferred Stock and to fix the number of shares  constituting  any
series and the designation of such series, without any further vote or action by
the  Company's  stockholders.  For example,  in  connection  with the  Company's
Shareholder  Rights Plan,  the Board of Directors  designated  20,000  shares of
Preferred Stock as Series A Participating  Preferred Stock although none of such
shares have been  issued.  The  Preferred  Stock  could be issued  with  voting,
liquidation,  dividend  and other  rights  superior  to those of the  holders of
Common Stock. The issuance of Preferred Stock under certain  circumstances could
have the effect of delaying,  deferring or preventing a change in control of the
Company.

Year 2000 Readiness

         Many  installed  computer  programs were written using a two-digit date
field  rather  than a  four-digit  field to define  the  applicable  year.  Such
computer  programs  utilizing a two-digit  date field may recognize a date using
"00" as the year 1900 rather than the year 2000 (the "Year 2000 Issue").

         To date,  the Company has not  experienced  disruptions in its business
related  to the Year  2000  Issue.  However,  the  Company  cannot  provide  any
assurance  that no Year 2000 Issues will impact its  systems,  products or other
aspects of its  business in the  future.  The Company has taken steps to address
the Year 2000 Issue in the following  three areas:  (1) the  Company's  internal
systems, (2) the Company's products and (3) the Company's suppliers.  All of the
Company's  networks,  desktops,  application  servers,  operating systems and an
enterprise-wide  computer  software system have been found compliant,  have been
replaced  or  remediation  has been  completed.  Until  recently  the  Company's
products did not contain embedded systems to which Year 2000 compliance would be
necessary.  The Company's  latest  multicarrier  product does include date stamp
functionality and has been determined to be Year 2000 compliant.  All of the new
products are being manufactured using only hardware,  software, or firmware that
is  currently  Year  2000  compliant.  The  Company  believes  that  any  future
disruptions  to its  business  from the Year 2000  Issue  could  have a material
impact on  operating  expenses,  but that the  effect on  revenues  would not be
material.  Substantially all necessary remedial work was completed by the end of
December 1999.

         In  addition,  certain  of  the  materials  and  supplies  critical  to
production  and delivery of the  Company's  products are  furnished by a limited
number of  suppliers,  and in some cases a sole  supplier.  Key suppliers to the
Company and its contract manufacturer have not experienced  disruptions in their
business related to the Year 2000 Issue. However, the Company cannot provide any
assurance  that no Year  2000  Issue  will  effect  its  suppliers  or  contract
manufacturer in the future.

                                       37

<PAGE>


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The  Company  develops  products  in the United  States and markets its
products  in North  America,  Europe  and the  Asia-Pacific  region.  Thus,  the
financial  results  could be  affected  by  factors  such as  changes in foreign
currency exchange rates or weak economic  conditions in foreign markets.  As all
sales are currently made in U.S.  dollars,  a strengthening  of the dollar could
make the Company's products less competitive in foreign markets.

         The  Company's  exposure  to market  rate risk for  changes in interest
rates relate  primarily to its investment  portfolio.  The Company does not hold
derivative financial instruments in its investment portfolio. The Company places
its investments  with high quality  institutions and limits the amount of credit
exposure to any one issuer.  The Company is averse to principal loss and ensures
the safety and  preservation of its invested funds by limiting  default,  market
and  reinvestment  risk. The Company  classifies  its short-term  investments as
"fixed-rate" if the rate of return on such instruments  remains fixed over their
term.  These  "fixed-rate"   investments   include  fixed-rate  U.S.  government
securities and corporate  obligations  with  contractual  maturity dates ranging
from less than one year to greater than 10 years.  The table below  presents the
amounts  and  related  weighted  interest  rates  of  the  Company's  short-term
investments at March 31, 2000 and 1999 (dollars in thousands).

                                                                March 31,
                                                       ------------------------
                                                        2000              1999
                                                       -------          -------
Average fixed interest rate                                6.0%             6.6%
                                                       =======          =======

Amortized cost                                         $36,644          $36,280
                                                       =======          =======
Fair value                                             $36,027          $36,417
                                                       =======          =======

Contractual maturity dates:
     Less than 1 year                                  $ 3,500          $  --
     1 to 5 years                                       32,527           28,117
     Greater than 10 years                                --              8,300
                                                       -------          -------
                                                       $36,027          $36,417
                                                       =======          =======


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Company's  consolidated  financial  statements and the  independent
accountants' reports appear on pages F-1 through F-22 of this Report.


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

         On  January 5,  2000,  Spectrian  dismissed  KPMG LLP  ("KPMG")  as the
Company's  independent public  accountants,  a capacity in which KPMG had served
for several  years.  The  decision to change the  Company's  independent  public
accountants  was  approved  by the  Company's  full Board of  Directors  and the
Company's Audit Committee.

         During  the  Company's  years  ended  March  31,  1998 and 1999 and the
subsequent  interim period  preceding the change in  accountants,  there were no
disagreements  with KPMG on any matter of  accounting  principles  or practices,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreements,  if not resolved to the  satisfaction of KPMG,  would have caused
KPMG to make reference

                                       38

<PAGE>


to the subject matter of the disagreements in connection with its reports on the
Company's  financial  statements for the years ended March 31, 1998 and 1999. In
addition,  KPMG's  reports on the  financial  statements  of the Company for the
years ended March 31, 1998 and 1999 contained unqualified opinions.

         KPMG's  letter  to the  Audit  Committee  related  to its  audit of the
Company's  consolidated  financial statements of the fiscal year ended March 31,
1999 included two reportable conditions that (1) the Company was not reconciling
certain  balance sheet  accounts  maintained in the general  ledger on a monthly
basis and (2) the reduced  production  of the  Company's  products in the fiscal
year ended March 31, 1999  resulted in an under  absorption  of overhead and the
resulting  variances  were not  adequately  allocated  between cost of sales and
inventory  on hand.  The  Company  believes  it has  resolved  these  reportable
conditions  noted above.  The subject matter of the reportable  conditions  were
discussed with the Company's  Audit  Committee as were the  subsequent  remedial
actions  taken  and  the  informal  assessments  by  KPMG of  those  actions  in
subsequent interim periods.

         On January 5, 2000, Spectrian also selected  PricewaterhouseCoopers LLP
("PricewaterhouseCoopers")  to replace KPMG in this role. During the years ended
March 31, 1998 and 1999 years and through the  subsequent  period ended  January
11, 2000, the Company did not consult with PricewaterhouseCoopers on items which
(i) were or should  have been  subject to SAS 50 or (ii)  concerned  the subject
matter of a  disagreement  or  reportable  event with KPMG as  described in Item
304(a)(2)  of  Regulation  S-K.  PricewaterhouseCoopers  advises  the Company on
federal, state and local tax matters.

         The Company has  authorized  KPMG to respond  fully to the inquiries of
PricewaterhouseCoopers.  The  Company  also  provided  KPMG  with a copy  of the
disclosures  it made in Item 4 of the  Current  Report  filed on Form 8-K  dated
January  11,  2000  ("Form  8-K").  KPMG  furnished  the  Company  with a letter
addressed to the Commission  stating that it agrees with the statements  made by
the  Company  in the Form 8-K.  The  Company  filed a copy of  KPMG's  letter as
Exhibit 99.1 to the Form 8-K which was incorporated by reference therein.

                                       39

<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The  information   required  by  this  item  concerning  the  Company's
directors is  incorporated by reference to the sections  captioned  "Election of
Directors"  and  "Section  16(a)  Beneficial  Ownership  Reporting   Compliance"
contained in the Company's Proxy Statement  related to the Company's 2000 Annual
Meeting of  Stockholders,  to be filed by the Company  with the  Securities  and
Exchange  Commission  within 120 days of the end of the  Company's  fiscal  year
pursuant  to  General  Instruction  G(3) of Form 10-K (the  "Proxy  Statement").
Certain information  required by this item concerning  executive officers is set
forth in Part I of this Report in "Business  --  Management"  and certain  other
information  required by this item is incorporated by reference from the section
captioned "Section 16(a) Beneficial Ownership Reporting Compliance" contained in
the Proxy Statement.


ITEM 11. EXECUTIVE COMPENSATION

         The  information  required by this item is incorporated by reference to
the section captioned  "Executive  Compensation and Other Matters"  contained in
the Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  information  required by this item is incorporated by reference to
the sections  captioned  "Security  Ownership of Certain  Beneficial  Owners and
Management"  and  "Record  Date;  Outstanding  Shares"  contained  in the  Proxy
Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  information  required by this item is incorporated by reference to
the  sections   captioned   "Compensation   Committee   Interlocks  and  Insider
Participation" and "Certain Transactions" contained in the Proxy Statement.

                                       40

<PAGE>


                                     PART IV

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

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

         1.  Financial   Statements.   The  following   consolidated   financial
             statements are  incorporated by reference in Item 8 of this Report:

                                                                            Page
                                                                            ----
             Report of Independent Accountants - PricewaterhouseCoopers LLP..F-2
             Independent Auditors' Report - KPMG LLP.........................F-3
             Consolidated Balance Sheets as of March 31, 2000 and 1999.......F-4
             Consolidated Statements of Operations for the Years ended
               March 31, 2000, 1999 and 1998.................................F-5
             Consolidated Statements of Stockholders' Equity
               for the Years ended March 31, 2000, 1999 and 1998.............F-6
             Consolidated Statements of Cash Flows for the Years ended
               March 31, 2000, 1999, and 1998................................F-7
             Notes to Consolidated Financial Statements......................F-8

         2.  Financial Statement  Schedules.  Financial statement schedules have
             been omitted because they are not applicable or are not required or
             the information required to be set forth therein is included in the
             consolidated financial statements or notes thereto.

         3.  Exhibits.

              Exhibit
               Number                        Description
               ------      -----------------------------------------------------
               3.5(14)     Certificate of Incorporation of Registrant.
               3.6(15)     Bylaws of Registrant.
               4.1(11)     Amended  and   Restated   Preferred   Shares   Rights
                           Agreement of January 15, 1997, between the Registrant
                           and  ChaseMellon  Shareholder  Services,  L.L.C.,  as
                           amended, including the form of Rights Certificate and
                           the  Certificate  of  Determination,  the  Summary of
                           Rights  attached  thereto  as  Exhibits  A,  B and C,
                           respectively.
               4.1.1(11)   Letter  Agreement to amend  Preferred  Shares  Rights
                           Agreement  dated as of January 15,  1997  between the
                           Registrant and Kopp Investment Advisors, Inc.
               4.1.2       Letter Agreement  regarding  Stockholder  Rights Plan
                           between Kopp Investment Advisors, Inc. and Registrant
                           dated February 16, 2000.
              10.2(20)     1992 Stock Plan, as amended.
              10.4(20)     1994  Director  Option  Plan  and  form of  agreement
                           thereunder.
              10.13+(4)    Hardware Supply Agreement dated April 6, 1995 between
                           Northern Telecom Limited and Registrant.
              10.16(5)     Purchase and Sale Agreement between Metropolitan Life
                           Insurance Company

                                       41

<PAGE>


                           and Registrant.
              10.19(8)     Employment  Agreement  between  Garrett A. Garrettson
                           and Registrant.
              10.22(10)    Lease  Agreement  dated November 19, 1996 between the
                           Registrant and SPEC (CA) QRS 12-20, Inc.
              10.23(10)    Bill  of  Sale  dated   November   19,  1996  by  the
                           Registrant to SPEC (CA) QRS 12-20, Inc.
              10.26(13)    Stock  Option   Agreement  dated  November  26,  1997
                           between Registrant and Garrett A. Garrettson.
              10.27(13)    Stock  Option   Agreement  dated  November  26,  1997
                           between Registrant and Garrett A. Garrettson.
              10.28(13)    Stock  Option   Agreement  dated  November  26,  1997
                           between Registrant and Garrett A. Garrettson.
              10.32(15)    Form of Indemnification  Agreement with directors and
                           officers.
              10.33(20)    1998 Nonstatutory Stock Option Plan.
              10.34(17)    1998 Employee Stock Purchase Plan.
              10.35(18)    Lease  Agreement  between  Registrant  and  Ellington
                           Development Inc. dated April 13, 1998.
              10.36(21)    Separation Agreement dated March 23, 1999 between the
                           Registrant and Stephen B. Greenspan.
              10.37(21)    Separation  Agreement  dated May 7, 1999  between the
                           Registrant and Bruce R. Wright.
              10.39        Amended  and  Restated  Loan and  Security  Agreement
                           between Silicon Valley Bank and Registrant.
              10.39.1      Loan  Modification  Agreement  between Silicon Valley
                           Bank and Registrant dated November 24, 1999.
              10.39.2      Loan  Modification  Agreement  between Silicon Valley
                           Bank and Registrant dated January 31, 2000.
              10.39.3      Loan  Modification  Agreement  between Silicon Valley
                           Bank and Registrant dated May 2, 2000.
              10.40        Form of Change of Control Severance Agreement.
              10.41        Master  Lessor's  Consent to Sublease  between  North
                           American Resort Properties, Inc and Registrant.
              10.41.1      Agreement and  Assumption  of Sublease  between North
                           American Resort Properties, Inc. and The Gap, Inc.
              10.42        Closing  documents  regarding  165  Gibraltar  Court,
                           Sunnyvale, California.
              10.43        Summary of Lease Contract between Ensung Building and
                           Registrant.
              10.44        Contract  to  Lease  between  Ellington   Development
                           Incorporated and Registrant.
              10.45        Manufacturing  Agreement between GSS/Array Technology
                           and Registrant.
              23.1.1       Consent of PricewaterhouseCoopers LLP.
              23.1.2       Consent of KPMG LLP.
              24.1         Power of Attorney (included on page 45).
              27.1         Financial Data Schedule.

---------------------
+    Confidential  treatment  has been  requested  or  granted  with  respect to
     certain  portions  of  this  exhibit.  Omitted  portions  have  been  filed
     separately with the Securities and Exchange Commission.

                                       42

<PAGE>


4    Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the fiscal year ended March 31, 1995.
5    Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended July 1, 1995.
8    Incorporated   by  reference  to  exhibits  filed  with  the   Registrant's
     Registration  Statement on Form S-8 (File No. 333--38561) as filed with the
     Securities and Exchange Commission on October 23, 1997.
10   Incorporated by reference to the  Registrant's  Form 8-K dated November 19,
     1996.
11   Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on Form 8-A (File No. 000-24360) as filed with the Securities and
     Exchange Commission on January 17, 1997.
13   Incorporated   by   reference   to   exhibits   filed   with   Registrant's
     Post-Effective  Amendment No. 1 to the  Registration  Statement on Form S-8
     (File No.  333-25435) as filed with the Securities and Exchange  Commission
     on October 21, 1997.
14   Incorporated  by reference to exhibits  filed with  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended June 28, 1997.
15   Incorporated  by  reference  to exhibits  filed with  Registrant's  Current
     Report on Form 8-K dated October 10, 1997.
16   Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on Form S-8 (File No.  333--49081)  as filed with the  Securities
     and Exchange Commission on April 1, 1998.
17   Incorporated by reference to exhibits filed with Registrant's Annual Report
     on Form 10-K for the year ended March 31, 1998 as filed with the Securities
     and Exchange Commission on May 27, 1998.
18   Incorporated  by reference to exhibits  filed with  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended June 28, 1998.
19   Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on Form S-8 (File No. 333-61085) as filed with the Securities and
     Exchange Commission on August 10, 1998.
20   Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on form S-8 (File No. 333-84827) as filed with the Securities and
     Exchange Commission on August 9, 1999.
21   Incorporated by reference to exhibits filed with Registrant's Annual Report
     on Form 10-K for the year ended March 31, 1999 as filed with the Securities
     and Exchange Commission on May 27, 1998.

(b)  Reports on Form 8-K. On January 11,  2000,  the  Registrant  filed  Current
     Report on Form 8-K  regarding  (i)  dismissal  of KPMG LLP  ("KPMG") as the
     Registrant's  independent  public  accountants  and (ii) the  selection  of
     PricewaterhouseCoopers  LLP to replace KPMG in that role,  which  contained
     disclosures under Item 4. Changes in Registrant's Certifying Accountant.

(c)  Exhibits Pursuant to Item 601 of Regulation S-K. See Item 14(a)(3) above.

                                       43

<PAGE>


(d)  Financial Statement Schedules. See Item 14(a)(2) above.

                                       44

<PAGE>


                                   SIGNATURES

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

                                              SPECTRIAN CORPORATION

                                By:          /s/ Thomas H. Waechter
                                    --------------------------------------------
                                               Thomas H. Waechter
                                      President and Chief Executive Officer

Date: June 29, 2000


                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE  PRESENTS,  that each person whose  signature  appears
below constitutes and appoints Thomas H. Waechter and Michael D. Angel, and each
of them, his true and lawful  attorneys-in-fact  and agents,  with full power of
substitution  and  resubstitution,  to sign  any and all  amendments  (including
post-effective  amendments)  to this Annual  Report on Form 10-K and to file the
same,  with all exhibits  thereto and other  documents in connection  therewith,
with  the  Securities  and  Exchange  Commission,  granting  unto  each  of said
attorneys-in-fact  and agents,  full power and  authority to do and perform each
and  every  act and  thing  requisite  and  necessary  to be done in  connection
therewith,  as fully to all intents and  purposes as he or she might or could do
in   person,   hereby   ratifying   and   confirming   all  that  each  of  said
attorneys-in-facts and agents, or his substitute or substitutes, or any of them,
shall do or cause to be done by virtue hereof.

<TABLE>
         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:

<CAPTION>
                 Signature                                         Title                                 Date
                 ---------                                         -----                                 ----
<S>                                           <C>                                                    <C>
          /s/ Thomas H. Waechter              President, Chief Executive Officer and Director        June 29, 2000
--------------------------------------------  (Principal Executive Officer)
             Thomas H. Waechter


           /s/ Michael D. Angel               Executive Vice President, Finance and                  June 29, 2000
------------------------------------------    Administration, Chief Financial Officer and
              Michael D. Angel                Secretary (Principal Financial and Accounting
                                              Officer)


         /s/ Garrett A. Garrettson            Director and Chairman                                  June 29, 2000
------------------------------------------
           Garrett A. Garrettson


             /s/ James A. Cole                Director                                               June 29, 2000
------------------------------------------
               James A. Cole


             /s/ Martin Cooper                Director                                               June 29, 2000
------------------------------------------
               Martin Cooper


          /s/ Charles D. Kissner              Director                                               June 29, 2000
------------------------------------------
             Charles D. Kissner


           /s/ Robert W. Shaner               Director                                               June 29, 2000
------------------------------------------
              Robert W. Shaner


           /s/ Robert C. Wilson               Director                                               June 29, 2000
------------------------------------------
              Robert C. Wilson
</TABLE>

                                                        45

<PAGE>


                              SPECTRIAN CORPORATION

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                           Page
                                                                           ----
Report of Independent Accountants - PricewaterhouseCoopers LLP............. F-2
Independent Auditors' Report - KPMG LLP.................................... F-3
Consolidated Balance Sheets................................................ F-4
Consolidated Statements of Operations...................................... F-5
Consolidated Statements of Changes in Stockholders' Equity................. F-6
Consolidated Statements of Cash Flows...................................... F-7
Notes to Consolidated Financial Statements................................. F-8

                                      F-1

<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS

To the  Board  of  Directors  and  Stockholders  of  Spectrian  Corporation  and
subsidiaries:

In our opinion,  the  accompanying  consolidated  balance  sheet and the related
consolidated statement of operations, of stockholders' equity and of cash flows,
present fairly, in all material  respects,  the financial  position of Spectrian
Corporation  and its  subsidiaries  at March 31, 2000,  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. 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 of these  statements  in  accordance  with
auditing standards  generally accepted in the United States,  which 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,   assessing  the  accounting  principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for the opinion expressed above.


/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP
San Jose, California
April 26, 2000 except for Note 4,
which is as of May 2, 2000 and
Note 10, which is as of May 19, 2000

                                      F-2

<PAGE>


                          Independent Auditors' Report


The Board of Directors and Stockholders
Spectrian Corporation:

         We  have  audited  the  accompanying   consolidated  balance  sheet  of
Spectrian  Corporation  and  subsidiaries  as of March 31, 1999, and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
each  of  the  years  in  the  two-year  period  ended  March  31,  1999.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
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, the consolidated financial statements referred to above
present fairly, in all material  respects,  the financial  position of Spectrian
Corporation  and  subsidiaries  as of March 31,  1999,  and the results of their
operations  and their  cash flows for each of the years in the  two-year  period
ended  March 31,  1999,  in  conformity  with  accounting  principles  generally
accepted in the United States of America.

                                                                    /s/ KPMG LLP


Mountain View, California
April 29, 1999
                                      F-3

<PAGE>


<TABLE>
                                                        SPECTRIAN CORPORATION

                                                     CONSOLIDATED BALANCE SHEETS
                                                  (In thousands, except share data)

<CAPTION>
                                                                                                                March 31,
                                                                                                       ----------------------------
                                                                                                         2000               1999
                                                                                                       ---------          ---------
<S>                                                                                                    <C>                <C>
ASSETS

CURRENT ASSETS:
   Cash and cash equivalents .................................................................         $  11,553          $  26,254
   Short-term investments ....................................................................            36,027             36,417
   Accounts receivable, less allowance for doubtful accounts of
     $420 and $388, respectively .............................................................            23,817             12,983
   Inventories ...............................................................................            34,542             20,826
   Prepaid expenses and other current assets .................................................             5,668              3,464
                                                                                                       ---------          ---------

     Total current assets ....................................................................           111,607             99,944

Property and equipment, net ..................................................................            19,668             28,468
                                                                                                       ---------          ---------

     Total assets ............................................................................         $ 131,275          $ 128,412
                                                                                                       =========          =========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable ..........................................................................         $  16,416          $   8,058
   Accrued liabilities .......................................................................            13,793             17,884
   Current portion of debt and capital lease obligations .....................................               730              1,603
                                                                                                       ---------          ---------

     Total current liabilities ...............................................................            30,939             27,545

Debt and capital lease obligations, net of current portion ...................................             1,351              4,899
                                                                                                       ---------          ---------

     Total liabilities .......................................................................            32,290             32,444
                                                                                                       ---------          ---------

Commitments and contingencies (Notes 4 and 10)

STOCKHOLDERS' EQUITY:
   Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued
     and outstanding, respectively ...........................................................              --                 --
   Common stock, $0.001 par value, 20,000,000 shares authorized; 11,859,507 and
     11,102,333 shares issued, respectively; 10,859,507 and 10,102,333 shares
     outstanding, respectively ...............................................................                12                 10
   Additional paid-in capital ................................................................           160,117            149,588
   Treasury stock, 1,000,000 shares of common stock held .....................................           (14,789)           (14,789)
   Deferred compensation expense .............................................................              (937)              --
   Accumulated other comprehensive income (loss) .............................................              (617)               137
   Accumulated deficit .......................................................................           (44,801)           (38,978)
                                                                                                       ---------          ---------

     Total stockholders' equity ..............................................................            98,985             95,968
                                                                                                       ---------          ---------

     Total liabilities and stockholders' equity ..............................................         $ 131,275          $ 128,412
                                                                                                       =========          =========

<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>

                                                                F-4

<PAGE>


<TABLE>
                                                        SPECTRIAN CORPORATION

                                                CONSOLIDATED STATEMENTS OF OPERATIONS
                                                (In thousands, except per share data)

<CAPTION>
                                                                                            Year Ended March 31,
                                                                              -----------------------------------------------------
                                                                                2000                  1999                  1998
                                                                              ---------             ---------             ---------
<S>                                                                           <C>                   <C>                   <C>
NET REVENUES .....................................................            $ 163,567             $  99,331             $ 168,798
                                                                              ---------             ---------             ---------

COSTS AND EXPENSES:
   Cost of revenues ..............................................              129,998                96,880               132,684
   Research and development ......................................               22,488                26,735                18,644
   Selling, general and administrative ...........................               19,337                16,315                13,014
   Restructuring costs ...........................................                1,032                  --                    --
                                                                              ---------             ---------             ---------
     Total costs and expenses ....................................              172,855               139,930               164,342
                                                                              ---------             ---------             ---------

Operating income (loss) ..........................................               (9,288)              (40,599)                4,456

INTEREST INCOME ..................................................                3,344                 4,540                 4,045
INTEREST EXPENSE .................................................                 (473)                 (853)                 (710)
OTHER INCOME .....................................................                  624                  --                   1,530
                                                                              ---------             ---------             ---------

INCOME (LOSS) BEFORE INCOME TAXES ................................               (5,793)              (36,912)                9,321

INCOME TAXES .....................................................                   30                    59                   399
                                                                              ---------             ---------             ---------
                                                                                                                                 30

NET INCOME (LOSS) ................................................            $  (5,823)            $ (36,971)            $   8,922
                                                                              =========             =========             =========

NET INCOME (LOSS) PER SHARE:
   Basic .........................................................            $   (0.56)            $   (3.50)            $    0.90
                                                                              =========             =========             =========
   Diluted .......................................................            $   (0.56)            $   (3.50)            $    0.83
                                                                              =========             =========             =========

SHARES USED IN COMPUTING PER SHARE AMOUNTS:
   Basic .........................................................               10,426                10,568                 9,881
                                                                              =========             =========             =========
   Diluted .......................................................               10,426                10,568                10,701
                                                                              =========             =========             =========

<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>

                                                                F-5

<PAGE>


<TABLE>
                                                        SPECTRIAN CORPORATION

                                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                  (In thousands, except share data)

<CAPTION>
                                        Common Stock                                      Deferred
                                    -----------------------    Paid-In     Treasury     Compensation
                                      Shares       Amount      Capital       Stock         Expense
                                    ----------   ----------   ----------   ----------    ----------
<S>                                  <C>         <C>          <C>          <C>           <C>
Balances as of April 1, 1997 ....    8,265,230   $       88   $   53,387   $     --      $     --
Exercise of stock options .......      431,470         --          5,589         --            --
Employee stock purchase plan ....      207,377         --          1,604         --            --
Public offering, net of
  $4,969 expenses ...............    2,000,000            2       85,029         --            --
Deferred stock-based
  compensation ..................         --           --          1,218         --          (1,218)
Stock-based compensation
  expense .......................         --           --           --           --             609
Net income ......................         --           --           --           --            --
Unrealized gains on investments .         --           --           --           --            --
Comprehensive income ............         --           --           --           --            --
                                    ----------   ----------   ----------   ----------    ----------
Balances as of March 31, 1998 ...   10,904,077           10      146,827         --            (609)
Exercise of stock options .......      136,981         --          1,223         --            --
Employee stock purchase plan ....       61,275         --            541         --            --
Purchase of treasury stock ......         --           --           --        (14,789)         --
Deferred stock-based
  compensation ..................         --           --            997         --            (997)
Stock-based compensation
  expense .......................         --           --           --           --           1,606
Net loss ........................         --           --           --           --            --
Unrealized gains on investments .         --           --           --           --            --
Comprehensive loss ..............         --           --           --           --            --
                                    ----------   ----------   ----------   ----------    ----------
Balances as of March 31, 1999 ...   11,102,333           10      149,588      (14,789)         --

Exercise of stock options .......      565,941            1        7,420         --            --
Employee stock purchase plan ....      191,233            1        1,762         --            --
Deferred stock-based
  compensation ..................         --           --          1,347         --          (1,347)
Stock-based compensation expense          --           --           --           --             410
Net loss ........................         --           --           --           --            --
Unrealized losses on
  investments ...................         --           --           --           --            --
Comprehensive loss ..............         --           --           --           --            --
                                    ----------   ----------   ----------   ----------    ----------
Balances as of March 31, 2000 ...   11,859,507   $       12   $  160,117   $  (14,789)   $     (937)
                                    ==========   ==========   ==========   ==========    ==========



                                        Accumulated
                                           Other                       Total
                                       Comprehensive  Accumulated  Stockholders'
                                       Income (Loss)    Deficit       Equity
                                        ----------    ----------    ----------
Balances as of April 1, 1997 ....       $     --      $  (10,929)   $   42,466
Exercise of stock options .......             --            --           5,589
Employee stock purchase plan ....             --            --           1,604
Public offering, net of
  $4,969 expenses ...............             --          85,031
Deferred stock-based
  compensation ..................             --            --            --
Stock-based compensation
  expense .......................             --            --             609
Net income ......................             --           8,922
Unrealized gains on investments .              121          --
Comprehensive income ............             --            --           9,043
                                        ----------    ----------    ----------
Balances as of March 31, 1998 ...              121        (2,007)      144,342
Exercise of stock options .......             --            --           1,223
Employee stock purchase plan ....             --            --             541
Purchase of treasury stock ......             --            --         (14,789)
Deferred stock-based
  compensation ..................             --            --            --
Stock-based compensation
  expense .......................             --            --           1,606
Net loss ........................             --         (36,971)
Unrealized gains on investments .               16          --
Comprehensive loss ..............             --            --         (36,955)
                                        ----------    ----------    ----------
Balances as of March 31, 1999 ...              137       (38,978)       95,968

Exercise of stock options .......             --            --           7,421
Employee stock purchase plan ....             --            --           1,763
Deferred stock-based
  compensation ..................             --            --            --
Stock-based compensation expense              --            --             410
Net loss ........................             --          (5,823)
Unrealized losses on
  investments ...................             (754)         --
Comprehensive loss ..............             --            --          (6,577)
                                        ----------    ----------    ----------
Balances as of March 31, 2000 ...       $     (617)   $  (44,801)   $   98,985
                                        ==========    ==========    ==========


<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>

                                                                F-6

<PAGE>


<TABLE>
                                                        SPECTRIAN CORPORATION

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                           (In thousands)

<CAPTION>
                                                                                                   Year Ended March 31,
                                                                                           ----------------------------------------
                                                                                             2000            1999             1998
                                                                                           --------        --------        --------
<S>                                                                                        <C>             <C>             <C>
Cash flows from operating activities:

   Net income (loss) ...............................................................       $ (5,823)       $(36,971)       $  8,922
   Adjustments to reconcile net income (loss) to net cash provided by
     (used for) operating activities:
     Gain on sale of subsidiary ....................................................           --              --            (1,530)
     (Gain) loss on sale of property and equipment, net ............................           (624)           --              --
     Depreciation and amortization .................................................         13,255          13,715           9,761
     Equipment retirements, net ....................................................            375           1,409            --
     Provision for doubtful accounts receivable ....................................             32              12              24
     Provision for excess and obsolete inventories and write-down
        to market ..................................................................          1,468           1,360           5,385
     Stock compensation expense ....................................................            410           1,606             609
     Changes in operating assets and liabilities:
       Accounts receivable .........................................................        (10,866)          8,128         (10,075)
       Inventories .................................................................        (15,184)         (6,824)         (5,023)
       Prepaid expenses and other assets ...........................................         (2,204)          2,738            (412)
       Accounts payable ............................................................          8,358          (2,398)          3,141
       Accrued liabilities .........................................................         (4,091)          4,903           5,811
                                                                                           --------        --------        --------
       Net cash provided by (used for) operating activities ........................        (14,894)        (12,322)         16,613
                                                                                           --------        --------        --------

Cash flows from investing activities:

   Proceeds (purchases) of short-term investments, net .............................           (364)         31,727         (68,008)
   Proceeds from sale of subsidiary ................................................           --              --             4,016
   Purchase of property and equipment ..............................................         (7,731)        (11,284)           --
   Proceeds from sale of property and equipment ....................................          3,525             468         (17,953)
                                                                                           --------        --------        --------
     Net cash provided by (used for) investing activities ..........................         (4,570)         20,911         (81,945)
                                                                                           --------        --------        --------

Cash flows from financing activities:

   Repayments of debt and capital lease obligations ................................         (4,421)           (770)         (1,672)
   Purchase of treasury stock ......................................................           --           (14,789)           --
   Proceeds from sales of common stock, net ........................................          9,184           1,764          92,224
                                                                                           --------        --------        --------
   Net cash provided by (used for) financing activities ............................          4,763         (13,795)         90,552
                                                                                           --------        --------        --------

Net increase (decrease) in cash and cash equivalents ...............................        (14,701)         (5,206)         25,220
Cash and cash equivalents, beginning of year .......................................         26,254          31,460           6,240
                                                                                           --------        --------        --------
Cash and cash equivalents, end of year .............................................       $ 11,553        $ 26,254        $ 31,460
                                                                                           ========        ========        ========

Supplemental disclosures of cash flow information:
   Cash paid during the year for interest ..........................................       $    473        $    853        $    457
                                                                                           ========        ========        ========
   Taxes paid during the year ......................................................       $     67        $     59        $    952
                                                                                           ========        ========        ========

   Noncash investing and financing activities:
     Equipment recorded under capital lease obligations ............................       $   --          $   --          $    307
                                                                                           ========        ========        ========
     Deferred stock option compensation ............................................       $  1,347        $    997        $  1,218
                                                                                           ========        ========        ========

<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>

                                                                F-7

<PAGE>
SPECTRIAN CORPORATION
Notes to Consolidated Financial Statements
Years Ended March 31, 2000, 1999 and 1998

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

         Spectrian  Corporation  ("the Company") was originally  incorporated in
California in 1984 under the name Microwave Modules & Devices, Inc. ("MM&D") and
engaged in the  manufacture of power  amplifiers for military  applications.  On
April 2, 1992,  MM&D  changed its name to Spectrian  Corporation.  On October 3,
1997,  the Company  reincorporated  in  Delaware.  The Company is engaged in the
design,   manufacturer  and  marketing  of  high-power  radio  frequency  ("RF")
amplifiers and semiconductor  devices,  through its division that operates under
the  trade  name  UltraRF,  for the  global  wireless  communications  industry.
Spectrian's power amplifiers are utilized as part of the infrastructure for both
wireless voice and data networks. The Company's power amplifiers boost the power
of a signal  so that it can  reach a  wireless  phone or other  device  within a
designated geography.  The Company's semiconductor devices are key components of
a power amplifier.

Principles of Consolidation

         The accompanying consolidated financial statements include the accounts
of the Company and its wholly and majority-owned  subsidiaries.  All significant
intercompany accounts and transactions have been eliminated in consolidation.

Revenue Recognition

         The  Company  recognizes  revenue  upon  shipment.  Repair and  service
revenues are recognized when the related service is performed.

Concentration of Credit Risk and Fair Value of Financial Instruments

         The carrying value of the Company's  financial  instruments,  including
cash and cash  equivalents,  short-term  investments,  accounts  receivable  and
long-term debt  approximates  fair market value,  since the  discounted  present
value of  investments  and  long-term  debt is  approximately  equal to carrying
value,  and  receivables  are subject to  collection  in less than three months.
Financial  instruments that subject the Company to concentrations of credit risk
consist primarily of cash and cash equivalents, short-term investments and trade
accounts  receivable.  Management  believes the financial risks  associated with
these financial instruments are minimal. The Company maintains its cash and cash
equivalents and short-term investments with high quality financial institutions.

         The Company  performs  ongoing  credit  evaluations  of its  customers'
financial  condition  and  generally  does not  require  collateral  on accounts
receivable.  When required,  the Company maintains  allowances for credit losses
and such losses have been within management's expectations.

Cash Equivalents and Short-Term Investments

         The Company considers all liquid  investments with an original maturity
of three months or less to be cash equivalents.  The cash equivalents  consisted
of commercial paper and U.S. government securities as of March 31, 2000.

         The Company has classified its  investments in certain debt  securities
as "available-for-sale," and records such investments at fair market value, with
unrealized  gains and losses reported as a separate  component of  stockholders'
equity.   Realized   gains  and  losses  are   determined   using  the  specific
identification  method.  Interest income is recorded using an effective interest
rate, with the associated  premium or discount  amortized to interest income. At
March 31, 2000, the unrealized losses on the Company's investments aggregated to
$617,000.

                                      F-8

<PAGE>


Inventories

         Inventories  are  stated at the lower of  first-in,  first-out  cost or
market. The company periodically reviews inventory for potential slow moving and
obsolete  items  and  writes  down  specific  items to net  realizable  value as
appropriate.

Property and Equipment

         Property  and   equipment   are  stated  at  cost.   Depreciation   and
amortization  are computed  using the  straight-line  method over the  estimated
useful lives of the respective  assets,  generally  three to five years.  Assets
recorded  under  capital  leases and leasehold  improvements  are amortized on a
straight-line  basis over the shorter of the lease terms or the estimated useful
lives of the respective assets.

Income Taxes

         Income  taxes  are  recorded  using the  asset  and  liability  method.
Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases and operating loss and tax credit  carryforwards.  Deferred tax assets and
liabilities  are measured  using enacted tax rates  expected to apply to taxable
income in the years in which  those  temporary  differences  are  expected to be
recovered  or settled.  The effect on deferred tax assets and  liabilities  of a
change in tax rates is  recognized  in income in the period  that  includes  the
enactment date. A valuation  allowance is recorded to reduce deferred tax assets
to an amount whose realization is more likely than not.

 Per Share Computations

         Basic net income  (loss) per share is computed  by dividing  net income
(loss) available to common stockholders by the weighted-average number of common
shares  outstanding  for the  period.  Diluted  net  income  (loss) per share is
computed using the weighted  average number of common and  potentially  dilutive
common  shares  outstanding  during the period using the treasury  stock method.
Potentially  dilutive common shares include the effect of stock options. For the
years ended March 31, 2000 and 1999,  3,271,536 and 2,317,642 common  equivalent
shares with weighted averages exercise prices of $18.46 and $16.75, respectively
were not included for the calculation of diluted net loss per share as they were
considered  antidilutive  due to the net loss the Company  experienced  in these
fiscal years.

<TABLE>
         A  reconciliation  of the basic  and  diluted  per  share  calculations
follows:

<CAPTION>
                                                                 Year ended March 31,
                            ----------------------------------------------------------------------------------------------------
                                       2000                                1999                               1998
                            --------------------------         -----------------------------        ----------------------------
                                                 Per                                   Per                                 Per
                             Net                Share          Net                    Share           Net                 Share
                            Loss      Shares    Amount         Loss         Shares    Amount        Income     Shares     Amount
                            ----      ------    ------         ----         ------    ------        ------     ------     ------
<S>                        <C>        <C>       <C>          <C>            <C>       <C>           <C>         <C>      <C>
Basic.................     $ (5,823)  10,426    $(0.56)      $(36,971)      10,568    $(3.50)       $ 8,922     9,881    $   0.90
Effect of dilutive
   securities.........          --       --       --             --           --        --              --       820        (0.07)
                           --------   ------    -------      ---------      ------    -------       -------    ------    --------
Diluted...............     $ (5,823)  10,426    $(0.56)      $(36,971)      10,568    $(3.50)       $ 8,922    10,701    $   0.83
                           ========   ======    =======      =========      ======    =======       =======    ======    ========
</TABLE>


Use of Estimates in the Preparation of Financial Statements

         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,  the
disclosure of contingent  assets and  liabilities,  revenues and expenses during
the reporting period. Actual results could differ from those estimates.

                                      F-9

<PAGE>


Accounting for Stock-Based Compensation

         The Company  accounts for its stock  option  plans using the  intrinsic
value method. The Company calculates the fair value of stock-based  compensation
and  discloses  the  proforma  impact  of the value on net loss and net loss per
share in the notes to the financial statements.

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of

         The  Company  reviews   long-lived  assets  and  certain   identifiable
intangibles for impairment whenever events or changes in circumstances  indicate
that  the  carrying  amount  of an  asset  may not be  recoverable  based  on an
evaluation of the discounted  cash flow  generated by such assets.  Although the
Company currently has no significant  impaired assets, if such assets were to be
considered  impaired,  the impairment to be recognized  would be measured by the
amount by which the carrying amount of the asset exceeds its fair value.

Comprehensive Income (Loss)

         Comprehensive income, as defined, includes all changes in equity during
a period from  non-owner  sources.  The  Company's  comprehensive  income (loss)
includes  unrealized  gains or losses on  investments  and is  displayed  in the
Consolidated Statement of Stockholders Equity.

Warranty

         The  Company's  products  are  generally  subject to  warranty  and the
Company  provides  for the  estimate  future  costs of  repair,  replacement  or
customer accommodation upon shipment of the product.

Reclassifications

         Certain  items have been  reclassified  to be  consistent  with current
presentation.  The reclassifications  have no effect on previously disclosed net
income or stockholders' equity.

Recent Accounting Pronouncements

         In June 1998, the Financial Accounting Standards Board issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments  and Hedging  Activities"  ("SFAS 133").  SFAS 133 established a new
model for accounting for derivative and hedging  activities.  In July,  1999 the
Financial  Accounting  Standards  Board  issued  SFAS No.  137  "Accounting  for
Derivative  Instruments and Hedging  Activities - Deferral of the Effective Date
of FASB Statement No. 133" ("SFAS 137"). SFAS 137 deferred the effective date of
SFAS 133 until the first fiscal year beginning  after June 15, 2000. SFAS 133 is
not expected to have any material impact on the Company's consolidated financial
statements.

         In December 1999, the Securities and Exchange  Commission  issued Staff
Accounting Bulletin: No. 101 "Revenue Recognition in Financial Statements" ("SAB
101").  SAB 101  summarizes  certain of the Staff's views in applying  generally
accepted accounting  principles to revenue  recognition in financial  statements
and is effective for the Company  beginning fiscal 2001. SAB 101 is not expected
to have any material impact on the Company's consolidated financial statements.

         In  March  2000,  the  Financial   Accounting  Standards  Board  issued
Interpretation No. 44 ("FIN 44") "Accounting for Certain Transactions  involving
Stock  Compensation" an  interpretation  of APB Opinion No. 25. FIN 44 clarifies
the application of Opinion 25 for (a) the definition of employee for purposes of
applying  Opinion 25, (b) the criteria for determining  whether a plan qualifies
as  a  non  compensatory  plan,  (c)  the  accounting   consequence  of  various
modifications  to the terms of a previously

                                      F-10

<PAGE>


fixed stock  option or award,  and (d) the  accounting  for an exchange of stock
compensation awards in a business combination. FIN 44 is effective July 1, 2000,
but certain  conclusions  cover specific events that occur after either December
15, 1998, or January 12, 2000. The Company  believes that FIN 44 will not have a
material effect on its financial position or results of operations.


2. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

<TABLE>
         Available-for-sale  securities  at March  31,  2000  and  1999  were as
follows (in thousands):

<CAPTION>
                                                                                  Amortized           Unrealized             Fair
                     As of March 31, 2000                                           Cost              Gain (Loss)            Value
----------------------------------------------------------------------            --------            ----------            --------
<S>                                                                               <C>                  <C>                  <C>
Government bonds & notes .............................................            $ 14,599             $   (166)            $ 14,433
Commercial paper .....................................................              29,545                 (451)              29,094
                                                                                  --------             --------             --------
                                                                                    44,144                 (617)              43,527
Less amounts classified as cash equivalents ..........................               7,500                 --                  7,500
                                                                                  --------             --------             --------
Securities available for sale ........................................            $ 36,644             $   (617)            $ 36,027
                                                                                  ========             ========             ========

     Contractual maturity dates, less than 1 year ....................                                                      $  3,500
     Contractual maturity dates, 1 to 5 years ........................                                                        32,527
                                                                                                                            --------
                                                                                                                            $ 36,027
                                                                                                                            ========


                                                                                      Amortized           Unrealized          Fair
                     As of March 31, 1999                                               Cost              Gain (Loss)        Value
----------------------------------------------------------------------                 -------            -----------        -------
Government bonds & notes ..................................................            $ 8,973            $    81            $ 9,054
Commercial paper ..........................................................             48,936                 56             48,992
                                                                                       -------            -------            -------
                                                                                        57,909                137             58,046
Less amounts classified as cash equivalents ...............................             21,629               --               21,629
                                                                                       -------            -------            -------
Securities available for sale .............................................            $36,280            $   137            $36,417
                                                                                       =======            =======            =======

     Contractual maturity dates, 1 to 5 years .............................                                                  $28,117
     Contractual maturity dates, 10 years and over ........................                                                    8,300
                                                                                                                             -------
                                                                                                                             $36,417
                                                                                                                             =======
</TABLE>


3. BALANCE SHEET COMPONENTS

         Balance sheet  components at March 31, 2000 and 1999 are as follows (in
thousands):

                                                               March 31,
                                                       -------------------------
                                                        2000              1999
                                                       -------           -------
Inventories:
   Raw materials ...........................           $16,763           $ 9,100
   Work in progress ........................            10,353             5,701
   Finished goods ..........................             7,426             6,025
                                                       -------           -------
                                                       $34,542           $20,826
                                                       =======           =======

                                      F-11

<PAGE>


Property and equipment:
   Machinery and equipment .............................     $58,322     $57,077
   Software ............................................       4,248       1,245
   Land, building and improvements .....................        --         2,736
   Leasehold improvements ..............................       3,781       1,957
                                                             -------     -------
                                                              66,351      63,015
   Less accumulated depreciation and amortization ......      46,683      34,547
                                                             -------     -------
                                                             $19,668     $28,468
                                                             =======     =======


         Depreciation  expense was  $13,154,000,  $13,614,000 and $9,710,000 for
fiscal 2000,  1999 and 1998,  respectively.  Amortization  expense was $101,000,
$101,000 and $51,000 for fiscal 2000, 1999 and 1998, respectively.

Accrued liabilities:
Employee compensation and benefits ...............        $ 4,310        $ 4,672
Warranty .........................................          7,123          9,473
Restructuring ....................................            996           --
Other accrued liabilities ........................          1,364          3,739
                                                          -------        -------
                                                          $13,793        $17,884
                                                          =======        =======


4. DEBT AND LEASE COMMITMENTS

Lines of Credit

         The Company has a revolving line of credit of $10.0 million with a bank
collateralized  by the  majority  of the  Company's  assets.  The line of credit
expires on June 30, 2001. Under the terms of the master agreement governing this
credit  instrument,  the Company is required to maintain certain minimum working
capital,  net worth,  profitability  and other specific  financial  ratios.  The
master  agreement also has certain  restrictions on other  indebtedness  and the
payment of dividends. The Company was in default of certain of the covenants and
the bank has granted a waiver of the default  effective  through  June 30, 2000.
The  Company  expects to be in  default  of a  covenant  at the end of the first
quarter of fiscal  2001.  The amount  available  to borrow at March 31, 2000 was
$10.0 million. The Company can borrow at either (i) a variable rate equal to the
prime rate or (ii) a fixed rate equal to 200 basis  points above the LIBOR rate,
which at March 31,  2000 was 9% and  8.29%,  respectively.  The  Company  had no
borrowings under the line of credit at March 31, 2000.

Equipment Loan

          In January 1997,  the Company  borrowed $6.0 million  collaterized  by
certain  capital  equipment.  Under the terms of the  agreement,  the Company is
required to make a series of uneven monthly  principal  payments through January
2002 ranging from $42,000 to $136,000, plus interest at a rate of 9.1%, and must
maintain  certain minimum working  capital,  net worth and other specific ratios
for which the Company was in compliance as of March 31, 2000.

                                      F-12

<PAGE>


         Future minimum debt principal  payments under this loan as of March 31,
2000 were as follows (in thousands):

2001 ..................................................                   $  819
2002 ..................................................                    1,301
                                                                          ------
                                                                          $2,120
                                                                          ======

Lease Commitments

         In May 1997,  the Company  entered  into capital  lease for  production
equipment in Sunnyvale  premises for a sixty-month lease term expiring in August
2002.  Future  minimum lease  payments  under this capital lease as of March 31,
2000 are as follows (in thousands):

2001 ...................................................                    $ 76
2002 ...................................................                      76
2003 ...................................................                      32
                                                                            ----
                                                                            $184
                                                                            ====

         During  fiscal  1997,  the Company  sold its  principal  facilities  in
Sunnyvale for approximately $16.4 million,  and leased the facilities back under
a lease that has been  classified  as an operating  lease.  The lease expires in
November  2011 and the  quarterly  rent  payments are subject to Consumer  Price
Index adjustments on a tri-annual basis beginning in November 1999.

         Future minimum lease payments under all noncancelable  operating leases
as of March 31, 2000 are as follows (in thousands):

2001 ..................................................                  $ 2,043
2002 ..................................................                    2,046
2003 ..................................................                    2,018
2004 ..................................................                    2,016
2005 ..................................................                    2,016
Thereafter ............................................                   15,284
                                                                         -------
                                                                         $25,423
                                                                         =======


         In 1998, the Company  entered into an operating  lease for an ancillary
40,000 square foot  manufacturing  facility in Rocklin,  California  for a sixty
month  lease term  expiring  in June 2003.  During the second  quarter of fiscal
2000,  the Company  subleased  its Rocklin  facility  to The Gap,  Inc.  for the
reminder of the Company's lease term. At March 31, 2000,  minimum lease payments
required  and  sublease  income  under this  operating  lease are as follows (in
thousands):

                                      F-13

<PAGE>


                                             Lease Payments     Sublease Income
                                             --------------     ---------------
2001 .................................          $  422               $  423
2002 .................................             422                  434
2003 .................................             422                  447
2004 .................................              70                   75
                                                ------               ------
                                                $1,336               $1,379
                                                ======               ======


         Rent expense was  $2,300,000,  $3,323,000  and $2,530,000 for the years
ended March 31, 2000,  1999 and 1998,  respectively.  Sublease rental income was
$310,000  for the year ended  March 31,  2000 and none for the years ended March
31, 1999 and 1998.


5. STOCKHOLDERS' EQUITY

Preferred Stock

         The Board of  Directors  has the  authority  to issue up to 5.0 million
shares of undesignated preferred stock and to determine the powers,  preferences
and rights and the  qualifications,  limitations or  restrictions  granted to or
imposed upon any wholly unissued  shares of undesignated  preferred stock and to
fix the number of shares  constituting  any series and the  designation  of such
series,  without any further vote or action by the Company's  stockholders.  The
Board of Directors has designated  20,000 shares of preferred  stock as Series A
Participating Preferred Stock, although none of such shares have been issued.

Shareholder Rights Plan

          The Board of Directors  of the Company  adopted a  Shareholder  Rights
Plan in October 1996 (the "Rights Plan"). Pursuant to the Rights Plan, the Board
declared a dividend of one Preferred  Stock  Purchase  Right per share of Common
Stock (the "Rights") and each such Right has an exercise  price of $126.00.  The
Rights become  exercisable upon the occurrence of certain events,  including the
announcement of a tender offer or exchange offer for the Company's  Common Stock
or the acquisition of a specified  percentage of the Company's Common Stock by a
third  party.  The  exercise  of the Rights  could have the effect of  delaying,
deferring or preventing a change in control of the Company,  including,  without
limitation,   discouraging   a  proxy  contest  or  making  more  difficult  the
acquisition  of a  substantial  block  of  the  Company's  Common  Stock.  These
provisions  could also limit the price that investors might be willing to pay in
the future for shares of the Company's Common Stock.

Treasury Stock

         In March 1998,  the Board of Directors  authorized the repurchase of up
to 1 million  shares of  Spectrian's  common  stock at a price up to $18.00  per
share.  The  Company's  repurchases  of shares of common  stock are  recorded as
"Treasury Stock" and result in reduction of Stockholders'  Equity. During fiscal
1999,  1,000,000  shares of common  stock at an average per share cost of $14.79
were repurchased.

Stock Option Plans

         The Company has adopted three stock option plans,  (the  "Plans"):  the
1992  Stock  Plan  (the  "1992  Plan"),  the  1994  Director  Option  Plan  (the
"Directors'  Plan"),  and the 1998  Nonstatutory  Stock  Options Plan (the "1998
Plan").  Pursuant to the terms of the plan, the Company's Board of Directors may
grant stock options to selected employees,  directors,  officers and consultants
of the Company. Stock options are generally granted with an exercise price equal
to the fair market value of the Company's stock at the date of grant.

                                      F-14

<PAGE>


1992 Plan

         In 1997,  the Company  amended the 1992 Plan under which the  Company's
Board of Directors  could issue  options to purchase up to  3,300,886  shares of
common stock to employees and directors of and  consultants  to the Company.  In
July 1999,  the Company  amended the 1992 Plan to reserve an additional  450,000
shares of common stock for issuance under the 1992 Plan.

         Under the 1992 Plan, the Company's Board of Directors has the authority
to determine to whom options will be granted, the number of shares under option,
the option term and the exercise price. The options generally have 10-year terms
and vest 25%  after one year from the  grant  date  with the  remaining  options
vesting pro rata over the  following 36 months.  The term of any options  issued
under the plan may not exceed ten years from the date of grant.

Directors' Plan

         The Directors' Plan provides for automatic  grants to purchase 5,000 of
the Company's common stock upon new non-employee  directors being elected to the
Board of Directors.  The Directors'  Plan also provides for the grant of options
to purchase up to an additional 5,000 shares annually thereafter.  Options under
the  Directors'  Plan vest  over 48 months  and the  exercise  price of  options
granted shall be 100% of the fair market value of the Company's  common stock on
the date of grant. The options expire ten years after the date of grant. In July
1999, the Company amended the Directors'  Plan to increase the aggregate  number
of shares  authorized by 60,000 shares to 145,000  shares.  Under the Director's
Plan, 30,000 shares were granted during fiscal 2000.

1998 Plan

         In January  1998,  the  Company  adopted  the 1998 Plan under which the
Company's  Board of  Directors  could  issue  options to  purchase up to 400,000
shares of common stock to employees of and  consultants  to the Company.  In the
second quarter of fiscal 1999, an additional  500,000 shares were reserved under
the 1998 Plan. In the first quarter of fiscal 2000, an additional 250,000 shares
were reserved under the 1998 Plan.

         Under the 1998 Plan, the Company's Board of Directors has the authority
to determine to whom options will be granted, the number of shares under option,
the option term and the exercise price. The options generally have 10-year terms
and vest 25%  after one year from the  grant  date  with the  remaining  options
vesting pro rata over the following 36 months.

         Under this plan,  certain  employees  were granted  stock  options with
exercise  prices  ranging  from $6.59 to $16.36  that were below the $17.25 fair
market  value of the stock on the day of grant and were  subject to a  six-month
vesting schedule. Stock compensation of $609,000 and $1,606,000 was recorded for
these options in the fourth  quarter of fiscal 1998 and the first half of fiscal
1999, respectively.

Other Stock Option Grant Activity

         Outside of the 1992 Plan,  the  Director's  Plan and the 1998 Plan, two
officers  and one  employee  of the  Company  were  granted a combined  total of
390,000  options  during fiscal 1997, at exercise  prices  ranging from $9.50 to
$14.50,  which are subject to the same vesting schedule as that of the Company's
1992 Plan. In fiscal 1998, one officer and two employees were granted a combined
total of 90,000  options  outside of the Plans at exercise  prices  ranging from
$16.88 to $56.38,  which are subject to the same vesting schedule as that of the
1992 Plan.  During fiscal 1999,  91,667 options were cancelled.  In fiscal 2000,
one officer and one employee  were granted a combined  total of 160,000  options
outside of the Plans at an exercise  price ranging from $11.38 to $22.50,  which
are subject to the same vesting schedule as that of the 1992 Plan.

<TABLE>
         The following  table  summarizes  option  activity  under the Company's
various plans:

                                      F-15

<PAGE>


<CAPTION>
                                                                                                        Weighted
                                                                                                        Average
                                                                      Available for      Options        Exercise
                                                                          Grant        Outstanding        Price
                                                                          -----        -----------        -----
<S>                                                                       <C>            <C>              <C>
Outstanding as of April 1, 1997.................................          685,420        1,737,789        $ 13.18
   Additional shares reserved...................................          490,000               --             --
   Granted......................................................         (855,755)         855,755          25.91
   Exercised....................................................               --        ( 431,511)         12.87
   Canceled.....................................................          138,028         (138,028)         17.45
                                                                      -----------       -----------
Outstanding as of March 31, 1998................................          457,693        2,024,005          18.34
   Additional shares reserved...................................          500,000               --             --
   Granted......................................................         (964,921)         964,921          13.38
   Exercised....................................................               --         (136,981)          8.93
   Canceled(1)..................................................          442,636         (534,303)         18.64
                                                                      -----------      -----------
Outstanding as of March 31, 1999................................          435,408        2,317,642          16.75
   Additional shares reserved...................................        1,170,000               --             --
   Granted......................................................       (1,944,794)       1,944,794          18.83
   Exercised....................................................               --         (565,941)         13.16
   Canceled.....................................................          424,959         (424,959)         17.88
                                                                      -----------      -----------
Outstanding as of March 31, 2000................................           85,573        3,271,536        $ 18.46
                                                                      ===========      ===========

<FN>
-------------------
(1)  91,667  shares which were outside of the Plans were  cancelled and were not
     available for re-grant.
</FN>
</TABLE>


<TABLE>
         The  following  tables  summarize   information   about  stock  options
outstanding at March 31, 2000:

<CAPTION>
                            Options Outstanding                                       Options Exercisable
       --------------------------------------------------------------           ---------------------------
                             Number            Weighted        Weighted            Number            Weighted
       Range of          Outstanding at        Average         Average          Exercisable at       Average
      Exercise             March 31,          Remaining        Exercise           March 31,          Exercise
       Prices                2000            Life (Years)       Price               2000              Price
       ------                ----            ------------       -----               ----              -----
<S>                          <C>                 <C>            <C>                 <C>               <C>
  $ 0.20 - $ 6.59            76,620              6.47           $ 5.31              76,620            $ 5.31
  $ 7.00 - $10.25           229,562              7.82             9.79              82,351              9.30
  $11.38 - $15.38         1,462,438              8.03            13.95             578,544             14.12
  $15.44 - $23.06         1,028,581              9.28            21.38             149,787             18.94
  $23.50 - $34.63           291,561              9.88            25.54                  21             24.00
  $36.00 - $50.06           143,003              7.17            39.01             103,112             38.88
  $52.00 - $64.13            39,771              7.48            58.03              25,446             58.17
                          ---------                                              ---------
  $ 0.20 - $64.13         3,271,536              8.49          $ 18.46           1,015,881          $  17.39
                          =========                                              =========
</TABLE>


         Using the  Black-Scholes  Option-Pricing  Model, the per share weighted
average fair market value of stock options  granted  during fiscal 2000,  fiscal
1999 and fiscal 1998 were $15.32, $10.86 and $18.34,  respectively,  on the date
of grant.  Assumptions used with the Black-Scholes  Option-Pricing Model were as
follows:

                                      F-16

<PAGE>


                                                     Fiscal Year
                                        --------------------------------------
                                          2000          1999           1998
                                        ---------     ---------      ---------
Risk-free interest rate..............      5.8%          5.4%           5.6%
Expected term of options.............   5.3 years     4.4 years      4.5 years
Expected volatility..................     86.2%         81.0%          83.0%
Expected dividend yield..............      0.0%          0.0%           0.0%


Stock-Based Compensation

         Stock-based  compensation  expense  related to stock options granted to
non-employees  is  recognized as earned.  At each  reporting  date,  the Company
re-values the stock-based  compensation related to unvested non-employee options
using the  Black-Scholes  option pricing  model.  As a result,  the  stock-based
compensation  expense will  fluctuate as the fair market value of the  Company's
common  stock  fluctuates.  In  connection  with the grant of stock  options  to
consultants,  the Company recorded stock-based  compensation expense of $410,000
for the year ended March 31, 2000. As of March 31, 2000, the Company  expects to
amortize  stock-based  compensation expense of $409,000 in fiscal 2001, $269,000
in fiscal 2002, $187,000 in fiscal 2003, and $72,000 in fiscal 2004, assuming no
change in the underlying value of the Company's common stock.

                          Employee Stock Purchase Plan

         In June 1998,  the  Company's  stockholders  approved the 1998 Employee
Stock Purchase Plan (the "Purchase Plan") which permitted  eligible employees to
purchase the Company's  Common Stock through  payroll  deductions.  The Purchase
Plan consisted of consecutive and overlapping  12-month offering  periods,  each
divided into two 6-month purchase  periods.  The purchase price of the shares in
the  Purchase  Plan is 85% of the lower of the fair  market  value of the Common
Stock  at the  beginning  of the  offering  period  or the end of each  purchase
period.  The  Company  reserved  a total of 250,000  shares of common  stock for
issuance under this plan. The Purchase Plan has a feature  whereby the number of
shares reserved under the Purchase Plan are increased automatically on an annual
basis by the  lesser of  300,000  shares or 2% of  outstanding  shares of Common
Stock.  There were 199,538  shares of Common Stock  available for issuance as of
March 31, 2000.  During the fiscal  years ended March 31, 2000 and 1999,  shares
totaling  191,233 and 61,275 were acquired under the Purchase Plan at an average
per share price of $9.22 and $9.08, respectively.

         Under SFAS No. 123, Accounting for Stock-Based Compensation,  pro forma
compensation  cost is  calculated  for the fair market  value of the  employees'
purchase  rights.  The fair value of each stock purchase right granted under the
Purchase Plan is estimated using the Black-Scholes Option-Pricing Model with the
following weighted average assumptions by fiscal year:

                                                     Fiscal Year
                                        --------------------------------------
                                          2000          1999           1998
                                        ---------     ---------      ---------
Risk-free interest rate..............      5.0%          5.4%           5.6%
Expected term of options.............   0.5 years     0.4 years      0.5 years
Expected volatility..................     86.2%         81.0%          83.0%
Expected dividend yield..............      0.0%          0.0%           0.0%


         The per share  weighted  average  fair market  value of those  purchase
rights granted in fiscal 2000, fiscal 1999 and fiscal 1998 was $6.08,  $3.87 and
$4.32, respectively, per share.


                        Pro Forma Fair Value Information

         The Company  accounts for its stock options  using the intrinsic  value
method. Had the Company determined  compensation cost based on the fair value at
the grant date for its stock  options  under SFAS No.  123,  the  Company's  net
income  (loss) and related per share amounts would have been as indicated in the
pro forma amounts indicated below (in thousands, except per share amounts):

                                      F-17

<PAGE>


                                                  Year Ended March 31,
                                      -----------------------------------------
                                          2000            1999           1998
                                      -----------     -----------     ---------
Net income (loss):
   As reported ...................    $    (5,823)    $   (36,971)    $   8,922
                                      ===========     ===========     =========
   Pro forma .....................    $   (15,099)    $   (40,972)    $  (1,870)
                                      ===========     ===========     =========

Earnings (loss)  per share:
   Basic:
     As reported .................    $     (0.56)    $     (3.50)    $    0.90
                                      ===========     ===========     =========
     Pro forma ...................    $     (1.45)    $     (3.88)    $   (0.19)
                                      ===========     ===========     =========

   Diluted:
     As reported .................    $     (0.56)    $     (3.50)    $    0.83
                                      ===========     ===========     =========
     Pro forma ...................    $     (1.45)    $     (3.88)    $   (0.19)
                                      ===========     ===========     =========


         Pro forma net income  (loss)  reflects  only the options  granted since
April 1, 1995. Therefore,  the full impact of calculating  compensation cost for
stock  options  under SFAS No. 123 is not  reflected in the pro forma net income
(loss) amounts  presented above because  compensation cost is reflected over the
options' vesting period of four years and compensation  cost for options granted
prior to April 1, 1995 is not considered.


6. EMPLOYEE BENEFIT PLAN

         In January 1997, the Company adopted the Spectrian  Corporation  401(k)
Savings Plan (the "Benefit Plan") to provide retirement and incidental  benefits
for eligible employees.  The Benefit Plan provides for Company  contributions as
determined  by the Company's  Board of Directors  that may not exceed 20% of the
annual  aggregate  salaries of those employees  eligible for  participation.  In
fiscal years 2000, 1999 and 1998, the Company contributed $148,000, $209,000 and
$181,000, respectively, in contributions to the Benefit Plan.


7. INCOME TAXES

The components of the provision for income taxes in the statement of operations
are as follows (in thousands):

                                                    March 31,
                                       ----------------------------------
                                       2000           1999           1998
                                       ----           ----           ----
Current
     Federal ......................     --             --             --
     State ........................     10             59            399
     Foreign ......................     20             --             --
                                       ----           ----           ----
          Total Current                 30             59            399
Deferred
     Federal ......................     --             --             --
     State ........................     --             --             --
     Foreign ......................     --             --             --
                                       ----           ----           ----
          Total Deferred                --             --             --
                                       ----           ----           ----
          Total Provision               30             59            399
                                       ====           ====           ====

<TABLE>
         Income tax expense for the years  ended March 31,  2000,  1999 and 1998
differs from the amount  computed by applying the federal income tax rate of 34%
to  pretax  income  (loss)  from  operations  as a result of the  following  (in
thousands):

                                      F-18

<PAGE>


<CAPTION>
                                                                                               Year Ended March 31,
                                                                                       --------------------------------------------
                                                                                         2000              1999              1998
                                                                                       --------          --------          --------
<S>                                                                                    <C>               <C>               <C>
Federal tax (benefit) at statutory rate ......................................         $ (1,970)         $(12,550)         $  3,189
State tax, net of Federal benefit ............................................               10                59              --
Utilization of net operating loss carryforwards ..............................             --                --              (3,314)
Alternative minimum tax ......................................................             --                --                 183
FSC tax expense ..............................................................               20              --                 215
Unrealized benefit from LLC loss .............................................             --                --                  44
Unutilized net operating losses and temporary differences ....................            2,299            12,093              --
Other ........................................................................             (329)              457                82
                                                                                       --------          --------          --------
Income tax expense ...........................................................         $     30          $     59          $    399
                                                                                       ========          ========          ========
</TABLE>


         The components of  significant  portions of the deferred tax assets and
liabilities are presented below (in thousands):


                                                                 March 31,
                                                          ---------------------
Deferred tax assets:                                        2000         1999
                                                          --------     --------
   Various accruals and reserves .....................    $  4,893     $  6,349
   Net operating loss carryforwards ..................      22,411       21,259
   Credit carryforwards ..............................       7,180        6,982
                                                          --------     --------
     Total gross deferred tax assets .................      34,484       34,590
   Less valuation allowance ..........................     (33,783)     (32,661)
                                                          --------     --------
     Total deferred tax assets .......................    $    701     $  1,929
                                                          --------     --------

Deferred tax liabilities:
   Property and equipment depreciation differences ...    $   (701)    $ (1,929)
                                                          --------     --------
   Total gross deferred tax liabilities ..............        (701)      (1,929)
                                                          --------     --------

Net deferred tax assets ..............................    $   --       $   --
                                                          ========     ========


         Due to the  uncertainties  surrounding  the realization of the deferred
tax assets  resulting from the Company's  accumulated  deficit and net losses in
fiscal 2000 and 1999, the Company has provided a full  valuation  allowance and,
therefore  no  benefit  has been  recognized  for the  operating  loss and other
deferred tax assets.  The Company evaluates positive and negative evidence about
the  recoverability  of its net  deferred tax asset each quarter and will record
the net  deferred  tax  asset  when it is more  likely  than not that it will be
recovered.

         As of March 31, 2000, the Company has a net operating loss carryforward
of  approximately  $62.5  million and $19.6  million for federal and  California
income tax purposes,  respectively.  If not utilized,  the federal carryforwards
will expire in various  amounts  beginning  in 2008  through  March 2020 and the
California  carryforwards  will  expire in  various  amounts  beginning  in 2004
through March 2006.

         The Company has research credit  carryforwards  of  approximately  $1.9
million  and $2.1  million  for  federal  and  California  income tax  purposes,
respectively.  If not utilized, the Federal carryforwards will expire in various
amounts beginning in 2003. The California research credit can be carried forward
indefinitely.

         The Company also has  California  manufacturing  investment  tax credit
carryforward of  approximately  $2.8 million for California  income tax purposes
which, if not utilized, will expire in 2005 through 2008.

                                      F-19

<PAGE>


         Included in the deferred tax assets is  approximately  $11.6 million of
assets  relating  to the stock  option  compensation  which will be  credited to
equity when realized.

         Utilization  of the net operating  losses and credits may be subject to
an annual  limitation due to the ownership  change  limitations  provided by the
Internal Revenue Code and similar state  provisions.  The annual  limitation may
result in the expiration of net operating loss  carryforwards and credits before
utilization.

8. CUSTOMER CONCENTRATIONS

         For  the  year  ended  March  31,  2000,  one  customer  accounted  for
approximately  72% of net  revenues.  For the year  ended  March 31,  1999,  two
customers accounted for approximately 76% and 11% of net revenues, respectively.
For the year ended March 31, 1998, two customers accounted for approximately 79%
and 14% of net revenues,  respectively. Two customers accounted for an aggregate
of 86% and 85% of accounts receivable at March 31, 2000 and 1999,  respectively.
The Company  has  written  off bad debts of none in fiscal  years 2000 and 1999,
respectively, and $13,000 in fiscal year 1998.


9. SEGMENT INFORMATION

         Under the management approach, the Company has broken down its business
into two divisions based upon product type: Amplifier Division and Semiconductor
Division,  which  operates  under the  tradename  of  UltraRF.  UltraRF  derives
virtually all of its revenues from sales to the Amplifier Division.  The Company
allocates  operating  expenses to these segments but does not allocate  interest
income and expense.  Corporate  expenses are allocated to the operating segments
based on  predetermined  annual  allocation  methods.  Appropriate  intersegment
eliminations  are  made  in  the  consolidation  of the  Company's  consolidated
financial statements.

         The Company  operated  and reported its  financial  information  as one
vertical integrated unit in the fiscal year ending March 31, 1999, and therefore
did not  identify or report  separate  segment  information.  The Company  began
reporting its operations by segment as of the fiscal period  beginning  April 1,
1999.  Segment  information  for the year ended March 31, 2000 is as follows (in
thousands):

<TABLE>
Consolidated Statement of Operations Data - Fiscal 2000:

<CAPTION>
                                                                                  Year Ended March 31, 2000
                                                               --------------------------------------------------------------------
                                                               Amplifier            UltraRF             Other*              Total
                                                               ---------           ---------          ---------           ---------
<S>                                                            <C>                 <C>                <C>                 <C>
Net revenues, external ..............................          $ 162,687           $     880          $    --             $ 163,567
Net revenues, intersegment ..........................               --                27,050            (27,050)               --
Amortization and depreciation .......................              5,797               2,546              4,912              13,255
Income (loss) before income taxes ...................          $  (9,906)          $   4,113          $    --             $  (5,793)
</TABLE>


*Data in the "Other" column represents the elimination of intersegment revenues.

         The  Company  does not  allocate  interest  income or  expenses,  other
income,  net, or the provision  for income taxes to these  segments for internal
reporting purposes.

<TABLE>
Consolidated Balance Sheet Data:

<CAPTION>
                                                                                                March 31, 2000
                                                                         ----------------------------------------------------------
                                                                         Amplifier         UltraRF           Other            Total
                                                                         ---------         -------           -----            -----
<S>                                                                       <C>              <C>              <C>              <C>
Segment Assets .................................................          $32,142          $13,605          $ 8,463          $54,210
Expenditures for additions to long-lived assets ................          $ 3,181          $ 2,362          $ 2,188          $ 7,731
</TABLE>

                                                                F-20

<PAGE>


         Segment assets represent inventories and property and equipment,  which
are allocated to these segments.

         Net revenues  from major product  categories  for the three years ended
March 31, 2000 were as follows:

                                               Year ended March 31,
                                            -----------------------------
                                            2000       1999          1998
                                            ----       ----          ----
SCPA ......................................  77%         90%           90%
MCPA ......................................  20%          4%            --%
Other......................................   3%          6%           10%
                                            ---         ---           ---
Total Revenue.............................. 100%        100%          100%
                                            ===         ===           ===


Geographic Segment Data:

         Revenue  from   unaffiliated   customers  by  geographic  region  as  a
percentage of net revenues were as follows:

                                                     Year Ended March 31,
                                              --------------------------------
                                              2000           1999         1998
                                              ----           ----         ----
Canada.......................................  42%            57%          49%
Korea........................................  16%            14%          26%
United States................................  13%            16%           5%
France.......................................  26%            13%          20%
Other........................................   3%             --%          -- %


         The Company's  long-lived assets are located in the following countries
(in thousands):

                                                              March 31,
                                                     ---------------------------
                                                       2000               1999
                                                     -------             -------
United States ..........................             $18,226             $27,441
Thailand ...............................               1,218               1,011
Korea ..................................                 224                  16
                                                     -------             -------
                                                     $19,668             $28,468
                                                     =======             =======


10. LITIGATION

         On May 19, 2000, the Company announced that it had reached a settlement
in principle of the  shareholder  class action  lawsuits which were filed in the
United States  District  Court for the Northern  District of California  and the
Superior Court of the State of California  for Santa Clara County.  The terms of
the  settlement  will  not  have a  material  adverse  effect  on the  Company's
financial position or results from operations. The final settlement agreement is
subject to Court approval and class notice provisions.

                                      F-21

<PAGE>


11. DISCONTINUED MANUFACTURING OPERATIONS AND RELATED RESTRUCTURING CHARGES

         During fiscal 1999, the Company  transitioned  the assembly and test of
its  higher  volume  single  carrier  power  amplifier  products  to a  contract
manufacturer  located in Thailand on a turnkey basis.  During the fourth quarter
of fiscal 2000, the Company  decided to transfer the remaining  power  amplifier
production in Sunnyvale, California, to the contract manufacturer. In connection
with the decision,  the Company  recognized in fiscal 2000 an approximately $1.0
million   restructuring   charge  for  estimated   severance  costs  related  to
organizational  changes and a planned reduction in work force.  Approximately 90
employees  engaged  in  manufacturing  and  production   related  functions  are
anticipated  to be  terminated  as a result of the  restructuring.  At March 31,
2000,   approximately  six  employees  had  been  terminated   pursuant  to  the
restructuring.  The restructuring  will be substantially  completed in the third
quarter  of fiscal  2001.  The  following  table  represents  the  restructuring
activity that took place up to March 31, 2000 (in thousands):

                                                                 Reduction in
                                                                   Workforce
                                                                    -------
Reserve for estimated severance costs .......................       $ 1,032
Cash payment of severance costs .............................           (36)
                                                                    -------

Balance at March 31, 2000 ...................................       $   996
                                                                    =======


         The  balance  of the  restructuring  accrual  is  included  in  current
liabilities on the consolidated balance sheets.

                                      F-22