================================================================================

                                  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, 2001.

         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 May
24,  2001  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 May 24, 2001,  registrant had  outstanding  11,578,568  shares of
Common Stock exclusive of treasury 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 2001  Annual  Meeting of
Stockholders.

================================================================================
<PAGE>

                              SPECTRIAN CORPORATION

                                    INDEX TO

                           ANNUAL REPORT ON FORM 10-K

                          FOR YEAR ENDED MARCH 31, 2001

<TABLE>
<CAPTION>
                                                                                                             Page
<S>  <C>                                                                                                      <C>
                                     PART I

Item 1.          Business..........................................................................             3
Item 2.          Properties........................................................................            15
Item 3.          Legal Proceedings.................................................................            16
Item 4.          Submission of Matters to a Vote of Security Holders...............................            16

                                     PART II

Item 5.          Market for the Registrant's Common Equity and Related Stockholder Matters.........            17
Item 6.          Selected Consolidated Financial Data..............................................            18
Item 7.          Management's Discussion and Analysis of Financial Condition and Results of
                     Operations....................................................................            19
Item 7A.         Quantitative and Qualitative Disclosures About Market Risk........................            37
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.........................................................................................            44

</TABLE>

                                       2
<PAGE>

                                     PART I


ITEM 1.  BUSINESS

This Annual  Report on Form 10-K,  including  the  information  incorporated  by
reference herein,  includes "forward looking  statements"  within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and
Section 21E of the  Securities  Exchange Act of 1934, as amended (the  "Exchange
Act"). All of the statements contained in this Annual Report on Form 10-K, other
than  statements  of  historical  fact,  should be  considered  forward  looking
statements,  including, but not limited to, those regarding the expansion of the
market for wireless communications;  the growth of new digital PCS networks; the
new opportunities  created by the attempt of traditional  mobile  communications
systems  providers  to  provide  high  Internet  access  speeds;  the demand for
amplifier  hardware;  the  Company's  pursuit of new  opportunities  with single
carrier designs; the potential for wireless  communications in countries without
reliable or extensive  wireline  systems;  the future use of wireless systems by
multicarrier power amplifiers; the Company's expectation to incur future pricing
pressures  from its  customers;  the Company's  expectation of the importance of
international  sales;  the  Company's  pricing  commitments  to OEM customers to
achieve manufacturing cost reductions;  customers' demanding  specifications for
the Company's  products and the Company's  devotion of resources to research and
development  programs.  There can be no assurance that these  expectations  will
prove to have been correct.  Certain  important  factors that could cause actual
results to differ  materially from the Company's  expectations  are disclosed in
this Annual Report on Form 10-K, including,  without limitation,  in the section
entitled "Factors  Affecting Future Operating Results" in Item 7 -- Management's
Discussion and Analysis of Financial Condition and Results of Operation and this
section.  All  subsequent  written and oral  forward  looking  statements  by or
attributable  to the  Company  or persons  acting on its  behalf  are  expressly
qualified in their entirety by such factors.

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.

General

         Spectrian   Corporation   ("Spectrian"   or  "the  Company")   designs,
manufacturers  and markets  high-power radio frequency ("RF") amplifiers 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" and "CDMA2000"), Personal Communications System ("PCS"),
Global System for Mobil  Communications  ("GSM"),  Wireless  Local Loop ("WLL"),
Universal Mobile Telephone  Service  ("UMTS"),  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.

         On December 29, 2000, the Company  completed the sale of  substantially
all  of  the  assets  and  external  liabilities  comprising  its  semiconductor
division,  UltraRF,  to  Cree  Inc.  ("Cree")  pursuant  to the  Asset  Purchase
Agreement dated as of November 20, 2000 (the "Asset Purchase  Agreement")  among
Cree, Zoltar  Acquisition,  Inc. ("Zoltar") and the Company for 1,815,402 shares
of common stock of Cree plus common stock with a guaranteed  realizable value of
$30 million,  less $1,141,000 owed by the Company to Cree due to a change in the
net assets of UltraRF  between October 1, 2000 and December 29, 2000. As part of
the definitive  agreement,  the Company and Cree entered into a two-year  supply
agreement  under which Spectrian is obligated to purchase from Cree an aggregate
of $58 million

                                       3
<PAGE>

of  semiconductors.  UltraRF  operated its own wafer  fabrication  facility that
utilized  bipolar and laterally  diffused  metal oxide  semiconductor  ("LDMOS")
technologies to produce high-power, high-performance RF power semiconductors for
use in the  design  and  manufacture  of second  and third  generation  wireless
infrastructure equipment.

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
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.  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  modulation formats 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
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.  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'  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

                                       4
<PAGE>

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.

         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.  Spectrian
has been involved in initial deployments of early wireless Internet systems such
as CDMA2000 or 1xRTT systems in Korea,  wireless  local loop systems,  and field
trials of 1xEV-DO  systems.  Initial  consumer  acceptance of wireless  Internet
services in Japan has indicated a growing demand for wireless data equipment.

         The growth of infrastructure equipment purchases is, however,  impacted
by  the  industry's  focus  on  price  reductions.  Cellular  Telecommunications
Industry Association ("CTIA") indicates that minutes of use has increased by 31%
in the United  States  during  2000;  however,  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.  Therefore  the demand for  amplifier
hardware is growing rapidly but the power amplifier  market  experiences  severe
price pressures.

The Spectrian Solution

         Spectrian  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
Company's amplifiers provide significant advantages to its customers, including:

         High Linearity and  Efficiency.  The Company has developed the multiple
technological  competencies  and disciplines  required to achieve high linearity
and efficiency 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 Company's power amplifiers  enables its customers to furnish
wireless 3G services with high  capacity  base station  equipment at low capital
cost per subscriber. In addition, Spectrian believes that the high efficiency of
the Company's power amplifiers reduce its customers' operating costs.

         Time to Market and Volume Manufacturing. The Company's design processes
aid it in addressing wireless  infrastructure  equipment suppliers' quantity and
time to  market  requirements  for power  amplification  products.  The  Company
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 Company's experience with automated testing,  which
is faster than manual testing with  replicable  results,  enables the Company 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.

                                       5
<PAGE>

         Standards Independence.  The Company's technologies support every major
wireless  modulation  standard,  and its multicarrier  power amplifiers  support
several standards simultaneously,  including 3G modulation standards. Certain of
the Company's single carrier products support both analog and digital  standards
in a dual mode  format.  The  Company  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  Company  strives  to design  its power
amplifiers  to be reliable in the field.  The  Company'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 Company has  implemented  a  continuous  process
improvement  program  throughout  its  operations  and the  Company  is ISO 9001
certified.

         Multicarrier   Functionality.   The  Company   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 Company 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,  high efficiency
multicarrier units can reduce service providers' equipment and maintenance costs
and space requirements, thereby lowering the total costs of ownership.

Spectrian Strategy

         The  Company's  objectives  in  fiscal  2001  were to focus on  growing
multicarrier  power  amplifier  sales,  to diversify its customer  base,  and to
maintain the Company's position in single-carrier power amplifier markets.

         Focus on growing  multicarrier  power amplifier sales. With a new suite
of multicarrier  power amplifiers,  the Company 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.  Spectrian increased
multicarrier  amplifier sales from $32.2 million in fiscal 2000 to $58.7 million
in fiscal 2001.

         Diversify the customer  base. In fiscal 2001,  the Company  diversified
its customer base by adding new network operators in North and South America and
OEM customers, such as Samsung.

         Maintain its market  position in single  carrier power  amplifiers.  In
fiscal 2001, the Company  maintained its market position in single carrier power
amplifiers  through volume  manufacturing  with outsource  partners while making
minimal redesigns for cost reductions.  Generally,  the single carrier market is
declining, but from time to time, the Company will pursue new opportunities with
single  carrier  designs  if  the  return  on  investment  is  competitive  with
multicarrier or broadband opportunities.

         Outsource power amplifier  manufacturing.  From fiscal 1999 through the
third quarter of fiscal 2001, the Company  transferred the  manufacturing of its
power amplifiers to a contract manufacturer in Thailand. This transition allowed
the Company to lower  overhead  spending  through a reduction in fixed costs and
labor rates while maintaining its manufacturing and quality standards.

Markets

         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

                                       6
<PAGE>

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").

         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  Company's  current  product
offerings.

<TABLE>
<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)                 EDGE         CDMA 2000 (800, 1900)           JDC (800)
                              GSM (800)                                     GSM (900)               CDMA (800)
                                EDGE                                           EDGE                    HDR
                                                                         TDMA (450, 800)
--------------------- -------------------------- ------------------- ------------------------- ---------------------
        PCS                  CDMA (1900)             GSM (1800)         CDMA(1900)&(1800)           PHS (1900)
                      CDMA 2000 (800, 1900)             EDGE          CDMA 2000 (800, 1900)
                             TDMA (1900)                                    GSM (1800)
                              GSM (1900)                                       EDGE
                                EDGE
--------------------- -------------------------- ------------------- ------------------------- ---------------------
      Wideband               CDMA (800)            UMTS (2.1 GHz)       IMT-2000 (2.1 GHz)       IMT-2000 (2.1 GHz)
     3G & WCDMA              CDMA (1900)                               Korean WLL (2.4 GHz)
                            WCS (2.3 GHz)
--------------------- -------------------------- ------------------- ------------------------- ---------------------
</TABLE>

         The Company 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 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

         The Company  designs  highly linear power  amplifiers  that address the
specific  requirements  of its OEM  customers  and the  market in  general.  The
Company'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
Company currently provides in its single carrier amplifiers:

                                       7
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                          Spectrian Single Carrier Amplifier Configurations
-----------------------------------------------------------------------------------------------------
<S>                                                                <C>                   <C>
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            17,25
   GSM 1900                                                        1930-1990              30
   CDMA                                                            1805-1870              25
-------------------------------------------------------------- ------------------ -------------------
WCS:
   32-QAM                                                          2305-2360              63
-------------------------------------------------------------- ------------------ -------------------
WLL:
   Wideband CDMA                                                   2370-2400           10,20,40
-------------------------------------------------------------- ------------------ -------------------
</TABLE>

         While  many  existing   wireless   systems  use  single  carrier  power
amplifiers,   the  Company   believes  that  more  wireless   systems  will  use
multicarrier  power  amplifiers  in the future.  To meet this  potential  market
trend,  the  Company  also  offers  multicarrier   amplification  products.  The
following  table  provides a list of the standards for  multicarrier  amplifiers
offered by the Company:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                         Spectrian Multicarrier Amplifier Configurations
-----------------------------------------------------------------------------------------------------
<S>                                                   <C>              <C>            <C>
Standard                                              Frequency        Power           Typical
                                                        (MHZ)         (Watts)         Linearity
                                                                                        (dBc)*
--------------------------------------------------- --------------- ------------- -------------------
AMPS
TDMA
CDMA
CDPD                                                   869-894         60-500            -60
CDMA 2000/1xEV
--------------------------------------------------- --------------- ------------- -------------------
CDMA                                                  1805-1990        30-60             -55
TDMA
CDMA 2000/1xEV
--------------------------------------------------- --------------- ------------- -------------------
CDMA                                                  1930-1990        30-80             -60
TDMA
CDMA2000/1xEV
GSM/EDGE
--------------------------------------------------- --------------- ------------- -------------------
IMT-2000/UMTS                                         2110-2170        30-60             -60
--------------------------------------------------- --------------- ------------- -------------------
<FN>

*Carrier to Intermodulation Distortion Ratio.
</FN>
</TABLE>

         The Company's  amplifiers can be configured as either separate  plug-in
amplifier units or integrated  subsystems and range in price from  approximately
$500 to $100,000.  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
Company'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 and Network Operator Customers, Sales and Marketing

         Network  operators obtain their equipment from a concentrated  group of
large  wireless   infrastructure   OEMs.   The  Company   believes  that  Lucent
Technologies,   Inc.   ("Lucent"),   Ericsson  Wireless   Communications,   Inc.
("Ericsson"),    Motorola   Corporation   ("Motorola"),   LG   Information   and
Communications  Limited ("LGIC"),  Siemens AG ("Siemens"),  Samsung  Electronics
Co., Ltd.  ("Samsung"),  Nortel Networks  Corporation  ("Nortel"),  and Nokia OY
("Nokia") supplied over 80% of the wireless  infrastructure  equipment installed
worldwide in 2000 according to Allied Business Intelligence.  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.

         The Company sells power amplifiers to a limited number of OEMs in North
America,  Europe and Asia  principally  through its direct  sales  organization.
Other current customers include worldwide operators of wireless networks such as
AT&T Wireless  Services ("AT&T  Wireless"),  Cingular Wireless  ("Cingular"),  a
joint  venture  between the wireless  divisions of SBC  Communications  Inc. and
BellSouth  Corporation,   and  Verizon  Communications   ("Verizon").  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.
During the year ended  March 31,  2001  ("fiscal  2001"),  Nortel,  Verizon  and
Samsung  accounted  for  approximately  59%,  18%,  and  13%  of  net  revenues,
respectively.  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.

         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  customer  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 affects the Company's ability to efficiently  manage production  schedules
and inventory levels and to accurately  forecast product sales.  There can be no
assurance that the Company will not experience such  fluctuations in the future.
If the  Company  is unable to find  customers  to  generate  demand  for its new
products,  the Company's revenues may be materially  adversely affected.  If the
Company were to lose Nortel, Verizon, Samsung or any other major customer, or if
orders by Nortel, Verizon, Samsung or any other major 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.  The  market  for the  Company's  products  is  becoming  increasingly
competitive. The Company is selling its power amplifier products in South Korea,
as well as directly to cellular  service  providers  where its  competitors  are
already  established  as suppliers.  In addition,  the Company  competes with at
least one  merchant  amplifier  manufacturer  for  business  from  Nortel.  This
competition  has  resulted  in, and will  continue to result in reduced  average
selling prices for the Company's  products,  which  accordingly  will negatively
impact gross  margins.  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."

                                       9
<PAGE>

Sales and Marketing

         The  Company  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 Company's
application specific  amplification products require experienced sales personnel
to match the  customer's  amplification  requirements  to the Company's  product
capabilities.  The Company 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 Company'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 Company began
to  sell  multicarrier  amplifier  systems  (including  filters  and  combiners)
directly to service providers in fiscal 1997. The Company  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 Company's  direct sales to service  providers will not cause
its OEM  equipment  suppliers to reduce orders or terminate  their  relationship
with the  Company.  Any such  reduction  or  termination  could  have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.

         The  Company  also  markets  its  products   with  the   assistance  of
independent sales representatives in various parts of the world. The Company has
one  independent  sales   representative  in  the  United  States;   four  sales
representatives in Europe covering Austria,  Finland,  France,  Germany,  Italy,
Sweden and  Switzerland;  six sales  representatives  in South America  covering
Argentina,   Brazil,  Colombia,   Chile,  Venezuela;  one  sales  representative
dedicated  to each of  Canada,  Japan,  Israel  and  China  and a sales  support
organization  in South  Korea.  The Company  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 Company's direct sales staff provides sales
direction and support to its international sales representatives.  Sales outside
of the United  States  represented  78%,  87% and 84% of net  revenues in fiscal
2001,  fiscal 2000, and fiscal 1999,  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 Company expects
that international  sales will continue to account for a significant  portion of
its revenues.

Manufacturing

         In  Sunnyvale,  California,  the Company  services its power  amplifier
products.  In September  2000,  the Company  completed the transfer of its power
amplifier production to a contract manufacturer located in Thailand on a turnkey
basis.  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.

         Demands of its customers drive the Company to frequently  introduce and
rapidly expand volume of the  manufacture  of new products.  This has caused the
Company 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 Company's results of
operations.  In  addition,  the Company has made and expects to continue to make
pricing commitments to OEM customers in anticipation of achieving  manufacturing
cost reductions.

                                       10
<PAGE>

         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.  Products  as complex  as those  offered by the
Company often encounter development delays and may contain undetected defects or
failures when first  introduced or after  commencement of commercial  shipments.
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.  See  "MD&A - Factors  Affecting  Future
Operating Results - Product Quality,  Performance and Reliability."

         Amplifier  Assembly and Test. During fiscal 2000, the Company completed
the transfer of the production of power amplifiers to a contract manufacturer in
Thailand.  Regardless of whether the Company  assembles an amplifier in house or
relies  on a  turnkey  contractor,  each  of  the  Company's  products  receives
extensive  in process  and final  quality  inspections  and tests.  The  Company
attempts  to utilize  standard  parts and  components  that are  available  from
multiple vendors. However, certain components used in the Company'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 Company 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.  After the sale of UltraRF to Cree in  December
2000, the Company no longer manufactures LDMOS RF semiconductors,  which are one
critical  component in the Company's  power amplifier  products.  As part of the
Asset Purchase  Agreement,  the Company and Cree entered into a two-year  supply
agreement  under  which  the  Company  is  obligated  to  purchase  from Cree an
aggregate of $58 million of semiconductors.  Consequently, Cree is the Company's
sole source vendor of certain bipolar and LDMOS RF power semiconductors.  If the
Company 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 Company's business, financial condition and results of operations.
See "MD&A - Factors  Affecting  Future  Operations - Sole or Limited  Sources of
Materials and Services."

Research and Development

         The  Company's  research  and  development  organization  designs  high
performance low cost, highly manufacturable power amplifiers.  The Company'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 Company uses an automated design  environment to model
amplifiers. This design environment, together with the Company'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  Company  historically  has  devoted a  significant  portion of its
resources to research and development programs and expects to continue to do so.
The Company's  research and development  expenses were $20,762,000,  $22,488,000
and $26,735,000 for fiscal 2001, 2000 and 1999, respectively.

Competition

         The  Company's  principal   competitors  in  the  market  for  wireless
amplification  products  provided by merchant  suppliers  currently  include AML
Communications,  Amplidyne,  Fujitsu,  Mitsubishi, NEC Corporation 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  Company  and have,  or could have,
greater  name   recognition   and  market   acceptance  of  their  products  and
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.  To the extent that OEMs increase their reliance on external
sources for their power amplification needs, more competitors could be

                                       11
<PAGE>

attracted to the market.  The Company  expects its  competitors to offer new and
existing  products  at prices  necessary  to gain or retain  market  share.  The
Company has experienced  significant  price  competition,  which has in the past
affected gross margins.  Certain of the Company'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 Company will not be subject to increased price competition or
that the Company will be able to compete successfully in the future. See "MD&A -
Factors  Affecting  Future  Operating  Results - Internal  Amplifier  Design and
Production  Capabilities  of OEMs" and  "Market  for the  Company's  Products is
Highly Competitive."

         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  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  a  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.  See "MD&A - Factors Affecting Future Operating
Results - Internal  Amplifier  Design and Production  Capabilities  of OEMs" and
"Market for the Company's Products is Highly Competitive."

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 23 United States  patents
and no foreign  patents,  has 2 United States  patents and 1 foreign patent that
have  been  allowed  and  has 9  United  States  patent  and 21  foreign  patent
applications pending. The data presented excludes 20 United States patents and 4
foreign  patents  that were  awarded to the Company and  assigned to Cree at the
time  of the  sale  of  UltraRF,  to  which  the  Company  has  been  granted  a
royalty-free  license.  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 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

                                       12
<PAGE>

material  adverse  effect on its  business,  financial  condition and results of
operations.  See "MD&A - Factors  Affecting Future Operating Results - 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,  to indemnify its customers,  to cease the
manufacture,  use  and  sale  of  infringing  products,  to  expend  significant
resources to develop noninfringing technology, to discontinue the use of certain
processes  or to  obtain  licenses  to the  infringing  technology.  See "MD&A -
Factors  Affecting  Future  Operating  Results - 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 Affecting Future Operating Results - Risk of Third
Party Claims of Infringement

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,  2001,  the Company had a total of 318  employees.  The
Company's  future  success will depend,  in part,  on its ability to continue to
attract,   retain  and  motivate  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.

                                       13
<PAGE>

Executive Officers of the Registrant

         The executive officers of the Company are and certain information about
them as of May 15, 2001 is as follows:
<TABLE>
<CAPTION>

                       Name                     Age                           Position
                       ----                     ---                           --------
<S>                                              <C>
        Thomas H. Waechter................       48      President, Chief Executive Officer and Director
        Garrett A. Garrettson.............       57      Chairman of the Board of Directors
        Michael D. Angel..................       45      Executive Vice President, Finance and
                                                         Administration, Chief Financial Officer and
                                                         Secretary
        Warren Dumanski...................       37      Vice President, Sales
        Tim Jones.........................       46      Vice President, Human Resources
        Joseph Madden.....................       34      Vice President, Marketing
        Christopher A. Menicou............       42      Vice President, Operations
        Harry Oh..........................       44      Vice President and General Manager, Asia Pacific
        David S. Piazza...................       37      Vice President, Development

</TABLE>

         Mr.  Waechter  joined the  Company in March 2000 as its  President  and
Chief Executive  Officer,  and as a Director.  From January 2000 until he joined
the Company,  Mr. Waechter was employed by Asyst  Technologies,  Inc., a company
that provides  mini-environment  and manufacturing  automation  systems,  as its
Senior Vice President of Global Business  Operations.  From September 1986 until
January  2000,  Mr.  Waechter  was  employed  by  Schlumberger  Ltd.,  a company
providing  oilfield  services,  natural  resource  management,  smart card-based
technology and associated systems, and semiconductor test equipment,  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.  Garrettson  joined the Company in April 1996 and is currently  its
Chairman  of the  Board  of  Directors.  From  April  1996 to  March  2000,  Mr.
Garrettson  served as President,  Chief Executive  Officer and a Director of the
Company.  From  March  1993  until he joined the  Company,  Mr.  Garrettson  was
President and Chief  Executive  Officer of Censtor  Corporation,  a company that
designs and sells  technology  related to magnetic  recording heads for the disk
drive  industry.  Mr.  Garrettson  has also held  various  executive  management
positions  with  Control  Data  Corporation,  a computer  system  company,  from
November 1986 to October 1989, and then with Seagate  Technology Inc., a company
that designs and manufactures disk drives, from October 1989 to March 1993. From
October 1973 to November  1986,  Mr.  Garrettson  also held various  engineering
management  positions with Hewlett Packard  Laboratories,  a division of Hewlett
Packard  Company,  a company  providing  computing  and  imaging  products.  Mr.
Garrettson  also serves on the boards of directors of the San Jose  Symphony and
HealthHelper Corporation. Mr. Garrettson holds a B.S. and an M.S. in Engineering
Physics and a Ph.D. in Mechanical Engineering from Stanford University.

         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, a company that designs and manufactures semiconductor
products,  in various  management  positions,  most  recently as its Director of
Finance of Worldwide Manufacturing and Central Technology Operations.  Mr. Angel
has also held various  positions with Hitachi Data Systems,  a  manufacturer  of
mainframe computers,  storage systems,  open systems hardware and software,  and
PricewaterhouseCoopers  LLP, an accounting and professional consulting firm. Mr.
Angel holds a B.S. degree in Business  Administration  with a  concentration  in
Accounting from California State University, Chico.

                                       14
<PAGE>

         Mr.  Dumanski joined the Company in September 1997 and is currently its
Vice  President,  Sales.  From  September  1991 until he joined  Spectrian,  Mr.
Dumanski  was  employed by Nortel  Networks,  a global  supplier  of  networking
solutions and services,  in various management  positions,  most recently as its
Accounting  Manager  responsible  for Sprint PCS account.  Mr.  Dumanski holds a
Bachelors of Science degree in Engineering from University of Waterloo in Canada
and a M.B.A. from McMaster University in Canada.

         Mr. Jones joined the Company in April 2001 as its Vice President, Human
Resources.  From December 1999 until he joined Spectrian, Mr. Jones was employed
by GN Resound, Inc., a manufacturer of high-technology  hearing instruments,  as
its Senior Vice  President  of Global Human  Resources.  Mr. Jones has also held
various positions with TriStrata  Corporation,  a company that develops internet
security   technology,   from  February  to  August  1999  and  with   Forte/Sun
Microsystems,  a provider of computer systems,  high speed  microprocessors  and
high performance software,  from August 1997 to February 1999. Mr. Jones holds a
Bachelors  degree in Psychology  from  Baldwin-Wallace  College and a Masters of
Science degree from Iowa State University.

         Mr.  Madden  joined the Company in June 1997 and is currently  its Vice
President,  Marketing.  From May 1992 until he joined Spectrian,  Mr. Madden was
employed  by   Superconductor   Technologies,   Inc.,  a  manufacturer  of  high
performance  filters for the mobile  wireless  telecommunications  industry,  in
various  management  positions,   most  recently  as  its  Director  of  Product
Management.  Mr. Madden holds a Bachelors  degree in Physics from  University of
California, Los Angeles.

         Mr.  Menicou  joined the Company in January 1998 and is  currently  its
Vice President,  Operations. Prior to the current position, Mr. Menicou was Vice
President, Quality of the Company. From February 1997 until he joined Spectrian,
Mr. Menicou was employed by Credence Systems Corporation, a company that designs
and manufactures  equipment for testing  semiconductor  integrated circuits,  as
Vice  President of Quality.  Mr.  Menicou has also held  Quality and  Operations
Management   positions  with  LTX  Corporation,   a  company  that  designs  and
manufactures test equipment for the semiconductor  industry. Mr. Menicou holds a
Bachelors  of  Science  degree  in  Business  Management  from  San  Jose  State
University.

         Mr. Oh joined the Company in May 2000 as its Vice President and General
Manager,  Asia  Pacific.  From April 1996 to May 2000,  Mr. Oh was the Company's
senior  advisor  for Far East  Sales and  Executive  Managing  Director  in Asia
Pacific with a consultant status.  From February 1989 until he joined Spectrian,
Mr. Oh was self-employed as President of Capitalend Corporation.  Mr. Oh holds a
Bachelors of Science degree in Industrial & System  Engineering  from University
of Southern California.

         Mr.  Piazza  joined the Company in February  1990 and is currently  its
Vice President, Development. Mr. Piazza has held various positions since joining
the  Company  including  General  Manager,   Semiconductor   Division  and  Vice
President,  Semiconductor Research and Development. Mr. Piazza holds a Bachelors
of Science  degree in Electrical  Engineering  from  University  of  California,
Davis.

ITEM 2.        PROPERTIES

         The  Company's   principal   administrative,   engineering  and  repair
facilities  are located in one building of  approximately  91,400 square feet in
Sunnyvale,  California. In connection with the sale of UltraRF in December 2000,
the Company  subleased  another building of  approximately  49,600 in Sunnyvale,
California,  to Cree for a term of 11 years  (with  three  options to extend the
lease an  additional  five  years)  under the  substantially  the same terms and
conditions as the Company's  lease.  In November 1996, the Company  entered into
several  agreements in connection  with a transaction  with respect to these two
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

                                       15
<PAGE>

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  third  quarter  of  fiscal  2001,  the  Company  signed an
agreement  to lease a facility of  approximately  13,400  square feet in Folsom,
California,  commencing in the first quarter of fiscal 2002 and  terminating  in
April 2008. This facility will be used for research and development functions.

         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)
from May 2000 and this lease expires in April 2002.

         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.  The Company  leases
approximately  21,500  square  feet of a facility on a  month-to-month  basis in
Seoul,  South Korea for  administrative,  development,  manufacturing and repair
functions for the Asia Pacific region.

ITEM 3.        LEGAL PROCEEDINGS

         Not applicable.

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

         Not applicable.


                                       16
<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, 2001          High          Low
                                                         ----          ---

                  Fourth Quarter                        $24.750       $12.031
                  Third Quarter                         $19.563       $11.688
                  Second Quarter                        $20.250       $12.813
                  First Quarter                         $22.500       $13.438

               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




         The  reported  last sale  price of the  Company's  Common  Stock on the
Nasdaq  National Market on May 24, 2001 was $19.17.  The  approximate  number of
holders of record of the shares of the Company's  Common Stock was 212 as of May
24,  2001.  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 6,000 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.


                                       17
<PAGE>

ITEM 6:  SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                    Fiscal Year Ended March 31,
                                                 -------------------------------------------------------------
                                                   2001         2000         1999         1998         1997
                                                 ---------    ---------    ---------    ---------    ---------
                                                               (in thousands, except per share data)
<S>                                              <C>          <C>          <C>          <C>          <C>
Statement of Operations Data:

NET Revenues .................................   $ 179,752    $ 163,567    $  99,331    $ 168,798    $  88,252
                                                 ---------    ---------    ---------    ---------    ---------

Costs and expenses:
  Cost of revenues ...........................     145,055      129,998       96,880      132,684       65,322
  Research and development ...................      20,762       22,488       26,735       18,644       17,230
  Selling, general and administrative ........      21,602       19,337       16,315       13,014        9,299
  Restructuring (1) ..........................        (100)       1,032         --           --           --
                                                 ---------    ---------    ---------    ---------    ---------

     Total costs and expenses ................     187,319      172,855      139,930      164,342       91,851
                                                 ---------    ---------    ---------    ---------    ---------

Operating income (loss) ......................      (7,567)      (9,288)     (40,599)       4,456       (3,599)


Interest income ..............................       2,850        3,344        4,540        4,045          210
Interest expense .............................        (162)        (473)        (853)        (710)        (602)
Other income, net ............................      18,371          624         --          1,530         --
                                                 ---------    ---------    ---------    ---------    ---------
Income (loss) before income taxes ............      13,492       (5,793)     (36,912)       9,321       (3,991)

Income taxes .................................          12           30           59          399         --
                                                 ---------    ---------    ---------    ---------    ---------

Net income (loss) ............................   $  13,480    $  (5,823)   $ (36,971)   $   8,922    $  (3,991)
                                                 =========    =========    =========    =========    =========

Net income (loss) per share:(2)

    Basic ....................................   $    1.21    $   (0.56)   $   (3.50)   $    0.90    $   (0.49)
                                                 =========    =========    =========    =========    =========

    Diluted ..................................   $    1.19    $   (0.56)   $   (3.50)   $    0.83    $   (0.49)
                                                 =========    =========    =========    =========    =========

Shares used in computing per share amounts:(2)

    Basic ....................................      11,113       10,426       10,568        9,881        8,150
                                                 =========    =========    =========    =========    =========

    Diluted ..................................      11,343       10,426       10,568       10,701        8,150
                                                 =========    =========    =========    =========    =========
</TABLE>

<TABLE>
<CAPTION>
                                                                   March 31,
                                               ------------------------------------------------
                                               2001       2000       1999       1998       1997
                                               ----       ----       ----       ----       ----
                                                                (in thousands)
<S>                                          <C>        <C>        <C>        <C>        <C>
Balance Sheet Data:

Working capital ..........................   $104,936   $ 79,400   $ 72,399   $117,478   $ 24,062
Total assets .............................    188,023    131,275    128,412    175,051     66,633
Debt and capital lease obligations, net of
current portion(3) .......................       --        1,351      4,899      5,912      7,057
Total stockholders' equity ...............   $ 98,502   $ 98,985   $ 95,968   $144,342   $ 42,466

<FN>
(1) See Note 13 of Notes to Consolidated Financial Statements herein for details
    of the restructuring.

(2) See  Note 10 of  Notes  to  Consolidated  Financial  Statements  herein  for
    information concerning the per share computations.

(3) See  Note 6 of Notes  to  Consolidated  Financial  Statements  herein  for a
    description of the Company's debt and lease obligations.
</FN>
</TABLE>

                                       18
<PAGE>

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

The  statements  contained  in the  following  discussion  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,  but are not limited to: the statements in
the second  paragraph of "Overview"  regarding the  recognition in the future of
gains on the sale of  UltraRF  and the  effect  of the  sale of  UltraRF  on the
Company's semiconductor cost, in the third paragraph regarding the impact on the
Company of a loss of a major OEM  customer,  in the fourth  paragraph  regarding
international  sales as a  percentage  of  future  revenues  and the  impact  of
currency  fluctuations on future revenues,  and in the last paragraph  regarding
average selling prices and gross margins; the statements in the second paragraph
under "Results of Operations - Cost of Revenues" regarding the gross margin as a
percentage  of net  revenues;  the  statements  under  "Results of  Operations -
Research and Development"  regarding new product  development  initiatives;  the
statements  in the second  paragraph  under  "Liquidity  and Capital  Resources"
concerning  renewal of a line of credit and the statements in the last paragraph
regarding the availability of the line of credit,  the anticipated  spending for
capital  additions for the next twelve months,  the sufficiency of the Company's
available  resources  to meet  cash  requirements  and the  factors  which  will
determine the Company's future cash requirements; and the statements in "Factors
Affecting Future Operating  Results."  Results could differ  materially based on
various factors including,  but not limited to, those described below, under the
heading  "Factors  Affecting  Future  Operating  Results" and  elsewhere in this
Annual Report on Form 10-K. Among such factors,  those which could cause results
to  differ  materially  in  the  case  of the  above-referenced  forward-looking
statements  include,  but are not limited to: the risks of international  sales;
fluctuations  in  operating   results;   customer   concentration;   the  highly
competitive market for the Company's  products;  declining average sales prices;
rapid technological change,  evolving industry standards,  and dependence on new
products; and product quality, performance and reliability.

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.

Overview

         Spectrian designs,  manufacturers and markets high-power RF amplifiers,
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,  IMT-2000,  CDMA2000 and UMTS.  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.

         On December 29, 2000, the Company  completed the sale of  substantially
all  of  the  assets  and  external  liabilities  comprising  its  semiconductor
division,  UltraRF, to Cree pursuant to the Asset Purchase Agreement dated as of
November  20,  2000  (the  "Asset  Purchase   Agreement")   among  Cree,  Zoltar
Acquisition,  Inc.  ("Zoltar")  and the Company for  1,815,402  shares of common
stock of Cree  plus  common  stock  with a  guaranteed  realizable  value of $30
million,  less $1,141,000 owed by the Company to Cree due

                                       19
<PAGE>

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

to a change in the net assets of UltraRF  between  October 1, 2000 and  December
29, 2000. As part of the definitive agreement, the Company and Cree entered into
a two-year supply  agreement under which Spectrian is obligated to purchase from
Cree an aggregate of $58 million of semiconductors. In the event Spectrian fails
to make these  purchases,  it is obligated to purchase excess  inventory that it
may  never  utilize  or to pay Cree the  amount of the  shortfall.  Accordingly,
Spectrian deferred $58 million of the gain on sale of UltraRF and is recognizing
it in periods as the related  purchase  commitments to Cree are being fulfilled.
During the quarter  ended  March 31,  2001,  Spectrian  fulfilled  its  purchase
obligation  under the contract and recognized $6.8 million of the deferred gain.
Spectrian  and Cree  entered  into a one-year  joint  development  agreement  to
develop  advanced   technologies  related  to  laterally  diffused  metal  oxide
semiconductors ("LDMOS"), linear high gain LDMOS driver modules, high efficiency
LDMOS power modules and SiC MESFET  components.  Following the close of the sale
of UltraRF,  the Company no longer has  revenues  related to the sale of UltraRF
products to third party  customers.  Additionally,  as a result of the sale, the
Company's cost of semiconductors used in the manufacturing of amplifier products
have  increased  because  purchases from UltraRF are at fair market value rather
than at manufacturing cost as has historically been the case.


         For the year ended March 31, 2001 ("fiscal 2001"),  Nortel, Verizon and
Samsung  accounted  for  approximately   59%,  18%  and  13%  of  net  revenues,
respectively.  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.  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 affects the Company's ability to efficiently  manage production  schedules
and inventory  levels and to accurately  forecast  product sales.  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  customer
requirements.  In fiscal  1999,  the first and fourth  quarters of fiscal  2000,
product orders from Nortel fell sharply and in the first and second  quarters of
fiscal 2001, the Company did not receive any revenues from Nortel for several of
its products  which  adversely  affected the Company's  revenues and earnings in
those  fiscal  periods.  There can be no  assurance  that the  Company  will not
experience  such  fluctuations  in the future.  If the Company is unable to find
customers to generate demand for its new products, the Company's revenues may be
materially  adversely  affected.  If the Company were to lose  Nortel,  Verizon,
Samsung or any other major customer, or if orders by Nortel, Verizon, Samsung or
any other major 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 2001,  2000 and 1999,  sales outside of the United States
were 78%, 87% and 84% 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 Canada,
South  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  services its power  amplifier
products.  In September  2000,  the Company  completed the transfer of its power
amplifier production to a contract manufacturer located in

                                       20
<PAGE>

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

Thailand on a turnkey basis.  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 were higher than the savings from costs of products, which
adversely  affected the  Company's  gross  margins from January 1999 to November
2000. As a result of its  infrastructure,  the Company has a high level of fixed
costs  and is  dependent  upon  substantial  revenue  to  achieve  and  maintain
profitability.

         The  market  for  the  Company's  products  is  becoming   increasingly
competitive. The Company is selling its power amplifier products in South Korea,
as well as directly to cellular  service  providers  where its  competitors  are
already  established  as suppliers.  In addition,  the Company  competes with at
least one  merchant  amplifier  manufacturer  for  business  from  Nortel.  This
competition  has  resulted  in, and will  continue to result in reduced  average
selling prices for the Company's  products,  which  accordingly  will negatively
impact gross margins.

Results of Operations

         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 sales.

<TABLE>
<CAPTION>
                                                                        Fiscal Year Ended March 31,
                                                                   -------------------------------------
                                                                   2001            2000             1999
                                                                   ----            ----             ----
<S>                                                                  <C>             <C>             <C>
     NET REVENUES.........................................           100.0%          100.0%          100.0%
                                                                ----------       ---------       ---------

     COSTS AND EXPENSES:
        Cost of revenues..................................            80.7            79.5            97.6
        Research and development..........................            11.6            13.7            26.9
        Selling, general and administrative...............            12.0            11.8            16.4
        Restructuring ....................................            (0.1)            0.6              --
                                                                ----------       ---------       ---------
          Total costs and expenses........................           104.2           105.6           140.9
                                                                ----------       ---------       ---------

     Operating LOSS ......................................            (4.2)           (5.6)          (40.9)

     INTEREST INCOME......................................             1.6             2.0             4.6
     INTEREST EXPENSE.....................................            (0.1)           (0.3)           (0.9)
     OTHER INCOME, NET ...................................            10.2             0.4              --
                                                                ----------     -----------      ----------


     INCOME (LOSS) BEFORE INCOME TAXES....................             7.5            (3.5)          (37.2)

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

     NET INCOME (LOSS)....................................             7.5%           (3.5)%         (37.2)%
                                                                ==========      ==========      ==========

     Gross margin on REVENUES.............................            19.3%           20.5%            2.4%
                                                                ==========      ==========      ==========
</TABLE>

Years Ended March 31, 2001 and 2000

         Net  Revenues.  The  Company's  net  revenues  increased  10% to $179.8
million for fiscal 2001 from $163.6  million for fiscal 2000.  The growth in net
revenue was primarily due to higher demand in the multi-channel  power amplifier
("MCPA") product line and Broadband product line,  partially offset by a decline
in

                                       21
<PAGE>

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

the single  carrier power  amplifier  ("SCPA")  product line,  sold primarily to
Nortel.  MCPA revenues increased 81% to $58.7 million for fiscal 2001 from $32.2
million for fiscal 2000.  Broadband revenues increased 221% to $11.1 million for
fiscal  2001  from  $3.5  million  for  fiscal  2000.  Broadband  revenues  were
recognized  primarily  in the first and second  quarters  of fiscal  2001.  SCPA
revenues decreased 19% to $102.8 million for fiscal 2001 from $126.4 million for
fiscal 2000 on lower average selling prices and volumes.

         Cost of  Revenues.  Cost of  revenues  consists  primarily  of  turnkey
amplifier costs for the Company's products, internal amplifier assembly and test
costs,  radio  frequency  ("RF")  semiconductor  fabrication,  assembly and test
costs, raw materials,  manufacturing  overhead and warranty costs. The Company's
cost of revenues  increased by 12% to $145.1 million for fiscal 2001 from $130.0
million for fiscal 2000. The increase on a dollar basis for fiscal year 2001 was
due  primarily  to  higher  production  volumes  associated  with the  increased
revenues,  especially the increase in MCPA production  volumes,  lower yields on
semiconductor production and higher inventory obsolescence expense.

         Gross  margin on sales was 19% for fiscal  2001 as  compared to 21% for
fiscal 2000.  The  decrease in gross  margin  reflected  lower  average  selling
prices, lower yields on semiconductor production,  higher inventory obsolescence
expense,  and higher  semiconductor prices in the fourth quarter of fiscal 2001,
partially  offset by decreased  manufacturing  costs due to the increased use of
contract  manufacturing  and product  mix.  The Company  anticipates  that gross
margin as a percentage  of net revenues will decrease as a result of the sale of
the UltraRF division to Cree as the Company is required to purchase the LDMOS RF
semiconductor parts at market price rather than recognizing the cost of revenues
at the actual cost of production and continued lower average selling prices.

         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 8% to
$20.8  million in fiscal 2001 from $22.5 million in fiscal 2000. As a percentage
of net revenues, R&D expenses represented 12% of net revenues for fiscal 2001 as
compared to 14% of net revenues for fiscal 2000. The decrease in R&D expenses on
both a dollar and  percentage of net revenues  basis  reflected  higher  revenue
levels on a year-to-year  basis,  reduced expenses associated with completion of
the initial products in the new MCPA product line in early fiscal 2000, the sale
of UltraRF, and the use of a product development methodology that allows for the
reuse of designs in several products.  The Company  anticipates  spending at the
current  or  higher  levels on new  product  development  initiatives  which the
Company  believes are  required to meet  current and future  market and customer
requirements.

         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 12% to $21.6 million in fiscal 2001 from
$19.3 million in fiscal 2000.  As a percentage  of net  revenues,  SG&A expenses
represented  12% of net  revenues  for  fiscal  2001 as  compared  to 12% of net
revenues  for fiscal 2000.  The increase in SG&A  expenses on a dollar basis for
fiscal 2001 was principally due to increased  commissions,  marketing efforts to
diversify  the customer  base,  creation of the UltraRF sales force and network,
increased sales and marketing  activities in South Korea,  and costs incurred to
evaluate strategic alternatives for UltraRF.

         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

                                       22
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

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. In fiscal 2001, the Company reversed  $100,000
of  unused  restructuring  charge  due to  changes  in the  restructuring  plan.
Approximately  60 employees  engaged in  manufacturing  and  production  related
functions were terminated as a result of the  restructuring  during fiscal 2001.
The transfer of production to Thailand was completed during the third quarter of
fiscal 2001.

         Interest  Income.  Interest income  decreased to $2.9 million in fiscal
2001 from $3.3 million in fiscal 2000.  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 $0.2 million in fiscal
2001 from $0.5 million in fiscal 2000. The decrease in interest  expense for the
year was a result of  substantially  reduced  average  borrowing  levels  due to
repayments  made in  association  with the sale of property in December 1999 and
the sale of UltraRF in December 2000.

         Other  Income.  Other income  increased to $18.4 million in fiscal 2001
from $0.6 million in fiscal 2000.  Other  income for fiscal 2001  represents  an
$18.9  million gain  recognized  on sale of UltraRF  recognized in the third and
fourth  quarter of fiscal 2001 and a $0.5 million  realized  loss on the sale of
Cree common stock in the fourth quarter of fiscal 2001.  Other income for fiscal
2000,  represents a $0.6 million gain on the sale of a light industrial building
in December 1999.

         Income Taxes.  Due to the losses incurred by the Company in years prior
to fiscal 2001 and the related net operating loss carryforwards available to the
Company,  the Company did not record income tax expense except for foreign taxes
in fiscal 2001 and foreign  taxes and the  minimum  state  income tax expense in
fiscal  2000.  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 valuation  allowance
against  deferred tax assets where the  realization is uncertain.  The valuation
allowance reduces the net deferred tax asset to the amount that is estimated may
be recovered through carryback from future periods. The Company will continue to
evaluate  positive  and  negative  evidence  on 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.

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 SCPA product line from Nortel
and  achieving  volume  shipments of the new 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 in fiscal 2000 from none in fiscal 1999.

         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 21% 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,

                                       23
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

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.  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.  This decrease  reflects  reduced
expenses  associated  with  completion  of the initial  products in the new MCPA
product line in early fiscal 2000. As a percentage of net revenues, R&D expenses
represented  14% of net  revenues  for  fiscal  2000 as  compared  to 27% of net
revenues for fiscal 1999.  The  decrease in R&D  expenses as  percentage  of net
revenues basis reflected  substantially  higher revenue levels on a year-to-year
basis.

         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 19% 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.  The transfer of  production  to Thailand was  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 fiscal 2000
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.

                                       24
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

Segment Information

         The Company  operated  and reported its  financial  information  as one
vertical  integrated  unit in the fiscal year ended 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. Under the management  approach,  the Company divided its business into two
divisions  based  upon  product  type:   Amplifier  Division  and  Semiconductor
Division,  which  operated  under the  tradename  of  UltraRF.  UltraRF  derived
virtually  all of its net revenues  from sales to the  Amplifier  Division.  The
Company  allocated  operating  expenses to these  segments  but did not allocate
interest income and expense.  Corporate expenses were allocated to the operating
segments  based  on  predetermined   annual  allocation   methods.   Appropriate
intersegment  eliminations  were  made  in the  consolidation  of the  Company's
consolidated financial statements. Following the sale of UltraRF on December 29,
2000, the Company began operating as one vertical integrated unit. See Note 2 to
the  Condensed  Consolidated  Financial  Statements  "Sale of UltraRF".  Segment
information for fiscal 2001 and fiscal 2000 is as follows (in thousands):


Consolidated Statement of Operations Data - Fiscal 2001:
<TABLE>
<CAPTION>
                                                                       Year Ended March 31, 2001
                                                   ------------------------------------------------------------
                                                   Amplifier           UltraRF           Other            Total
                                                   ---------           -------           -----            -----
<S>                                              <C>                <C>              <C>                <C>
Net revenues, external......................     $    178,671       $    1,081       $        --        $ 179,752
Net revenues, intersegment..................               --           23,487           (23,487)             --
Amortization and depreciation...............            5,290            2,185             2,950           10,425
Income (loss) before income taxes...........           (7,605)             313            20,784           13,492


Consolidated Statement of Operations Data - Fiscal 2000:

                                                                       Year Ended March 31, 2000
                                                   ------------------------------------------------------------
                                                   Amplifier           UltraRF           Other            Total
                                                   ---------           -------           -----            -----
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...........          (13,401)           4,113             3,495           (5,793)
<FN>
*Data in the "Other" column represents the elimination of intersegment revenues,
interest  income and expense,  other  income,  the  provision  for income taxes,
certain   unallocated   corporate   expenses  and  corporate   amortization  and
depreciation that is subsequently allocated to the operating segments.
</FN>
</TABLE>

Recent Accounting Pronouncements

         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting  Standards No. 133, Accounting for Derivative
Instruments  and Hedging  Activities.  The standard,  as amended by Statement of
Financial  Accounting  Standards No. 137, Accounting for Derivative  Instruments
and Hedging  Activities - Deferral of the Effective  Date of FASB  Statement No.
133,  an  amendment  of FASB  Statement  No. 133,  and  Statement  of  Financial
Accounting Standards No. 138, Accounting for Certain Derivative  Instruments and
Certain Hedging Activities,  an amendment of FASB Statement No. 133 (referred to
hereafter  as "FAS 133"),  is  effective  for all fiscal  quarters of all fiscal
years  beginning  after June 15, 2000 (April 1, 2001 for the  Company).  FAS 133
requires  that all  derivative  instruments  be recorded on the balance sheet at
their fair value.  Changes in the fair value of  derivatives  are recorded  each
period in  current  earnings  or in other  comprehensive  income,  depending  on
whether a derivative is designated as part of a hedging  relationship and, if it
is,  depending on the type of

                                       25
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

hedging  relationship.  For  fair-value  hedges in which the  Company is hedging
changes in an asset's fair value,  the fair value of the  derivative  instrument
will generally be offset in the income statement by changes in the hedged item's
fair  value.  The  ineffective  portion  of all  hedges  will be  recognized  in
current-period earnings.

         While FAS 133 provides a significant change in the accounting  guidance
related to  derivative  instruments  and  hedging  activities,  the  Company has
determined  that the more stringent  accounting and  documentation  requirements
under  FAS 133 will not  cause  any  significant  changes  in its  overall  risk
management strategy and in its overall hedging activities.

         On April 1, 2001, the Company adopted FAS 133 and accordingly  recorded
a net-of-tax cumulative-effective-type gain adjustment of less than $1 million.

Liquidity and Capital Resources

         The Company has  financed  its growth  through  sales of common  stock,
private sales of equity  securities,  capital  equipment  leases,  bank lines of
credit and cash flows from operations.  Principal  sources of liquidity at March
31, 2001 consisted of cash and cash equivalents,  restricted cash and short-term
debt  investments of $81.7 million,  investment in Cree common stock and options
of $34.6 million and bank borrowing arrangements.

         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 was
scheduled to expire on June 30, 2001. In May 2001, the Company  renewed the line
of credit for one additional  year with terms  substantially  similar to the old
line. Under the terms of the master agreement  governing this credit instrument,
as amended, 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. In February 2001, the Company was in default of certain covenants and
the bank has granted a waiver of the default. The Company was in compliance with
all debt covenants as of March 31, 2001. The amount available to borrow at March
31, 2001 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, 2001 was 8% and 6.9%,  respectively.  The Company
had no borrowings under the line of credit at March 31, 2001.

         In January  1997,  the Company  borrowed $6.0 million under a term loan
collateralized  by  certain  capital   equipment.   The  Company  paid  off  the
outstanding principal balance of this term loan in December 2000.

         The  Company's  working  capital  increased by $25.5  million to $104.9
million  as of March 31,  2001 from  $79.4  million  as of March 31,  2000.  The
increase was primarily  attributable  to the $93.4 million in proceeds  received
for the sale of UltraRF,  less the  unrealized  loss on the market value of Cree
common stock of $23.1 million and the short-term portion of the deferred gain on
the sale of UltraRF of $31.6 million at March 31, 2001, a $3.8 million  increase
in accounts  receivable,  and the  recognition  of a deferred  tax asset of $3.8
million,  which were  partially  offset by a decrease  in  inventories  of $12.3
million due to the transfer of  manufacturing  to a subcontract  manufacturer in
Thailand  and the sale of UltraRF and an increase in accounts  payable,  accrued
liabilities and income taxes payable of $8.1 million.  The Company's  short-term
debt investments were principally invested in investment grade, interest-bearing
securities.  The  Company's  working  capital  increased  by $7 million to $79.4
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.

                                       26
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

         Cash provided by operations  was $10.2 million for fiscal 2001 compared
to cash used by  operations  of $14.9  million and $12.3 million for fiscal 2000
and fiscal 1999,  respectively.  Cash  provided by operations in fiscal 2001 was
principally  the  result  of  a  $13.5  million  net  income,  depreciation  and
amortization of $10.4 million, a $7.1 million decrease in net inventories due to
the transfer of manufacturing to a subcontract  manufacturer in Thailand and the
write down of inventory,  a $7.7 million increase in accounts payable due to the
timing of purchases to support the higher revenue level, a $0.7 million increase
in income taxes  payable,  which were  partially  offset by a  recognized  $18.9
million non-cash gain on the sale of UltraRF net assets, a $3.8 million increase
in deferred tax assets,  a $3.8 million  increase in accounts  receivable due to
the higher  revenue  levels and the timing of shipments  in the quarter,  a $2.5
million  decrease in accrued  liabilities  due to lower  payroll and  commission
related accruals  primarily due to the decrease in headcount and the utilization
of the  restructuring  reserve which was partially offset by the increase in the
warranty  reserve  and a $1.1  million  increase in prepaid  expenses  and other
current  assets.  Cash used by  operations  in fiscal 2000 was  principally  the
result of a $13.7 million net 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 $10.9 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 $4.1 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 provided cash of approximately $8.5
million  as  compared  to using  cash of $4.6  million  during  fiscal  2000 and
providing cash of $20.9 million during fiscal 1999.  Cash provided by investment
activities  during fiscal 2001 resulted  primarily  from $45.4 million  proceeds
from sale and maturities of short-term  investments  which were partially offset
by $17.4  million  in  purchases  of  short-term  investments,  $9.6  million in
additions to property and equipment and $9.8 million in payments for transaction
costs  associated  with the sale of UltraRF.  Proceeds  from sale of  short-term
investments in fiscal 2001 included the  liquidation of Cree common stock with a
guaranteed realizable value of $30 million,  which was part of the consideration
received for the sale of UltraRF to Cree.  Capital  additions during fiscal 2001
included  manufacturing  test and production  equipment  required to support new
products  and  test  equipment  to  support  various  research  and  development
projects.  Cash  used for  investing  activities  during  fiscal  2000  resulted
primarily  from $7.7 million of additions to property and  equipment,  partially
offset by $3.5 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 $6.1
million in fiscal 2001 as  compared to  providing  cash of $4.8  million  during
fiscal 2000,  and using cash of $13.8  million in fiscal 1999.  Cash provided by
financing  activities during fiscal 2001 was the result of $8.1 million 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
$2.0 million in repayments of debt and capital lease obligations.  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.

          As part of the sale of UltraRF,  the Company has committed to purchase
$58.0 million of semiconductors  over a two-year period starting from the fourth
quarter of fiscal 2001.  The Company met its quarterly  purchase  commitment for
the quarter ended March 31, 2001. The Company anticipates spending approximately
$5 million  over the next  twelve  months for  capital  additions  primarily  to
support manufacturing production and test requirements, development projects and
facilities improvements. Based on the Company's current working capital position
and the available line of credit, the Company believes


                                       27
<PAGE>

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

that  sufficient  resources  will  be  available  to  meet  the  Company's  cash
requirements for at least the next twelve months.  Cash  requirements for future
periods will depend on the Company's profitability,  timing and level of capital
expenditures, working capital requirements and rate of growth.

Factors Affecting Future Operating Results

          Customer Concentration; Dependence on Nortel and Verizon. The wireless
infrastructure equipment market is dominated by a small number of large OEMs and
wireless  service  providers,  including  Ericsson,  Lucent,  Motorola,  Nortel,
Verizon and Siemens.  The Company's revenues are derived primarily from sales to
a  limited  number  of these  customers,  in  particular,  Nortel  and  Verizon.
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  customer
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
affects the Company's  ability to efficiently  manage  production  schedules and
inventory levels and to accurately  forecast product sales. Any reduction in the
level of purchases of the Company's amplifiers by Nortel, Verizon or Samsung, 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.  For example,  in the first and second quarters of fiscal
2001 product orders from Nortel fell  drastically  and as a result the Company's
revenues and earnings were adversely  affected.  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, Verizon or Samsung or any other major customer,
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,
Verizon, Samsung and other major customers in future periods, which could result
in declining average sales prices and gross margins for the Company's products.

         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 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  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

                                       28
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

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 or that the  Company  will  experience  in the future the same annual
revenue growth that it did in fiscal 2000 and 2001. 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 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,  especially  in the market for its single  carrier  power  amplifiers.
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 and
reliability  problems.  In addition, a multicarrier power amplifier has a higher
probability of malfunction than a single carrier power amplifier  because of its
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

                                       29
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

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.

         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.

         Purchase  and  Supply  Agreement  with  Cree.  In  connection  with the
Company's  completion of the sale of UltraRF to Cree, the Company entered into a
Purchase and Supply Agreement,  dated as of December 29, 2000 by and between the
Company  and Zoltar  (subsequently  renamed  "UltraRF,  Inc.").  Pursuant to the
Purchase  and Supply  Agreement,  the Company  committed  to purchase and accept
delivery from UltraRF,  Inc. certain  components at a minimum aggregate purchase
price. The Company's need for UltraRF, Inc. components during a calendar quarter
may be  insufficient  to  satisfy  its  minimum  commitments  for such  calendar
quarter.  In such  event,  the Company  would be  obligated  to purchase  excess
inventory that it may never utilize or to pay a shortfall  surcharge,  either of
which could have a material adverse effect on the Company's business,  financial
condition, and cash flows.

         Arm's-Length Relationship. The Company relies on UltraRF for the supply
of a substantial  amount of components  used in the manufacture of its products.
When the Company operated UltraRF as a separate  division,  it may have obtained
more favorable terms for semiconductor  products than through  negotiations with
unaffiliated third parties.  With the sale of UltraRF, the Company must now deal
with UltraRF on an arm's-length basis.  Accordingly,  the prices and other terms
for UltraRF semiconductor products may now be less favorable to the Company.

         Sole or Limited  Sources  of  Products,  Materials  and  Services.  The
Company  currently  procures  from single  sources power  amplifier  assemblies,
certain  specialized  semiconductors,  components and services for its products.
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.  During
fiscal  2000,  the Company  completed  the transfer of the  production  of power
amplifiers to a contract manufacturer in Thailand. As a result of this transfer,
the Company no longer has significant manufacturing capacity. 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.  On  December  29,  2000,  the  Company
completed the sale of substantially all of the assets and liabilities comprising
the Company's

                                       30
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

semiconductor division,  UltraRF, pursuant to the Asset Purchase Agreement dated
as of November 20, 2000 to Cree. As a result, the Company no longer manufactures
bipolar and LDMOS RF power semiconductors,  which are critical components in the
Company's power amplifier  products.  As part of the definitive  agreement,  the
Company  and Cree  entered  into a two-year  supply  agreement  under  which the
Company is  obligated  to  purchase  from Cree an  aggregate  of $58  million of
semiconductors.  Consequently,  Cree is the  Company's  sole  source  vendor  of
certain  bipolar and LDMOS RF power  semiconductors.  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  manufacturer,
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 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  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

                                       31
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

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 and network operators 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 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,  Fujitsu, Mitsubishi 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.  In addition,  the
Company assigned 20 of its United States patents and 4 of its foreign patents to
Cree in  connection  with the sale of UltraRF.  The Company has been  granted by
Cree a non-exclusive,  royalty-free  license to each of these patents,  however,
there can be no assurance  that Cree will  adequately  protect this  proprietary
information and any such failure could adversely affect the Company's  business,
financial condition and results of operations. 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  secrets or  proprietary
technology  will not  otherwise  become known or be

                                       32
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

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,
postponement or rescheduling of the  installation of  communications  systems by
the

                                       33
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

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.  As a
result  of the  plan  to  discontinue  manufacturing  operations  in  Sunnyvale,
California,  and the  Company's  other  restructuring  activities,  several  key
executives have ceased 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.  The Company can give no assurance that it 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,  technology,  assets  or  product  lines  that
complement or expand its existing  business.  The Company may also, from time to
time,  pursue  divestitures  of  existing  operations,   technology  or  assets.
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 fluctuation of operating
results due to the timing of charges for costs  associated with  acquisitions or
divestitures,  the difficulty of combining and  assimilating  the operations and
personnel of the acquired  companies,  the  difficulty  of separating a divested
operation from the remaining operations,  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 or  divestiture.  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.

         Risk of Business Interruption.  The Company's operations are vulnerable
to interruption by fire, earthquake, power loss,  telecommunications failure and
other events beyond the Company's control.  The Company does not have a detailed
disaster  recovery  plan  and its  facilities  in the  State of  California  are

                                       34
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

currently  subject to  electrical  blackouts as a  consequence  of a shortage of
available electrical power. In the event these blackouts continue or increase in
severity,  they could  disrupt the  operations  of the  Company's  facilities in
California and increase the Company's operating costs. In addition,  the Company
does not carry sufficient business  interruption  insurance to compensate it for
losses that may occur and any losses or damages  incurred  could have a material
adverse effect on the Company's business.

         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, the market price of the shares of the common stock of Cree, concentration
of stock  ownership by a few entities  resulting in a low float of the Company's
common stock in the public market,  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.

         Volatility of Cree's Common Stock Price. Pursuant to the Asset Purchase
Agreement,  the  Company  received  as  partial  consideration  for the  sale of
UltraRF,  1,815,402 shares of common stock of Cree. In January 2001, the Company
sold 191,094 shares, which were held in escrow, for approximately $6,309,000 and
realized a loss of approximately $481,000 from the sale of these securities.  In
May 2001, the Company sold 524,000 shares of Cree common stock for approximately
$15.4  million and  recognized a loss of  approximately  $3.2  million.  Between
January to May 2001, the Company entered into various option arrangements, known
as a  cashless  collar,  expiring  from  July  2001 to May  2002,  to hedge  the
remaining  1,100,000  shares of Cree  common  stock on hand.  As a  result,  the
Company is able to realize an average of $25.32 per share  ("the  floor  price")
for the 1,100,000  hedged shares if the share price of Cree is lower than $25.32
when the options  expire.  If the Cree stock price  exceeds an average of $41.14
("the ceiling  price) when the options  expire,  the Company may sell its hedged
shares at $41.14 or settle the options for a cash amount equal to the difference
between the Cree stock price and the option price. Until the options expire, the
Company will be  restricted  from  disposing of the hedged  shares.  The Company
faces a number of risks due to the size of its  ownership in Cree  including the
risk that its  financial  statements  and  results  of  operations  reflect  the
Company's  ownership stake in Cree,  which impacts the Company's stock price. At
March 31, 2001, the unrealized loss on the Company's  investments in Cree common
stock and option was approximately $23.1 million. The market price of the shares
of Cree's common stock has been and is likely to continue to be highly volatile.
Although the 1,100,000 shares of Cree common stock on hand have been hedged, the
Company's  investment  in Cree  common  stock is  subject  to price  fluctuation
between the floor and ceiling prices of the option arrangements. Such volatility
in the market price of Cree's common stock and the resulting impact on investors
and analysts'  perceptions  of the change of the Company's  valuation due to the
size of its holdings in Cree common stock may adversely  affect the market price
of the Company's common stock.

                                       35
<PAGE>
ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (CONTINUED)

         Escrow Shares. Of the total consideration paid under the Asset Purchase
Agreement,  approximately  $6 million is currently  held in escrow to secure the
Company's  representations,  warranties  and covenants  under the Asset Purchase
Agreement  over a 12-month  period,  ending in December  2001. If any claims for
indemnification  are made  against  the  Company  anytime  during  this 12 month
period, whether meritorious or not, the Company may be delayed or precluded from
realizing the proceeds placed in escrow.

         Shareholder  Rights  Plan;  Issuance of Preferred  Stock.  The Board of
Directors of the Company adopted a Shareholder  Rights Plan in October 1996 (the
"Original Agreement"). On August 9, 2000, pursuant to section 27 of the Original
Agreement,  the Company's Board of Directors agreed to restate the dividend that
it had declared  under the Original  Agreement in a Second  Amended and Restated
Preferred Shares Rights Agreement dated August 14, 2000 (the "Prior Agreement").
On  January  18,  2001,  pursuant  to  section  27 of the Prior  Agreement,  the
Company's  Board of Directors  agreed to amend the  triggering  event  threshold
applicable to Kopp Investment  Advisors,  Inc. and State of Wisconsin Investment
Board to thirty percent (30%) and twenty percent (20%), respectively.  Under the
Prior Agreement,  each right (a "Right," and collectively the "Rights") entitles
the registered holder to purchase from the Company one one-thousandth of a share
of Series A Preferred at an exercise  price of $126.00 (the  "Purchase  Price"),
subject to  adjustment.  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  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.


                                       36
<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,  South 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  except for the
option  arrangements  to hedge one million  shares of the Cree  common  stock on
hand.  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 up to five years. The table below presents
the amounts and related  weighted  interest  rates of the  Company's  short-term
investments at March 31, 2001 and 2000 (dollars in thousands).

                                               March 31,          March 31,
                                                  2001              2000
                                                  ----              ----

           Average fixed interest rate               5.5%              6.0%
                                                 =======           =======

           Amortized cost                        $38,655           $36,644
                                                 =======           =======
           Fair value                            $38,919           $36,027
                                                 =======           =======

           Contractual maturity dates:
                Less than 1 year                  $8,931          $  3,500
                1 to 5 years                      29,988            32,527
                                                --------          --------
                                                 $38,919           $36,027
                                                 =======           =======


         Pursuant  to the Asset  Purchase  Agreement,  the  Company  received as
partial consideration for the sale of UltraRF,  1,815,402 shares of common stock
of Cree. In January 2001,  the Company sold 191,094  shares,  which were held in
escrow,  for  approximately  $6,309,000  and  realized  a loss of  approximately
$481,000  from the sale of these  securities.  In May  2001,  the  Company  sold
524,000 shares of Cree common stock for approximately $15.4 million and realized
a loss of  approximately  $3.2 million,  which will be recognized in the quarter
ending  July 1, 2001.  Between  January to May 2001,  the Company  entered  into
various option arrangements, known as a cashless collar, expiring from July 2001
to May 2002,  to hedge the  remaining  1,100,000  shares of Cree common stock on
hand. As a result, the Company is able to realize an average of $25.32 per share
for the 1,100,000  hedged shares if the share price of Cree is lower than $25.32
when the options  expire.  If the Cree stock price  exceeds an average of $41.14
when the options  expire,  the  Company may sell its hedged  shares at $41.14 or
settle the options for a cash amount  equal to the  difference  between the Cree
stock price and the option price.  Until the options expire, the Company will be
restricted from disposing of the hedged shares. A 20% adverse change in the fair
value of Cree common  stock as of March 31,  2001,  assuming the hedging had not
been in place,  would result in an approximate $4.9 million decrease in the fair
value of the Company's available for sale securities.

                                       37
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

QUARTERLY RESULTS-- UNAUDITED
(in thousands, except per share data)
<TABLE>
<CAPTION>
                                                           Three Months Ended
                                               -----------------------------------------
                                               July 2,     Oct. 1,    Dec. 31,  Mar. 31,
                                                2000        2000       2000       2001
                                                ----        ----       ----       ----
<S>                                           <C>         <C>         <C>        <C>
Net revenues ..............................   $ 42,190    $ 41,916    $ 51,398   $ 44,248
Cost of revenues ..........................   $ 35,268    $ 34,714    $ 39,490   $ 35,583
Gross profit ..............................   $  6,922    $  7,202    $ 11,908   $  8,665
Net income (loss) (1) .....................   $ (3,800)   $ (3,865)   $ 13,410   $  7,735
Net income (loss) per share:
    Basic .................................   $  (0.35)   $  (0.35)   $   1.20   $   0.68
    Diluted ...............................   $  (0.35)   $  (0.35)   $   1.19   $   0.67

Shares used in computing per share amounts:
    Basic .................................     10,916      10,974      11,154     11,416
    Diluted ...............................     10,916      10,974      11,270     11,627


                                                           Three Months Ended
                                               -----------------------------------------
                                               June 27,   Sept. 26,   Dec. 26,  Mar. 31,
                                                 1999        1999       1999      2000
                                                 ----        ----       ----      ----

Net revenues ..............................    $ 31,484    $ 42,967   $ 49,144   $ 39,972
Cost of revenues ..........................    $ 25,892    $ 32,676   $ 37,195   $ 34,235
Gross profit ..............................    $  5,592    $ 10,291   $ 11,949   $  5,737
Net income (loss) .........................    $ (2,622)   $    788   $  2,344   $ (6,333)
Net income (loss)  per share:
    Basic .................................    $  (0.26)   $   0.08   $   0.22   $  (0.59)
    Diluted ...............................    $  (0.26)   $   0.07   $   0.20   $  (0.59)

Shares used in computing per share amounts:
    Basic .................................      10,176      10,249     10,519     10,734
    Diluted ...............................      10,176      10,632     11,774     10,734

<FN>
Note (1):  Consolidated  financial  results for the quarters  ended December 31,
2000 and  March  31,  2001  reflect a gain of $11.7  million  and $7.2  million,
respectively,  related to the sale of UltraRF to Cree on December 29, 2000.  See
Note 2 of Notes to Consolidated  Financial  Statements herein regarding the sale
of UltraRf.
</FN>
</TABLE>

         The Company's  consolidated  financial  statements and the  independent
accountants' reports appear on pages F-1 through F-26 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.

                                       38
<PAGE>

         During the  Company's  year  ended  March 31,  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 to the subject  matter of the  disagreements  in  connection  with its
reports on the Company's financial statements for the year ended March 31, 1999.
In addition,  KPMG's report on the  financial  statements of the Company for the
year ended March 31, 1999 contained an unqualified opinion.

         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 audit role.  During the year
ended March 31, 1999 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  also  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 2001 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  --  Executive  Officers  of the
Registrant" 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:

<TABLE>
<CAPTION>
                                                                                                           Page
                                                                                                           ----
<S>                                                                                                           <C>
           Report of Independent Accountants - PricewaterhouseCoopers LLP...........................        F-2
           Report of Independent Accountants - KPMG LLP.............................................        F-3
           Consolidated Balance Sheets as of March 31, 2001 and 2000................................        F-4
           Consolidated Statements of Operations for the Years ended
              March 31, 2001, 2000 and 1999.........................................................        F-5
           Consolidated Statements of Stockholders' Equity and Comprehensive Loss
              for the Years ended March 31, 2001, 2000 and 1999.....................................        F-6
           Consolidated Statements of Cash Flows for the Years ended
              March 31, 2001, 2000, and 1999........................................................        F-7
           Notes to Consolidated Financial Statements...............................................        F-8
</TABLE>

         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

            2.1(27)      Asset Purchase  Agreement dated as of November 20, 2000
                         among Cree, Inc., a North Carolina corporation,  Zoltar
                         Acquisition,  Inc., a North  Carolina  corporation  and
                         Spectrian Corporation, a Delaware corporation.

            3.5(15)      Certificate of Incorporation of Registration.

            3.6(23)      Amended and Restated Bylaws of Spectrian Corporation (a
                         Delaware Corporation) dated June 9, 2000

            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(22)    Letter  Agreement  to  amend  Preferred  Shares  Rights
                         Agreement  dated as of February  16, 2000  between Kopp
                         Investment Advisors, Inc. and Registrant.

            10.2(29)     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 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.

                                       41
<PAGE>

            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.

            10.39(22)    Amended  and  Restated  Loan  and  Security   Agreement
                         between Silicon Valley Bank and Registrant.

            10.39.1(22)  Loan Modification Agreement between Silicon Valley Bank
                         and Registrant dated November 24, 1999.

            10.39.2(22)  Loan Modification Agreement between Silicon Valley Bank
                         and Registrant dated January 31, 2000.

            10.39.3(22)  Loan Modification Agreement between Silicon Valley Bank
                         and Registrant dated May 2, 2000.

            10.40(22)    Form of Change of Control  Severance  Agreement between
                         the  Registrant  and  Michael  D.  Angel,   Garrett  A.
                         Garrettson,  Tim  Jones,  Christopher  A.  Menicou  and
                         Thomas H. Waechter.

            10.41(22)    Master  Lessor's  Consent  to  Sublease  between  North
                         American Resort Properties, Inc and Registrant.

            10.41.1(22)  Agreement  and  Assumption  of Sublease  between  North
                         American Resort Properties, Inc. and The Gap, Inc.

            10.42(22)    Closing   documents   regarding  165  Gibraltar  Court,
                         Sunnyvale, California.

            10.43(22)    Summary of Lease Contract  between Ensung  Building and
                         Registrant.

            10.44(22)    Contract  to  Lease   between   Ellington   Development
                         Incorporated and Registrant.

            10.45(22)    Manufacturing  Agreement between  GSS/Array  Technology
                         and Registrant.

            10.46(23)    Sublease    Agreement   between   American    Microwave
                         Technology and Registrant dated May 31, 2000.

            10.47(25)    Loan  Modification  Agreement  between  the Company and
                         Silicon Valley Bank dated August 15, 2000.

            10.48(+26)   Purchase and Supply  Agreement dated as of December 29,
                         2000 by and between Spectrian  Corporation,  a Delaware
                         corporation  and  Zoltar  Acquisition,  Inc.,  a  North
                         Carolina corporation.

            10.49(26)    Sublease  Agreement  dated  as  of  December  29,  2000
                         between  Zoltar  Acquisition,  Inc.,  a North  Carolina
                         corporation,  and  Spectrian  Corporation,  a  Delaware
                         corporation.

            10.50(26)    Payment and  Performance  Guaranty  of  Sublease  dated
                         December 29,  2000,  by Cree,  Inc.,  a North  Carolina
                         corporation  in  favor  of  Spectrian  Corporation,   a
                         California corporation.

            10.51(26)    Standard Industrial/Commercial Net Lease dated December
                         12,  2000 by and  between  CSS  Properties  II, LLC and
                         Spectrian Corporation.

            10.52        Loan  Modification  Agreement  between  the Company and
                         Silicon Valley Bank dated May 23, 2001.

            23.1.1       Consent of PricewaterhouseCoopers LLP.

            23.1.2       Consent of KPMG LLP.

            24.1         Power of Attorney (included on page 44).

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

+    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.

4    Incorporated  by reference to the  Registrant's  Annual Report on Form 10-K
     for the fiscal year ended March 31, 1995.

                                       42
<PAGE>

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 the  Registrant's  Annual Report on Form 10-K
     for the fiscal year ended March 31, 1996.

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.

15   Incorporated  by  reference  to exhibits  filed with  Registrant's  Current
     Report on Form 8-K dated October 10, 1997.

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 21, 1998.

18   Incorporated  by reference to exhibits  filed with  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended June 28, 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 June 14, 1999.

22   Incorporated by reference to exhibits filed with Registrant's Annual Report
     on Form 10-K for the year ended March 31, 2000 as filed with the Securities
     and Exchange Commission on June 29, 2000.

23   Incorporated  by reference to exhibits  filed with  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended July 2, 2000.

25   Incorporated  by reference to exhibits  filed with  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended October 1, 2000.

26   Incorporated  by reference to exhibits  filed with  Registrant's  Quarterly
     Report on Form 10-Q for the quarter ended December 31, 2000.

27   Incorporated  by  reference  to Exhibit  2.1 of Current  Report on Form 8-K
     filed by the Registrant on January 16, 2001.

28   Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on form S-8 as filed with the Securities and Exchange  Commission
     on August 17, 2000.

29   Incorporated by reference to exhibits filed with Registrant's  Registration
     Statement on form S-8 as filed with the Securities and Exchange  Commission
     on March 30, 2001.

30   Incorporated by reference to exhibits filed with the  Registrants'  Amended
     Registration  Statement on Form 8-A12G/A as filed with the  Securities  and
     Exchange Commission on January 30, 2001.


(b)  Reports on Form 8-K. On January 16, 2001,  the  Registrant  filed a Current
     Report on Form 8-K  regarding  the  completion of the sale of the Company's
     UltraRF division to Cree on December 29, 2000.

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

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

                                       43
<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 4, 2001
                                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.

         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:
<TABLE>
<CAPTION>

                 Signature                                         Title                                 Date
                 ---------                                         -----                                 ----
<S>                                           <C>                                                    <C>
          /s/ Thomas H. Waechter              President, Chief Executive Officer and Director        June 4, 2001
--------------------------------------------  (Principal Executive Officer)
             Thomas H. Waechter

           /s/ Michael D. Angel               Executive Vice President, Finance and                  June 4, 2001
------------------------------------------    Administration, Chief Financial Officer and
              Michael D. Angel                Secretary (Principal Financial and Accounting
                                              Officer)


         /s/ Garrett A. Garrettson            Director and Chairman                                  June 4, 2001
------------------------------------------
           Garrett A. Garrettson

             /s/ Martin Cooper                Director                                               June 4, 2001
------------------------------------------
               Martin Cooper

          /s/ Charles D. Kissner              Director                                               June 4, 2001
------------------------------------------
             Charles D. Kissner

          /s/ Henry C. Montgomery             Director                                               June 4, 2001
------------------------------------------
            Henry C. Montgomery

           /s/ Robert W. Shaner               Director                                               June 4, 2001
------------------------------------------
              Robert W. Shaner

           /s/ Robert C. Wilson               Director                                               June 4, 2001
------------------------------------------
              Robert C. Wilson
</TABLE>

                                       44
<PAGE>

                              SPECTRIAN CORPORATION

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                          Page
                                                                                                          ----
<S>                                                                                                          <C>
Report of Independent Accountants - PricewaterhouseCoopers LLP.....................................        F-2
Report of Independent Accountants - KPMG LLP.......................................................        F-3
Consolidated Balance Sheets........................................................................        F-4
Consolidated Statements of Operations..............................................................        F-5
Consolidated Statements of Changes in Stockholders' Equity and Comprehensive Loss..................        F-6
Consolidated Statements of Cash Flows..............................................................        F-7
Notes to Consolidated Financial Statements.........................................................        F-8
</TABLE>

                                      F-1
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders of Spectrian Corporation:


In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated statements of operations, of stockholders' equity and comprehensive
loss and of cash flows, present fairly, in all material respects,  the financial
position of Spectrian  Corporation  and its  subsidiaries  at March 31, 2001 and
March 31,  2000,  and the results of their  operations  and their cash flows for
each of the two years in the period  ended  March 31, 2001, in  conformity  with
accounting principles generally accepted in the United States of America.  These
financial  statements are the  responsibility of the Company's  management;  our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We conducted  our audits of these  statements  in  accordance  with
auditing  standards  generally  accepted in the United States of America,  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  audits  provide  a
reasonable basis for our opinion.





/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP
San Jose, California

April 17, 2001 except for Note 14, which is as of May 23, 2001


                                      F-2

<PAGE>



                        REPORT OF INDEPENDENT ACCOUNTANTS



The Board of Directors and Stockholders
Spectrian Corporation:


We  have  audited  the  accompanying   consolidated  statements  of  operations,
stockholders'  equity and cash flows of Spectrian  Corporation and  subsidiaries
for the year 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 audit.

We conducted our audit 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  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the results of operations and cash flows of
Spectrian  Corporation  and  subsidiaries  for the year 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>


                              SPECTRIAN CORPORATION

                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)
<TABLE>
<CAPTION>
                                                                                             March  31,
                                                                                        ----------------------
                                                                                          2001         2000
                                                                                        ---------    ---------
<S>                                                                                     <C>          <C>
ASSETS

CURRENT ASSETS:
   Cash and cash equivalents ........................................................   $  36,397    $  11,553
   Restricted cash ..................................................................       6,354         --
   Short-term investments ...........................................................      73,512       36,027
   Accounts  receivable,  less  allowance  for  doubtful  accounts
     of $460 and $420, respectively .................................................      27,587       23,817
   Inventories ......................................................................      22,221       34,542
   Deferred tax asset ...............................................................       3,818         --
   Prepaid expenses and other current assets ........................................       4,918        4,400
                                                                                        ---------    ---------

     Total current assets ...........................................................     174,807      110,339

Property and equipment, net .........................................................      11,632       19,668
Other assets ........................................................................       1,584        1,268
                                                                                        ---------    ---------

     Total assets ...................................................................   $ 188,023    $ 131,275
                                                                                        =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable .................................................................   $  23,613    $  16,416
   Accrued liabilities ..............................................................      13,958       13,773
   Income taxes payable .............................................................         750           20
   Deferred gain, current portion ...................................................      31,550         --
   Current portion of debt and capital lease obligations ............................        --            730
                                                                                        ---------    ---------

     Total current liabilities ......................................................      69,871       30,939

Deferred gain, net of current portion ...............................................      19,650         --
Debt and capital lease obligations, net of current portion ..........................        --          1,351
                                                                                        ---------    ---------

     Total liabilities ..............................................................      89,521       32,290
                                                                                        ---------    ---------


Commitments (Notes 6)


STOCKHOLDERS' EQUITY:


   Preferred stock,  $0.001 par value,  5,000,000 shares authorized;  none issued and
     outstanding ....................................................................        --           --
   Common stock, $0.001 par value, 20,000,000 shares authorized; 12,501,026
     and 11,859,507 shares issued, respectively; 11,501,026 and 10,859,507 shares
     outstanding, respectively ......................................................          13           12
   Additional paid-in capital .......................................................     167,524      160,117
   Treasury stock, 1,000,000 shares of common stock held ............................     (14,789)     (14,789)
   Deferred compensation expense ....................................................         (69)        (937)
   Accumulated other comprehensive loss .............................................     (22,856)        (617)
   Accumulated deficit ..............................................................     (31,321)     (44,801)
                                                                                        ---------    ---------

     Total stockholders' equity .....................................................      98,502       98,985
                                                                                        ---------    ---------

     Total liabilities and stockholders' equity .....................................   $ 188,023    $ 131,275
                                                                                        =========    =========
<FN>

See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
                                      F-4
<PAGE>

                              SPECTRIAN CORPORATION

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

                                                      Year Ended March 31,
                                              ---------------------------------
                                                 2001        2000       1999
                                              ---------   ---------   ---------

NET REVENUES ..............................   $ 179,752   $ 163,567   $  99,331
                                              ---------   ---------   ---------

COSTS AND EXPENSES:
   Cost of revenues .......................     145,055     129,998      96,880
   Research and development ...............      20,762      22,488      26,735
   Selling, general and administrative ....      21,602      19,337      16,315
   Restructuring ..........................        (100)      1,032        --
                                              ---------   ---------   ---------
     Total costs and expenses .............     187,319     172,855     139,930
                                              ---------   ---------   ---------

OPERATING LOSS ............................      (7,567)     (9,288)    (40,599)
INTEREST INCOME ...........................       2,850       3,344       4,540
INTEREST EXPENSE ..........................        (162)       (473)       (853)
OTHER INCOME, NET .........................      18,371         624        --
                                              ---------   ---------   ---------

INCOME (LOSS) BEFORE INCOME TAXES .........      13,492      (5,793)    (36,912)

INCOME TAXES ..............................          12          30          59
                                              ---------   ---------   ---------

NET INCOME (LOSS) .........................   $  13,480   $  (5,823)  $ (36,971)
                                              =========   =========   =========


NET INCOME (LOSS) PER SHARE:
   Basic ..................................   $    1.21   $   (0.56)  $   (3.50)
                                              =========   =========   =========
   Diluted ................................   $    1.19   $   (0.56)  $   (3.50)
                                              =========   =========   =========

SHARES USED IN COMPUTING PER SHARE AMOUNTS:
   Basic ..................................      11,113      10,426      10,568
                                              =========   =========   =========
   Diluted ................................      11,343      10,426      10,568
                                              =========   =========   =========

See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>




                              SPECTRIAN CORPORATION

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

<TABLE>
<CAPTION>


                                          Common Stock          Paid-In     Treasury
                                      Shares        Amount      Capital       Stock
                                    ----------   ----------   ----------    ----------
<S>                  <C>            <C>          <C>          <C>           <C>
Balances as of April 1, 1998 ....   10,904,077   $       10   $  146,827    $     --

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          --
Stock-based compensation expense          --           --           --            --
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          --
Stock-based compensation expense          --           --           --            --
Net loss ........................         --           --           --            --
Unrealized losses on investments          --           --           --            --
Comprehensive loss ..............         --           --           --            --
                                    ----------   ----------   ----------    ----------
Balances as of March 31, 2000  ..   11,859,507           12      160,117       (14,789)

Exercise of stock options .......      510,806            1        6,458          --
Employee stock purchase plan ....      130,713         --          1,607          --
Deferred stock-based compensation         --           --           (658)         --
Stock-based compensation expense          --           --           --            --
Net income ......................         --           --           --            --
Unrealized losses on investments          --           --           --            --
Comprehensive loss ..............         --           --           --            --
                                    ----------   ----------   ----------    ----------
Balances as of March 31, 2001  ..   12,501,026   $       13   $  167,524    $  (14,789)
                                    ==========   ==========   ==========    ==========
</TABLE>
<TABLE>
<CAPTION>
                                                                   Accumulated
                                       Deferred                      Other         Total
                                     Compensation   Accumulated   Comprehensive  Stockholders'
                                        Expense     Income (Loss)  Income (Loss)   Equity
                                       ----------    ----------    ----------    ----------
<S>                  <C>               <C>           <C>           <C>           <C>
Balances as of April 1, 1998 ....      $     (609)   $   (2,007)   $      121    $  144,342

Exercise of stock options .......            --            --            --           1,223
Employee stock purchase plan ....            --            --            --             541
Purchase of treasury stock ......            --            --            --         (14,789)
Deferred stock-based compensation            (997)         --            --            --
Stock-based compensation expense            1,606          --            --           1,606
Net loss ........................            --         (36,971)         --
Unrealized gains on investments .            --            --              16
Comprehensive loss ..............            --            --            --         (36,955)
                                       ----------    ----------    ----------    ----------
Balances as of March 31, 1999  ..            --         (38,978)          137        95,968

Exercise of stock options .......            --            --            --           7,421
Employee stock purchase plan ....            --            --            --           1,763
Deferred stock-based compensation          (1,347)         --            --            --
Stock-based compensation expense              410          --            --             410
Net loss ........................            --          (5,823)         --
Unrealized losses on investments             --            --            (754)
Comprehensive loss ..............            --            --            --          (6,577)
                                       ----------    ----------    ----------    ----------
Balances as of March 31, 2000  ..            (937)      (44,801)         (617)       98,985

Exercise of stock options .......            --            --            --           6,459
Employee stock purchase plan ....            --            --            --           1,607
Deferred stock-based compensation             658          --            --            --
Stock-based compensation expense              210          --            --             210
Net income ......................            --          13,480          --
Unrealized losses on investments             --            --         (22,239)
Comprehensive loss ..............            --            --            --          (8,759)
                                       ----------    ----------    ----------    ----------
Balances as of March 31, 2001  ..      $      (69)   $  (31,321)   $  (22,856)   $   98,502
                                       ==========    ==========    ==========    ==========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>

                                      F-6
<PAGE>




                              SPECTRIAN CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                              Year Ended March 31,
                                                                        --------------------------------
                                                                          2001        2000       1999
                                                                        --------    --------    --------
<S>                                                                     <C>         <C>         <C>
Cash flows from operating activities:
   Net income (loss) ................................................   $ 13,480    $ (5,823)   $(36,971)
   Adjustments to reconcile net income (loss) to net cash provided by
     (used for) operating activities:
     Gain on sale of UltraRF ........................................    (18,853)       --          --
     (Gain) loss on sale of property and equipment, net .............         61        (624)       --
     Depreciation and amortization ..................................     10,425      13,255      13,715
     Equipment retirements, net .....................................       --           375       1,409
     Provision for doubtful accounts receivable .....................         40          32          12
     Provision for excess and obsolete inventories and write-down to
         market .....................................................      4,297       1,468       1,360
     Stock compensation expense .....................................        210         410       1,606
     Loss on sale of short-term investments .........................        488        --          --
     Changes in deferred tax assets .................................     (3,818)       --          --
     Increase in income tax payable .................................        730        --          --
     Changes in operating assets and liabilities
       (in fiscal 2001, net of the effect of sale of UltraRF):
       Accounts receivable ..........................................     (3,810)    (10,866)      8,128
       Inventories ..................................................      2,848     (15,184)     (6,824)
       Prepaid expenses and other assets ............................     (1,065)     (2,204)      2,738
       Accounts payable .............................................      7,673       8,358      (2,398)
       Accrued liabilities ..........................................     (2,513)     (4,091)      4,903
                                                                        --------    --------    --------
         Net cash provided by (used for) operating activities .......     10,193     (14,894)    (12,322)
                                                                        --------    --------    --------
Cash flows from investing activities:
   Purchases of short-term investments ..............................    (17,434)    (15,975)    (45,868)
   Proceeds from sale and maturities of short-term investments ......     45,371      15,611      77,595
   Costs associated with sale of UltraRF ............................     (9,844)       --          --
   Purchase of property and equipment ...............................     (9,642)     (7,731)    (11,284)
   Proceeds from sale of property and equipment .....................         98       3,525         468
                                                                        --------    --------    --------
         Net cash provided by (used for) investing activities .......      8,549      (4,570)     20,911
                                                                        --------    --------    --------
Cash flows from financing activities:
   Repayments of debt and capital lease obligations .................     (1,964)     (4,421)       (770)
   Purchase of treasury stock .......................................       --          --       (14,789)
   Proceeds from sales of common stock, net .........................      8,066       9,184       1,764
                                                                        --------    --------    --------
         Net cash provided by (used for) financing activities .......      6,102       4,763     (13,795)
                                                                        --------    --------    --------
         Net decrease in cash and cash equivalents ..................     24,844     (14,701)     (5,206)
         Cash and cash equivalents, beginning of year ...............     11,553      26,254      31,460
                                                                        --------    --------    --------
         Cash and cash equivalents, end of year .....................   $ 36,397    $ 11,553    $ 26,254
                                                                        ========    ========    ========
Supplemental disclosures of cash flow information:
   Cash paid during the year for interest ...........................   $    162    $    473    $    853
                                                                        ========    ========    ========
   Taxes paid during the year .......................................   $  3,100    $     67    $     59
                                                                        ========    ========    ========
   Noncash investing and financing activities:
     Exchange of short-term investments for restricted cash .........   $  6,309    $   --      $   --
                                                                        ========    ========    ========
     Deferred stock option compensation .............................   $   (658)   $  1,347    $    997
                                                                        ========    ========    ========
     Cree stock received for sale of UltraRF ........................   $ 94,503    $   --      $   --
                                                                        ========    ========    ========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
                                      F-7
<PAGE>

                              SPECTRIAN CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

         Spectrian  Corporation and subsidiaries  ("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,  manufacture and marketing of high-power  radio frequency
("RF") amplifiers for the global wireless communications  industry. Prior to the
sale of its semiconductor  division, that operated under the trade name UltraRF,
to  Cree  Inc.  ("Cree")  on  December  29,  2000,  the  Company  also  produced
semiconductor  devices for use in the design and manufacture of second and third
generation wireless infrastructure  equipment.  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.

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

         Revenues  from product  sales and repair and service  transactions  are
generally  recognized when  persuasive  evidence of an arrangement  exists,  the
price is fixed or determined,  collection is reasonably  assured and delivery of
product or service has occurred. Reserves are provided for estimated returns.

Concentration of Credit Risk and Fair Value of Financial Instruments


         The carrying value of the Company's  financial  instruments,  including
cash and cash  equivalents,  restricted  cash,  short-term  investments,  equity
options,  accounts receivable and long-term debt approximates fair market value,
since marketable  equity  securities have been valued at market,  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,  restricted  cash,
short-term investments, equity options and trade accounts receivable. Management
believes the financial risks  associated  with these  financial  instruments are
minimal.  The Company maintains its cash and cash  equivalents,  restricted cash
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.


         By using derivative financial instruments to hedge exposures to changes
in share prices for its marketable equity securities, the Company exposes itself
to credit risk and market  risk.  Credit risk is the risk that the  counterparty
might  fail to  fulfill  its  performance  obligations  under  the  terms of the
derivative  contract.  When the fair value of a derivative contract is positive,
the counterparty owes the Company, which creates repayment risk for the Company.
When the fair value of a derivative  contract is negative,  the Company owes the
counterparty  and,  therefore,  does not  assume  repayment  risk.  The  Company
minimizes  its credit  (or  repayment)  risk in  derivative  instruments  by (1)
entering into transactions with  high-quality  counterparties,  (2) limiting the
amount of its exposure to each  counterparty,  and (3)  monitoring the financial
condition  of its  counterparties.  The  Company  also  maintains  a  policy  of

                                      F-8

<PAGE>
                              SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

requiring that all derivative  contracts be governed by an  International  Swaps
and Derivatives Association Master Agreement.


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, 2001.

         The Company has classified its investments in certain debt  securities,
equity options and common stock investments in Cree 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, 2001, the unrealized losses
on the Company's investments aggregated to $22,856,000.

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.

                                      F-9

<PAGE>
                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

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.

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 undiscounted 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 and Comprehensive Loss.

Warranty

         The  Company's  products  are  generally  subject to  warranty  and the
Company  provides  for the  estimated  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 (loss) or stockholders' equity.

Recent Accounting Pronouncements

         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting  Standards No. 133, Accounting for Derivative
Instruments  and Hedging  Activities.  The standard,  as amended by Statement of
Financial  Accounting  Standards No. 137, Accounting for Derivative  Instruments
and Hedging  Activities - Deferral of the Effective  Date of FASB  Statement No.
133,  an  amendment  of FASB  Statement  No. 133,  and  Statement  of  Financial
Accounting Standards No. 138, Accounting for Certain Derivative  Instruments and
Certain Hedging Activities,  an amendment of FASB Statement No. 133 (referred to
hereafter  as "FAS 133"),  is  effective  for all fiscal  quarters of all fiscal
years  beginning  after June 15, 2000 (April 1, 2001 for the  Company).  FAS 133
requires  that all  derivative  instruments  be recorded on the balance sheet at
their fair value.  Changes in the fair value of  derivatives  are recorded  each
period in  current  earnings  or in other  comprehensive  income,  depending  on
whether a derivative is designated as part of a hedging  relationship and, if it
is,  depending on the type of

                                      F-10
<PAGE>
                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

hedging  relationship.  For  fair-value  hedges in which the  Company is hedging
against  changes  in an asset's  fair  value,  the fair value of the  derivative
instrument  will  generally be offset in the income  statement by changes in the
hedged  item's  fair  value.  The  ineffective  portion  of all  hedges  will be
recognized in current-period earnings.

         While FAS 133 provides a significant change in the accounting  guidance
related to  derivative  instruments  and  hedging  activities,  the  Company has
determined  that the more stringent  accounting and  documentation  requirements
under  FAS 133 will not  cause  any  significant  changes  in its  overall  risk
management strategy and in its overall hedging activities.

         On April 1, 2001, the Company adopted FAS 133 and accordingly  recorded
a net-of-tax cumulative-effective-type gain adjustment of less than $1 million.

2.  SALE OF ULTRARF

         On December 29, 2000, the Company  completed the sale of  substantially
all of  the  assets  and  liabilities  comprising  the  Company's  semiconductor
division, UltraRF, pursuant to the Asset Purchase Agreement dated as of November
20, 2000 (the "Asset Purchase  Agreement") among Cree, Zoltar Acquisition,  Inc.
("Zoltar")  and the Company for 1,815,402  shares of Cree common stock valued at
$64,503,000,  based upon the per share price at the date of closing, plus common
stock of Cree with a guaranteed realizable value of $30 million, less $1,141,000
owed by the Company to Cree due to a change in the net assets of UltraRF between
October 1, 2000 and  December  29, 2000.  Of the total  consideration  received,
191,094  shares of Cree  common  stock  were  placed  in  escrow  to secure  the
Company's  representations,  warranties  and covenants  under the Asset Purchase
Agreement  over a 12-month  period.  In January  2001,  the Company sold all the
shares held in escrow for  approximately  $6,309,000  and  recognized  a loss of
approximately $481,000 from the sale of these securities.  Accordingly, the cash
proceeds  received from the sale of escrow shares plus interest  earned totaling
$6,354,000 was classified as restricted cash in the financial statements.

         As part of the definitive agreement,  the Company and Cree entered into
a two-year supply  agreement under which Spectrian is obligated to purchase from
Cree an aggregate of $58 million of semiconductors. In the event Spectrian fails
to  make  these  purchases,  it is  obligated  to pay  Cree  the  amount  of the
shortfall.  Accordingly, the Company deferred $58 million of the gain on sale of
UltraRF and is recognizing it in periods as the related purchase  commitments to
Cree are  being  fulfilled.  In  addition,  Spectrian  and Cree  entered  into a
one-year joint development agreement to develop advanced technologies related to
laterally diffused metal oxide semiconductors ("LDMOS"),  linear high gain LDMOS
driver modules,  high efficiency LDMOS power modules and SiC MESFET  components,
under which Spectrian will pay to Cree a development fee of $2.4 million in four
quarterly  installments  of $600,000  beginning in April 2001.  The Company also
subleased one of the facilities in Sunnyvale,  California, to Cree for a term of
11 years (with three options to extend the lease an additional  five years) with
similar terms as the lease agreement between the Company and its landlord.

         The Company  realized an aggregate  gain of $69.7 million from the sale
of UltraRF assets,  of which $58.0 million was deferred as noted above, with the
balance of $11.7 million  being  recognized as other income during third quarter
of fiscal 2001.  During the fourth quarter fiscal 2001,  Spectrian  recognized a
gain of $7.2 million as other income.

         Summarized  below are the unaudited pro forma results of the Company as
though  UltraRF had been sold at April 1, 1999 (in  thousands,  except per share
data):

                                      F-11
<PAGE>
                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

                                                      Year Ended March 31
                                                     2001                2000

  Total revenue                                  $  178,671          $ 162,687
                                                 ==========          =========
  Net loss                                       $   (8,436)         $ (13,914)
                                                 ==========          =========
  Net loss per share basic and diluted           $    (0.76)         $   (1.33)
                                                 ==========          =========

         The pro forma financial  information presented above is not necessarily
indicative of either the results of operations  that would have occurred had the
disposal  taken place at the  beginning  of fiscal 2000 or of future  results of
operations of the Company.  The gain on sale of UltraRF has not been included in
the pro forma results above because it is non-recurring  and directly related to
the sale.


3.  EQUITY OPTION CONTRACTS

         The Company has an  investment  in the common stock of Cree (see Note 2
above). The Company's  investment exposes it to a risk related to the effects of
changes in price of Cree common stock. This financial  exposure is monitored and
managed  by  the  Company.   The  Company's   risk-management   focuses  on  the
unpredictability  of  financial  markets  and  seeks to reduce  the  potentially
adverse  effects that the  volatility  of these markets may have on the Company.
The Company uses cashless collars,  which are a combination of option contracts,
to hedge this risk.

         In January 2001, the Company  entered into various option  arrangements
known as a cashless  collar,  expiring  from July 2001 to October 2001, to hedge
one million  shares of the Cree common stock on hand.  As a result,  the Company
should be able to realize  an  average  of $25.25 per share for the one  million
hedged   shares  if  the  share  price  of  Cree  common  stock  is  lower  than
approximately $25.25 per share when the options expire. If the Cree common stock
price  exceeds  an average of $41.68  per share  when the  options  expire,  the
Company may sell its hedged shares at approximately $41.68 or settle the options
for a cash amount  equal to the  difference  between the Cree common stock price
and the option price.  Until the options expire,  the Company will be restricted
from disposing of the one million shares.

                                      F-12

<PAGE>
                              SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

4.  CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

         Available-for-sale  securities  at March  31,  2001  and  2000  were as
follows (in thousands):
<TABLE>
<CAPTION>

                                                                    Amortized     Unrealized Gain         Fair
                  As of March 31, 2001                                 Cost            (Loss)             Value
                  --------------------                                 ----            ------             -----
<S>                                                                 <C>              <C>               <C>
Government bonds and notes...................................       $  23,355        $     120         $  23,475
Corporate bonds and notes....................................          41,164              144         $  41,308
Common stock investments.....................................          57,713          (33,397)           24,316
Equity options...............................................              --           10,277            10,277
                                                                    ---------        ---------         ---------
                                                                      122,232          (22,856)           99,376
Less amounts classified as cash equivalents..................          25,864               --            25,864
                                                                    ---------        ---------         ---------
Short-term investments.......................................       $  96,368        $ (22,856)        $  73,512
                                                                    =========        =========         =========

Contractual maturity dates of bonds and notes:
     Less than 1 year........................................                                          $   8,931
     1 to 5 years............................................                                             29,988
                                                                                                       ---------
                                                                                                       $  38,919
                                                                                                       =========

                                                                    Amortized     Unrealized Gain         Fair
                  As of March 31, 2000                                 Cost            (Loss)             Value
                  --------------------                                 ----            ------             -----

Government bonds and notes...................................       $  14,599        $    (166)        $  14,433
Corporate bonds and notes....................................          29,545             (451)           29,094
                                                                    ---------        ---------         ---------
                                                                       44,144             (617)           43,527
Less amounts classified as cash equivalents..................           7,500               --             7,500
                                                                    ---------        ---------         ---------
Short-term investments.......................................       $  36,644        $    (617)        $  36,027
                                                                    =========        =========         =========

Contractual maturity dates of bonds and notes:
     Less than 1 year........................................                                          $   3,500
     1 to 5 years............................................                                             32,527
                                                                                                       ---------
                                                                                                       $  36,027
                                                                                                       =========
</TABLE>


5.  BALANCE SHEET COMPONENTS

         Balance sheet  components at March 31, 2001 and 2000 are as follows (in
thousands):

                                                               March 31,
                                                        2001              2000
                                                        ----              ----
Inventories:
   Raw materials.....................................  $ 11,185         $ 16,763
   Work in progress..................................     5,699           10,353
   Finished goods....................................     5,337            7,426
                                                       ----------       --------
                                                       $ 22,221         $ 34,542
                                                       ==========       ========
                                      F-13

<PAGE>
                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

                                                               March 31,
                                                        2001              2000
                                                        ----              ----
Property and equipment:
   Machinery and equipment...........................  $ 47,341         $ 58,322
   Software..........................................     3,819            4,248
   Leasehold improvements............................     2,673            3,781
                                                       --------         --------
                                                         53,833           66,351
   Less accumulated depreciation and amortization....    42,201           46,683
                                                       --------         --------
                                                       $ 11,632         $ 19,668
                                                       ========         ========


         Depreciation  expense was $10,374,000,  $13,154,000 and $13,614,000 for
fiscal  2001,  2000 and 1999,  respectively.  Amortization  expense was $51,000,
$101,000 and $101,000 for fiscal 2001, 2000 and 1999, respectively.

Accrued liabilities:
   Employee compensation and benefits.................  $  2,839        $ 4,310
   Warranty...........................................     9,800          7,123
   Restructuring......................................        --            996
   Other accrued liabilities..........................     1,319          1,344
                                                        --------        -------
                                                        $ 13,958        $13,773
                                                        ========        ======

6.  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. It is anticipated that the Company will renew the line
of  credit.  Under the  terms of the  master  agreement  governing  this  credit
instrument,  as amended,  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.  In February  2001,  the Company was in default of certain
covenants  and the bank has granted a waiver of the default.  The Company was in
compliance with all debt covenants as of March 31, 2001. The amount available to
borrow at March 31, 2001 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,  2001  was 8% and  6.9%,
respectively.  The Company had no  borrowings  under the line of credit at March
31, 2001.

Purchase Commitments

         As  described  in Note 2, the  Company  has  signed a  two-year  supply
agreement  with  Cree  on  December  29,  2000  to  purchase  $58.0  million  of
semiconductors.  The Company  fulfilled its purchase  obligation  for the fourth
quarter of fiscal 2001 and  recognized  $6.8 million of the deferred gain. As of
March 31, 2001,  the Company has an obligation  to purchase an additional  $51.2
million of semiconductors  from Cree under the supply agreement,  of which $31.6
million of purchases are required to be made in fiscal 2002 and $19.6 million of
purchases are required to be made in fiscal 2003.

                                      F-14


<PAGE>
                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

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.
During the third  quarter of fiscal 2001,  the Company paid off the  outstanding
principal balance of this term loan.

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, which was sold to Cree in connection with the sale of UltraRF. See Note 2.

         During  fiscal  1997,  the Company  sold its  principal  facilities  in
Sunnyvale, California 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. In
connection  with the sale of  UltraRF  to Cree in  December  2000,  the  Company
subleased one of the two facilities under the aforementioned  operating lease to
Cree for the remaining term of the lease under  substantially  the same term and
conditions as the Company's lease.

         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.

         The  Company  also leases  facilities  in Folsom,  California;  Qunicy,
Illinois; and Korea to support its administrative,  development,  manufacturing,
repair, sales and marketing activities.

         Future minimum lease payments under all noncancelable  operating leases
and  sublease  income under these  operating  leases as of March 31, 2001 are as
follows (in thousands):


                                             Lease Payments      Sublease Income
                                             --------------      ---------------

          2002 ..........................      $   2,821           $    1,341
          2003 ..........................          2,762                1,349
          2004 ..........................          2,319                1,020
          2005 ..........................          2,237                  907
          2006 ..........................          2,241                  907
          Thereafter.....................         11,906                5,140
                                               ---------           ----------
                                                $ 24,286             $ 10,664
                                                ========             ========

         Rent expense was  $2,859,000,  $2,300,000  and $3,323,000 for the years
ended March 31, 2001,  2000 and 1999,  respectively.  Sublease rental income was
$615,000 and $310,000 for the year ended March 31, 2001 and 2000,  respectively,
and none for the year ended March 31, 1999.

                                      F-15

<PAGE>
                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

7.  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"),  amended and restated in January 1997,
August 2000 and January 2001.  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 plans, 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.

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.  In August  2000,  an
additional 400,000 shares were reserved 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.

                                      F-16

<PAGE>
                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

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,  25,000 shares were granted and 45,000 shares were cancelled during fiscal
2001.

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.  In the second  quarter of fiscal 2001,  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.

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 Stock 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 Stock Plan.  During  fiscal 1999,  91,667  options were  cancelled.  In
fiscal 2000,  two officers  and one  employee  were granted a combined  total of
410,000 options outside of the Plans at an exercise price ranging from $11.38 to
$23.06, which are subject to the same vesting schedule as that of the 1992 Plan.
During fiscal 2001, 22,917 options were cancelled.

                                      F-17

<PAGE>
                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

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

<TABLE>
<CAPTION>

                                                                                                         Weighted
                                                                                                         Average
                                                                      Available for      Options         Exercise
                                                                          Grant        Outstanding        Price
                                                                          -----        -----------        -----
<S>                                                                       <C>            <C>               <C>
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
   Additional shares reserved...................................          650,000               --             --
   Granted......................................................       (1,221,950)       1,221,950          15.12
   Exercised....................................................               --         (510,806)         12.65
   Canceled (1).................................................        1,089,096       (1,112,013)         20.46
                                                                       ----------       ----------
Outstanding as of March 31, 2001................................          602,719        2,870,667         $17.34
                                                                      ===========       ==========
<FN>
------------------
(1)  91,667 shares which were outside of the Plans were cancelled in fiscal 1999
     and 22,917 shares which were outside of the Plans were  cancelled in fiscal
     2001 and were not available for re-grant.
</FN>
</TABLE>

         The  following  tables  summarize   information   about  stock  options
outstanding at March 31, 2001:

<TABLE>
<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              2001         Life (Years)          Price              2001             Price
       ------              ----         ------------          -----              ----             -----
<S>        <C>             <C>                <C>            <C>                <C>                 <C>
  $ 0.20 - $ 12.56         460,037            8.81           $11.24             119,598             $8.46
  $12.75 - $ 14.25         471,116            8.84            13.12             106,399             13.06
  $14.38 - $ 14.75         463,387            6.15            14.58             378,643             14.55
  $14.88 - $ 18.75         486,611            8.97            16.60              77,163             15.98
  $19.00 - $ 22.50         507,150            8.54            21.30             156,602             21.68
  $22.56 - $ 36.00         410,833            8.89            23.77             109,777             24.27
  $36.63 - $ 64.13          71,533            6.31            42.37              65,808             42.10
                         ---------                                            ---------
   $0.20 - $ 64.13       2,870,667            8.31           $17.34           1,013,990            $17.73
                         =========                                            =========
</TABLE>

         Using the  Black-Scholes  Option-Pricing  Model, the per share weighted
average fair market value of stock options  granted  during fiscal 2001,  fiscal
2000 and fiscal 1999 were $11.14, $15.32 and $10.86,  respectively,  on the date
of grant.  Assumptions used with the Black-Scholes  Option-Pricing Model were as
follows:

                                      F-18

<PAGE>
                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

                                                     Fiscal Year
                                         -----------------------------------
                                          2001          2000           1999
                                          ----          ----           ----
        Risk-free interest rate........    5.8%          5.8%           5.4%
        Expected term of options.......  5.5 years     5.3 years      4.4 years
        Expected volatility............   89.7%         86.2%          81.0%
        Expected dividend yield........    0.0%          0.0%           0.0%

Stock-Based Compensation

         Under the 1998 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. The Company has also granted certain consultants stock options
under the 1992 Plan and 1998 Plan.  In fiscal  2001,  the  Company  granted  one
consultant  7,500  shares  under the 1998 Plan at an  exercise  price of $15.50,
which were fully vested at the date of grant.  Stock-based  compensation expense
related to grant of stock options to employees and  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.  Accordingly  during fiscal 2001, due to a decline in the
share  price,  the Company  recorded a net  reduction  in deferred  compensation
expense of  $658,000.  In  connection  with the grant of stock  options to these
employees and consultants, the Company recorded stock-based compensation expense
of  $210,000,   $410,000  and  $1,606,000  for  fiscal  2001,   2000  and  1999,
respectively.  As of March 31, 2001, the Company expects to amortize stock-based
compensation  expense of $29,000 in fiscal 2002, $29,000 in fiscal 2003, $11,000
and in fiscal 2004.

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 six-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 286,188  shares of Common Stock  available for issuance as of
March 31, 2001.  During the fiscal  years ended March 31, 2001 and 2000,  shares
totaling 130,713 and 191,233 were acquired under the Purchase Plan at an average
per share price of $12.30 and $9.22, 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:

                                      F-19
<PAGE>
                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999


                                                      Fiscal Year
                                           ---------------------------------
                                           2001          2000           1999
                                           ----          ----           ----
Risk-free interest rate.............        5.6%          5.0%           5.4%
Expected term of options............      0.5 years     0.5 years      0.4 years
Expected volatility.................       110.3%         86.2%          81.0%
Expected dividend yield.............        0.0%          0.0%           0.0%



         The per share  weighted  average  fair market  value of those  purchase
rights granted in fiscal 2001, fiscal 2000 and fiscal 1999 was $6.50,  $6.08 and
$3.87, 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):




                                      Year Ended March 31,
                             ---------------------------------------
                                 2001          2000          1999
                             -----------   -----------    ----------

Net income (loss):
   As reported ...........   $    13,480   $    (5,823)   $  (36,971)
                             ===========   ===========    ==========
   Pro forma .............   $     3,325   $   (15,099)   $  (40,972)
                             ===========   ===========    ==========

Earnings (loss) per share:
   Basic:
     As reported .........   $      1.21   $     (0.56)   $    (3.50)
                             ===========   ===========    ==========
     Pro forma ...........   $      0.30   $     (1.45)   $    (3.88)
                             ===========   ===========    ==========

   Diluted:
     As reported .........   $      1.19   $     (0.56)   $    (3.50)
                             ===========   ===========    ==========
     Pro forma ...........   $      0.29   $     (1.45)   $    (3.88)
                             ===========   ===========    ==========


         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.

                                      F-20

<PAGE>
                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999


8.  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 2001, 2000 and 1999, the Company contributed $514,000, $148,000 and
$209,000, respectively, in contributions to the Benefit Plan.


9.  INCOME TAXES

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


                                                      Year Ended March 31,
                                              ----------------------------------
                                               2001           2000         1999
                                              -------       -------      -------
Current:
   Federal .............................      $ 3,713       $  --        $  --
   State ...............................          105            10           59
   Foreign .............................           12            20         --
                                              -------       -------      -------
     Total current .....................        3,830            30           59
                                              -------       -------      -------

Deferred:
   Federal .............................       (3,245)         --           --
   State ...............................         (573)         --           --
   Foreign .............................         --            --           --
                                              -------       -------      -------
     Total deferred ....................       (3,818)         --           --
                                              -------       -------      -------

Total provision for income taxes .......      $    12       $    30      $    59
                                              =======       =======      =======


         Income tax expense for the years  ended March 31,  2001,  2000 and 1999
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):


                                                      Year Ended March 31,
                                               ---------------------------------
                                                 2001        2000        1999
                                               --------    --------    ---------
Federal tax (benefit) at statutory rate ....   $  4,587    $ (1,970)   $(12,550)
State tax, net of Federal benefit ..........        283          10          59
Alternative minimum tax ....................        295        --          --


FSC tax expense ............................         12          20        --
Change in valuation allowance ..............     (5,290)      2,299      12,093

Other ......................................        125        (329)        457
                                               --------    --------    --------
Income tax expense .........................   $     12    $     30    $     59
                                               ========    ========    ========

                                      F-21
<PAGE>
                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999


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

                                                                March 31,
                                                          ---------------------
Deferred tax assets:                                        2001         2000
                                                          --------     --------
   Various accruals and reserves .....................    $  6,706     $  4,893
   Net operating loss carryforwards ..................        --         22,411
   Credit carryforwards ..............................       4,364        7,180
   Property and equipment depreciation differences ...         607         --
   Unrealized loss on available for sale securities ..       7,561         --
   Deferred gain .....................................      20,634         --
                                                          --------     --------
     Total gross deferred tax assets .................      39,872       34,484
   Less valuation allowance ..........................     (36,054)     (33,783)
                                                          --------     --------
     Total deferred tax assets .......................    $  3,818     $    701
                                                          --------     --------

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

Net deferred tax assets ..............................    $  3,818     $   --
                                                          ========     ========


         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 valuation  allowance  against
deferred tax assets where the realization is uncertain.  The valuation allowance
reduces  the net  deferred  tax asset to the  amount  that is  estimated  may be
recovered  through  carryback from future periods.  The Company will continue to
evaluate  positive  and  negative  evidence  on 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.

         The Company has  approximately  $2.3 million of Federal and  California
research credit carryforwards.  If not utilized,  the Federal carryforwards will
expire in various amounts beginning 2003. The California  research credit can be
carried forward  indefinitely.  The Company also has an alternative  minimum tax
credit of approximately  $2.1 million which can be carried forward  indefinitely
and offset against regular tax.

         Included in the deferred tax assets is  approximately  $15.5 million of
assets  relating  to the stock  option  compensation  which will be  credited to
equity when realized and $7.6 million  related to  unrealized  loss on available
for sale securities  which will be credited to accumulated  other  comprehensive
loss in equity if the valuation allowance is reduced in the future.

10.  PER SHARE COMPUTATION

         For fiscal  2001,  options to  purchase  1,451,242  common  shares were
outstanding,  but were not included in the computation of diluted net income per
share  because the exercise  prices of the options were greater than the average
market price of the common shares.  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.

                                      F-22
<PAGE>

                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

         A  reconciliation  of the  basic  and  diluted  per  share  calculation
follows:
<TABLE>
<CAPTION>
                                                             Year ended March 31,
                          ------------------------------------------------------------------------------------------------
                                       2001                            2000                             1999
                          ------------------------------ -------------------------------  --------------------------------
                                                   Per                            Per                              Per
                             Net                  Share      Net                 Share       Net                   Share
                            Income     Shares     Amount     Loss      Shares     Amount     Loss       Shares     Amount
                            ------     ------     ------     ----      ------     ------     ----       ------     ------
<S>                       <C>          <C>      <C>      <C>           <C>      <C>       <C>           <C>      <C>
Basic .................   $ 13,480     11,113   $   1.21 $ (5,823)     10,426   $  (0.56) $(36,971)     10,568   $  (3.50)
Effect of stock options         --        230      (0.02)      --          --         --        --          --         --
                          --------     ------   -------- --------      ------   --------  --------      ------   --------
Diluted ...............   $ 13,480     11,343   $   1.19 $ (5,823)     10,426   $  (0.56) $(36,971)     10,568   $  (3.50)
                          ========     ======   ======== ========      ======   ========  ========      ======   ========
</TABLE>

11.  CUSTOMER CONCENTRATIONS

         For the year  ended  March 31,  2001,  three  customers  accounted  for
approximately  59%,  18% and 13% of net  revenues.  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.  Three customers accounted for an aggregated of 90%
of accounts  receivable  at March 31, 2001 and two  customers  accounted  for an
aggregate  of 86% of  accounts  receivable  at March 31,  2000.  The Company has
written off bad debts of $40,000 in fiscal  years 2001,  and none for the fiscal
years of 2000 and 1999, respectively.

12.  SEGMENT INFORMATION

         The Company  operated  and reported its  financial  information  as one
vertical  integrated  unit in the fiscal year ended 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. Under the management  approach,  the Company divided its business into two
divisions  based  upon  product  type:   Amplifier  Division  and  Semiconductor
Division,  which  operated  under the  tradename  of  UltraRF.  UltraRF  derived
virtually  all of its net revenues  from sales to the  Amplifier  Division.  The
Company  allocated  operating  expenses to these  segments  but did not allocate
interest income and expense.  Corporate expenses were allocated to the operating
segments  based  on  predetermined   annual  allocation   methods.   Appropriate
intersegment  eliminations  were  made  in the  consolidation  of the  Company's
consolidated financial statements. Following the sale of UltraRF on December 29,
2000, the Company began operating as one vertical  integrated  unit. See Note 2.
Segment information for fiscal 2001 and fiscal 2000 is as follows:

Consolidated Statement of Operations Data - Fiscal 2001 (in thousands):

<TABLE>
<CAPTION>
                                               Year Ended March 31, 2001
                                     --------------------------------------------
                                     Amplifier    UltraRF       Other       Total
                                     ---------    -------       -----       -----
<S>                                 <C>          <C>         <C>          <C>
Net revenues, external ..........   $ 178,671    $   1,081   $    --      $ 179,752
Net revenues, intersegment ......        --         23,487     (23,487)        --
Amortization and depreciation ...       5,290        2,185       2,950       10,425
Income (loss) before income taxes      (7,605)         313      20,784       13,492
</TABLE>
                                      F-23
<PAGE>


                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

Consolidated Statement of Operations Data - Fiscal 2000 (in thousands):
<TABLE>
<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...........          (13,401)           4,113             3,495           (5,793)
<FN>

*Data in the "Other" column represents the elimination of intersegment revenues,
interest  income and expense,  other  income,  the  provision  for income taxes,
certain   unallocated   corporate   expenses  and  corporate   amortization  and
depreciation that is subsequently allocated to the operating segments.
</FN>
</TABLE>

Consolidated Balance Sheet Data (in thousands):
<TABLE>
<CAPTION>
                                                                                 March 31, 2001
                                                          -----------------------------------------------------------
                                                            Amplifier        UltraRF          Other         Total
                                                            ---------        -------          -----         -----
<S>                                                          <C>              <C>            <C>           <C>
Segment Assets........................................       $ 30,235         $   --         $3,618        $33,853
Expenditures for additions to long-lived assets.......       $  5,228         $3,478         $  936        $ 9,642

                                                                                 March 31, 2000
                                                          -----------------------------------------------------------
                                                            Amplifier        UltraRF          Other         Total
                                                            ---------        -------          -----         -----

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>

         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 were as follows:

                                                    Year ended March 31,
                                              --------------------------------
                                              2001          2000          1999
                                              ----          ----          ----
        SCPA ...........................        63%           77%           90%
        MCPA ...........................        33%           20%            4%
        Other...........................         4%            3%            6%
                                             -----         -----         -----
        Total Revenue...................       100%          100%          100%
                                             =====         =====         =====

                                      F-24

<PAGE>

                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

Geographic Segment Data:

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

                                                   Year Ended March 31,
                                             --------------------------------
                                             2001          2000          1999
                                             ----          ----          ----
        Canada.........................       42%           42%           57%
        South Korea....................       18%           16%           14%
        United States..................       22%           13%           16%
        France.........................       12%           26%           13%
        Other..........................        6%            3%            --%

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


                                                     March 31,
                                              -------------------------
                                                2001             2000
                                                ----             ----
United States ..........................      $ 7,966           $18,226
Thailand ...............................        2,707             1,218
Korea ..................................          959               224
                                              -------           -------
                                              $11,632           $19,668
                                              =======           =======

13.  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  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.  In
fiscal 2001, the Company reversed $100,000 of unused restructuring charge due to
changes  in the  restructuring  plan.  Approximately  60  employees  engaged  in
manufacturing  and production  related  functions were terminated as a result of
the restructuring during fiscal 2001. The transfer of production to Thailand was
completed  during  the  third  quarter  of  fiscal  2001.  The  following  table
represents the  restructuring  activity that took place up to March 31, 2001 (in
thousands):


                                                                   Reduction in
                                                                    Workforce
                                                                    ---------

      Reserve for estimated severance costs...................      $  1,032
      Cash payment of severance costs.........................          (932)
      Reversal of estimated severance costs...................          (100)
                                                                    --------
      Balance at March 31, 2001                                     $     --
                                                                    ========

                                      F-25
<PAGE>

                             SPECTRIAN CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
                    YEARS ENDED MARCH 31, 2001, 2000 AND 1999

14.  SUBSEQUENT EVENTS

Cree Common Stock and Option Transactions


         In May 2001,  the Company sold 524,000  shares of Cree common stock for
about $15.4 million and  recognized a loss of  approximately  $3.2  million.  In
addition,  the  Company  entered  into  various  option  arrangements,  known as
cashless collar,  expiring in May 2002, to hedge the remaining 100,000 shares of
Cree stock on hand. As a result,  the Company  should be able to realize  $26.05
per share for 100,000  shares if the share  price of Cree common  stock is lower
than $26.05 per share when the options  expire.  If the Cree common  stock price
exceeds of $36.25 per share when the  options  expire,  the Company may sell its
hedged  shares at  approximately  $36.25 or settle the options for a cash amount
equal to the  difference  between  the Cree  common  stock  price and the option
price.  Until the options expire,  the Company will be restricted from disposing
of the 100,000 shares.


Line of Credit


         In May 2001,  the Company  renewed its line of credit  expiring in June
2001 for one year at terms substantially similar to the old line.



                                      F-26