<PAGE>


                                  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 ACT OF 1934

For the fiscal year ended December 31, 1997 [ X ]

                                       OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OR THE
                                    SECURITIES ACT OF 1934

For the transition period from  .......................to .....................

                         Commission file number 0-12489

                              SPECTRAN CORPORATION
     ........................................................................
           (Exact name of the registrant as specified in its charter)

         Delaware                                        04-2729372
     ...............................          ..............................
     State or other jurisdiction of         (I.R.S. Employer Identification No.)
     incorporation or organization

50 Hall Road, Sturbridge, Massachusetts                             01566
 ......................................................           ............
   (Address of Principal Executive Offices)                       (Zip Code)

Registrant's telephone number, including area code   (508) 347-2261

Securities registered pursuant to Section 12(b) of the Act:
                                                       Name of each exchange on
             Title of each class                          which registered

                        None                                Not Applicable
         .....................................................................


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

                           Common Stock, $.10 par value
  ............................................................................

                               (Title of class)

     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. [ X ]

                                       1
<PAGE>

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant,  computed  by  reference  to the  closing  price of such  stock,  on
February 27, 1998: $61.7 million.

The number of shares  outstanding of each of the Registrant's  classes of common
stock, as of the latest practicable date: 6,998,683 shares of common stock, $.10
par value, outstanding on February 27, 1998.

                                        DOCUMENTS INCORPORATED BY REFERENCE


The  information  required for Part III hereof is incorporated by reference from
the Registrant's  Proxy Statement for its 1998 Annual Meeting of Shareholders to
be filed with the Securities and Exchange  Commission  within 120 days after the
end of the Registrant's fiscal year.


                                                      PART I

Item 1.       BUSINESS.


         SpecTran  Corporation  ("SpecTran," the "Company" or the  "Registrant")
operates through two wholly-owned  subsidiaries,  SpecTran  Communication  Fiber
Technologies,  Inc.  ("SpecTran  Communication")  and SpecTran  Specialty Optics
Company ("SpecTran  Specialty"),  and through General  Photonics,  LLC ("General
Photonics"),  a joint venture with General Cable Corporation  ("General Cable").
In December  1996,  the Company sold  certain of the assets of its  wholly-owned
subsidiary,  Applied Photonic Devices,  Inc.  ("APD"),  and then contributed the
remaining  assets of APD to General  Photonics for a 50% equity  interest.  (See
Note  14  to  the  Consolidated   Financial  Statements  -   "Acquisitions/Joint
Venture").  SpecTran Communication develops,  manufactures and markets multimode
and single-mode  optical fiber for data  communications  and  telecommunications
applications.   SpecTran  Specialty,   acquired  in  February  1994,   develops,
manufactures  and  markets   specialty   multimode  and  single-mode  fiber  and
value-added   fiber   optic   products   for   industrial,   military/aerospace,
communication and medical applications. General Photonics develops, manufactures
and markets  communications-grade  fiber optic cable  primarily for the customer
premises market in the United States, Canada and Mexico.


Technology

         Fiber optic technology  utilizing glass as a communications  medium was
developed in the 1970s and offers numerous technical advantages over traditional
media such as copper. Optical fibers are hair-thin solid strands of high quality
glass usually  combined in cables for  transmitting  information  in the form of
light  pulses.  An optical  fiber  consists of a core of high purity glass which
transmits light with little signal loss. This core is typically encased within a
covering  layer of high  purity  glass  referred to as optical  cladding,  which
reduces signal loss through the side walls of the fiber.  The  information to be
transmitted is converted from electrical impulses into light waves by a laser or
light emitting diode.  At the point of reception,  the light waves are converted
back into electrical impulses by a photo-detector.

         Optical fiber's  advantages  include its high bandwidth,  which permits
reliable transmission of complex signals such as multiple high-quality audio and
video  channels  and  high-speed  data formats  such as Fiber  Distributed  Data
Interface  (FDDI),  Asynchronous  Transfer  Mode (ATM) and other  communications
                                       2
<PAGE>

protocols. Compared to traditional copper cable used in telephony, optical fiber
has thousands of times the information  carrying  capacity,  occupies less space
and operates over greater distances with  significantly  less attenuation.  This
high  capacity  and  reliability  makes  optical  fiber  systems well suited for
interactive  applications,  allowing  digitally  encoded  voice,  data and video
signals to be transmitted in large volumes at high speed.  Furthermore,  optical
fiber is immune to  electrical  surges and  electromagnetic  interference  which
cause static in copper wire  transmission  and wireless  communication.  Optical
fiber has  technical  advantages  over  wireless  communications  media  such as
transmission  quality  and  signal  reliability.  Optical  fiber is also a safer
choice  in  flammable  environments  because  it  does  not  carry  electricity.
Additionally, communicating through optical fiber is more secure than copper and
wireless communications because tapping into fiber optic cable without detection
is very difficult.

         Optical   fiber   quality   is   measured   by   several    performance
characteristics  and is reflected in the price of the fiber.  These  performance
characteristics  include  bandwidth,  attenuation  (signal loss over  distance),
tensile  strength,  geometry and the dimensional  and optical  uniformity of the
fiber. Optical fiber users and manufacturers have established specifications and
standards for both multimode and single-mode fiber.

Products

         The following  table  describes  the  Company's and General  Photonics'
principal product areas and the markets they serve:
<TABLE>
<CAPTION>

--------------------------------------- ------------------------------------- --------------------------------------
               Products                             Applications                        Target Customers
--------------------------------------- ------------------------------------- --------------------------------------
--------------------------------------- ------------------------------------- --------------------------------------
SpecTran Communication
--------------------------------------- ------------------------------------- --------------------------------------
<S>                                     <C>                                   <C>

Data  communication   grade  multimode  Data   communications,   including    Integrated  cablers (e.g.,  Lucent,
fiber: 50, 62.5 and 100 micrometer      FDDI and fast Ethernet; LANs; video;  Chromatic Technologies); independent
core diameters                          CCTV; computer peripherals channel    cablers (e.g.,Optical Cable
                                        attachment                            Corporation, CommScope, General
                                                                              Photonics)


--------------------------------------- ------------------------------------- --------------------------------------
Telephone grade    single-mode   fiber  Telephony (principally in emerging    Independent dat communications
                                        economies); high-speed domestic       cablers: international
                                        short-distance data communication,    telecommunications cablers
                                        including Fibre Channel and FDDI      (e.g., Indial, China, Mexico)




--------------------------------------- ------------------------------------- --------------------------------------
</TABLE>

                                       3
<PAGE>

<TABLE>
<CAPTION>


--------------------------------------- ------------------------------------- --------------------------------------
               Products                             Applications                        Target Customers
--------------------------------------- ------------------------------------- --------------------------------------
SpecTran Specialty
--------------------------------------- ------------------------------------- --------------------------------------
<S>                                     <C>                                   <C>

Step & graded  index  multimode fiber & Factory  LANs  and PLC interconnects; Factory, transportation and medical
cable: polymer clad/glass core, high    mobile video; avuibucs; high-speed    OEMs; systems designers and
numerical aperture, radation            ground-based transportation;          integrators; geophysical exploration
tolerant, power delivery and high       geophysical exploration and           companies; US government and
temperature fiber; avionics cable;      monitoring; sensing; power            military: utilities; telecom and
high dielectric strength cable          transmission, including laser         supercomputer OEMs; systems
tether cables                           surgery; blood gas monitoring;        designers and integrators
including laser  supercomputer  OEMs;   radiation resistant links; high-
monitoring; designers and integrators   speed, short-distance telecom
                                        interconnects (e.g., telephone
                                        switching systems and PBXs);
                                        supercomputer links


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

Specialty    single-mode  fiber   and   Metallized pigtails, couplers,        Telecommunication; optoelectronic
cable: photo-sensitive, rare-earth      amplifiers, geophysical exploration   manufacturers; well-logging
delay line, fatigue resistant fiber;    and monitoring; gyroscopes;           companies and system integrators;
avionics cable; tether cables           wave-length division multiplexers     defense contracts


--------------------------------------- ------------------------------------- --------------------------------------
--------------------------------------- ------------------------------------- --------------------------------------
Components  and  assemblies: crimp and  Industrial  automation;               OEMs; systems designers and
cleave connectors; pigtails; fiber      enviromental monitoring; customer     integrators; facilities managers;
optic arrays; specialty and hybrid      premises networking; military spec    utilities; optoelectronic device
interconnects; tool kits                and high reliability assemblies;      manufactures; defense contractors
                                        high power laser delivery; sensing;
                                        illumination; spectroscopy


--------------------------------------- ------------------------------------- --------------------------------------
General Photonics
--------------------------------------- ------------------------------------- --------------------------------------

Indoor cable:  tight buffered           Building backbones; riser and         Networking systems and LAN OEMs;
distribution and breakout designs       plenum installation                   systems designers and integrators;
                                                                              installers; facilities managers

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

Outdoor cable:  loose tube;             Customer premises backbones,          Networking systems and LAN OEMs;
gel-filled; direct burial; aerial;      including densely populated           systems designers and integrators;
armored; figure eight                   buildings and campuses; Fibre         installers; facilities managers
                                        Channel; FDDI; bypass telecom

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

Cable accessories:  pulling devices;    Customer premises systems and LAN     Installers; system integrators; LAN
breakout, splitter and restoration      installation & repair                 OEMs; utilities
kits; cable terminations

--------------------------------------- ------------------------------------- --------------------------------------
</TABLE>

Customers and Marketing

         The Company  sells its  multimode  and  single-mode  optical  fibers to
various cable manufacturers,  domestically and  internationally,  which assemble
them into cables for resale in  configurations  of their own  design.  Specialty
                                       4
<PAGE>

fiber products are sold directly to a large number of OEMs, product  development
groups,   international   distributors   and   manufacturers'   representatives,
installers,  universities  and governmental  agencies,  primarily for use in the
industrial, medical, military, aerospace,  transportation and telecommunications
and data  communications  markets.  Optical  fiber cable and cable  accessories,
manufactured by General  Photonics,  are sold largely to  distributors,  systems
integrators and installers  primarily for use in the customer premises market in
the United States, Canada and Mexico.
<PAGE>

         The Company markets its multimode and single-mode  data  communications
and telecommunications optical fiber products principally through a direct sales
force  in  the   United   States  and   through  a  network  of   manufacturer's
representatives   internationally.   Specialty   fiber   products  are  marketed
domestically  through a direct  technical field sales force and  internationally
through a network of technical distributors and sales  representatives.  Optical
fiber cable and cable  components  produced by General  Photonics  are  marketed
primarily through General Cable's direct sales force and sales  representatives.
Marketing,  technical  support and some direct  sales and  customer  support are
provided  by  General  Photonics  personnel.  The  Company  advertises  in trade
publications,  distributes  brochures and other  material to its mailing list of
potential  customers  worldwide  and  participates  at  trade  shows,  technical
symposia and standards committees.

         As  a  result  of  its  diversification  efforts  and  broader  product
offering,  the Company has  significantly  increased  its customer base over the
last three years and plans to continue to expand this base  aggressively  within
its targeted markets.  International sales, primarily Asia and Europe, accounted
for 22% of total sales in 1997. For the year ended  December 31, 1997,  sales to
Corning Inc.,  Optical Cable  Corporation and Lucent  Technologies were equal to
10% or more of the Company's revenues.  These three companies together accounted
for 40% of the Company's revenues in 1997.

Manufacturing and Quality Control


         The basic raw materials  required for the  manufacture of the Company's
optical fiber products are high quality glass tubes and rods,  various chemicals
and gases and certain polymers.  The Company believes that its sources of supply
of these raw materials are adequate and that alternative  sources are available.
The Company  typically  manufactures  optical fibers by  introducing  vapors and
gases of varying  chemical  compositions  into a special  glass tube in a clean,
controlled  environment.  In the modified  chemical  vapor  deposition  ("MCVD")
process, an inside vapor deposition process used by the Company, the glass tube,
which forms all or a portion of the optical cladding,  and the introduced vapors
and gases are  simultaneously  heated,  and oxide  particles,  formed  through a
reaction of chemical  vapors with  oxygen,  are  deposited  on and adhere to the
inside of the tube. As the particles  attach to the tube wall, they are fused to
create a layer of high purity glass.  Succeeding  layers of glass of the same or
different  compositions are deposited in this fashion to permit the transmission
of light in accordance  with the desired  specifications.  The Company  believes
that the MCVD process is more flexible than other processes in the production of
optical fiber and uses it to produce both multimode and single-mode  fiber.  The
other main  process for making  optical  fiber is the outside  vapor  deposition
process which, the Company  believes,  is less flexible  overall,  but more cost
effective  for  producing  single-mode  fiber.  As  part of its  acquisition  of
SpecTran  Specialty,  the  Company  acquired  patent  rights  to  outside  vapor
deposition processes collectively known as hybrid vapor deposition ("HVD") which
it is continuing to develop for possible use in conjunction with its single-mode
fiber production process.
                                       5
<PAGE>

         In the MCVD process,  once  deposition is completed,  the glass tube is
then collapsed into a rod, or primary  preform,  consisting of a deposited core,
in certain instances some deposited  cladding and cladding provided by the glass
tube  itself.  In most  cases,  additional  cladding  is added  to this  primary
preform.  The rod is then  placed at the top of a fiber  drawing  tower,  heated
until it softens and drawn into a fiber of predetermined diameter.

         The majority of the  Company's  specialty  products  use a  proprietary
polymer clad glass core fiber drawn from  manufactured or purchased  silica rod.
This  fiber is either  sold to third  parties  or cabled  and/or  combined  with
assemblies and sold. The Company owns certain hard polymer cladding, coating and
fiber  termination   technology  known  as  "crimp/cleave,"   which  facilitates
attachment of optical fibers to connectors and other  components and has certain
proprietary  technology  used for the cabling of optical fiber.  The Company has
developed proprietary  technology related to the processing of a wide variety of
polymeric  compounds  for  the  manufacture  of  optical  fiber  cable.  General
Photonics  purchases fiber from the Company and protectively  covers and bundles
the fibers  into cable.  Certain of General  Photonics'  technology  enables the
manufacture  of  nonflammable,  low  smoke,  low  toxicity  cables  for use both
outdoors and inside buildings, which the Company believes provides a significant
competitive advantage.

         The Company believes that its quality control programs are essential to
its success.  The Company's  quality  control  programs are designed to maintain
strict  tolerances during the  manufacturing  process and to assure  performance
standards of its products.  The Company  performs quality control testing on all
of its products.  The Company  designs and builds much of the equipment its uses
to manufacture and test its optical fiber products.  In November 1995,  SpecTran
Communication's facility in Sturbridge, Massachusetts became certified under ISO
9001, an internationally  recognized  manufacturing  standard designed to ensure
process consistency.  SpecTran Specialty's Avon, Connecticut facility became ISO
9001 certified in March 1996. All of the Company's  operations  utilize internal
testing  procedures based on the  internationally  recognized  "Fiber Optic Test
Procedures"  and have in place and continue to develop  specialized  proprietary
testing systems and procedures to support the  requirements of their  respective
customers.

Environmental Matters

         The Company  uses  certain  hazardous  materials  in its  research  and
manufacturing  operations. As a result, the Company is subject to federal, state
and local  governmental  regulations.  The Company believes that it has complied
with all regulations and has all permits necessary to conduct its business.

Proprietary Rights

         The Company  considers  its  proprietary  know-how  with respect to the
development  and  manufacture of flexible glass fibers and  value-added  optical
fiber products to be a valuable asset. This know-how includes formulation of new
glass compositions, development of special fiber coatings, coating applications,
fiber  designs,  preform  fabrication,  fiber  drawing,  optical  fiber  cabling
methods,  fiber cleaving,  polishing and end finishing  techniques,  proprietary
testing capabilities,  development and implementation of manufacturing processes
and quality control techniques, and design and construction of manufacturing and
quality control equipment. Product and application knowledge are also considered
to be valuable assets of the Company.


         Corning   License.   The   Company   has  a  limited,   non-assignable,
non-exclusive,  royalty-bearing license from Corning to make, use and sell fiber
under  certain of Corning's  United  States  patents with a filing date prior to
January 1, 1996, in the field of optical  fiber.  The license  contains  certain
annual quantity limitations. The Corning license is not applicable to sales made
                                       6
<PAGE>

directly or  indirectly  to certain  customers  such as Corning,  Lucent and the
United States  Government.  The quantities  that can be  manufactured  under the
license increase annually through the year 2000. The license has a term equal to
the life of the last to expire of the Corning or Company patents  licensed under
the agreement.  Corning has the right to terminate the license in the event that
more than 30% of the Company's voting stock is acquired, directly or indirectly,
by  another  manufacturing  company.  The  Company  granted  back to  Corning  a
non-exclusive  royalty-free  license for any of its  patents  with a filing date
prior to January 1, 1996, in the field of optical fiber.


         Lucent  License.  The  Company  has  a  non-assignable,  non-exclusive,
unlimited,  royalty-bearing  license  from  Lucent  under all  patents  covering
optical  fiber and optical  fiber cable owned by Lucent or which  Lucent and its
affiliates  had the right to license on or before  August 15, 1986.  The Company
granted back to Lucent a non-exclusive,  royalty-free  license under patents the
Company may obtain relating to optical fiber inventions made on or before August
15, 1986. The license  extends for the life of the last to expire of the patents
licensed under the agreement.


         Sales Subject to Corning and Lucent License  Agreements.  Approximately
30% of the Company's  net sales during 1997 were subject to the Corning  license
and  approximately  45%  were  subject  to the  Lucent  license.  These  license
agreements  required  aggregate royalty payments by the Company of approximately
3% of net sales of the  Company's  products  manufactured  under the  agreements
during 1997. The Company believes that certain Corning  patents,  which may have
been relevant to the Company's single-mode fiber, including patents covered by a
non-exclusive  license  from  Corning  to the  Company,  have  expired  in  many
countries  (including the United States).  Therefore,  the Company believes that
manufacturing  and sale of its  single-mode  fiber is not subject to the Corning
license  and has been  marketing  its  single-mode  fiber  without  payments  of
royalties to Corning and without  regard to the annual  quantity  limitations of
the Corning  license since 1993.  The Company  presently does not expect to need
the  Corning  license  for the  manufacture  of its  multimode  fiber after 1999
because the Company  believes that a Corning United States patent with relevancy
to its multimode fiber will expire in 1999.


         Patents and Trademarks.  The Company and its  subsidiaries  own 24 U.S.
patents  relating to products,  processes and equipment in the fields of optical
fibers,  optical  connectors,  coatings and cleaving tools. The Company believes
that its patents afford it certain  competitive  advantages.  Under the terms of
the  Corning  and Lucent  license  agreements,  the  optical  fiber  patents are
required  to be made  available  royalty-free  to Corning  and  certain of those
patents are also required to be made available royalty-free to Lucent.

         The Company is using its trademark  SPECTRAGUIDE(R)  for its commercial
grade optical fiber and for certain of its value added fiber  products.  It also
uses the trademarks HCS(R) (Hard Clad Silica),  Avioptics(TM),  Flightguide(TM),
PYROCOAT(TM), V-System(TM) and V-Pin(TM).

Research and Development


         Research  and  development  activities,  and the  Company's  ability to
develop and improve  products  employing both existing and new  technology,  are
important to the Company.  During the fiscal years ended December 31, 1997, 1996
and 1995,  the  Company  spent $3.3  million,  $3.1  million  and $2.8  million,
respectively, or 5.3%, 5.1% and 7.3%, respectively, of its net sales on research
and  development.  The Company expects to continue to increase the annual dollar
amount of its research and development  expenditures.  The Company has continued
to  invest  in  programs  to  reduce  manufacturing  cost  and  improve  product
performance in both the single-mode and multimode  product lines, to develop new
                                       7
<PAGE>

optical fiber  products and to develop  alternative  process  technologies.  The
Company's  personnel  conduct  substantially all of its research and development
activities.  See "Item 7.  Management's  Discussion  and  Analysis of  Financial
Condition and Results of Operations."


Backlog

         As  of  January  31,  1998,   the  Company's   backlog  of  orders  was
approximately  $35.2  million,  as compared to a backlog of $69.4  million as of
January 31, 1997. Approximately $18.5 million of the January 31, 1998 backlog is
expected to be delivered during 1998.

Competition


         The Company  produces and sells optical  fibers and value added optical
fiber components and assemblies for data communications,  telecommunications and
specialized applications. Optical fiber cable and cable components are also sold
through  General  Photonics.   While  there  may  be  less  competition  in  the
specialized  markets,  all of the  markets  served by the  Company  and  General
Photonics are very  competitive.  The Company's main  competitors for its fibers
for data communications and  telecommunications  are its licensers,  Corning and
Lucent,  to whom the Company pays royalties and who have  substantially  greater
resources  and  operating  experience  than  the  Company.  The  Company's  main
competitors for its specialty fibers generally have been smaller operations, but
some of those  competitors  are part of  companies  with  substantially  greater
resources than the Company.  General Photonics' main competitors for its optical
fiber cable products are large companies with  substantially  greater  resources
and operating  experience than the Company and General Photonics,  some of which
may also be customers of SpecTran Communications. The Company competes for sales
based upon its ability to fill orders  promptly at competitive  prices,  product
performance, product features, unique proprietary products, flexibility, quality
and service.

         The Company  believes that optical  fibers offer a number of advantages
over and compete favorably with other means of transmitting information, such as
copper wire, satellite and other line of sight transmissions (e.g.,  microwaves)
despite  increased  interest in wireless  communications  in the marketplace and
enhancements  to  the  existing  copper  wire  telephony  infrastructure.   Many
companies   offering  such  other  means  of   transmitting   information   have
substantially  greater resources and operating  experience than the Company. The
Company often competes with both mature existing  technology and new technology,
some of which have cost advantages over optical fiber for certain applications.


         The number of  participants  in the optical  fiber  industry is to some
extent limited by patents covering the fundamental optical fiber technology, the
need  for  substantial   capital  investment  and  the  availability  of  highly
specialized equipment and personnel with the requisite technical expertise.  The
Company believes that certain Corning  patents,  which may have been relevant to
the Company's  single-mode  fiber,  including patents covered by a non-exclusive
license from Corning to the Company,  have expired in many countries  (including
the United States).  The Company further  believes that a certain Corning United
States  patent,  covered by this  non-exclusive  license,  with relevance to the
Company's  multimode fiber,  expires in 1999. In addition,  the Company believes
that a certain Lucent patent  licensed to the Company  relating to its multimode
and  single-mode  fiber expired in 1997.  The expiration of these patents may or
may not reduce the patent  barrier to entry by other  participants.  The Company
estimates  that the initial  investment  required  for a turn-key  manufacturing
facility  capable of  producing  200,000  kilometers  of  world-class  multimode
optical fiber annually is between $50 million and $100 million.

                                       8

<PAGE>


Employees


         As of December 31, 1997, the Company employed 504 persons,  of whom 132
were employed in technology,  278 were employed in manufacturing  operations and
94 provided  marketing,  administrative,  management and other support services.
These  numbers do not  include 64  employees  of  General  Photonics  previously
employed by APD. The Company's  employees are not  represented by a labor union.
The Company believes its employee relations are good.


Item 2.       PROPERTIES.


         The  Company's  administrative  offices and the offices and  production
facilities  of SpecTran  Communication  are located in an  approximately  50,000
square  foot  building  which the  Company  is in the  process of  expanding  to
approximately  100,000 square feet. The building is situated on approximately 43
acres of land owned by  SpecTran  Communication  in  Sturbridge,  Massachusetts.
SpecTran  Communication  also owns an  approximately  5,000  square  foot office
building used for offices that is next to this manufacturing facility.


     SpecTran  Specialty's  offices and production  facilities are located in an
approximately  58,000  square  foot  building.   The  building  is  situated  on
approximately  14  acres  of  land  located  in  Avon,  Connecticut.  All  these
properties are owned by the Company.

     General  Photonics  has assumed  APD's  lease for  offices  and  production
facilities in an approximately 45,000 square foot facility located in Danielson,
Connecticut  with a term of two years expiring May 31, 1998,  subject to General
Photonics'  right to renew the lease for two consecutive one year renewal terms.
General  Photonics  has also  assumed  APD's lease for  offices  and  production
facilities  in a 65,000 square foot  facility  located in Dayville,  Connecticut
under a lease  expiring  February  6,  2001,  which is  subject  to a three year
renewal option, followed by a second renewal option for an additional two years.


Item 3.       LEGAL PROCEEDINGS.

              None.


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

              None.

                                       9
<PAGE>


                                     PART II


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


         The  Company's  Common  Stock is traded on the NASDAQ  National  Market
System  under the symbol  "SPTR."  Set forth  below is high and low sales  price
information for the Company's Common Stock for the periods indicated as reported
on the NASDAQ National Market:


                                                                 Price
 Fiscal Year         Fiscal Quarter Ended                 High           Low



     1996            March 31, 1996                       8-7/8          5-1/4
                     June 30, 1996                        28-5/8         8
                     September 30, 1996                   22-1/8         12-1/2
                     December 31, 1996                    23-3/8         16-1/8


     1997            March 31, 1997                       25             12-5/8
                     June 30, 1997                        21             11-1/4
                     September 30, 1997                   20-3/4         13-3/4
                     December 31, 1997                    15-1/4         8-5/8




         The  approximate  number of  shareholders  of  record of the  Company's
Common Stock as of February  27, 1998 was 773 which  includes all shares held in
nominee names by brokerage firms and financial  institutions as one stockholder.
It is estimated that such shares held in street name are held for  approximately
6,300 stockholders.

         The Company has never declared or paid cash dividends.

                                       10
<PAGE>




Item 6.       SELECTED CONSOLIDATED FINANCIAL DATA.
<TABLE>
<CAPTION>


                                                                       Years Ended December 31
                                                                (in thousands, except per share data)

                                                 ---------------------------------------------------------------------
OPERATING RESULTS                                    1997          1996          1995          1994          1993
-----------------                                    ----          ----          ----          ----          ----

<S>                                              <C>           <C>              <C>           <C>           <C>

Net Sales                                        $   62,057    $   61,571       $38,581       $26,926       $25,578
Gross Profit                                         23,276        22,375        13,061         7,623         9,615
Income (Loss) Before Income Taxes                     7,111         5,537           777          (487)        5,629
Net Income (Loss)                                     4,842         3,655           542          (487)        3,655
Earnings per Common Share-Basic                         .72           .68           .10          (.09)          .67
Earnings per Common Share-Diluted                       .68           .61           .10          (.09)          .67


FINANCIAL POSITION

Total Assets                                         92,105        62,456        40,365        31,362        26,712
Long-Term Debt                                       24,000        24,000        10,000         5,240           300
Stockholders' Equity                                 56,759        28,403        24,296        23,104        23,614

</TABLE>




                                       11
<PAGE>




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

      Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Overview


         Currently,  SpecTran develops,  manufactures,  and markets high quality
optical fiber, optical fiber cables and value-added optical fiber components and
assemblies.  Prior to 1993,  the  Company  had a  narrow  customer  base and was
focused on the production of multimode  fiber for the domestic  market.  In 1993
the Company  began to  implement a strategic  plan to  diversify  its  products,
markets  and  customer  base.  As part of this plan,  the  Company  reintroduced
single-mode  fiber in 1993 and began marketing it  internationally.  In 1994 the
Company  acquired  Ensign-Bickford's  specialty  fiber  operations  (which later
became SpecTran  Specialty),  allowing the Company to become a world-wide leader
in fiber optic specialty applications. The Company entered the fiber optic cable
market in May 1995 by acquiring APD in order to participate  more extensively in
the rapid growth of the data communications  market, the principal end market of
multimode fiber. In December 1996 the Company formed General Photonics,  a joint
venture  with  General  Cable,  to develop,  manufacture  and market fiber optic
cable.


Results of Operations

         The  following  table sets forth,  for the periods  indicated,  certain
financial data as a percentage of net sales:
<TABLE>

                                                                             Years Ended December 31,
                                                                          1997              1996              1995
                                                                          ----              ----              ----

<S>                                                                       <C>               <C>              <C>
Net Sales                                                                 100.0%            100.0%           100.0%
Cost of Sales                                                              62.5%             63.7%            66.1%
                                                                           -----             -----            -----
   Gross Profit                                                            37.5%             36.3%            33.9%
Selling and Administrative Expenses                                        22.5%             22.1%            25.1%
Research and Development Cost                                               5.3%              5.1%             7.3%
                                                                            ----              ----             ----

   Income from Operations                                                   9.7%              9.1%             1.5%
Other Income (Expense), net                                                 1.8%             (.1)%              .5%
                                                                            ----             -----              ---
   Income before Income Taxes                                              11.5%              9.0%             2.0%
Income Tax Expense                                                          3.5%              3.1%             0.6%
                                                                            ----              ----             ----

   Income before equity in Joint Venture                                    8.0%              5.9%             1.4%
Income (loss) from Joint Venture, net                                      (.2)%                --               --
                                                                           -----                --               --
      Net Income                                                            7.8%              5.9%             1.4%
                                                                            ====              ====             ====
</TABLE>


                                       12

<PAGE>


Net Sales

         Net sales  increased  $486,000,  or .8%,  from $61.6 million in 1996 to
$62.1  million  in 1997.  Net  sales in 1997 did not  include  those of  General
Photonics,  whereas  sales  for 1996  included  the  sales of  Applied  Photonic
Devices,  Inc. (APD), certain assets of which were sold in December 1996 to form
General  Photonics,  a joint venture with General Cable. On a comparative basis,
including  General  Photonics  sales in 1997  would  have  resulted  in an 18.4%
increase compared with 1996. Net sales increased at both SpecTran  Communication
and  SpecTran  Specialty  in 1997 as  compared to 1996 due to  continued  market
demand.  This was  partially  offset by industry  pricing  pressure for standard
communication fiber products experienced during the second half of 1997.

Gross Profit

         Gross profit increased $901,000, or 4.0%, from $22.4 million in 1996 to
$23.3 million in 1997. As a percentage of net sales,  the gross profit increased
to 37.5% for the year ended  December  31,  1997,  from 36.3% for the year ended
December 31,  1996.  The  increase in gross  profit was  primarily  due to lower
production  costs  for  the  Company's  standard  communication  fiber  products
resulting from manufacturing process and yield improvements.  This was partially
offset by lower  margins at SpecTran  Specialty,  primarily  due to greater than
planned costs incurred in connection with the consolidation and expansion into a
new facility.

         As a percentage of net sales,  royalties decreased from 3.7% in 1996 to
3.0% in 1997.  This  decrease  in  royalties  as a  percentage  of net sales was
primarily due to an increase in 1997 in the net sales not subject to royalties.

Selling & Administrative

         Selling and administrative  expenses increased $325,000,  or 2.4%, from
$13.6 million in 1996 to $14.0 million in 1997.  This increase was primarily due
to costs associated with the Company's  one-time  management  reorganization and
training costs partially offset by a lower provision for incentive  compensation
in 1997.  As a  percentage  of net sales,  selling and  administrative  expenses
slightly  increased to 22.5% for the year ended December 31, 1997 from 22.2% for
the year ended December 31, 1996.

Research and Development

         Research and development costs increased  $157,000,  or 5.0%, from $3.1
million in 1996 to $3.3 million in 1997. As a percentage of net sales,  research
and  development  costs increased from 5.1% for the year ended December 31, 1996
to 5.3% for the year ended December 31, 1997. The Company continues to invest in
programs  to  improve  manufacturing  costs  and  product  performance  in  both
multimode and  single-mode  product  lines,  to develop new special  performance
fiber  products and to develop  alternative  process  technologies.  The Company
intends to approximately double its research and development spending in 1998.

                                       13

<PAGE>


Other Income (Expense), net


         Other income (expense),  net favorably increased by $1.2 million to net
other income of $1.1 million in 1997  compared with net other expense of $65,000
in 1996.  Interest income  increased $1.1 million,  or 487.2%,  from $226,000 in
1996 to $1.3  million  in 1997  due to a  higher  level  of cash  available  for
investment as a result of the Company's  secondary  public offering in February,
1997. Interest expense,  net of capitalized  interest,  increased  $276,000,  or
58.6%,  from  $471,000 in 1996 to  $747,000 in 1997 due to the  increase in debt
related to the Company's capacity expansion.


Income Taxes


         The  effective  tax rate  declined  from 34.0% in 1996 to 29.9% in 1997
primarily due to a lower provision for state income taxes in 1997 as a result of
investment tax credits  associated  with capacity  expansion.  The effective tax
rates for 1997 and 1996 were lower than the statutory combined federal and state
tax rates due  primarily to a reduction of $300,000 in 1997 and $400,000 in 1996
in the valuation  allowance for deferred tax assets due to the Company's  belief
that it is more likely than not that the additional  deferred tax assets will be
realized through the utilization of operating loss and tax credit carryforwards.
See Note 11 of "Notes to the Consolidated Financial Statements."


Income From Equity in Joint Venture

         The Company realized a loss of $145,000,  net of tax from its equity in
General  Photonics,  the joint  venture  formed in  December,  1996 with General
Cable. The loss in 1997 was primarily due to lower than anticipated revenues. In
1996, the results of Applied Photonic Devices,  Inc., the predecessor to General
Photonics, were included in the consolidated results.

Net Income

         Net income increased $1.2 million,  or 32.5%, from $3.7 million in 1996
to $4.8 million for the year ended in 1997.  The increase was  primarily  due to
improved operating results at Communication Fiber and higher interest income.


      Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Net Sales

         Net sales  increased  $23.0  million,  or 59.6%,  from $38.6 million to
$61.6  million in 1996.  This increase was primarily due to strong market demand
for  the  Company's   multimode  and  single-mode   communications   fiber.  The
acquisition  of APD in May 1995 also  contributed  to the increase in net sales.
Selling  prices for  multimode  and  single-mode  fiber have  increased in 1996,
largely due to the strong market demand and price adjustments related to certain
raw  material  cost  increases  in  the  case  of  multimode   fiber.   SpecTran
                                       14
<PAGE>

Communication represented approximately half of the Company's net sales with the
balance divided relatively evenly between SpecTran Specialty and APD.

Gross Profit

         Gross profit  increased $9.3 million,  or 71.3%,  from $13.1 million to
$22.4 million in 1996. As a percentage of net sales,  the gross profit increased
to 36.3% for the year  ended  December  31,  1996 from  33.9% for the year ended
December 31, 1995.  This increase in gross profit was primarily due to increased
net  sales in 1996 and  lower  production  costs  resulting  from  manufacturing
process  and yield  improvements.  The  increase in gross  margin was  partially
offset by lower margins at APD which was acquired in May 1995.

         As a percentage of net sales,  royalties  decrease from 4.1% in 1995 to
3.7% in 1996.  This  decrease  in  royalties  as a  percentage  of net sales was
primarily due to an increase in the net sales not subject to royalties.

Selling & Administrative

         Selling and administrative  expenses increased $3.9 million,  or 41.1%,
from $9.7 million to $13.6  million for the year ended  December 31, 1996.  This
increase  was  primarily  due to  including a full year of APD  expenses in 1996
versus only seven months in 1995. A substantially higher provision for incentive
compensation  in  the  1996  period  also  contributed  to  the  increase.  As a
percentage of net sales, selling and administrative  expenses decreased to 22.1%
for the year ended  December 31, 1996 from 25.1% for the year ended December 31,
1995.

Research & Development

         Research and development costs increased $305,000,  or 10.8%, from $2.8
million to $3.1 million for the year ended December 31, 1996. As a percentage of
net sales, research and development costs decreased from 7.3% for the year ended
December 31, 1995, to 5.1% for the year ended  December 31, 1996.  The Company's
increased research and development  spending,  in absolute dollars, is primarily
in programs designed to improve  manufacturing  cost and product  performance in
both multimode and single-mode product lines, to develop new special performance
fiber products and to develop alternative process technologies.

Other Income (Expense), net

         Other  income  (expense),  net  declined by $227,000 for the year ended
December  31, 1996  compared to the same period of 1995.  The decline was caused
primarily by the absence of  non-recurring  income in 1996 partially offset by a
decrease in interest  expense of $155,000 due to  capitalization  of interest in
1996 related to the Company's ongoing plant expansion.
                                       15
<PAGE>


Income Taxes

         A tax  provision  of 34% of pre-tax  income was  provided  for the year
ended  December 31, 1996 compared to a tax provision of 30% of pre-tax income in
1995.  The  effective  tax rates for 1996 and 1995 were lower than the statutory
combined federal and state tax rates due primarily to a reduction of $400,000 in
1996 and $437,000 in 1995 in the valuation allowance for deferred tax assets due
to the  Company's  belief that it is more  likely  than not that the  additional
deferred tax assets will be realized  through the  utilization of operating loss
and  tax  credit  carryforwards.  See  Note  10 of  "Notes  to the  Consolidated
Financial Statements."

Net Income (Loss)

     Net income for the year ended December 31, 1996 was $3.7 million or 5.9% of
net sales.  Net income for the same period in 1995 was $542,000,  or 1.4% of net
sales.

                         Liquidity and Capital Resources


         The Company's  principal sources of cash are cash flow from operations,
established bank credit  facilities and existing cash balances.  During the year
ended  December 31, 1997,  the Company  generated  $5.6 million in net cash from
operating activities.  In February 1997 the Company completed a secondary public
offering  for a total of  1,500,000  shares of common stock at a price of $19.00
per share.  Of the  1,500,000  shares,  1,300,000  were sold by the  Company and
200,000  by  Allen  and  Company,  Incorporated,  a  selling  stockholder.  This
offering,  including  proceeds  from the  exercise  of  warrants  by the selling
stockholder,  raised approximately $23.0 million for the Company.  This has been
used to fund the Company's continuing capacity expansion.


         As of December 31, 1997, the Company had approximately  $7.0 million of
cash, cash equivalents and marketable securities,  including  approximately $1.0
million in marketable  securities classified as long-term assets, which could be
converted to cash if  necessary.  In  addition,  the Company has an unused $20.0
million  revolving  credit  agreement with its principal bank. The Company's net
working capital  position at December 31, 1997 was  approximately  $16.1 million
with a current ratio of 2.4 to 1.

           The Company currently has underway capacity  expansion which required
significant  capital  expenditures  in  1997.  Total  planned  expenditures  for
capacity   expansion   include   approximately   $44.0   million  for   SpecTran
Communication  (which will be completed in 1998) and approximately  $9.0 million
for SpecTran  Specialty,  which was completed in 1997. The expansion at SpecTran
Specialty  has increased  capacity  there by 50%.  When fully  operational,  the
expansion at SpecTran  Communication  will increase  capacity there by 100%. The
Company  has and  intends to  continue  to finance  these  expansions  through a
combination  of cash flow from  operations,  borrowings  and  existing  cash and
marketable security balances.


                                       16
<PAGE>


                                  Other Matters

Management is aware of the potential  software logic  anomalies  associated with
the year 2000 date  change.  The  Company is in the  process of  evaluating  the
potential  issues  that  might  need to be  addressed  in  connection  with  its
operations. Based on preliminary information,  costs of addressing the issue are
not expected to have any material effect upon the Company's  financial position,
results of operations or cash flows in future periods.

                                Subsequent Events

         On March 13, 1998 the Company  announced  the  settlement  of Corning's
obligation  to  purchase  multimode  optical  fiber  from  the  Company  under a
multi-year  supply  contract  the  companies  entered  into on  January 1, 1996.
Corning has terminated its purchase of multimode  optical fiber from the Company
in exchange for a series of cash payments to the Company totaling $4.1 million.


                        Recent Accounting Pronouncements

         In October 1995, the Financial  Accounting Standards Board (the "FASB")
issued  SFAS  No.  123,   "Accounting  for  Stock-Based   Compensation,"   which
established   financial  accounting  and  reporting  standards  for  stock-based
compensation plans.  Companies are encouraged,  rather than required, to adopt a
new method that accounts for stock compensation awards based on their fair value
using an option pricing model.  Companies that do not adopt this new method will
be required to make pro forma footnote  disclosures of net income as if the fair
value-based method of accounting required by SFAS No. 123 had been applied.  The
Company adopted SFAS No. 123 on January 1, 1996.  Adoption of this pronouncement
did not have a material impact on the Company's financial position or results of
operations.  The Company has made pro forma footnote disclosures in its December
31,  1997,  financial  statements  (See  "Note 9 to the  Consolidated  Financial
Statements - Stockholder's Equity").

         On January 1, 1996, the Company  adopted SFAS No. 121,  "Accounting for
the  Impairment of Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed
Of." This statement  requires that  long-lived  assets and certain  identifiable
intangibles to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.  This statement also requires that long-lived assets and
certain  identifiable  intangibles to be disposed of be reported at the lower of
carrying  value or fair value less costs to sell.  Adoption of the statement had
no impact on the Company's financial statements.


         Effective December 31, 1997, the Company adopted Statement of Financial
Accounting  Standards No. 128 " Earnings per Share" (SFAS 128) which has changed
the method of computing  and  presenting  earnings per common  share.  All prior
periods  presented  have  been  restated  in  accordance  with  SFAS  128.  This
restatement  had an immaterial  impact on the prior periods'  earning per common
share  amounts  calculated  under the  previous  standard  (See  "Note 10 to the
Consolidated Financial Statements - Computation of Earnings per Common Share").

                                       17
<PAGE>

         Effective  January 1, 1998,  the  provisions of Statements of Financial
Accounting  Standards  No.  130  "Reporting  Comprehensive  Income"  and No. 131
"Disclosures about Segments of an Enterprise and Related Information" will apply
to the Company.  The Company  anticipates  that  application of these statements
will have an effect on presentation of its financial information.

Item 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

              The response to this Item is  submitted  as a separate  section of
this Form 10-K.


Item 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
              FINANCIAL DISCLOSURE.
              None.

                                       18
<PAGE>



                                                     PART III


Item 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The  information  to  be  contained  under  the  heading  "Election  of
Directors" in the Company's proxy statement  relating to the 1998 Annual Meeting
of  Shareholders  (the  "Proxy  Statement")  is  hereby  incorporated  herein by
reference.


Item 11.      EXECUTIVE COMPENSATION.

         The  information  with  respect to  compensation  of certain  executive
officers  and all  executive  officers of the Company as a group to be contained
under the heading  "Compensation  of Executive  Officers and  Directors"  in the
Proxy Statement is hereby incorporated herein by reference.


Item 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information with respect to ownership of the Company's Common Stock
by management and by certain other  beneficial  owners to be contained under the
heading "Principal Stockholders and Other Information" in the Proxy Statement is
hereby incorporated herein by reference.


Item 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The  information  with  respect to certain  relationships  and  related
transactions to be contained  under the heading  "Certain  Transactions"  in the
Proxy Statement is hereby incorporated herein by reference.

                                       19
<PAGE>


                                                      PART IV


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

(a)    1. & 2.    Financial Statements and Financial Statement Schedules:
                  The  response  to this  portion of Item 14 is  submitted  as a
separate section of this Form 10-K.

             3.   Exhibits:

                  See Exhibit Index on Pages 22 through 27 of this Form 10-K.


(b)               Reports on Form 8-K filed during the final quarter of fiscal
                  1997:  None

                                                    SIGNATURES

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

Dated:                                      SPECTRAN CORPORATION

          March 27, 1998               By:    /s/  Raymond E. Jaeger
                                              ----------------------
                                              Raymond E. Jaeger
                                              President,
                                              Chief Executive Officer and
                                              Chairman of the Board of Directors



          March 27, 1998               By:    /s/  Bruce A. Cannon
                                              --------------------
                                              Bruce A. Cannon
                                              Senior Vice President,
                                              Chief Financial Officer and
                                              Chief Accounting Officer

                                       20
<PAGE>


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



<PAGE>
<TABLE>
<CAPTION>


               Signatures                                Title                                Date



<S>                                       <C>                                            <C>
/s/  Raymond E. Jaeger                    President, Chief Executive Officer             March 27, 1998
------------------------------
Jaeger                                        and Chairman of the Board of
                                             Directors (principal executive
                                                        officer)

/s/  Bruce A. Cannon                          Senior Vice President, Chief               March 27, 1998
Bruce A. Cannon                              Financial Officer, Secretary,
                                           Treasurer and Director (principal
                                            financial officer and principal
                                                  accounting officer)

/s/  John E. Chapman                       Senior Vice President - Technology            March 27, 1998
-------------------------------
John E. Chapman                                       and Director




/s/  Ira S. Nordlicht                                   Director                         March 27, 1998
-----------------------------------
Ira S. Nordlicht



/s/  Paul D. Lazay                                      Director                         March 27, 1998
---------------------------------
Paul D. Lazay



/s/  Richard M. Donofrio                                Director                         March 27, 1998
----------------------------------
Richard  M. Donofrio



/s/  Lily K. Lai                                        Director                         March 27, 1998
-------------------------------------
Lily K. Lai



/s/  Charles B. Harrison                                Director                       March 27, 1998
---------------------------------------
Charles B. Harrison

</TABLE>
                                       21
<PAGE>


                   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


    3.1    Certificate  of   Incorporation   of  the  Registrant,   as  amended.
           (Incorporated by reference to Registrant's Annual Report on Form 10-K
           for its fiscal year ended December 31, 1991.)

    3.2    By-Laws of the Registrant, as amended.  (Incorporated by reference to
           Registrant's  Annual  Report on Form 10-K for its  fiscal  year ended
           December 31, 1991.)

    4.5*   Form of Stock Certificate for Voting Common Stock.

   10.1    Registrant's  1991  Incentive  Stock  Option Plan.  (Incorporated  by
           reference to the Registrant's Proxy Statement dated April 9, 1991.)

   10.7*   License  Agreement dated August 15, 1981,  between the Registrant and
           Western Electric Company, Incorporated.  (Registrant has been granted
           confidential treatment of portions of this Exhibit.)

   10.49   License  Agreement  dated as of the first day of January  1991 by and
           between the Registrant  and Corning,  Incorporated.  (Registrant  has
           been granted  confidential  treatment  of portions of this  Exhibit.)
           (Incorporated by reference to Registrant's Annual Report on Form 10-K
           for its fiscal year ended December 31, 1991.)


   10.61   Stock Purchase  Agreement among APD  Acquisition  Corp. and Irving N.
           Dwyer,  David P.  DaVia,  The  Irving N.  Dwyer and  Annette M. Dwyer
           Charitable  Remainder Trust and the DaVia Charitable Remainder Trust.
           (Incorporated  by  reference to the  Registrant's  Report on Form 8-K
           filed June 7, 1995.)

   10.62   Directors  Retirement Plan dated December 27, 1995.  (Incorporated by
           reference  to the  Registrant's  Report on Form 10-K dated  March 29,
           1996.)

   10.63   Registrant's  Employee  Profit  Sharing  Plan as revised  and adopted
           effective  January  1,  1995.   (Incorporated  by  reference  to  the
           Registrant's Report on Form 10-K dated March 29, 1996).

   10.64   Lease between Mark C. Yellin and Applied Photonic Devices, Inc. dated
           January 15, 1996.  (Incorporated  by  reference  to the  Registrant's
           Report on Form 10-K dated March 29, 1996).

   10.65   Lease between  Fabrilock,  Inc. and Applied  Photonic  Devices,  Inc.
           dated February 6,  1996.(Incorporated by reference to the
           Registrant's Report on Form 10-K dated March 29, 1996).

                                       22
<PAGE>

   10.69   Supplemental  Retirement  Agreement between SpecTran  Corporation and
           Raymond E. Jaeger  dated May 8, 1996.  (Incorporated  by reference to
           the Registrant's Quarterly Report on Form 10-Q dated August 9, 1996.)

   10.70   Supplemental  Retirement  Agreement between SpecTran  Corporation and
           Bruce A. Cannon dated May 8, 1996.  (Incorporated by reference to the
           Registrant's Quarterly Report on Form 10-Q dated August 9, 1996.)

   10.71   Supplemental  Retirement  Agreement between SpecTran  Corporation and
           Crawford L. Cutts dated May 8, 1996.  (Incorporated  by  reference to
           the Registrant's Quarterly Report on Form 10-Q dated August 9, 1996.)

   10.72   Supplemental  Retirement  Agreement between SpecTran  Corporation and
           William B. Beck dated May 8, 1996.  (Incorporated by reference to the
           Registrant's Quarterly Report on Form 10-Q dated August 9, 1996.)

   10.73   Supplemental  Retirement  Agreement between SpecTran  Corporation and
           John E. Chapman dated May 8, 1996.  (Incorporated by reference to the
           Registrant's Quarterly Report on Form 10-Q dated August 9, 1996.)

   10.74   Lease  between  CRJ Realty  Trust and  SpecTran  Communication  Fiber
           Technologies, Inc. dated July 22, 1996. (Incorporated by reference to
           the Registrant's Quarterly Report on Form 10-Q dated August 9, 1996.)

   10.75   Contractual  Agreement Between Lucent  Technologies Inc. and SpecTran
           Corporation  dated  October 3,  1996.  (Registrant  has been  granted
           confidential  treatment for portions of this Exhibit.)  (Incorporated
           by reference to the Registrant's  Quarterly Report on Form 10-Q dated
           November 13, 1996.)

   10.76   Three Year Multimode  Optical Fiber Supply  Contract  between Corning
           Incorporated  and SpecTran  Corporation  dated as of January 1, 1996.
           (Registrant has been granted  confidential  treatment for portions of
           this  Exhibit.)   (Incorporated  by  reference  to  the  Registrant's
           Quarterly Report on Form 10-Q dated November 13, 1996.)

   10.79   Key  Employee  Incentive  Plan  effective  as  of  January  1,  1996.
           (Incorporated  by reference to the  Registrant's  Quarterly Report on
           Form 10-Q dated November 13, 1996.)

   10.80   Employment  Agreement  between  SpecTran  Corporation  and Raymond E.
           Jaeger dated as of December 14, 1992.  (Incorporated  by reference to
           the  Registrant's  Quarterly  Report on Form 10-Q dated  November 13,
           1996.)

                                       23
<PAGE>

   10.81   Employment Agreement between SpecTran Corporation and Bruce A. Cannon
           dated as of December  14,  1992.  (Incorporated  by  reference to the
           Registrant's Quarterly Report on Form 10-Q dated November 13, 1996.)

   10.82   Employment Agreement between SpecTran Corporation and John E. Chapman
           dated as of December  14,  1992.  (Incorporated  by  reference to the
           Registrant's Quarterly Report on Form 10-Q dated November 13, 1996.)

   10.83   Employment  Agreement  between  SpecTran  Corporation and Crawford L.
           Cutts dated as of January 1, 1996.  (Incorporated by reference to the
           Registrant's Quarterly Report on Form 10-Q dated November 13, 1996.)

   10.84   Employment Agreement between SpecTran Corporation and William B. Beck
           dated as of February  18,  1994.  (Incorporated  by  reference to the
           Registrant's Quarterly Report on Form 10-Q dated November 13, 1996.)

   10.85   Employment  Agreement between SpecTran Corporation and Glenn E. Moore
           dated  as  of  December  1995.  (Incorporated  by  reference  to  the
           Registrant's Quarterly Report on Form 10-Q dated November 13, 1996.)

   10.86   Note   Purchase   Agreement   between   SpecTran    Corporation   and
           Massachusetts  Mutual Life Insurance  Company dated as of December 1,
           1996.  (Incorporated by reference to the Registrant's  Current Report
           on Form 8-K dated December 31, 1996.)

   10.87   Note Purchase  Agreement  between  SpecTran  Corporation  and CM Life
           Insurance  Company  dated as of  December 1, 1996.  (Incorporated  by
           reference  to the  Registrant's  Current  Report  on Form  8-K  dated
           December 31, 1996.)

   10.88   Note Purchase  Agreement between SpecTran  Corporation and The Mutual
           Life  Insurance  Company  of New York dated as of  December  1, 1996.
           (Incorporated by reference to the Registrant's Current Report on Form
           8-K dated December 31, 1996.)

   10.89   Note Purchase Agreement between SpecTran Corporation and Atwell & Co.
           dated as of  December  1, 1996.  (Incorporated  by  reference  to the
           Registrant's Current Report on Form 8-K dated December 31, 1996.)

   10.90   Security Agreement among SpecTran Corporation, SpecTran Communication
           Fiber Technologies,  Inc., SpecTran Specialty Optics Company, Applied
           Photonic Devices, Inc. and Fleet National Bank, as Trustee,  dated as
           of December 1, 1996.  (Incorporated  by reference to the Registrant's
           Current Report on Form 8-K dated December 31, 1996.)

   10.91   Trademark  Security  Agreement among SpecTran  Corporation,  SpecTran
           Communication  Fiber  Technologies,  Inc.,  SpecTran Specialty Optics
           Company,  Applied Photonic Devices,  Inc. and Fleet National Bank, as
           Trustee, dated as of December 1, 1996.  (Incorporated by reference to
           the Registrant's Current Report on Form 8-K dated December 31, 1996.)

                                       24
<PAGE>

   10.92   Patent  Collateral  Assignment among SpecTran  Corporation,  SpecTran
           Communication  Fiber  Technologies,  Inc.,  SpecTran Specialty Optics
           Company,  Applied Photonic Devices,  Inc. and Fleet National Bank, as
           Trustee, dated as of December 1, 1996.  (Incorporated by reference to
           the Registrant's Current Report on Form 8-K dated December 31, 1996.)

   10.93   Pledge Agreement among SpecTran Corporation,  SpecTran  Communication
           Fiber Technologies,  Inc., SpecTran Specialty Optics Company, Applied
           Photonic Devices, Inc. and Fleet National Bank, as Trustee,  dated as
           of December 1, 1996.  (Incorporated  by reference to the Registrant's
           Current Report on Form 8-K dated December 31, 1996.)

   10.94   Mortgage,  Assignment  of Rents and  Security  Agreement  by SpecTran
           Communication  Fiber  Technologies,  Inc. to Fleet  National Bank, as
           Trustee, dated as of December 1, 1996.  (Incorporated by reference to
           the Registrant's Current Report on Form 8-K dated December 31, 1996.)

   10.95   Open-End  Mortgage,  Assignment  of Rents and  Security  Agreement by
           SpecTran Specialty Optics Company to Fleet National Bank, as Trustee,
           dated as of  December  1, 1996.  (Incorporated  by  reference  to the
           Registrant's Current Report on Form 8-K dated December 31, 1996.)

   10.96   Guaranty   Agreement  dated  as  of  December  1,  1996  by  SpecTran
           Communication  Fiber  Technologies,  Inc.,  SpecTran Specialty Optics
           Company and Applied Photonic Devices,  Inc. in favor of Massachusetts
           Mutual Life Insurance  Company,  CM Life Insurance  Company,  The New
           York Mutual Life Insurance Company and Atwell & Co.  (Incorporated by
           reference  to the  Registrant's  Current  Report  on Form  8-K  dated
           December 31, 1996.)

   10.97   Loan Agreement  among SpecTran  Corporation,  SpecTran  Communication
           Fiber Technologies,  Inc., SpecTran Specialty Optics Company, Applied
           Photonic  Devices,  Inc. and Fleet National Bank dated as of December
           1, 1996.  (Incorporated  by  reference  to the  Registrant's  Current
           Report on Form 8-K dated December 31, 1996.)

   10.98   Limited Liability Company Agreement of General Photonics, LLC between
           Applied Photonic Devices,  Inc. and General Cable  Industries,  Inc.
           dated as of December 23, 1996. (Incorporated by reference to the
           Registrant's Current Report on Form 8-K dated January 8, 1997.)

                                       25
<PAGE>

   10.99   Asset  Purchase  Agreement  among  Applied  Photonic  Devices,  Inc.,
           SpecTran  Corporation,  General Cable  Corporation  and General Cable
           Industries,  Inc.  dated as of December  23, 1996.  (Incorporated  by
           reference  to the  Registrant's  Current  Report  on Form  8-K  dated
           January 8, 1997.)

   10.100  Investor's  Representations,  Contribution Agreement and Subscription
           Agreement among Applied Photonic Devices,  Inc., SpecTran Corporation
           and  General   Photonics,   LLC  dated  as  of  December   23,  1996.
           (Incorporated by reference to the Registrant's Current Report on Form
           8-K dated January 8, 1997.)

   10.101  Non-Competition  Agreement  among  General  Cable  Industries,  Inc.,
           General Cable Corporation,  Applied Photonic Devices,  Inc., SpecTran
           Corporation  and General  Photonics,  LLC dated  December  23,  1996.
           (Registrant has been granted  confidential  treatment for portions of
           this Exhibit.) (Incorporated by reference to the Registrant's Current
           Report on Form 8-K dated January 8, 1997.)

   10.102  Standstill  Agreement among General Cable Industries,  Inc.,  General
           Cable  Corporation and SpecTran  Corporation dated as of December 23,
           1996.  (Incorporated by reference to the Registrant's  Current Report
           on Form 8-K dated January 8, 1997.)

   10.103  Letter  amendment  to  Three  Year  Multimode  Optical  Fiber  Supply
           Contract between Corning  Incorporated and SpecTran Corporation dated
           as of January  1, 1996.  (Registrant  has been  granted  confidential
           treatment for portions of this Exhibit.)  (Incorporated  by reference
           to the  Registrant's  Current  Report  on Form 8-K dated  January  8,
           1997.)

   10.104  Letter amendment to Employment  Agreement between SpecTran  Specialty
           Optics   Company  and   William  B.  Beck  dated   April  18,   1996.
           (Incorporated by reference to the Registrant's Current Report on Form
           8-K dated January 8, 1997.)

   10.105  Cross-Indemnity  Agreement between SpecTran Corporation and Allen
           Company Incorporated.  (Incorporated by reference to the
           Registrant's Registration Statement on Form S-3 (Reg. No. 333-19449)
           effective February 12,1997.)


   10.106  Common Stock Purchase Warrant issued to Allen & Company Incorporated.
           (Incorporated by reference to the Registrant's  Annual Report on Form
           10-K for the fiscal year ended December 31, 1996.)


   10.107  Settlement   Agreement  dated  February  13, 1998  between  SpecTran
           Corporation and Corning Incorporated.

   21.0    Subsidiaries.

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

     * Incorporated by reference to Registrant's  Registration Statement on Form
       S-1 (Reg. No. 2-83172) effective June 2, 1983

                                       26
<PAGE>




                              SpecTran Corporation

                                    Form 10-K

                           Items 8, 14 (a) (1) and (2)

             Index to Consolidated Financial Statements and Schedule

The following consolidated financial statements of the registrant required to be
included in Item 8 and 14 (a) (1) are listed below:
<TABLE>

                                                                                                   Page

<S>                                                                                         <C>
Independent Auditors' Report                                                                       F-2
Financial Statements:
     Consolidated   Balance  Sheets  as  of  December  31,  1997  and  1996  F-3
     Consolidated  Statements  of  Operations  for the Years Ended  December 31,
     1997,
          1996 and 1995                                                                            F-4
     Consolidated Statements of Cash Flows for the Years Ended December 31, 1997,
          1996 and 1995                                                                            F-5
     Consolidated Statements of Stockholders' Equity for the Years
           Ended December 31, 1997, 1996 and 1995                                                  F-6
     Notes to Consolidated Financial Statements                                              F-7 through F-24



The  following  financial  statement  schedule  of the  registrant  is  included
pursuant to Item 14 (a) (2):

Financial Statement Schedule                                                                       Page


        I.  Valuation and Qualifying Accounts                                                      F-25

Schedules  other than that  mentioned  above are omitted because the conditions
requiring  their  filing do not exist or because  the  required  information  is
presented in the consolidated financial statements, including the notes thereto.

</TABLE>
                                      F-1


<PAGE>




                                           Independent Auditors' Report




The Board of Directors and Stockholders
SpecTran Corporation:


     We  have  audited  the  consolidated   financial   statements  of  SpecTran
Corporation as listed in the  accompanying  index. In connection with our audits
of the  consolidated  financial  statements,  we also have audited the financial
statement  schedule  as listed in the  accompanying  index.  These  consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly,  in all material  respects,  the financial  position of SpecTran
Corporation  as of  December  31,  1997  and  1996,  and the  results  of  their
operations and their cash flows for each of the years in the  three-year  period
ended  December 31, 1997,  in  conformity  with  generally  accepted  accounting
principles.  Also in our opinion, the related financial statement schedule, when
considered  in  relation to the  consolidated  financial  statements  taken as a
whole,  presents  fairly,  in all material  respects,  the information set forth
therein.


                                                           KPMG PEAT MARWICK LLP



Boston, Massachusetts
February 16, 1998


                                      F-2



<PAGE>


                                               SpecTran Corporation
                                            Consolidated Balance Sheets
                                               Dollars in thousands
<TABLE>

                                              ASSETS (NOTE 8 AND 15)
                                                                                       1997                1996
                                                                                       ----                ----
<S>                                                                               <C>                 <C>
Current Assets:
     Cash and Cash Equivalents                                                    $      445          $    3,565
     Current Portion of Marketable Securities (Note 2)                                 5,535              13,822
     Trade Accounts Receivable, net of allowance for doubtful
                  accounts of $389 and $218 in 1997 and 1996, respectively             8,622               7,621
     Inventories (Note 3)                                                              9,666               7,254
     Deferred Income Taxes, net (Note 11)                                              1,189                 791
     Prepaid Expenses and Other Current Assets                                         1,943               1,316
                                                                                  ----------          ----------

     Total Current Assets                                                             27,400              34,369
                                                                                  ----------          ----------

Investment in Joint Venture (Note 15)                                                  4,213               4,135

Property, Plant and Equipment, net (Note 4)                                           55,409              17,890

Other Assets:
     Long-term Marketable Securities (Note 2)                                            996               1,595
     License Agreements, net (Note 5)                                                    603                 804
     Deferred Income Taxes, net (Note 11)                                                412                 814
     Goodwill, net (Note 6)                                                              872                 950
     Other Long-Term Assets (Note 14)                                                  2,200               1,899
                                                                                  ----------          ----------
     Total Other Assets                                                                5,083               6,062
                                                                                  ----------          ----------
              Total Assets                                                        $   92,105          $   62,456
                                                                                  ==========          ==========

                                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities (Note 15):
     Accounts Payable                                                              $    4,758          $    3,763
     Income Taxes Payable                                                                 573                 301
     Accrued Defined Benefit Pension Liability (Note 14)                                1,716               1,461
     Accrued Liabilities (Note 7)                                                       4,299               4,528
                                                                                   ----------          ----------

     Total Current Liabilities                                                         11,346              10,053
                                                                                   ----------          ----------

Long-term Debt (Note 8)                                                                24,000              24,000
                                                                                   ----------          ----------


Stockholders' Equity (Note 9):

     Common  Stock,  voting,  $.10  par  value;  authorized  20,000,000  shares;
         outstanding 7,000,634 shares and 5,400,071 shares in 1997 and
         1996, respectively                                                               700                 540
     Common Stock, non-voting, $.10 par value;

          authorized 250,000 shares, no shares outstanding                                 --                  --
     Paid-in Capital                                                                   50,223              26,884
     Net Unrealized Loss on Marketable Securities (Note 2)                                 (1)                (16)
     Retained Earnings                                                                  5,837                 995
                                                                                   ----------          ----------


     Total Stockholders' Equity                                                        56,759              28,403
                                                                                   ----------          ----------

              Total Liabilities and Stockholders' Equity                           $   92,105          $   62,456
                                                                                   ==========          ==========
</TABLE>

                See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>

                                               SpecTran Corporation
                                       Consolidated Statements of Operations
                                   Dollars in thousands except per share amounts


<TABLE>

                                                                           Years Ended December 31,
                                                           ---------------------------------------------------------
                                                                 1997                1996               1995
                                                                 ----                ----               ----

<S>                                                            <C>                <C>                <C>
Net Sales (Note 12)                                            $   62,057         $   61,571         $   38,581
Cost of Sales                                                      38,781             39,196             25,520
                                                               ----------         ----------         ----------

     Gross Profit                                                  23,276             22,375             13,061

Selling and Administrative Expenses                                13,966             13,641              9,669
Research and Development Costs                                      3,289              3,132              2,827
                                                               ----------         ----------         ----------

Income from Operations                                              6,021              5,602                565
                                                               ----------         ----------         ----------

Other Income (Expense):
     Interest Income                                                1,327                226                328
     Interest Expense                                                (747)              (471)              (626)
     Other, Net                                                       510                180                510
                                                               ----------         ----------         ----------

     Other Income (Expense), net                                    1,090                (65)               212
                                                               ----------         ----------         ----------

Income before Income Taxes                                          7,111              5,537                777
Income Tax Expense (Note 11)                                        2,124              1,882                235
                                                               ----------         ----------         ----------

Income before Equity in Joint Venture                               4,987              3,655                542
Income (Loss) from Joint Venture, Net of
     Income Taxes                                                    (145)                --                 --
                                                               ----------         ----------         ----------

Net Income                                                     $    4,842         $    3,655         $      542
                                                               ==========         ==========         ==========

Net earnings per Common Share (Note 10):

            Basic                                             $     .72           $         .68       $    .10
                                                               ========           =============       ========

            Diluted                                           $     .68          $         .61       $     .10
                                                               ========           ============        ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-4

<PAGE>


                                               SpecTran Corporation
                                       Consolidated Statements of Cash Flows
                                               Dollars in thousands
                                            Years Ended December 31,
<TABLE>

                                                                                 1997              1996             1995
                                                                                 ----              ----             ----
<S>                                                                            <C>              <C>               <C>
Cash Flows from Operating Activities:

     Net income                                                                $   4,842        $   3,655         $     542
     Reconciliation of net income to net cash provided by operating

     activities:
         Depreciation and amortization                                             3,969            3,071             2,338
         Loss (gain) on sale of assets                                                --               --                 8
         Loss (gain) on sale of marketable securities                                (24)              19                17
         Changes in valuation accounts                                              (532)            (380)             (632)
         Change in long-term deferred income taxes                                   402            1,118               576
         Change in other long-term assets                                           (409)            (344)             (110)
     Changes  in  assets  and  liabilities,  net of  effects  from  purchase  of
     businesses:

         Current deferred income taxes                                              (398)             (83)             (339)
         Accounts receivable                                                      (1,172)          (2,136)             (409)
         Inventories                                                              (1,709)          (3,742)           (2,501)
         Prepaid expenses and other current assets                                  (639)             (50)             (260)
         Income taxes payable/receivable                                             273             (150)              716
         Accounts payable and accrued liabilities                                  1,021            3,606             1,854
                                                                               ---------        ---------         ---------


Net Cash Provided by Operating Activities                                          5,624            4,584             1,800
                                                                               ---------        ---------         ---------

Cash Flows from Investing Activities:

     Sale of Assets of Applied Photonic Devices                                       --            5,278                --
     Acquisition of businesses                                                        --               --            (3,822)
     Acquisition of property, plant and equipment                                (41,157)         (11,100)           (2,540)
     Loss on Disposition of Equipment                                                 61               --                --
     Purchase of marketable securities                                          (254,437)         (29,658)          (10,894)
     Proceeds from sale/maturity of marketable securities                        263,368           19,439            11,839
     Proceeds from sale of equipment                                                  --               --                 5
     Investment in joint venture                                                     (78)            (354)               --
                                                                               ---------        ---------         ---------


Net Cash Used in Investing Activities                                            (32,243)         (16,395)           (5,412)
                                                                               ---------        ---------         ---------

Cash Flows from Financing Activities:

     Borrowings of long-term debt                                                     --           28,000             4,760
     Reduction of debt                                                                --          (14,000)               --
     Issuance of Common Stock, net                                                23,082               --                --
     Tax effect of disqualifying disposition of ISO shares                            43              117                --
     Proceeds from exercise of stock options and warrants                            374              329                --
     Deferred financing costs                                                         --             (695)               --
                                                                               ---------        ---------         ---------

Net Cash Provided by Financing Activities                                         23,499           13,751             4,760
                                                                               ---------        ---------         ---------


Increase (Decrease) in Cash and Cash Equivalents                                  (3,120)           1,940             1,148
Cash and Cash Equivalents at Beginning of Year                                     3,565            1,625               477
                                                                               ---------        ---------         ---------

Cash and Cash Equivalents at End of Year                                       $     445        $   3,565         $   1,625
                                                                               =========        =========         =========
</TABLE>

          See accompanying notes to consolidated financial statements.
                                      F-5
<PAGE>

                              SpecTran Corporation
                 Consolidated Statements of Stockholders' Equity
              For the Years Ended December 31, 1997, 1996 and 1995
                              Dollars in thousands
<TABLE>
<CAPTION>

                                                                                   Net
                                                                                Unrealized
                                                                              Gain(Loss) on
                                                                                                 Retained         Total
                                          Common Stock           Paid-in        Marketable       Earnings     Stockholders'
                                       Shares     Par Value      Capital        Securities       (Deficit)        Equity

<S>                                  <C>               <C>         <C>             <C>            <C>             <C>
Balance at December 31, 1994         5,207,409         $520        $26,028         $(242)         $(3,202)        $23,104

     Exercise of Stock Options
     (Note 9)                            1,833           --              7            --               --               7
     Issuance of Shares in
       Connection with
       Acquisition (Note 15)           144,444           15            408            --               --             423
     Unrealized Gain on
       Marketable Securities                --           --             --           220               --             220
     Net Income                             --           --             --            --              542             542
                                  ------------       ------       --------        ------        ---------      ----------


Balance at December 31, 1995         5,353,686          535         26,443          (22)           (2,660)         24,296


     Exercise of Stock Options
     (Note 9)                           46,385            5            324           --                --             329
     Tax Effect of Disqualifying
        Disposition of ISO shares                        --            117           --                --             117
        (Note 11)
     Unrealized Gain on
       Marketable Securities                --           --             --            6                --               6
     Net Income                             --           --             --           --             3,655           3,655
                                  ------------       ------       --------       ------         ---------      ----------

Balance at December 31, 1996         5,400,071          540         26,884          (16)              995          28,403

      Exercise of Stock Options
      (Note 9)                         100,563           10            364           --               --              374
      Issuance of Shares in
        Connection with Stock
        Offering (Note 9)            1,500,000          150         22,932           --               --           23,082
      Tax Effect of Disqualifying
         Disposition of ISO shares
         (Note 11)                          --           --             43           --               --               43
     Unrealized Gain on
       Marketable Securities                --           --             --           15               --               15
     Net Income                             --           --             --           --            4,842            4,842
                                   -----------       ------       --------       ------        ---------       ----------

Balance at December 31, 1997         7,000,634          $700      $ 50,223       $   (1)       $   5,837         $   56,759
                                     =========        ======      ========       ======        =========         ==========


</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-6

<PAGE>



                              SPECTRAN CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        December 31, 1997, 1996 and 1995



1 - Nature of Business and Summary of Significant Accounting Policies

Nature of Business

         SpecTran Corporation (the "Company") develops, manufactures and markets
a wide range of fiber optic  products.  These include  multimode and single-mode
optical fiber and cable for use in data  communications  and  telecommunications
applications.  The Company also develops special performance  fibers,  coatings,
cables,  cable assemblies and other value-added products for use in a variety of
specialty markets.

Principles of Consolidation and Basis of Accounting

         The  consolidated  financial  statements  include  the  accounts of the
Company  and  all  wholly  owned  subsidiaries:   SpecTran  Communication  Fiber
Technologies,  Inc.,  SpecTran  Specialty  Optics  Company and Applied  Photonic
Devices, Inc. ("APD") which holds the Company's investment in General Photonics,
LLC, a 50-50 joint  venture  between the Company and General  Cable  Corporation
("General  Cable"),  a former  subsidiary of Wassall plc. In December  1996, the
Company sold certain of the assets of APD to General Cable and then  contributed
the  remaining  non-cash  assets of APD to  General  Photonics  for a 50% equity
interest  (See Note 15). The  investment  in General  Photonics is accounted for
under the equity method of accounting  pursuant to which the Company records its
50% interest in General Photonics' net operating results. Prior to the formation
of General  Photonics,  APD's  results of  operations,  including  net sales and
expenses,   were  consolidated  with  those  of  the  Company.  All  significant
intercompany balances and transactions have been eliminated.

         Management  uses  estimates and  assumptions in preparing the financial
statements in accordance with generally accepted  accounting  principles.  Those
estimates and assumptions  affect the reported amounts of assets and liabilities
and the  reported  revenue  and  expenses.  Actual  results  may  vary  from the
estimates.

         Certain 1996 and 1995 balances have been  reclassified to be consistent
with the current year's presentation.


Revenue Recognition

         Sales  revenues  are  recognized  upon  shipment  of  goods.  Customers
generally have the right to return for  replacement  any goods which do not meet
the customer's purchase order  specifications.  Sales revenues and cost of sales
as reported in the consolidated statements of operations are adjusted to reflect
estimated returns and warranty costs.

                                      F-7

<PAGE>



                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995

Marketable Securities

         Marketable securities are classified as available-for-sale and reported
at fair value,  with  unrealized  gains and losses  excluded  from  earnings and
reported as a separate  component  of  stockholders'  equity,  net of  estimated
income  taxes.  Gains  and  losses  on the  sale of  marketable  securities  are
recognized at the time of sale on a specific identification basis.

Inventories

         Inventories  are stated at the lower of cost or market  value.  Cost is
determined by the first-in, first-out method.

Statements of Cash Flows

         For purposes of the statements of cash flows, the Company considers all
highly  liquid debt  instruments  purchased  with  original  maturities of three
months or less to be cash equivalents.

     Supplemental  disclosure of cash flow information includes cash paid during
the year for (in thousands):
                                   1997               1996                1995
                                   ----               ----                ----
            Interest              $2,120               $780               $510
            Income Taxes           2,159              1,044                100

Property, Plant and Equipment


         Property,  plant and  equipment  are  carried  at cost.  Machinery  and
equipment  assembled  by the Company are valued at the cost of  component  parts
purchased,  plus the  approximate  labor  and  overhead  costs  to the  Company.
Significant  renewals and betterments are  capitalized.  The cost of maintenance
and  repairs is charged to income as  incurred.  Repairs and  maintenance  costs
amounted to $1.6 million,  $1.5 million and $1.0 million in 1997, 1996 and 1995,
respectively.


         Depreciation  is provided by the  straight-line  method.  The principal
annual rates of depreciation are:

         Buildings and building improvements..................4%
         Machinery and equipment.......................14% to 33-1/3%

         In 1997 the Company changed the rate of depreciation  for all machinery
and equipment put in service after January 1, 1997, from 5 to 7 years.  This was
to more accurately reflect the economic life of these assets.

         Depreciation expense of property,  plant and equipment amounted to $3.6
million, $2.5 million and $1.9 million in 1997, 1996 and 1995, respectively.
                                      F-8

<PAGE>

                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995


Cost in Excess of Net Assets Acquired and Other Intangibles

         The  Company  monitors  its  cost  in  excess  of net  assets  acquired
(goodwill)  and its other  intangibles  to determine  whether any  impairment of
these  assets  has  occurred.  In making  such  determination  with  respect  to
goodwill,  the Company evaluates the performance,  on an undiscounted  basis, of
the  underlying  businesses  which  gave rise to such  amount.  Amortization  of
goodwill is recorded on a straight-line  basis over the estimated useful life of
15 years.

         With respect to other  intangibles,  which  include the cost of license
agreements and patents, the Company bases its determination of impairment on the
performance, on an undiscounted basis, of the related products.

License Agreement and Other Assets

         The  total  cost of the  license  agreement  obtained  in 1991 is being
amortized and charged to expense based on a ten year life.  Amortization expense
amounted to  $201,000  for 1997,  1996 and 1995.  Deferred  financing  costs are
amortized and charged to expense over the lives of the related debt. Patents are
being amortized over a seventeen year life.

Single-mode Fiber Manufacturing Development Costs

         Manufacturing  development costs are expensed as incurred.  In addition
to  research  and  development   expenses  for  single-mode  fiber,  there  were
manufacturing  development  start-up  costs  relating  to  single-mode  fiber of
approximately  $1.8 million in 1995 that were  included in cost of sales.  There
were no manufacturing  development  start-up costs relating to single-mode fiber
in 1997 and 1996.

Income Taxes

         The Company  accounts  for income  taxes using the asset and  liability
method.  Under this method,  deferred tax assets and  liabilities are recognized
for the estimated  future tax consequences  attributable to differences  between
the financial  statement carrying amounts of existing assets and liabilities and
their  respective tax bases.  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.

Income (Loss) per Share of Common Stock

         Effective December 31, 1997, the Company adopted Statement of Financial
Accounting  Standards  No. 128 "Earnings per Share" (SFAS 128) which has changed
the method of computing  and  presenting  earnings per common  share.  All prior
                                      F-9
<PAGE>

                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995




periods  presented  have  been  restated  in  accordance  with  SFAS  128.  This
restatement had an immaterial  impact on the prior periods'  earnings per common
share amounts calculated under the previous standard.

Financial Instruments


     Financial  instruments of the Company consist of cash and cash equivalents,
marketable securities,  accounts receivable,  accounts payable, accrued expenses
and senior secured notes.  The carrying  amounts of these financial  instruments
approximate their fair value.


Stock-Based Compensation

         Statement of Financial Accounting Standards Number 123, "Accounting for
Stock-Based Compensation",  encourages, but does not require companies to record
compensation cost for stock-based employee compensation plans at fair value. The
Company has chosen to continue to account for stock-based compensation using the
intrinsic value method prescribed in Accounting  Principles Board Opinion Number
25,  "Accounting  for Stock Issued to Employees,"  and related  Interpretations.
Accordingly,  compensation  cost for stock options is measured as the excess, if
any, of the quoted market price of the Company's  stock at the date of the grant
over the amount an employee must pay to acquire the stock.

2 - Marketable Securities

         A summary of  marketable  securities  available  for sale for the years
ended December 31, 1997 and 1996 is as follows (in thousands):
<TABLE>
                                                                                                           Quoted
                                       Purchase         Amortized       Unrealized      Unrealized         Market
                                         Price            Cost            Gains           Losses            Value
                                         -----            ----            -----           ------            -----
<S>                                   <C>               <C>                <C>            <C>            <C>
1997
Money Market                          $       88        $     88           $  --          $    --        $       88
U.S. Government and
  Agency Obligations                          --              --              --               --                --
Corporate Debt Securities                  4,451           4,446              --                2             4,444
Commercial Paper                           1,998           1,998               1               --             1,999
                                      ----------        --------           -----          -------        ----------
Total                                 $    6,537        $  6,532           $   1          $     2        $    6,531
                                      ==========        ========           =====          =======        ==========

1996
Money Market                          $    4,715        $  4,715           $  --          $    --        $    4,715
U.S. Government and
  Agency Obligations                         902             900              --               12               888
Corporate Debt Securities                    860             859              --                3               856
Commercial Paper                           8,959           8,959              --                1             8,958
                                      ----------        --------           -----          -------        ----------
Total                                 $   15,436        $ 15,433           $  --          $    16        $   15,417
                                      ==========        ========           =====          =======        ==========
</TABLE>
                                      F-10

<PAGE>

                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995


     The amortized cost and estimated  market value of debt securities are shown
below (in thousands):
<TABLE>

                                                     1997                                      1996
                                        Amortized             Quoted              Amortized             Quoted
                                          Cost             Market Value             Cost             Market Value
                                          ----             ------------             ----             ------------
<S>                                       <C>                   <C>                <C>                   <C>
Expected Maturities:
   Within one year                        $3,448                $3,448             $   592               $   588
   One to five years                       1,167                 1,156               1,167                 1,156
</TABLE>

         Proceeds from sales of marketable securities, prior to maturity, during
1997 and 1996 were $4.8 million and $1 million,  respectively.  A pretax gain of
$24,000 for 1997 and a pretax loss  $19,000  for 1996 were  recognized  on these
sales.

3 - Inventories

         Inventories consisted of (in thousands):


                                                      December 31,
                                      -----------------------------------------
                                             1997                 1996
                                             ----                 ----

                   Raw Materials          $   4,036            $   3,677
                   Work in Process            1,010                1,209
                   Finished Goods             4,620                2,368
                                          ----------             --------
                                          $    9,666           $    7,254
                                          ==========           ==========


4 - Property, Plant and Equipment

         Property, plant and equipment consisted of (in thousands):
<TABLE>

                                                                                  December 31,
                                                                       -----------------------------------
                                                                             1997              1996
                                                                             ----              ----

<S>                                                                       <C>               <C>
Land and Land Improvements                                                $      978        $      937
Buildings and Improvements                                                    10,453             3,840
Machinery and Equipment                                                       33,567            19,213
Construction in Progress                                                      27,694             8,611
                                                                          ----------        ----------
                                                                              72,692            32,601
Less:  Accumulated Depreciation                                               17,283            14,711
                                                                          ----------        ----------
Property, Plant and Equipment, net                                        $   55,409        $   17,890
                                                                          ==========        ==========
</TABLE>

         In  1997,  the  Company  had  underway  capacity  expansion   requiring
significant  capital  expenditures.  Total  planned  expenditures  for  capacity
expansion  include  approximately  $44.0  million  for  SpecTran   Communication

                                      F-11
<PAGE>

                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995


(expected to be completed in 1998) and  approximately  $9.0 million for SpecTran
Specialty, which was completed in 1997.

         In 1997, the Company recorded approximately $1.4 million in capitalized
interest related to the expansions.



5 - License Agreements

         In February,  1983,  the Company  obtained from  Corning,  Incorporated
("Corning") a limited, non-assignable,  non-exclusive royalty-bearing license to
make,  use and sell  optical  fiber under  certain of  Corning's  United  States
patents owned or filed for on or before January 1, 1988. The Company  granted to
Corning a non-exclusive royalty-free license for any United States patents filed
for on or before January 1, 1988 related to the subject matter of the Corning or
Company patents licensed under the agreement.

         In January,  1991, the Company  entered into a new fiber  manufacturing
license  agreement  with Corning  which  expanded and extended the original 1983
agreement.   The  new   agreement   gives   SpecTran  the  ability  to  increase
substantially  its fiber  production  using  Corning's  United  States  patents,
providing for an immediate  considerable increase in licensed fiber eligible for
manufacture by SpecTran in 1991, with further annual increases  through the year
2000.  The Company  paid a $2 million fee for the new license  agreement in four
semiannual  installments  of $500,000,  beginning in January,  1991. The license
obtained   from   Corning  is   limited,   non-assignable,   non-exclusive   and
royalty-bearing,  to make, use and sell optical fiber under certain of Corning's
United States  patents with a filing date prior to January 1, 1996.  The license
has a term  equal to the life of the last to expire of the  Corning  or  Company
patents  licensed  under the  agreement.  Corning has the right to terminate the
license  in the  event  that  more  than 30% of the  Company's  voting  stock is
acquired,  directly or indirectly, by another manufacturing company. The Company
granted to Corning a  non-exclusive  royalty-free  license for any United States
patents  filed prior to January 1, 1996  related to optical  fiber.  The Company
believes that its  manufacturing and sale of single-mode fiber is not subject to
the Corning license agreement.

         At  December  31,  1997,  the  Company  or  its   subsidiaries   had  a
non-assignable,  non-exclusive,  unlimited,  royalty-bearing license from Lucent
Technologies  Inc.   ("Lucent"),   formerly  AT&T   Technologies,   Inc.  and  a
non-exclusive,  royalty-bearing license granted by Sumitomo Electric Industries,
Ltd. to make, use and sell optical  fibers under certain  patents owned by those
companies.  No payments are  required  under these  licenses  other than royalty
payments.

         During  1997,  approximately  30% and 45% of the  Company's  net sales,
respectively,  were  subject to the Corning and Lucent  licenses.  During  1996,
approximately 36% and 62% of the Company's net sales, respectively, were subject
to the Corning and Lucent licenses.  The Corning license contains certain annual
quantity limitations which increase annually through the year 2000.

     Total royalties expensed during the years ended December 31, 1997, 1996 and
1995 were $1.9 million, $2.3 million and $1.6 million, respectively.

6 - Goodwill

         Goodwill consisted of (in thousands):

                                                          December 31,
                                            -----------------------------------
                                                   1997              1996
                                                   ----              ----

           Goodwill                             $  1,181          $  1,181
           Less Accumulated Amortization            (309)             (231)
                                                --------          ---------

                                                $    872          $    950
                                                ========          ========
                                      F-12
<PAGE>

                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995



7 - Accrued Liabilities

         Accrued liabilities consisted of (in thousands):


                                                         December 31,
                                           -------------------------------------
                                                1997                      1996
                                                ----                      ----

             Salaries and Wages             $     612                $     827
             Royalties                            885                    1,149
             Health Insurance                     486                      514
             Incentive Compensation             1,492                    1,451
             Other                                824                      587
                                            ---------                ---------
                                            $   4,299                $   4,528
                                            =========                =========


8 - Long-Term Debt
<TABLE>

         Long-term debt consisted of (in thousands):
                                                                                              December 31,
                                                                                   ------------------------------------
                                                                                         1997                1996
                                                                                         ----                ----
<S>                                                                                    <C>                <C>
Revolving credit loan facility at the lower of prime or LIBOR

   plus 1.5%, repaid in April 1996                                                     $       --         $       --
Series A Senior Secured Notes at 9.24% interest                                            16,000             16,000
Series B Senior Secured Notes at 9.39% interest                                             8,000              8,000
                                                                                       ----------         ----------

              Total                                                                    $   24,000         $   24,000
                                                                                       ==========         ==========
</TABLE>


         In  December  1996,  the Company  sold to a limited  number of selected
institutional investors an aggregate principal amount of $24.0 million of senior
secured  notes (the  "Notes"),  consisting  of $16.0  million of 9.24%  interest
Series A Senior  Secured  Notes due December 26, 2003 (the "Series A Notes") and
$8.0 million of 9.39%  interest  Series B Senior  Secured Notes due December 26,
2004 (the  "Series B Notes").  Interest  on the Notes is payable  semi-annually,
with five equal annual principal repayments required beginning December 26, 1999
for  Series A Notes  and  December  26,  2000 for  Series  B  Notes.  The  Notes
constitute  senior  secured  debt of the  Company  secured  by a first  priority
security  interest  in  substantially  all of the assets of the  Company and all
current  and  hereinafter  created  or  acquired  subsidiaries,  a pledge by the
Company of the issued and outstanding stock of its subsidiaries and mortgages on
real estate owned by the Company's  subsidiaries.  The Company's obligations are
also  guaranteed by the Company's  subsidiaries  and rank on an equal basis with
all other senior secured indebtedness of the Company. The Notes also provide for
certain   financial  and   non-financial   covenants  usual  for  this  type  of
transaction.  The Company used approximately  $14.0 million from the sale of the
Notes to repay all outstanding  indebtedness and restructured its existing $22.0
million of total borrowing capacity with its principal bank, composed of a $14.5
million revolving credit agreement and $7.5 million in equipment and real estate
term loans, into a $20.0 million  revolving credit agreement,  maturing December

                                      F-13
<PAGE>


                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995


1999, with the same security  interest in the Company's assets as the Notes. The
Company  has the  option to select  from time to time the  interest  rate on the
revolving  credit  agreement  at either the LIBOR rate plus 1.5% or Fleet Bank's
prime rate provided that, under certain circumstances,  Fleet Bank may deem that
the LIBOR rate is not  available.  As of  December  31,  1997 the Company had no
borrowing against the revolving credit agreements.


9 - Stockholders' Equity

(a)  Warrants

     As part of an  agreement  entered  into in  September,  1990  with  Allen &
Company,  Incorporated (Allen),  warrants to purchase 350,000, 30,000 and 20,000
shares of SpecTran  voting  common stock at an exercise  price of $2.00  through
August 14, 1999, were issued to Allen, Richard A.M.C.  Johnson, who retired as a
director of the Company in 1996, and Patrick E. Brake, a former  director of the
Company,  respectively.  In conjunction  with the Company's  public  offering in
February 1997, Allen exercised warrants to purchase 200,000 shares and sold them
in the  offering.  At  December  31,  1997  Allen  owned  none of the  Company's
outstanding stock; if the remainder of the Allen warrants were exercised,  Allen
would own approximately  2.1% of the Company's  outstanding stock. In June, 1992
the Johnson  warrant was  exercised  and in January,  1993 the Brake warrant was
exercised.

(b)  Stock Options

         Pursuant  to the  Company's  Incentive  Stock  Option  Plan  adopted in
November, 1981, as amended, incentive and nonqualified options may be granted to
purchase up to an aggregate of 455,000  shares of the  Company's  voting  Common
Stock,  $.10 par value, at prices not less than 100% of the fair market value of
the shares at the time the  options  are  granted.  Currently,  all  options are
exercisable  in full  three  years from the date of grant in  cumulative  annual
installments of 33 1/3% commencing one year after the date of grant,  and expire
ten years after grant.
         Under its provisions,  no options were to be issued under the Incentive
Stock Option Plan  adopted in  November,  1981 (Old Plan) after the plan reached
its tenth anniversary.  During the year ended December 31, 1991, a new Incentive
Stock  Option  Plan  (New  Plan)  was  adopted.  The  terms  of the New Plan are
identical to those of the Old Plan except that (1) the number of shares eligible
for issuance is 625,490, (2) provision is made for the  non-discretionary  grant
of  nonqualified  options to directors  who are not  full-time  employees of the
Company or any subsidiary  ("outside  directors")  and (3) provision is made for
all  outstanding  options to vest upon the occurrence of a change in control (as
defined in the New Plan).

         At the Company's  Annual  meeting in 1996,  the holders of Common Stock
approved an amendment to the New Plan  increasing the number of shares of Common
Stock reserved for issuance by 250,000.

                                      F-14
<PAGE>

                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995


     Activity in the plans for the years ended December 31, 1997,  1996 and 1995
is summarized below (dollars in thousands except per share amounts):
<TABLE>

                                              Shares
                                            Available                       Shares Under Option
                                            for Option       Shares               Price                Amount
                                                                        ---------------------------
<S>                                             <C>           <C>            <C>           <C>          <C>
Balance at December 31, 1994                     272,259       411,271       $1.188 -      $22.250      $3,437

   Options Granted                              (139,750)      139,750       $5.375 -       $5.500         733
   Options Exercised                                  --        (1,833)      $3.375 -       $4.750          (6)
   Options Forfeited                               5,700        (5,700)      $6.000 -      $22.250         (57)
                                                   -----        ------       ------        -------         ---

Balance at December 31, 1995                     138,209       543,488       $1.375 -      $22.250       4,107

   Increase in Shares Reserved                   250,000            --           --             --          --
   Options Granted                              (165,500)      165,500       $5.500 -      $21.750       2,594
   Options Exercised                                  --       (46,385)      $1.375 -      $15.250        (329)
   Options Forfeited                              11,900       (11,900)      $3.375 -      $15.250        (100)
                                                  ------       -------       ------        -------        ----

Balance at December 31, 1996                     234,609       650,703       $1.375 -      $22.250       6,272

   Options Granted                              (123,450)      123,450       $10.875-      $14.187       1,711
   Options Exercised                                  --      (100,563)       $1.188-       $8.875        (374)
   Options Forfeited                               3,668        (3,668)       $5,500-      $21.125         (41)
                                                   -----        ------        ------       -------         ---

Balance at December 31, 1997                     114,827       669,922        $3.375-      $22.250      $7,568
                                                 =======       =======        ======       =======      ======


</TABLE>

         As of December  31,  1997,  options for 390,854  shares were vested and
exercisable at an aggregate exercise amount of $3.9 million ($9.96 per share).


         The Company  applies  Accounting  Principles  Board  Opinion No. 25 and
related interpretations in accounting for its stock option plan. Accordingly, no
compensation  cost has been  recognized  for its fixed stock options  plan.  Had
compensation  cost for the Company's stock option plan been determined  based on
the fair value at the grant dates for awards under the plan  consistent with the
provisions  of FASB  Statement  123, the  Company's  net income and earnings per
share for the years ended  December 31, 1997 and 1996 would have been reduced to
the pro forma amounts indicated as follows:

                                      F-15

<PAGE>

                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995


                                               1997           1996        1995
                                               ----           ----        ----
Net income (in thousands):
     As reported                             $4,842         $3,655        $542
     Pro forma                               $4,594         $3,340        $233

Net income per  share:
     As reported                               $.68           $.61        $.10
     Pro forma                                 $.64           $.56        $.04



     The fair value of options  granted under the  Company's  fixed stock option
plan during  1997,  1996 and 1995 were  estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions used: no dividend yield, expected volatility of 63% for 1997 and 64%
for 1996 and 1995,  risk free  interest  rate of 7%, and  expected  life of five
years.


(c)   Secondary Stock Offering

         On February 18, 1997, the Company completed a secondary public offering
of  1,500,000  shares of common  stock at a price of $19.00  per  share.  Of the
1,500,000  shares,  1,300,000  were sold by the Company and 200,000 by Allen and
Company, Incorporated, a selling stockholder.

10- Computation of Earnings per Common Share

         Effective December 31, 1997, the Company adopted Statement of Financial
Accounting  Standards  No. 128 "Earnings per Share" (SFAS 128) which has changed
the method of computing  and  presenting  earnings per common  share.  All prior
periods  presented  have  been  restated  in  accordance  with  SFAS  128.  This
restatement had an immaterial  impact on the prior periods'  earnings per common
share amounts calculated under previous standard.

         Under SFAS 128,  primary  earnings per common  share has been  replaced
with basic earnings per common share.  The basic earnings per share  computation
is based on the  earnings  applicable  to common  stock  divided by the weighted
average number of shares of common stock divided by the weighted  average number
of shares of common stock outstanding in 1997, 1996 and 1995.

         Fully diluted  earnings per common share has been replaced with diluted
earnings per common  share.  The diluted  earnings per common share  computation
includes the common stock  equivalency of options granted to employees under the
stock  incentive  plan.  Excluded  from the diluted  earnings  per common  share
calculation are options granted to employees that are anti-dilutive based on the
average stock price for the year.

                                      F-16

<PAGE>

                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995


<TABLE>
                                                             1997                1996                1995
                                                             ----                ----                ----
<S>                                                       <C>                 <C>                  <C>
Earnings per common share-basic
   Earnings applicable to common stock                    $  4,842            $   3,655            $     542
                                                          ========            =========            =========

   Weighted average shares outstanding                       6,724                5,374                5,298
                                                          ========            =========            =========

   Earnings per common share-basic                        $     .72           $      .68           $      .10
                                                          =========           ==========           ==========

Earnings per common share-diluted
   Earnings applicable to common share                    $  4,842            $   3,655            $     542
                                                          ========            =========            =========

   Weighted average shares outstanding                       6,724                5,374                5,298

    Plus shares issuable on:
        Exercise of dilutive options                           424                  588                  284
                                                          --------            ---------            ---------

    Weighted average shares outstanding
         assuming conversion                                 7,148                5,962                5,582
                                                          ========            =========            =========

   Earnings per common share-diluted                      $     .68           $      .61           $      .10
                                                          =========           ==========           ==========
</TABLE>

11- Income Taxes

         Income  tax  expense  attributable  to income  (loss)  from  operations
differs from the computed expected tax expense (benefit)  determined by applying
the federal income tax rate of 34 percent as follows (in thousands):
<TABLE>

                                                                   1997           1996             1995
                                                                   ----           -----            ----

<S>                                                               <C>            <C>              <C>
Computed expected tax expense at 34%                              $   2,368      $   1,883        $   264
   State income taxes, net of federal effect and change in
     valuation allowance                                                 14            298             81
   Research and experimentation credits                                  --             --            244
   Goodwill amortization                                                 --             74             50
   (Decrease) in valuation allowance for deferred income
     taxes                                                             (300)          (400)          (437)
   Other                                                                 42             27             33
                                                                  ---------      ---------        -------
                                                                  $   2,124      $   1,882         $  235
                                                                  =========      =========        =======

</TABLE>


                                      F-17


<PAGE>
                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995


     Total income tax expense  (benefit) for the years ended  December 31, 1997,
1996 and 1995 was allocated as follows (in thousands):

<TABLE>

                                                               1997              1996             1995
                                                               ----              -----            ----
<S>                                                          <C>               <C>               <C>
Income tax expense attributable to:
  Income from operations                                     $   2,124         $   1,882         $   235
  Stockholders' equity, for
     compensation expense for tax purposes from the
     disqualifying disposition of stock options
                                                                   (43)             (117)             --
                                                             ----------        ---------         -------

                                                             $   2,081         $   1,765         $   235
                                                             =========         =========         =======
</TABLE>

         Income tax expense  (benefit)  attributable  to income from  continuing
operations consists of (in thousands):


                                      Current       Deferred           Total
                                      -------       --------           -----

Year ended December 31, 1997:
     Federal                         $  1,719       $    165        $  1,884
     State                                401           (161)            240
                                     --------       --------        --------

                                     $  2,120       $      4        $  2,124
                                     ========       ========        ========

Year ended December 31, 1996:
     Federal                         $    687       $    668        $  1,355
     State                                560            (33)            527
                                     --------       --------        --------

                                     $  1,247       $    635        $  1,882
                                     ========       ========        ========

Year ended December 31, 1995:
     Federal                         $    277       $   (120)       $    157
     State                                158            (80)             78
                                     --------       ---------       --------

                                     $    435       $   (200)       $    235
                                     ========       ========        ========


                                      F-18


<PAGE>

                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995



         The  significant  components of deferred  income tax expense  (benefit)
attributable  to income from  operations  for the years ended December 31, 1997,
1996 and 1995 are as follows (in thousands):
<TABLE>

                                                             1997                 1996                 1995
                                                             ----                 ----                 ----
<S>                                                         <C>                  <C>                 <C>
Deferred tax expense (exclusive of the effects of
     other components listed below)
                                                            $    304             $  1,035            $    237

(Decrease) in valuation allowance for deferred
     income taxes                                               (300)                (400)               (437)
                                                            ---------            --------            --------

Deferred income tax expense (benefit) attributable
to income from operations                                   $      4             $    635            $   (200)
                                                            ========             ========            ========
</TABLE>



         The tax effect of temporary  differences  that give rise to significant
portions of the deferred tax assets and deferred tax  liabilities  are presented
below (in thousands):
<TABLE>


                                                                             1997              1996
                                                                             ----              ----
<S>                                                                       <C>               <C>
Deferred tax assets:

     Accounts receivable                                                  $     169         $     125
     Inventories                                                                694               536
     Accrued liability - compensation related expense                           168               115
     Accrued liability - pension                                                338               219
     Other nondeductible reserves and accruals                                    9                 9
     Investment in Joint Venture                                                215                --
     Net operating loss carryforward benefit                                    230               204
     Credit carryforwards benefit                                               716             1,583
                                                                          ---------         ---------

         Total gross deferred tax assets                                      2,539             2,791
         Less valuation allowance                                              (330)             (630)
                                                                          ----------        ----------

         Net deferred tax assets                                              2,209             2,161

Deferred tax liabilities                                                       (608)             (556)
                                                                          ----------        ----------

Net deferred tax assets                                                       1,601             1,605

Less current portion                                                          1,189               791
                                                                          ---------         ---------

Long-term deferred tax asset                                              $     412         $     814
                                                                          =========         =========
</TABLE>

                                      F-19

<PAGE>
                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995


         The valuation allowance for deferred tax assets as of December 31, 1997
and 1996 was $330,000 and $630,000,  respectively.  Based on the Company's level
of net income and projected  future  earnings,  the Company  believes that it is
more likely than not that a portion of the  deferred  tax asset will be realized
in the  future.  During  1997,  the portion of the  deferred  tax asset which is
expected to be realized increased from 1996; therefore,  the Company reduced its
valuation  allowance by $300,000.  The  remaining  valuation  allowance  relates
primarily to the risk that a portion of the tax credit  carryforwards  and state
operating loss carryforwards will not be used before they expire.

         At December 31, 1997,  the Company had the following  income tax credit
available to offset future income taxes (in thousands):
                                                      Amount          Expires
                                                      ------          -------

Alternative Minimum Tax Credit                    $      686         Indefinite

12- Major Customers

         The   approximate  net  product  sales  by  the  Company  to  customers
accounting  for 10% or  more of  total  net  annual  sales  are as  follows  (in
thousands):

                             1997                1996               1995
                             ----                ----               ----
   Customer                 Amount    %         Amount     %       Amount     %
   --------                 ------    -         ------     -       ------     -

       A                    $9,522    15        $7,902    13       $5,040    13
       B                     8,906    14                            4,153    11
       C                     6,601    11

         Substantially  all of the  Company's  business is to  customers  in the
telecommunications  and data  communications  industries.  International  sales,
primarily in Asia and Europe,  accounted  for 22%, 25% and 22% of total sales in
1997, 1996 and 1995, respectively.

13- Commitments


         SpecTran  Communication  Fiber  Technologies,  Inc.  leases  office and
warehouse  facilities under a lease through March 17, 1998 and leases additional
office space under a lease which  operates on a month to month  basis.  SpecTran
Specialty  leases  several cars under  leases which  operate on a month to month
basis. The scheduled  rental payments  required under these operating leases for
1998 are $31,000. The Company has no lease commitments after 1998.

         Total rent expense for the years ended December 31, 1997, 1996 and 1995
was $301,000, $634,000 and $364,000,  respectively.  A portion of the total rent
expense for 1996 and 1995 was for APD, since its acquisition in May, 1995.

                                      F-20

<PAGE>
                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995


14- Employee Benefit Plans

a)  Defined Benefit Pension Plan

         The  Company   sponsors  a  defined   benefit   pension  plan  covering
substantially  all of its employees.  The benefits are based on years of service
and an average of the employee's highest ten consecutive years of earnings.  The
Company's funding policy is, to the extent possible,  to contribute annually the
maximum   amount  that  can  be  deducted  for  federal   income  tax  purposes.
Contributions  are  intended  to provide  not only for  benefits  attributed  to
service to date, but also for those expected to be earned in the future.

         The  following  table sets forth the plan's  funded  status and amounts
recognized in the Company's consolidated balance sheets at December 31, 1997 and
1996.

         Actuarial present value of benefit obligations (in thousands):
<TABLE>

                                                                                      1997             1996
                                                                                      ----             ----

<S>                                                                                 <C>               <C>
          Vested benefit obligation                                                 $   1,041         $     803
                                                                                    =========         =========
          Accumulated benefit obligation                                            $   1,156         $     901
                                                                                    =========         =========
          Projected benefit obligation                                              $   2,155         $   1,650
          Plan assets at fair value - primarily mutual funds                            1,847             1,195
                                                                                    ---------         ---------
          Projected benefit obligation in excess of plan assets                           308               455
          Unrecognized net gain                                                           142                36
          Unrecognized net obligation at January 1, 1991
              being recognized over 17.4 years                                           (180)             (197)
                                                                                    ---------         ---------
          Accrued pension cost                                                      $     270         $     294
                                                                                    =========         =========
</TABLE>

          Net  pension  cost for  1997,  1996 and 1995  included  the  following
components:

<TABLE>

                                                                          1997             1996              1995
                                                                          ----             ----              ----
<S>                                                                     <C>               <C>              <C>
          Service cost - benefits earned during period                  $     285         $     289        $     151
          Interest cost on projected benefit obligation                       130               103               66
          Actual return on assets                                            (302)             (129)            (186)
          Net amortization and deferral                                       213                65              146
                                                                        ---------         ---------        ---------
          Net pension cost                                              $     326         $     328        $     177
                                                                        =========         =========        =========
</TABLE>

         Assumptions used in the accounting as of December 31 were as follows:
<TABLE>

                                                                             1997               1996
                                                                             ----               ----
<S>                                                                          <C>                <C>
          Discount rate                                                      7.5%               7.5%
          Rates of increase in compensation levels                           5.0%               5.0%
          Expected long-term rate of return on assets                        8.5%               8.5%
</TABLE>

                                      F-21

<PAGE>
                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995


b)  Supplemental Retirement Agreements

         The Company entered into supplemental  retirement  agreements with five
executive  officers in 1996. These agreements provide benefits based on years of
service and average eligible pay for executives.  The following table sets forth
the plan's  funded status and amounts  recognized in the Company's  consolidated
balance sheets at December 31, 1997 and 1996.

         Actuarial present value of benefit obligations (in thousands):
<TABLE>

                                                                              1997              1996
                                                                              ----              ----

<S>                                                                      <C>               <C>
         Vested benefit obligation                                       $        0        $        0
                                                                         ==========        ==========
         Accumulated benefit obligation                                  $    1,271        $    1,170
                                                                         ==========        ==========
         Projected benefit obligation                                    $    1,519        $    1,398
         Unrecognized net gain (loss)                                            83                --
         Unrecognized prior service cost                                 $     (994)       $   (1,096)
                                                                         ----------        ----------
         Accrued pension cost                                            $      608        $      302
                                                                         ==========        ==========
</TABLE>


         Net  pension  cost  for  1997,  1996 and 1995  included  the  following
components:
<TABLE>

                                                                             1997              1996             1995
                                                                             ----              ----             ----

<S>                                                                        <C>               <C>               <C>
         Service cost - benefits earned during period                      $     111         $     116         $      --
         Interest cost on projected benefit obligation                            92                84                --
         Net amortization and deferral                                           102                 2               100
                                                                           ---------         ---------         ---------
         Net pension cost                                                  $     305         $     202         $     100
                                                                           =========         =========         =========
</TABLE>

         Assumptions used in the accounting as of December 31 were as follows:
<TABLE>

                                                                             1997               1996
                                                                             ----               ----
<S>                                                                          <C>                <C>
         Discount rate                                                       7.0%               7.0%
         Rates of increase in compensation levels                            5.0%               5.0%
         Expected long-term rate of return on assets                         8.5%               8.5%
         COLA increase                                                       3.5%               3.5%
</TABLE>

c)  Defined Contribution Pension Plan

         The  Company  sponsors a defined  contribution  pension  plan  covering
substantially all of its employees.  Contributions to the plan are discretionary
and  amounted  to  $300,000,  $361,000  and  $83,000  in 1997,  1996  and  1995,
respectively.

                                      F-22

<PAGE>
                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995



d)  Directors Retirement Plan

         In December, 1995 the Company adopted a Directors Retirement Plan which
provides  for  retirement  benefits  for all  outside  directors  with five full
calendar  years of  service  as of the  later  of age 70 or the  date of  actual
retirement  as a  director.  There was no expense in 1997 or 1996 to provide for
past service costs.

e)  Bonus Plans

         The Company  sponsors an Employee  Profit  Sharing  Plan  covering  all
employees. The Company also sponsored a transitional plan covering key employees
in 1995 and  adopted a Key  Employee  Incentive  Plan in 1996 which  replaced an
Income  Growth  Incentive  Plan in 1994.  These plans provide for the payment of
bonuses if certain performance objectives are obtained. Bonuses of $1.4 million,
$1.4 million and  $380,000,  respectively,  were charged to  operations in 1997,
1996 and 1995.


15- Acquisitions/Joint Venture

a)  Applied Photonic Devices, Inc.

         On May 23, 1995 the Company purchased all the outstanding capital stock
of Applied  Photonic  Devices,  Inc.  ("APD")  for cash and common  stock  worth
approximately $3.9 million. The Company also retired  approximately  $600,000 of
APD bank debt. APD,  located in Danielson,  Connecticut,  manufactures and sells
fiber optic cable and related components.

         The  purchase  method  of  accounting  was  used  and  the  results  of
operations of APD are included in the consolidated financial statements from May
23, 1995.


         Goodwill  of $3.3  million  resulted  from the  purchase  and was being
amortized over 15 years.  Amortization expense amounted to $217,000 and $127,000
in 1996 and 1995, respectively.


         In  December  1996,  the Company  announced  the  formation  of General
Photonics, a 50-50 joint venture between the Company and General Cable, a former
subsidiary  of  Wassall  plc.  General  Cable  purchased  certain  assets of the
Company's  optical fiber cable subsidiary,  APD, for approximately  $5.8 million
and then  contributed them to General  Photonics for a 50% equity interest.  APD
contributed  its remaining  assets to General  Photonics in exchange for its 50%
equity  interest.  The net  assets,  including  goodwill,  of General  Photonics
totaled  $10.2  million at  December  31,  1996.  The Company  accounts  for its
interest in the joint  venture  under the equity  method and no gain or loss was
recognized as a result of this transaction.

                                      F-23


<PAGE>

                              SPECTRAN CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                        December 31, 1997, 1996 and 1995


         The  following  pro forma  statement of  operations  for the year ended
December  31,  1996  presents  the results of  operations  as if the Company had
entered into the joint venture as of January 1, 1996 (in thousands):

Statements of Operations (unaudited)
<TABLE>
                                                                                            1996
                                                                                            ----
<S>                                                                                       <C>
          Sales                                                                           $ 51,413
          Cost of Sales                                                                     31,977
                                                                                          --------
          Gross Profit                                                                      19,436
          Operating Expenses                                                                14,632
          Equity in Earnings of Joint Venture                                                  530
          Other Income                                                                         297
                                                                                          --------
          Income Before Taxes                                                                5,631
          Income Tax Expense                                                                 1,915
                                                                                          --------
          Net Income                                                                      $  3,716
                                                                                          ========
          Net income per Share of Common Stock                                            $    .63
                                                                                          ========
          Weighted Average shares Outstanding                                                5,926
                                                                                          ========
</TABLE>

16- Subsequent Event

         On March 13, 1998 the Company  announced  the  settlement  of Corning's
obligation  to  purchase  multimode  optical  fiber  from  the  Company  under a
multi-year  supply  contract  the  companies  entered  into on  January 1, 1996.
Corning  has  terminated  its  purchase of  multimode  fiber from the Company in
exchange for a series of cash payments to the Company totaling $4.1 million .

17- Quarterly Financial Information (unaudited)
In thousands of dollars except per share data


Quarters                         First       Second         Third       Fourth
----------------------- ------------------ ------------ ------------ ----------
1997
Net Sales                      $16,228      $15,881       $15,638       $14,310
Gross Profit                     6,542        6,162         5,777         4,795
Net Income                       1,122        1,330         1,151         1,239
Earnings per Common
   Share-Basic                     .18          .19           .17           .18
Earnings per Common
   Share-Diluted                   .17          .18           .16           .17

1996

Net Sales                      $13,473      $15,281       $16,161       $16,656
Gross Profit                     4,756        5,318         6,220         6,081
Net Income                         684          833         1,007         1,131
Earnings per Common
   Share-Basic                     .13          .15           .19           .21
Earnings per Common
   Share-Diluted                   .12          .14           .17           .18

                                      F-24

<PAGE>

                              SPECTRAN CORPORATION
                 Schedule I - Valuation and Qualifying Accounts
              For the Years Ended December 31, 1997, 1996 and 1995

                              Dollars in Thousands


<TABLE>


                      Column A                            Column B           Column C           Column D          Column E
                      --------                            --------           --------           --------          --------
                                                         Balance at          Additions                             Balance
                                                          Beginning         Charged to                             at End
                    Description                           of Period          Expenses          Deductions         of Period


For the Year Ended December 31, 1997:

<S>                                                      <C>                <C>                <C>               <C>
   Allowance - Net Deferred Tax Asset                    $          630     $        --        $        300      $         330
                                                         ==============     ===========        ============      =============

   Allowance for Doubtful Accounts                       $          218     $       171        $         --      $         389
                                                         ==============     ===========        ============      =============

   Allowance for Obsolete Inventory                      $          273     $       703        $         --      $         976
                                                         ==============     ===========        ============      =============


For the Year Ended December 31, 1996:

   Allowance - Net Deferred Tax Asset                    $        1,030     $        --        $        400      $         630
                                                         ==============     ===========        =============     =============

   Allowance for Doubtful Accounts                       $          265     $        --        $         47      $         218
                                                         ==============     ===========        ============      =============

   Allowance for Obsolete Inventory                      $          467     $        --        $        194      $         273
                                                         ==============     ===========        ============      =============


For the Year Ended December 31, 1995:

   Allowance - Net Deferred Tax Asset                    $        1,467     $        --        $        437      $       1,030
                                                         ==============     ===========        ==============    =============

   Allowance for Doubtful Accounts                       $          124     $       141        $         --      $         265
                                                         ==============     ===========        ============      =============

   Allowance for Obsolete Inventory                      $          556     $        --        $         89      $         467
                                                         ==============     ===========        ============      =============
</TABLE>


                                      F-25