REMEC INC, S-3, 2000-03-01

REMEC INC
S-3, 2000-03-01
SEMICONDUCTORS & RELATED DEVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 2000

REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

REMEC, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<S> <C> <C>
CALIFORNIA 3812 95-3814301
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFIED CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

9404 CHESAPEAKE DRIVE, SAN DIEGO, CALIFORNIA 92123, (858) 560-1301
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

RONALD E. RAGLAND, CHAIRMAN AND CHIEF EXECUTIVE OFFICER
9404 CHESAPEAKE DRIVE, SAN DIEGO, CALIFORNIA 92123, (858) 560-1301
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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

COPIES TO:

VICTOR A. HEBERT DOUGLAS J. REIN
PAUL H. GREINER JEFFREY T. BAGLIO
CHRISTINA L. VAIL CHRISTOPHER M. SMITH
HELLER EHRMAN WHITE & MCAULIFFE LLP GRAY CARY WARE & FREIDENRICH LLP
601 SOUTH FIGUEROA STREET 4365 EXECUTIVE DRIVE, SUITE 1600
LOS ANGELES, CALIFORNIA 90017-5758 SAN DIEGO, CALIFORNIA 92121-2189
(213) 689-0200 (858) 677-1400

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

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

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

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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

CALCULATION OF REGISTRATION FEE

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<CAPTION>
=================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE AGGREGATE OFFERING AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PRICE PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per
share.......................... 4,312,500 $32.44 $139,897,500 $36,933
=================================================================================================================================
</TABLE>

(1) Includes 562,500 shares which may be issued pursuant to the underwriters
over-allotment option.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 based upon the
average of the high and low prices of the registrant's common stock on
February 25, 2000, as reported on the Nasdaq National Market.

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

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

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

<PAGE> 2

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

SUBJECT TO COMPLETION, DATED MARCH 1, 2000

PROSPECTUS
- ----------------

3,750,000 SHARES

[REMEC LOGO]

COMMON STOCK
-------------------------
Of the 3,750,000 shares of common stock offered, we are offering 3,500,000
shares and one selling shareholder is offering 250,000 shares. We will not
receive any of the proceeds from the shares sold by the selling shareholder.

Our common stock is traded on the Nasdaq National Market under the symbol
"REMC." On February 29, 2000, the last reported sale price for our common stock
on the Nasdaq National Market was $36.875 per share.
-------------------------
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.
-------------------------

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
PER SHARE TOTAL
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Public Offering Price.......................... $ $
Underwriting Discount.......................... $ $
Proceeds, before expenses, to REMEC............ $ $
Proceeds to Selling Shareholder................ $ $
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>

The underwriters may also purchase up to an additional 562,500 shares from
the additional selling shareholders identified in this prospectus at the public
offering price, less the underwriting discount, within 30 days from the date of
this prospectus, to cover over-allotments. If the over-allotment option is
exercised, we will not receive any of the proceeds from the shares sold by the
selling shareholders.

The Securities and Exchange Commission and state securities regulators have
not approved or disapproved of these securities or determined if this prospectus
is truthful or complete. It is illegal for any person to tell you otherwise.
-------------------------

NEEDHAM & COMPANY, INC.
CIBC WORLD MARKETS
DAIN RAUSCHER WESSELS
A.G. EDWARDS & SONS, INC.
The date of this prospectus is , 2000
<PAGE> 3

TABLE OF CONTENTS

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PAGE
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<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 4
Forward-Looking Statements.................................. 14
Use of Proceeds............................................. 14
Price Range of Common Stock................................. 15
Capitalization.............................................. 16
Selected Consolidated Financial Data........................ 17
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 18
Business.................................................... 24
Management.................................................. 36
Principal and Selling Shareholders.......................... 40
Underwriting................................................ 42
Legal Matters............................................... 44
Experts..................................................... 44
Where You Can Find More Information......................... 45
</TABLE>

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

In this prospectus, "REMEC," "we," "us" and "our" refer to REMEC, Inc. and
our subsidiaries, on a consolidated basis.

"REMEC," "REMEC Microwave," "REMEC Wireless," "Humphrey," "REMEC Magnum,"
"REMEC Veritek," "REMEC CSH," "REMEC Q-bit," "REMEC Canada," "REMEC Nanowave,"
"REMEC WACOM," "REMEC Europe" and "Airtech" are trademarks of REMEC. All other
trademarks appearing in this prospectus are the property of their respective
owners.
<PAGE> 4

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information and the other information, financial statements and notes thereto
appearing elsewhere in this prospectus. Except as otherwise indicated, the
information in this prospectus assumes the underwriters do not exercise their
over-allotment option and assumes any outstanding options to purchase shares of
common stock have not been exercised.

REMEC

We manufacture products that operate at the full range of frequencies
currently used in the transmission of wireless communications traffic, including
at radio frequencies or RF, microwave frequencies and millimeter wave
frequencies. By offering products that cover the entire frequency spectrum for
wireless communications, we are able to address opportunities in the worldwide
mobile wireless communications market as well as the global fixed access
broadband wireless market.

In the mobile wireless communications market, we design and produce
subsystems used in base stations for analog cellular and digital cellular
systems, including personal communications systems or PCS and emerging third
generation or 3G networks. In the fixed access broadband market, we develop and
manufacture products for point-to-point, point-to-multipoint and
satellite-to-multipoint systems. Our point-to-multipoint products are designed
to be integrated into various broadband distribution systems, including local
multipoint distribution systems, or LMDS, and multichannel multipoint
distribution systems, or MMDS. Fixed access broadband wireless systems can
complement or provide cost effective alternatives to copper wire, cable and
fiber optic-based communications networks.

Demand for wireless infrastructure equipment is increasing due to a number
of factors, including the deregulation of the telecommunications industry,
advances in wireless communications technology and business and residential
demand for wireless services such as digital cellular, Internet access, two-way
paging and specialized mobile radio services. With industry estimates of 975
million cellular/ PCS subscribers worldwide by 2003 and 502 million Internet
users worldwide by 2003, we anticipate that there will be strong demand for
services by communications networks with the capacity to provide high speed
Internet access for mobile wireless products. In addition to mobile
applications, Internet use and corporate data applications are also expected to
increase the demand for fixed access broadband wireless networks.

We market our wireless products primarily to original equipment
manufacturers, or OEMs, such as Motorola, Inc., Digital Microwave Corporation,
Nokia Corp., Alcatel Network Systems, P-COM, Inc., STM Wireless, Inc., Lucent
Technologies Inc., Nortel Networks Corporation and SpectraPoint Wireless LLC.

We have augmented our existing technology base by acquiring specialized
technology firms that complement our product offerings and market strategies.
Over the last three years, we acquired eight companies, including our most
recent acquisition in April 1999 of Airtech plc, a United Kingdom-based
manufacturer of mobile wireless products with sales offices in Malaysia and
China. In acquiring Airtech, we were able to establish operations from which we
can more directly address the European and Asian wireless infrastructure
markets.
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<PAGE> 5

Our objective is to build on the strength of our core technological
competencies to be the supplier of choice of OEMs in the wireless infrastructure
equipment industry and prime contractors in the defense electronics industry.
Our strategy to accomplish this objective is to:

- leverage our technology leadership;

- continue to develop strong strategic alliances with customers;

- supply integrated microwave subsystems to OEMs' worldwide operations and
expand our international presence;

- supply niche products directly to network service providers;

- enhance our high volume manufacturing capability; and

- pursue strategic acquisitions.

Our principal executive offices are located at 9404 Chesapeake Drive, San
Diego, California 92123, and our telephone number is (858) 560-1301. Our website
address is http://www.remec.com. The information on our website is not
incorporated by reference into this prospectus.

THE OFFERING

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<S> <C>
Common stock offered by REMEC.............................. 3,500,000 shares
Common stock offered by the selling shareholder............ 250,000 shares
Common stock to be outstanding after the offering.......... 28,930,429 shares
Use of proceeds............................................ Working capital for expansion of
production capacity, marketing
activities and research and development
and for other general corporate
purposes.
Nasdaq National Market symbol.............................. REMC
</TABLE>

The number of shares offered by the selling shareholder does not include
shares to be sold by other selling shareholders if the underwriters'
over-allotment option is exercised. The number of shares to be outstanding
immediately after this offering is based on the number of shares outstanding as
of January 31, 2000. This number does not include 3,034,909 shares of common
stock issuable upon the exercise of outstanding options at a weighted average
price of $15.40 per share, of which options to purchase 1,154,376 shares are
currently exercisable.
2
<PAGE> 6

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEARS ENDED JANUARY 31, -------------------------
-------------------------------------------------- OCTOBER 30, OCTOBER 29,
1995 1996 1997 1998 1999 1998 1999
------- ------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales.......................... $84,407 $97,700 $131,643 $191,008 $179,215 $136,689 $138,863
Gross profit....................... 25,022 28,924 36,284 58,659 41,772 31,773 32,989
Income (loss) from operations...... 6,027 6,058 6,622 18,493 (5,966) (4,788) (9,752)
Income (loss) applicable to common
stock............................ 3,145 3,224 2,729 14,754 (4,831) (3,846) (7,377)
Earnings (loss) per common share:
Basic............................ $ 0.23 $ 0.23 $ 0.15 $ 0.65 $ (0.20) $ (0.16) $ (0.29)
======= ======= ======== ======== ======== ======== ========
Diluted.......................... $ 0.23 $ 0.23 $ 0.15 $ 0.64 $ (0.20) $ (0.16) $ (0.29)
======= ======= ======== ======== ======== ======== ========
Shares used in per share
calculations:
Basic............................ 13,892 13,819 17,633 22,535 24,722 24,742 25,093
======= ======= ======== ======== ======== ======== ========
Diluted.......................... 13,892 13,936 17,944 23,228 24,722 24,742 25,093
======= ======= ======== ======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
AS OF OCTOBER 29, 1999
-------------------------
ACTUAL AS ADJUSTED
----------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 54,869 $177,078
Working capital............................................. 108,637 230,846
Total assets................................................ 225,128 347,337
Long-term debt.............................................. 5,169 5,169
Total shareholders' equity.................................. 186,544 308,753
</TABLE>

Statements of operations data and balance sheet data set forth in the table
above include data of Airtech plc (acquired April 1999), Q-bit Corporation
(acquired October 1997), C&S Hybrid, Inc. (acquired June 1997), Radian
Technology, Inc. (acquired February 1997) and Magnum Microwave Corporation
(acquired August 1996), each of which was accounted for as a pooling of
interests. In the statements of operations data listed in the table above, we
have presented income or loss applicable to common stock to account for
dividends on preferred stock. Prior to completion of our initial public offering
in 1996, we had accrued dividends on outstanding preferred stock of $80,000
which were paid upon completion of our initial public offering. Prior to
completion of Airtech's initial public offering in 1997 and our acquisition of
Airtech, Airtech had accrued dividends on outstanding preferred stock of
$128,000, which were paid when Airtech completed its initial public offering. We
acquired Verified Technical Corporation in March 1997, Nanowave Technologies
Inc. in October 1997, Smartwaves International in February 1999 and Wacom
Products, Inc. in March 1999, each of which was accounted for as a purchase.

The balance sheet data under the as adjusted column at October 29, 1999 set
forth in the table above reflects the sale by us of 3,500,000 shares of our
common stock in this offering at an assumed offering price of $36.875 per share.
3
<PAGE> 7

RISK FACTORS

You should carefully consider the following risks before making an
investment decision in our common stock. The risks described below are not the
only ones that we face. Additional risks and uncertainties not presently known
to us or that are currently deemed immaterial may also impair our business
operations. Our business, operating results or financial condition could be
materially adversely affected by, and the trading price of our common stock
could decline due to, any of these risks, and you may lose all or part of your
investment. You should refer to the other information included in this
prospectus and the other information, our financial statements and the related
notes incorporated by reference into this prospectus before you decide to
purchase shares of our common stock.

This prospectus contains forward-looking statements that involve risks and
uncertainties, such as statements of our plans, objectives, expectations and
intentions. Our actual results could differ materially from those anticipated in
the forward-looking statements for many reasons, including the factors described
below and elsewhere in this prospectus. You should not place undue reliance on
these forward-looking statements.

OUR EFFORTS TO EXPAND OUR COMMERCIAL BUSINESS MAY CAUSE OUR REVENUE TO FLUCTUATE

Historically, our business focused almost exclusively on making wireless
communications and other tactical weapon system products for the U.S. defense
industry. In recent years, we have increased our business in the commercial
wireless communications market. We believe that our future growth depends on our
continued success in the commercial market. The commercial market for our
products could fail to grow, or could grow more slowly than anticipated.

Some segments of the commercial markets in which we sell products have only
recently begun to develop. For example, the point-to-multipoint wireless
communications equipment market has just begun to emerge in the last year.
Because these segments are relatively new, it is difficult to predict the rate
at which these segments will grow, if at all. Existing or potential applications
for our products may fail to develop or may erode for many different reasons.
These reasons include, but are not limited to:

- insufficient economic growth to support expensive infrastructure
equipment;

- insufficient consumer demand for wireless products or services because of
pricing or otherwise; or

- real or perceived security risks associated with wireless communications,
such as privacy of data and eavesdropping.

COMPETITION IN THE COMMUNICATIONS INDUSTRY MAY INCREASE THE TECHNOLOGICAL
OBSOLESCENCE OF OUR PRODUCTS AND REDUCE OUR PRODUCT PRICES, MARGINS AND REVENUES

The markets for our communications products are extremely competitive and
are characterized by rapid technological change. Specifically, new products are
generally developed quickly and industry standards are constantly evolving.
Thus, our products can become obsolete over a short period of time. In addition,
price competition is intense and the market prices and margins of products
frequently decline after competitors begin making similar products. We believe
that to remain competitive in the future we will need to invest significant
financial resources in research and development.

4
<PAGE> 8

Some of our current and potential competitors have substantially greater
technical, financial, marketing, distribution and other resources than we have.
They also may have greater name recognition and market acceptance of their
products and technologies. Our competitors, or the competitors of our customers,
may develop new technologies, enhancements to existing products or new products
that offer superior price or performance features. These new products or
technologies could render obsolete our products or the systems of our customers
into which our products are integrated.

CUSTOMER ORDER ESTIMATES MAY NOT NECESSARILY INDICATE FUTURE SALES

Some of our customers have provided us with estimates of their requirements
for our products over a period of time. We make a number of management decisions
based on these customer estimates, including our purchase of materials, hiring
of personnel and other matters that may increase our production capabilities and
costs. If a customer reduces its orders from prior estimates after we have
increased our production capabilities and costs, this reduction may decrease our
revenue and we may not be able to reduce our costs to account for this reduction
in customer orders.

WE MAY ENCOUNTER DIFFICULTIES IN EFFECTIVELY INTEGRATING ACQUIRED BUSINESSES

As part of our business strategy, we intend to augment our technology base
by acquiring specialized technology firms. Over the last several years we have
acquired a number of companies and have had some difficulties integrating those
companies into our business. These and any future acquisitions we make will be
accompanied by the risks commonly encountered in acquisitions of companies which
include, among other things:

- potential exposure to unknown liabilities of acquired companies;

- higher than anticipated acquisition costs and expenses;

- difficulty and expense of assimilating the operations and personnel of
the companies, especially if the acquired operations are geographically
distant;

- potential disruption of our ongoing business and diversion of management
time and attention;

- failure to maximize our financial and strategic position by the
successful incorporation of acquired technology;

- difficulties in adopting and maintaining uniform standards, controls,
procedures and policies;

- loss of key employees and customers as a result of changes in management;
and

- possible dilution to our shareholders.

We may not be successful in overcoming these risks or any other problems
encountered in connection with any acquisitions.

OUR STRATEGIC ACQUISITIONS MAY ADVERSELY AFFECT OUR PROFITABILITY

We may make a strategic acquisition knowing that the transaction may
adversely affect our short-term profitability. A company that is an acquisition
candidate may be experiencing operating losses. We may believe that the
strategic opportunity of acquiring such a company outweighs the operating losses
the candidate is experiencing and that we expect to experience before being able
to return the acquisition candidate to profitability. The completion of such an
acquisition in the future would negatively affect our profitability and may
cause a decline in our stock price.

5
<PAGE> 9

WE MAY NOT BE SUCCESSFUL IN ESTABLISHING THE MANUFACTURING CAPACITY NECESSARY TO
MEET ANTICIPATED GROWTH OF OUR COMMERCIAL BUSINESS

The commercial wireless business generally requires the ability to produce
a high volume of products in a short time relative to products we produce for
the defense electronics industry. As a result of expected growth in our
commercial wireless business, we are significantly increasing our manufacturing
capacity. Higher volume manufacturing generally requires greater automation in
order to be cost-effective. We may not be able to automate sufficiently in order
to fulfill high volume production orders in a cost-effective manner. If we can
not successfully manufacture our products in the future at volumes, yields or
cost levels necessary to meet our customers' needs, we may lose customers and
our sales will suffer. In addition, we can give no assurance that we will obtain
a sufficient amount of high volume orders to absorb the capital costs incurred
in increasing our automation.

In 1997, we acquired a manufacturing facility in Costa Rica through the
acquisition of Q-bit. The Costa Rica facility currently manufactures a wide
range of our microwave and RF products, and we intend to expand the number and
increase the volume of products manufactured in Costa Rica. There are several
risks inherent in the transfer of the manufacturing process from one facility to
another, including unexpected costs and risks related to technology transfer and
the ramp-up process in the new facility. Our failure to successfully transition
the manufacture in a cost effective manner may result in increased product costs
or delays.

OUR PRODUCTS MAY CONTAIN UNDETECTED OR UNRESOLVED DEFECTS WHEN SOLD OR MAY NOT
MEET OUR CUSTOMER'S PERFORMANCE CRITERIA

Our standard product warranties run between 12 months and three years. If
our products fail to perform as warranted and we do not resolve product quality
or performance issues in a timely manner, we may lose sales or be forced to pay
resulting damages. There is a risk that for unforeseen reasons we may be
required to repair or replace a substantial number of products in use or to
reimburse customers for products that fail to work or meet strict performance
criteria. In addition, because our products are sold and marketed in different
countries, our products must function in and meet the requirements of many
different communications environments and be compatible with various
communications systems and products. Any failure on our part to meet the
requirements of our customers' performance requirements could have a negative
impact on our sales.

Further, there is a risk that our customers may uncover latent design
defects in our products which were not apparent at the time the product was
sold. This type of defect may be discovered after the warranty period has
expired. A performance failure due to a design defect may cause loss of
customers, damage to our reputation for delivering high quality products, delay
in or loss of market acceptance, additional warranty expense or product recall.

OUR EXPANSION OF PRODUCT LINES AND CUSTOMER BASE COULD CAUSE PROBLEMS IN OUR
MANAGEMENT OF GROWTH

Our business has grown in size and complexity, and we have significantly
expanded our product lines and customer base. This growth and expansion has
placed significant demands on our management and operations, and we expect that
these demands will continue. Our ability to compete effectively and to manage
future growth will depend on our ability to implement and improve operating and
financial systems on a timely basis. We may not be able to manage our future
growth effectively.

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<PAGE> 10

OUR PRODUCTION SCHEDULES AND MANUFACTURING PROCESSES MAY CAUSE FLUCTUATIONS IN
QUARTERLY RESULTS

Our quarterly results have varied significantly in the past and are likely
to continue to vary significantly, due to a number of factors, including the
following:

- timing, cancellation or rescheduling of customer estimates for product,
customer orders and shipments;

- pricing and mix of products sold;

- introduction of new products;

- our ability to obtain components and subassemblies from contract
manufacturers and suppliers; and

- variations in manufacturing efficiencies.

Any one of these factors could substantially affect our results of operations
for any particular fiscal quarter.

OUR DEPENDENCE ON A SMALL NUMBER OF CUSTOMERS COULD RESULT IN A DECREASE IN OUR
REVENUES

We derive significant revenues from a limited group of customers. For the
nine-month period ending October 29, 1999, our top ten customers comprised
approximately 59% of revenues, with no customer accounting for more than 10% of
total fiscal year to date revenues. However, in January 2000, General Instrument
was acquired by Motorola, Inc., and the combined company would have accounted
for 15.1% of revenues at October 29, 1999. In addition, in December 1999, we
entered into a strategic supply agreement with SpectraPoint Wireless LLC which
we anticipate will provide a significant portion of our revenues in the near
future. We anticipate that we will continue to derive significant revenues from
sales to a relatively small group of customers. If any of these customers
cancels, reduces or delays orders or product estimates given to us or shipments
on account of their manufacturing or supply difficulties, financial difficulties
or reduction in demand for their systems and products or otherwise, our revenues
would be significantly reduced.

WE DEPEND ON COMMERCIAL OEMS AND DEFENSE PRIME CONTRACTORS TO OUTSOURCE PRODUCTS
WE PRODUCE AND WE ARE VULNERABLE IF THEY SHIFT TOWARDS RELYING EXCLUSIVELY ON
THEIR OWN IN-HOUSE CAPABILITIES

Currently, our primary competitors are the captive manufacturing operations
of our commercial customers that are large wireless infrastructure OEMs and
defense prime contractors. We believe that our future success depends largely
upon the extent to which the OEMs and defense prime contractors elect to
purchase integrated components and subsystems from outside sources such as us.
OEMs and defense prime contractors could develop greater internal capabilities
and manufacture these products exclusively in-house, rather than outsourcing
them which would have a negative impact on our sales.

INTENSE COMPETITION AMONG TECHNOLOGY COMPANIES FOR EXPERIENCED ENGINEERS AND
OTHER PERSONNEL MAY AFFECT OUR ABILITY TO SUSTAIN OUR GROWTH EXPECTATIONS

We depend on attracting and retaining competent personnel in all areas of
our business, including management, engineering, manufacturing, quality
assurance, marketing and support. In particular, our development efforts depend
on hiring and retaining qualified engineers. We believe that engineers,
including highly skilled microwave engineers with the skills necessary to
develop products for wireless communications are in high demand. We may not be
able to hire and retain these

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<PAGE> 11

personnel at compensation levels consistent with our existing compensation and
salary structure. If we are unable to hire a sufficient number of engineering
personnel, we may be unable to support the growth of our business and as a
result, our sales may suffer.

CUSTOMER PRESSURE TO REDUCE PRICES AND LONG-TERM SUPPLY ARRANGEMENTS MAY CAUSE
REDUCTIONS IN REVENUES OR PROFIT MARGINS

Many of our customers are under pressure to reduce prices and, therefore,
we expect to continue to experience pressure from our customers to reduce the
prices of our products. Our customers frequently negotiate supply arrangements
with us well in advance of delivery dates, requiring us to commit to price
reductions before we can determine whether we can achieve the product's assumed
cost reductions. To offset declining average sales prices, we believe that we
must reduce our manufacturing costs and obtain higher volume orders for
products. If we are unable to offset declining average selling prices, our gross
profit margins will decline.

THE FAILURE OF OUR CUSTOMERS TO SELL WIRELESS COMMUNICATIONS NETWORK SOLUTIONS
THAT INCLUDE OUR SUBSYSTEMS AND INTEGRATED COMPONENTS WOULD HARM OUR SALES

In general, our integrated components and subsystems must be custom
designed for use in our customers' products. As a result, we sell our products
to a relatively small group of customers, and our products must be specifically
engineered for each customer. While we select our customers based on our
assessment of their ability to succeed in the marketplace, we can not be sure of
their success. If our customers are not successful, the length of time required
to reengineer our product for another customer may delay our sales or prohibit
us from getting our product to the marketplace in a timely manner or at all.

OUR EXCLUSIVE ARRANGEMENTS WITH SOME CUSTOMERS MAY LIMIT OUR PURSUIT OF MARKET
OPPORTUNITIES AND MAY RESULT IN LOSS OF REVENUES

We have granted some of our customers exclusivity on specific products,
which means that we are only permitted to sell those specially engineered
products to them. We expect that in some cases our existing customers and new
customers may require us to give them exclusivity on new products that we make
for them. By entering into exclusive arrangements, we may forego opportunities
to supply these products to other companies. In addition, if we enter into
exclusive relationships with customers who prove to be unsuccessful, our
revenues will be negatively affected. We may not be able to establish business
relationships with, or negotiate acceptable arrangements with, significant
customers in the future. Also, our current or future arrangements with
significant customers may not continue or be successful.

OUR DEPENDENCE ON SUPPLIERS AND CONTRACT MANUFACTURERS MAY DECREASE OUR
TIMELINESS OF PRODUCT DELIVERY TO CUSTOMERS WHICH MAY RESULT IN LOST REVENUES

We rely on contract manufacturers and suppliers, in some cases sole
suppliers or limited groups of suppliers, to provide us with services and
materials necessary for the manufacture of our products. As a result of a
worldwide demand for and shortage of components, some suppliers have begun to
limit the number of components that we may purchase. These components include
chip components and other products necessary for the production of our products.
If we are not able to obtain sufficient allocations of these components, our
production and shipment of product will be delayed, we may lose customers and
our profitability will be affected.

8
<PAGE> 12

Other risks relating to our reliance on contract manufacturers and on sole
suppliers include reduced control over productions costs, delivery schedules,
reliability and quality of materials. Any inability to obtain timely deliveries
of acceptable quality materials, or any other circumstances that would require
us to seek alternative contract manufacturers or suppliers, could adversely
affect our ability to deliver products to our customers. In addition, if costs
for our contract manufacturers or suppliers increase, we may suffer losses if we
are unable to recover such cost increases under fixed price production
commitments to our customers.

OUR CONTINUED EFFORTS TO SERVICE THE DEFENSE MARKET MAY LIMIT OUR GROWTH IN
REVENUES

We make a substantial portion of our sales to the U.S. defense market. As a
result, lower defense spending by the U.S. government could materially reduce
our revenues. Lower defense spending by the U.S. government might occur because
of defense budget cuts, general budget cuts or other causes. The U.S. recently
has reduced its defense budget and may further reduce it.

In addition, the U.S. has reduced the number of newly initiated defense
industry production programs. In the existing defense programs in which we
participate, pricing pressure continues to be exerted on follow-on orders.

We expect to continue to derive a substantial portion of our revenues from
defense programs and to develop microwave products for defense applications. If
a significant defense program or contract ends, and we fail to replace sales
from that program or contract, our revenues will decline. In addition, a large
portion of our expenses are fixed and difficult to reduce, thus magnifying the
negative effect of any shortfall in revenue.

OUR DEFENSE DEVELOPMENT CONTRACTS COULD CAUSE OUR QUARTERLY RESULTS TO FLUCTUATE

Because of the decline in the number of defense industry production
programs, we have entered into more defense industry development contracts as a
source of defense revenues. Development contracts are contracts for the
development of products, rather than the production of products and they tend to
be fixed price contracts giving us lower gross profit margins than production
contracts. As a result, our increased reliance on development contracts has led
to an increased quarterly fluctuation in sales and gross profit margins.
Accordingly, our comparative performance from one fiscal quarter to the next is
not necessarily an accurate indicator of our future performance.

FIXED-PRICE CONTRACTS MAY INCREASE RISKS OF COST OVERRUNS AND PRODUCT
NON-PERFORMANCE

Our customers establish demanding specifications for product performance,
reliability and cost. Most of our customer contracts are firm fixed-price
contracts. Firm fixed-price contracts provide for a predetermined fixed price
for the products we make, regardless of the costs we incur. We have made pricing
commitments to customers based upon our expectation that we will achieve more
cost effective product designs and automate more of our manufacturing
operations.

Manufacture of our products is an extremely complex process. We face risks
of cost overruns or order cancellations if we fail to achieve forecasted product
design and manufacturing efficiencies or if products cost more to produce than
expected. The expense of producing products can rise due to increased cost of
materials, components or labor, or other factors. We may have cost overruns or
problems with the performance or reliability of our products in the future.

9
<PAGE> 13

SOME OF OUR DEVELOPMENT ARRANGEMENTS WITH CUSTOMERS MAY LEAD TO LOSS OF
INVESTMENT IN DESIGN AND ENGINEERING

We often make significant investments in the design and engineering of new
products for customers without any commitment by the customer for the future
purchase of the products. If we do not receive initial or follow-on orders for
products we design, our profitability will be affected because those costs would
not be offset by additional revenues.

WE DEPEND ON THE CONTINUED CONTRIBUTIONS OF OUR EXECUTIVE OFFICERS AND OTHER KEY
MANAGEMENT, EACH OF WHOM WOULD BE DIFFICULT TO REPLACE

We do not have employment or non-competition agreements with our key
executive officers, except for Tao Chow (Senior Vice President), James Mongillo
(Executive Vice President), Justin Miller (Vice President) and Nick Randall
(Executive Vice President). We also do not have "key man" life insurance on our
key executive officers. The loss of any of our executive officers or other key
management would disrupt our operations and divert the time and attention of our
remaining officers.

ENVIRONMENTAL REGULATIONS AND HEALTH RISKS MAY INCREASE OUR OPERATION COSTS OR
DECREASE OUR SALES

We are subject to a variety of environmental regulations by local, state,
federal and foreign governments. These regulations govern the storage,
discharge, handling, emission, generation, manufacture and disposal of toxic or
other hazardous substances used to manufacture our products. If we fail to
comply with current or future regulations, the following adverse effects could
occur:

- we could be forced to alter manufacturing processes;

- we could be fined substantial amounts;

- our production could be suspended; or

- we could be forced to cease operations.

News reports have asserted that power levels associated with hand held
cellular telephones and related infrastructure equipment may pose certain health
risks. If wireless communications equipment (or other devices that incorporate
our products) were determined or perceived to create a significant health risk,
the market for our products could be significantly impacted. Moreover, if such a
health risk were determined or perceived to exist, we might be named as a
defendant in product liability lawsuits commenced by governments, businesses or
individuals alleging that our products were harmful. We would be required to
defend such lawsuits and we might be held liable.

NEW GOVERNMENT REGULATIONS COULD INTERFERE WITH OUR BUSINESS GROWTH

Our products are incorporated into wireless communications systems that are
regulated domestically by the FCC and internationally by other government
agencies. Typically, the equipment operators and not REMEC are responsible for
compliance with these regulations. However, regulatory changes, including
changes in the allocation of available frequency spectrum, could negatively
affect our business by restricting development efforts by our customers, making
our current products obsolete or increasing the opportunity for additional
competition. Our sales will be adversely affected if our manufactured products
fail to comply with all applicable domestic and international regulations.

The delays inherent in the governmental approval process have in the past
caused, and may in the future cause, cancellation, postponement or rescheduling
of the installation of communications systems by our customers. This in turn may
have a negative impact on the sale of our products to

10
<PAGE> 14

these customers. In addition, the increasing demand for wireless communications
has exerted pressure on regulatory bodies world-wide to adopt new standards for
such products. The approval of new standards generally follows extensive
investigation of and deliberation over competing technologies.

IF WE ARE AUDITED BY U.S. GOVERNMENT AGENCIES, WE COULD INCUR SIGNIFICANT
EXPENSES AND EXPERIENCE DISRUPTION OF OUR BUSINESS

Because of our participation in the defense industry, we are subject to
audit from time to time for our compliance with government regulations by
various agencies, including the following:

- the Defense Contract Audit Agency;

- the Defense Investigative Service;

- the Office of Federal Control Compliance Programs; and

- the Office of Defense Supply Center (Columbus).

These and other governmental agencies may also from time to time conduct
inquiries or investigations that cover a broad range of our activity. Responding
to governmental audits, inquiries or investigations may involve significant
expense and divert management attention. Also, an adverse finding in any such
audit, inquiry or investigation could involve penalties.

OUR STOCK PRICE MAY FLUCTUATE SIGNIFICANTLY

The market price of our common stock, like the stock prices of many
companies in the telecommunications industry, is subject to wide fluctuations in
response to a variety of factors, including:

- actual or anticipated operating results;

- announcements of technological innovations;

- announcements of new products or new contracts by us, our competitors or
customers;

- government regulatory action;

- developments with respect to wireless telecommunications; and

- general market conditions and other factors.

In addition, the stock market has from time to time experienced significant
price and volume fluctuations. These fluctuations have particularly affected the
market prices for the stocks of technology companies and have often been
unrelated to the operating performance of particular companies. The market price
of our common stock has been highly volatile and may continue to be highly
volatile.

WE ARE CURRENTLY INVOLVED IN SECURITIES CLASS ACTION LITIGATION

In April 1999, a securities class action suit was brought against us
alleging violations of the Securities Exchange Act of 1934. We believe that the
lawsuit is without merit and we have been defending against it vigorously
through a motion to dismiss and otherwise. However, if the plaintiffs are
successful in pursuing their claims against us and our officers and directors,
such a result could have a significant negative effect on our business and
financial condition. In addition, we may be the

11
<PAGE> 15

target of similar litigation in the future. Securities litigation could result
in substantial costs and divert management's attention and resources, and could
seriously affect our business.

LACK OF PATENT PROTECTION ON OUR PRODUCTS AND TECHNOLOGY MAY ALLOW COMPETITORS
TO DEVELOP SIMILAR PROPRIETARY PRODUCTS OR TECHNOLOGY

IF INFRINGEMENT CLAIMS ARE BROUGHT AGAINST US IN THE FUTURE, WE COULD BE
REQUIRED TO PAY SUBSTANTIAL ROYALTIES AND OTHER COSTS

If a third party was successful in a claim that one of our products
infringed the third party's proprietary rights, we might have to pay substantial
royalties or damages or remove that product from the marketplace. We might also
have to expend substantial financial and engineering resources in order to
modify the product so that it would no longer infringe on those proprietary
rights. As to some of our products, we have agreed to indemnify our customers
against possible claims by third parties that the products infringe their
intellectual property rights. In the future, third parties may assert
infringement claims against us or with respect to our products. Asserting our
rights or defending against third party claims could involve substantial costs
and diversion of resources.

OUR SUCCESS IN PURSUING SALES IN INTERNATIONAL MARKETS MAY BE LIMITED BY RISKS
RELATED TO INTERNATIONAL TRADE AND MARKETING.

For the nine months ended October 29, 1999, approximately 17% of our
revenue was derived from sales to customers residing outside the U.S. In
addition, some of our U.S.-based customers which integrate our subsystems into
their products may sell into these international markets. Adverse international
economic conditions or developments, including economic instability in Asia in
the past, has and could in the future negatively affect our direct sales and
sales by our customers into these regions which would impact our revenues.

In addition to the uncertainty as to our ability to maintain and expand our
international presence, there are certain risks inherent in foreign operations,
including:

- delays in or prohibitions on exporting products resulting from export
restrictions for certain products and technologies;

- fluctuations in foreign currencies and the U.S. dollar;

- loss of revenue, property and equipment from expropriation,
nationalization, war, insurrection, terrorism and other political risks;

- overlap of different tax structures;

- seasonal reductions in business activity; and

- risks of increases in taxes and other government fees.

12
<PAGE> 16

In addition, foreign laws treat the protection of proprietary rights differently
from laws in the United States and may not protect our proprietary rights to the
same extent as U.S. laws.

OUR INCREASED INTERNATIONAL MARKET PRESENCE MAY INCREASE MARKETING AND SALES
COSTS OF DELIVERING PRODUCTS IN FOREIGN COUNTRIES

We seek to expand our presence in international wireless communications and
related markets by entering into partnerships or alliances with OEMs and service
providers in those countries and acquiring complementary international business.
We have had limited experience in partnering with international entities and
managing international operations. The success of our ability to increase our
international market presence is dependent on a number of factors, including the
success of our domestic operations, level of funding, stability of our stock
price, ability to produce competitive international products, attraction and
retention of key employees at our international locations and our execution of
strategic objectives.

WE ARE SIGNIFICANTLY CONTROLLED BY OUR MANAGEMENT

Our executive officers comprise five of the ten members of the Board of
Directors. As a result, our management has the ability to exercise influence
over our significant matters. This high level of influence may have a
significant effect in delaying, deferring or preventing a change in control of
REMEC.

MANAGEMENT WILL HAVE BROAD DISCRETION OVER THE USE OF PROCEEDS OF THE OFFERING

Our management will have significant flexibility in applying the net
proceeds of this offering. You will be relying on the judgment of our management
regarding application of the proceeds.

13
<PAGE> 17

FORWARD-LOOKING STATEMENTS

Some of the information in this prospectus contains forward-looking
statements. These statements can be identified by the use of forward-looking
terms such as "may," "will," "expect," "anticipate," "estimate," "continue" or
other similar words. These statements discuss future expectations, projections
of results of operations or of financial condition or state other "forward-
looking" information. When considering these forward-looking statements, you
should keep in mind the risk factors and other cautionary statements in this
prospectus. The risk factors noted under the heading "Risk Factors" and other
factors noted throughout this prospectus could cause our actual results to
differ materially from those contained in any forward-looking statement.

USE OF PROCEEDS

We estimate the net proceeds to us from the sale of the 3,500,000 shares of
our common stock being offered by this prospectus will be approximately $122.2
million, assuming a public offering price of $36.875 per share, and after
deducting the underwriting discount and estimated offering expenses payable by
us.

We plan to use the proceeds of the offering to fund working capital,
including estimated capital expenditures to increase production capacity,
expansion of marketing and research development. We may use a portion of the
proceeds to acquire technologies, products or businesses that complement our
current business, as such opportunities may arise. Although we do consider
acquisitions from time to time as a part of our normal business operations and
planning, we have no present commitments or agreements with respect to any
acquisitions.

We currently have no other specific plans for any significant portion of
the proceeds. Accordingly, our management will have broad discretion in the
application of the net proceeds.

Pending their use, the proceeds will be invested in short-term, U.S.
government or investment grade interest-bearing securities. We will not receive
any of the proceeds from the sale of common stock by the selling shareholders.

We will not receive any of the proceeds from the shares sold by the selling
shareholder. We have agreed to pay the expenses, other than the underwriting
discounts, relating to the sale of these shares.

14
<PAGE> 18

PRICE RANGE OF COMMON STOCK

Our common stock has been traded on the Nasdaq National Market since
February 1, 1996 under the symbol "REMC." The following table sets forth the
range of high and low closing sale prices of our common stock as reported on the
Nasdaq National Market for the quarterly periods indicated.

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
FISCAL 1999
First Quarter............................................. $29.000 $24.875
Second Quarter............................................ 25.125 7.625
Third Quarter............................................. 10.625 7.313
Fourth Quarter............................................ 21.938 11.469

FISCAL 2000
First Quarter............................................. $20.875 $11.063
Second Quarter............................................ 17.688 12.188
Third Quarter............................................. 15.000 10.438
Fourth Quarter............................................ 25.500 9.500

FISCAL 2001
First Quarter (through February 29, 2000)................. $36.875 $19.938
</TABLE>

On February 29, 2000, the last reported sale price of our common stock on
the Nasdaq National Market was $36.875 per share. As of January 31, 2000, there
were approximately 1,408 holders of record of our common stock.

15
<PAGE> 19

CAPITALIZATION

The following table sets forth our capitalization as of October 29, 1999
and as adjusted to reflect the sale of 3,500,000 shares of our common stock
offered by this prospectus at an assumed offering price of $36.875 per share,
after deducting underwriting discounts and offering expenses payable by us.

<TABLE>
<CAPTION>
AS OF OCTOBER 29, 1999
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt........................................... $ 5,169 $ 5,169
Shareholders' equity(1)..................................
Preferred stock, $.01 par value; 5,000,000 shares
authorized; none issued and outstanding............. -- --
Common stock, $.01 par value; 70,000,000 shares
authorized; 25,285,648 shares issued and
outstanding, actual; 28,785,648 shares issued and
outstanding, as adjusted............................ 253 288
Additional paid-in capital............................. 169,404 291,578
Accumulated other comprehensive income................. 150 150
Retained earnings...................................... 16,737 16,737
-------- --------
Total shareholders' equity.......................... 186,544 308,753
-------- --------
Total capitalization.............................. $191,713 $313,922
======== ========
</TABLE>

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

The table above excludes 3,106,072 shares of our common stock issuable upon
exercise of options outstanding as of October 29, 1999, which have a weighted
average exercise price of $15.22 per share. Also, the table above excludes
2,754,566 additional shares reserved for issuance under our Equity Incentive
Plan, 1996 Nonemployee Directors Stock Option Plan and Employee Stock Purchase
Plan.

16
<PAGE> 20

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with the "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this prospectus and
our consolidated financial statements and related notes incorporated by
reference into this prospectus. The selected consolidated financial data set
forth below with respect to statements of operations for each of the fiscal
years in the three year period ended January 31, 1999 and with respect to the
balance sheets at January 31, 1998 and 1999, are derived from the audited
consolidated financial statements. These consolidated financial statements are
incorporated by reference into this prospectus and the data below are qualified
by reference to those consolidated financial statements and related notes. The
consolidated statement of operations data for the fiscal years ended January 31,
1995 and 1996 and the consolidated balance sheet data at January 31, 1995, 1996
and 1997 are derived from audited consolidated financial statements not
incorporated by reference into this prospectus. The consolidated statements of
operations data for the nine months ended October 30, 1998 and October 29, 1999,
and the consolidated balance sheet data at October 29, 1999 are derived from
unaudited consolidated financial statements which are incorporated by reference
into this prospectus. The unaudited consolidated financial statements include
all adjustments, consisting only of normal recurring adjustments, which we
consider necessary for a fair presentation of our financial position and the
results of operations for these periods. Operating results for the nine months
ended October 29, 1999 are not necessarily indicative of the results that may be
expected for the fiscal year ended January 31, 2000.

Net sales........................................ $84,407 $97,700 $131,643 $191,008 $179,215 $136,689 $138,863
Cost of sales.................................... 59,385 68,776 95,359 132,349 137,443 104,916 105,874
------- ------- -------- -------- -------- -------- --------
Gross profit................................... 25,022 28,924 36,284 58,659 41,772 31,773 32,989
Operating expenses:
Selling, general and administrative............ 16,524 18,159 23,313 31,210 36,835 28,820 29,253
Research and development....................... 2,471 4,707 6,349 7,887 10,903 7,741 10,358
Transaction costs.............................. -- -- -- 1,069 -- -- 3,130
------- ------- -------- -------- -------- -------- --------
Total operating expenses..................... 18,995 22,866 29,662 40,166 47,738 36,561 42,741
------- ------- -------- -------- -------- -------- --------
Income (loss) from operations.................... 6,027 6,058 6,622 18,493 (5,966) (4,788) (9,752)
Gain on sale of subsidiary....................... -- -- -- 2,833 -- -- --
Interest income (loss) and other, net............ (592) (426) 15 2,314 3,008 2,189 1,891
------- ------- -------- -------- -------- -------- --------
Income (loss) before provision for income
taxes........................................ 5,435 5,632 6,637 23,640 (2,958) (2,599) (7,861)
Provision (credit) for income taxes.............. 2,290 2,328 3,780 8,886 1,873 1,247 (484)
------- ------- -------- -------- -------- -------- --------
Net income (loss)................................ 3,145 3,304 2,857 14,754 (4,831) (3,846) (7,377)
Dividend accrued on preferred stock.............. -- (80) (128) -- -- -- --
------- ------- -------- -------- -------- -------- --------
Income (loss) applicable to common stock......... $ 3,145 $ 3,224 $ 2,729 $ 14,754 $ (4,831) $ (3,846) $ (7,377)
======= ======= ======== ======== ======== ======== ========
Earnings (loss) per common share:
Basic.......................................... $ 0.23 $ 0.23 $ 0.15 $ 0.65 $ (0.20) $ (0.16) $ (0.29)
======= ======= ======== ======== ======== ======== ========
Diluted........................................ $ 0.23 $ 0.23 $ 0.15 $ 0.64 $ (0.20) $ (0.16) $ (0.29)
======= ======= ======== ======== ======== ======== ========
Shares used in per share calculations:
Basic.......................................... 13,892 13,819 17,633 22,535 24,722 24,742 25,093
======= ======= ======== ======== ======== ======== ========
Diluted........................................ 13,892 13,936 17,944 23,228 24,722 24,742 25,093
======= ======= ======== ======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
AS OF OCTOBER 29, 1999
-------------------------
ACTUAL AS ADJUSTED
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:

Cash and cash equivalents................................... $ 54,869 $177,078
Working capital............................................. 108,637 230,846
Total assets................................................ 225,128 347,337
Long-term debt.............................................. 5,169 5,169
Total shareholders' equity.................................. 186,544 308,753
</TABLE>

We acquired Airtech in April 1999, Q-bit in October 1997, C&S Hybrid in
June 1997, Radian in February 1997 and Magnum in August 1996, each of which was
accounted for as a pooling of interests and, accordingly, all financial amounts
contained in the above table have been restated to include the financial results
and data of Magnum, Radian, C&S Hybrid, Q-bit and Airtech for all periods
presented. We acquired Wacom Products, Inc. in March 1999, Smartwaves
International in February 1999, Nanowave Technologies Inc. in October 1997 and
Verified Technical Corporation in March 1997, each of which was accounted for as
a purchase.

The balance sheet data under the as adjusted column at October 29, 1999 set
forth in the table above reflects the sale by us of 3,500,000 shares of our
common stock offered by this prospectus hereby at an assumed offering price of
$36.875 per share.

17
<PAGE> 21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We commenced operations in 1983 and have become a leader in the design and
manufacture of subsystems and integrated components used in the wireless
communications industry and the defense industry. Our consolidated results of
operations include the operations of REMEC Microwave, Inc. (Microwave), REMEC
Wireless, Inc. (Wireless), Humphrey, Inc. (Humphrey), REMEC Magnum, Inc.
(Magnum), REMEC Veritek, Inc. (Veritek), REMEC CSH, Inc. (CSH), REMEC Q-bit,
Inc. (Q-bit), REMEC Nanowave, Inc. (Nanowave), REMEC WACOM L.P. (WACOM), REMEC
Airtech Ltd. (Airtech) and REMEC Inc., S.A. (REMEC Costa Rica). Our consolidated
results of operations also include the operations of RF Microsystems (RFM) for
the period from April 30, 1996 to August 26, 1997.

On August 26, 1996, we acquired all of the outstanding common stock of
Magnum in a transaction that was accounted for as a pooling of interests. Magnum
is a leading supplier of oscillators and mixers. On February 28, 1997, we
acquired all of the outstanding common stock of Radian, in a transaction that
was accounted for as a pooling of interests. Radian provides the defense market
with microwave components, primarily synthesizers, receivers, oscillators and
filters. On June 27, 1997, we acquired all of the outstanding common stock of
C&S Hybrid in a transaction that was accounted for as a pooling of interests.
C&S Hybrid is a manufacturer of transmitter and receiver hardware assemblies
that are integrated into terrestrial-based point-to-point microwave radios
primarily for use in commercial applications. On October 24, 1997, we acquired
all of the outstanding common stock of Q-bit in a transaction that was accounted
for as a pooling of interests. Q-bit is a manufacturer of amplifier-based
microwave components and multi-function modules. On April 29, 1999, we acquired
Airtech, a United Kingdom based manufacturer of coverage enhancement products
for wireless communications, in a transaction that was accounted for as a
pooling of interests. All accompanying historical financial statement
information has been restated to include the operations, assets and liabilities
of Magnum, Radian, C&S Hybrid, Q-bit and Airtech.

On April 30, 1996, we acquired all of the outstanding common stock of RFM
and various VSAT microwave design and manufacturing resources from STM Wireless,
Inc. in a transaction that was accounted for as a purchase. RFM provides the
Department of Defense with research and analysis, systems engineering and test
evaluation services. The consolidated statements of income and cash flows
include RFM's operating results from April 30, 1996. On August 26, 1997, we sold
RFM in exchange for cash consideration of $5.0 million. The sale resulted in an
after-tax gain of $1,728,000, or $0.08 per share. In March 1997, we acquired
Veritek, a producer of high quality surface mount manufacturing assemblies in a
transaction accounted for as a purchase. The consolidated statements of income
and cash flows for all periods subsequent to March 31, 1997 include Veritek's
operating results from April 1, 1997. In October 1997, we formed REMEC Canada
(as a wholly owned subsidiary) for the purpose of facilitating the acquisition
of Nanowave, a manufacturer of amplifier based microwave and millimeter wave
components and multi-function modules, in a transaction accounted for as a
purchase. REMEC Canada completed the acquisition of Nanowave on October 29,
1997. Our fiscal 1998 consolidated statements of income and cash flows include
Nanowave's operating results for all periods subsequent to October 31, 1997. On
February 12, 1999, we acquired the assets of Smartwaves International, a
designer and manufacturer of antenna and other products for the commercial
wireless market, in a transaction accounted for as a purchase. The consolidated
statement of income and cash flows include Smartwave's operating results from
February 12, 1999 forward. In March 1999, we formed a limited partnership, REMEC
WACOM, L.P., for the purpose of acquiring Wacom Products, Inc., a manufacturer
of commercial radio frequency filters. On March 29, 1999, WACOM acquired Wacom
Products, Inc. in a transaction accounted for as a purchase. The consolidated
statements of income and cash flows include WACOM's operating results from March
29, 1999 forward.

18
<PAGE> 22

Our research and development efforts for customers in the defense industry
are conducted in direct response to the unique requirements of a customer's
order and, accordingly, expenditures related to such efforts are included in
cost of sales and the related funding is included in net sales. As a result,
historical funded research and development expenses incurred by us have been
minimal. As our commercial business has expanded, research and development
expenses have generally increased in amount and as a percentage of sales. We
expect this trend to continue, although research and development expenses may
fluctuate on a quarterly basis both in amount and as a percentage of sales.

RESULTS OF OPERATIONS

The following table sets forth, as a percentage of total net sales, certain
consolidated statements of income data for the periods indicated.

<TABLE>
<CAPTION>
FISCAL YEARS ENDED NINE MONTHS ENDED
JANUARY 31, --------------------------
-------------------- OCTOBER 30, OCTOBER 29,
1997 1998 1999 1998 1999
---- ---- ---- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net sales................................. 100% 100% 100% 100% 100%
Cost of sales............................. 72 69 77 77 76
--- --- --- --- ---
Gross profit............................ 28 31 23 23 24
Operating expenses:
Selling, general and administrative..... 18 16 21 21 21
Research and development................ 5 4 6 6 8
Transaction costs....................... -- 1 -- -- 2
--- --- --- --- ---
Total operating expenses............. 23 21 27 27 31
--- --- --- --- ---
Income (loss) from operations............. 5 10 (4) (4) (7)
Gain on sale of subsidiary................ -- 1 -- -- --
Interest income and other, net............ -- 1 2 2 2
--- --- --- --- ---
Income (loss) before income taxes......... 5 12 (2) (2) (5)
Provision for income taxes................ 3 4 1 1 --
--- --- --- --- ---
Net income (loss)......................... 2% 8% (3)% (3)% (5)%
=== === === === ===
</TABLE>

NINE MONTHS ENDED OCTOBER 29, 1999 VS. NINE MONTHS ENDED OCTOBER 30, 1998

NET SALES. Net sales increased 1.6% from $136.7 million for the nine
months ended October 30, 1998 to $138.9 for the nine months ended October 29,
1999. Results of operations for the nine months ended October 29, 1999 include
revenues of $2.6 million generated by WACOM. The additional revenue from this
subsidiary, which was acquired during the current fiscal year, offset a slight
decline in sales to our other commercial customers.

GROSS PROFIT. Gross profit increased 3.8% from $31.8 million for the nine
months ended October 30, 1998 to $33.0 million for nine months ended October 29,
1999. The increase in gross profit in absolute dollar terms is primarily due to
the increase in sales discussed above. Despite charges to operations during
fiscal 2000 of approximately $7.0 million (associated with inventory
obsolescence, anticipated product warranty costs and write-downs of certain
fixed assets), gross margins increased from 23.2% for the nine months ended
October 30, 1998 to 23.8% for the nine months ended October 29, 1999. Gross
profits for the nine months ended October 30, 1998 were adversely affected by
costs associated with Airtech's MHA warranty upgrade program and the

19
<PAGE> 23

improvement in gross margins in the comparable current year period is primarily
attributable to the absence of such costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses, or SG&A, increased 1.5% from $28.8 million for the nine
months ended October 30, 1998 to $29.3 million for the nine months ended October
29, 1999. The increase in SG&A reflects the additional costs arising at WACOM,
which was acquired during the fiscal year. As a percentage of net sales, SG&A
remained unchanged.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased 33.8% from $7.7 million for the nine months ended October 30, 1998 to
$10.4 million for the nine months ended October 29, 1999, and as a percentage of
net sales, increased from 5.7% to 7.5%. These expenditures are almost entirely
attributable to our wireless business and reflect increased activity associated
with new product development.

TRANSACTION COSTS. Our results of operations for the nine months ended
October 29, 1999 include $3.1 million of transaction costs associated with our
acquisition of Airtech and the terminated acquisition of STM Wireless, Inc.
There were no similar costs in the comparable prior year period.

INTEREST INCOME AND OTHER, NET. Interest income and other, net decreased
13.6% from $2.2 million for the nine months ended October 30, 1998 to $1.9
million for the nine months ended October 29, 1999. The decrease in interest
income was due to a decrease in the level of cash available for investing as a
result of significant capital expenditures associated with the expansion of our
wireless communications business and cash paid for the acquisition of Smartwaves
International and Wacom Products, Inc.

PROVISION (CREDIT) FOR INCOME TAXES. We reported a credit for income taxes
of $.5 million for the nine months ended October 29, 1999 as compared with
income tax expense of $1.2 million recognized during the nine months ended
October 30, 1998. The credit reflects recognition of the tax benefit associated
with our domestic operating losses.

FISCAL YEAR ENDED JANUARY 31, 1999 VS. FISCAL YEAR ENDED JANUARY 31, 1998

NET SALES. Net sales decreased 6.2% from $191.0 million during fiscal 1998
to $179.2 million during fiscal 1999. The decrease in sales was primarily
attributable to the decreased revenues from our Airtech subsidiary (which was
acquired in April 1999 in a transaction accounted for as a pooling of
interests). The decline in Airtech's sales was attributable to delays in new PCS
mobile infrastructure "roll-outs" in the United States, delays to one customer's
new product program, financial instability in the Far East impacting new mobile
infrastructure projects in the region and customers delaying orders pending
availability of Airtech's next generation production, the G3 MHA.

GROSS PROFIT. Gross profit decreased 28.8% from $58.7 million in fiscal
1998 to $41.8 million in fiscal 1999. As a percentage of net sales, gross profit
decreased from 30.7% in fiscal 1998 to 23.3% in fiscal 1999. The fluctuations in
gross margins are primarily attributable to costs associated with Airtech's MHA
warranty upgrade program, changes in the mix of products sold and reduced
production volume at certain of our subsidiaries.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses increased
18.0% from $31.2 million in fiscal 1998 to $36.8 million in fiscal 1999. The
increase in SG&A was primarily attributable to inclusion of a full year of SG&A
expenses from our Veritek and Nanowave subsidiaries (which were acquired in
March and October 1997, respectively, in transactions accounted for as purchases
and, therefore, do not have a full year's operations included in the fiscal 1998
results of operations), increased administrative expenses related to Airtech's
continued development of its international sales infrastructure in the Far East
and accounting and legal expenses associated with an

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income tax credit study completed during fiscal 1999. As a percentage of net
sales, SG&A expenses increased from 16.9% in fiscal 1998 to 20.6% in fiscal
1999, due to the factors discussed above.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased 38.2% from $7.9 million in fiscal 1998 to $10.9 million in fiscal
1999, and as a percentage of net sales, research and development expenses
increased from 4.1% in fiscal 1998 to 6.1% in fiscal 1999. These expenditures
are almost entirely attributable to the commercial wireless communications
business and reflect an increase in activity associated with product
development.

TRANSACTION COSTS. Our results of operations for fiscal 1998 include $1.1
million of transaction costs associated with our acquisitions of Radian
Technology, Inc., C&S Hybrid, Inc. and Q-bit Corporation. There were no similar
costs in fiscal 1999.

GAIN ON SALE OF SUBSIDIARY. Our results of operations for fiscal 1998
include the gain from the sale of RFM. There was no similar gain in fiscal 1999.

INTEREST INCOME AND OTHER, NET. Interest income and other, net increased
from $2.3 million in fiscal 1998 to $3.0 million in fiscal 1999. This increase
was due to the increased level of cash available for investment as a result of
the funds generated from our follow-on public offering, which was completed in
March 1998.

PROVISION FOR INCOME TAXES. Income tax expense decreased 78.9% from $8.9
million in fiscal 1998 to $1.9 million in fiscal 1999. The decrease in income
tax expense reflects the tax benefit of $2.0 million related to the recognition
of research and experimentation tax credits pertaining to previously filed
income tax returns, the benefit of tax credits for certain capital expenditures,
the effect of tax exempt interest income and a decrease in domestic income
before taxes of $12.1 million.

FISCAL YEAR ENDED JANUARY 31, 1998 VS. FISCAL YEAR ENDED JANUARY 31, 1997

NET SALES. Net sales increased 45.1% from $131.6 million in fiscal 1997 to
$191.0 million in fiscal 1998. The increase in sales was primarily attributable
to increased customer demand for our commercial wireless products.

GROSS PROFIT. Gross profit increased 61.7% from $36.3 million in fiscal
1997 to $58.7 million in fiscal 1998. As a percentage of net sales, gross profit
increased from 27.6% in fiscal 1997 to 30.7% in fiscal 1998. The increase in
gross margins was primarily attributable to changes in the mix of products
shipped and due to the lower unit costs arising from improved overhead
absorption attributable to the increase in sales volume.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses increased
33.9% from $23.3 million in fiscal 1997 to $31.2 million in fiscal 1998. The
increase in SG&A was primarily attributable to increased personnel, legal and
other administrative expenses resulting from our revenue growth, as well as
approximately $1.1 million of direct transaction costs associated with the
acquisitions of Radian, C&S Hybrid and Q-bit. As a percentage of net sales, SG&A
expenses declined from 17.7% in fiscal 1997 to 16.9% in fiscal 1998.

RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased 24.2% from $6.3 million in fiscal 1997 to $7.9 million in fiscal 1998.
However, as a percentage of net sales, research and development expenses
decreased from 4.8% in fiscal 1997 to 4.1% in fiscal 1998. These expenditures
were almost entirely attributable to our commercial wireless business.

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GAIN ON SALE OF SUBSIDIARY. Our results of operations for fiscal 1998
include the gain from the sale of RFM. There was no similar gain in fiscal 1997.

INTEREST INCOME AND OTHER, NET. Interest income and other, net increased
from $15,000 during fiscal 1997 to $2.3 million in fiscal 1998. This increase
was due to the increased level of cash available for investment as a result of
the funds generated from our follow-on public offering which was completed in
January 1997.

PROVISION FOR INCOME TAXES. Our effective tax rate declined from 57%
during fiscal 1997 to 38% during fiscal 1998. The decrease primarily reflected
the pre-acquisition net income generated at our Q-bit subsidiary in fiscal 1998.
Prior to its acquisition by REMEC, Q-bit had operated as an S corporation for
federal and state income tax purposes and, accordingly, all taxable income
generated by Q-bit during the pre-acquisition period in fiscal 1998 was
allocated to the shareholders of Q-bit and included on their personal income tax
returns. Therefore, our effective tax rate in fiscal 1998 reflects no provision
for income taxes on Q-bit's pre-acquisition earnings. The reduction in the
effective tax rate in fiscal 1998 also reflects the benefit of tax credits for
certain capital expenditures.

LIQUIDITY AND CAPITAL RESOURCES

At October 29, 1999, we had $108.6 million of working capital, which
included cash and cash equivalents totaling $54.9 million. We also had $13.0
million available under two credit facilities consisting of a $9.0 million
revolving working capital line of credit and a $4.0 million revolving term loan.
The borrowing rate under both credit facilities is based on a fixed spread over
the London Interbank Offered Rate (LIBOR). The revolving working capital line of
credit terminates July 3, 2000. The revolving period under the term loan expires
July 1, 2000, at which time any loan amount outstanding will be converted to a
term loan to be fully amortized and paid in full by January 2, 2004. As of
October 29, 1999, there were no borrowings outstanding under these credit
facilities. As of October 29, 1999, we were out of compliance with certain
covenants associated with our credit facilities and leasing arrangements,
however, we received waivers for these violations from our lender. On January
31, 1999, we terminated our $4.0 million revolving term loan agreement. In
February 2000, we amended our leasing arrangements and received a waiver for the
violations of the covenants through the pledging of $17.0 million in cash as
collateralization for the remaining lease payments.

During the nine month period ended October 29, 1999, net cash provided by
operations totaled $520,000 as the increase in trade receivables and inventories
was offset by the increase in trade accounts payable and other accrued expenses.
The increase in trade receivables during this period was primarily due to the
increase in sales and an increase in the length of time that customers were
taking to pay invoices. The increase in inventories (and trade accounts payable)
was due to the need to support anticipated future sales growth. Other accrued
expenses increased as a result of the establishment of reserves for the
anticipated costs of certain litigation and product warranty costs.

Investing activities required $35.8 million during the nine months ended
October 29, 1999, primarily as a result of $20.3 million in capital
expenditures, $5.8 million (net of cash acquired) paid in connection with the
acquisition of Wacom Products and the assets of Smartwaves International, and a
$9.6 million increase in other assets (which was primarily comprised of a $4.6
million investment in an unconsolidated company and a $5.0 million loan to this
same company). The bulk of the capital expenditures were associated with the
expansion of our commercial wireless communications business. The above
expenditures were financed primarily by cash on hand. Our future capital
expenditures may continue to be significant as a result of commercial wireless
communications expansion requirements.

Financing activities generated approximately $7.4 million during the nine
months ended October 29, 1999, principally as a result of the proceeds borrowed
under a mortgage obligation at our

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Airtech subsidiary, net of repayments, and net proceeds of $2.7 million
generated by the issuance of shares in connection with our Employee Stock
Purchase Plan and from exercises of stock options.

Our future capital requirements will depend upon many factors, including
the nature and timing of orders by OEM customers, the progress of our research
and development efforts, expansion of our marketing and sales efforts, and the
status of competitive products.

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BUSINESS

INTRODUCTION

We are a leading designer and manufacturer of high frequency subsystems
used in the transmission of voice, video and data traffic over wireless
communications networks. Our products are designed to improve the capacity,
efficiency, quality and reliability of wireless communications infrastructure
equipment. We also develop and manufacture highly sophisticated wireless
communications equipment used in the defense industry, including communications
equipment integrated into tactical aircraft, satellites, missile systems and
smart weapons. We manufacture products that operate at the full range of
frequencies currently used in wireless communications transmission, including at
radio frequencies, or RF, microwave frequencies and millimeter wave frequencies.
By offering products that cover the entire frequency spectrum for wireless
communications, we are able to address opportunities in the worldwide mobile
wireless communications market as well as the global fixed access broadband
wireless market.

INDUSTRY BACKGROUND

DEREGULATION OF THE TELECOMMUNICATIONS INDUSTRY FOSTERS COMPETITION BY
SERVICE PROVIDERS. Global telecommunications deregulation is fostering
significant competition among providers of advanced communications services. We
believe that this competition is accelerating the deployment of communications
infrastructure equipment, including broadband access equipment. In the U.S.,
regional Bell operating companies, such as Ameritech, Bell Atlantic, BellSouth,
GTE, Pacific Bell, SBC Communications and US West, until recently were the
exclusive owners and operators of the copper wire connections between network
backbones and their subscribers, commonly known as the "last mile." The federal
Telecommunications Act of 1996 intensified the competitive environment in the
U.S. by requiring these telephone companies to provide access to portions of
their networks, including the last mile, to competing service providers. Similar
to the U.S., other countries have begun to privatize state-owned
telecommunications companies to encourage competition among communications
service providers. These events have been significant factors in creating
worldwide competition in the communications services industry. To compete in
this environment, many network service providers seek to differentiate
themselves and increase market share by offering integrated voice, video and
data services, which require broadband access and deployment of additional
communications infrastructure equipment.

DEMAND FOR HIGH SPEED INTERNET ACCESS AND OTHER DATA SERVICES INCREASES THE
NEED FOR BROADBAND ACCESS. Consumers around the world are using the Internet
for an ever-increasing range of purposes, including email, high quality audio,
streaming video and other multimedia services. Businesses are also using the
Internet to enhance their reach to both residential and business consumers with
applications such as electronic commerce, global marketing, customer support,
web hosting, order fulfillment and supply management. The Internet also permits
access to corporate data networks, including intranets and extranets,
facilitating communication among corporate sites or with telecommuters or
traveling employees. This increased usage requires an expanded capacity for the
quick and reliable transmission of voice, video and data, which can be
accomplished through broadband access.

INCREASED DEMAND FOR MOBILE WIRELESS SERVICES NECESSITATES EXPANSION OF
WIRELESS INFRASTRUCTURE. Wireless network service providers to date have focused
primarily on satisfying the increasing demand for wireless telephony and paging
services through the transmission of voice and low speed data signals over
analog cellular systems and digital personal communication systems or PCS. It is
estimated that the number of global cellular/PCS subscribers will grow from 308
million in 1998 to 975 million by 2003. Since each cellular or PCS base station
has a finite capacity, the demand

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created by increased subscribers will require a substantial increase in capital
investment in wireless communications infrastructure equipment. It is estimated
that wireless base stations, cell site equipment and switch equipment sales will
grow from $35.1 billion in 1998 to $75.2 billion in 2003.

ADVANCES IN MOBILE WIRELESS COMMUNICATIONS NETWORK TECHNOLOGY WILL REQUIRE
ADDITIONAL WIRELESS INFRASTRUCTURE EQUIPMENT. The capacity and quality of
domestic and international mobile wireless communications networks have evolved
with advances in technology. In response to capacity and level of service
demands, service providers are expanding their current infrastructure and also
are implementing new wireless technologies, such as third generation, or 3G,
networks. The level of technology advancement used in wireless mobile networks
is generally grouped into the following three basic categories:

- First generation, or 1G, networks. These mobile networks feature analog
technology that provides voice and low speed data services.

- Second generation, or 2G, networks. Second generation cellular networks
feature digital technology, including PCS. Digital technology provides
network service providers and subscribers with advantages over analog
technology, including increased system capacity, secure voice
communications, short messaging service and other enhanced services. This
technology can be implemented in new infrastructure or as an expansion of
existing 1G networks.

- Third generation, or 3G, networks. Third generation cellular networks
feature increased capacity and data speeds that permit wireless
transmission of integrated voice, video and data traffic. This technology
can be implemented in new infrastructure or also as an equipment overlay
to existing 2G networks. Network services providers are anticipated to
begin to upgrade their networks to 3G levels over the next few years as
regulatory agencies around the world begin to license the frequency band
for this digital technology. Licenses to use this frequency band have
been recently awarded in Japan and are expected to be awarded in Europe
in 2000, with the U.S. following over the next several years.

COPPER WIRE, CABLE AND FIBER OPTIC BROADBAND ACCESS IS COSTLY TO DEPLOY AND
HAS OTHER LIMITATIONS. Applications requiring high capacity data transmission or
high speed Internet access traditionally have been satisfied through deployment
of broadband last mile connections consisting of enhanced copper wire called
digital subscriber lines, or DSL, coaxial cable and fiber optic cable, each of
which are described below:

- Digital subscriber line. DSL has a data transmission rate of up to 1.5
Mbps. While the necessary copper infrastructure for DSL is already in
place through existing telephone copper wires, transmission rates and
availability are limited by the quality of the subscriber's existing
copper wire infrastructure and distance from the telephone company
switch.

- Coaxial cable. Cable has a data transmission rate of up to 27 Mbps. As
with DSL, the necessary cable infrastructure for residential use is
already in place. However, existing cable networks must be upgraded to
provide for two-way data transmission, and many businesses are not
currently wired for cable.

- Fiber optic cable. Fiber optic networks have data transmission rates of
up to 10 billion bits per second, or 10 Gbps, the fastest rate of any
current broadband access solution. However, fiber optic cable is very
expensive to deploy and may exceed the data transmission needs of many
subscribers.

Currently, to add capacity, these land line networks require right of way
access and a labor intensive process of physically laying wires or cables in
order to connect consumers to the network backbone. As a result of the
difficulties in deploying additional wires or cables, increased demand for

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communication access may create a "last mile bottleneck" between subscribers and
the backbone of these land line networks.

FIXED ACCESS BROADBAND WIRELESS TECHNOLOGY IS EMERGING AS A COST EFFECTIVE
ALTERNATIVE TO BROADBAND LAND LINE TRANSMISSION. New fixed access broadband
wireless technology can provide quality of service comparable to the best land
line network alternatives at speeds that are significantly faster than
conventional copper wire-based networks. Fixed access broadband wireless
technology is designed to be integrated with the existing network backbone to
address the last mile bottleneck problem. In addition, certain types of fixed
access broadband wireless technology provide an alternative for selective
network backbone applications. Broadband wireless systems include point-to-
point, point-to-multipoint and satellite-to-multipoint broadband technologies,
which are illustrated and described below:

[BROADBANK WIRELESS DIAGRAM]

- Point-to-point wireless. Point-to-point wireless systems generally have
data transmission rates of up to 155 Mbps. While point-to-point systems
have traditionally been deployed for high capacity trunking applications
between two wireless telephony networks, recently they have been used to
interconnect digital cellular networks. Point-to-point wireless networks
can also provide a last mile connection for large communications end
users, such as large office buildings, hospitals and universities.

- Point-to-multipoint wireless. Point-to-multipoint wireless systems
generally have data transmission rates of up to 500 Mbps.
Point-to-multipoint wireless systems use a single central hub radio to
serve multiple end users. Point-to-multipoint wireless systems have
additional advantages over point-to-point wireless systems. These include
reduced equipment cost as the addition of new customers requires only new
customer premises equipment, as well as allocation of bandwidth based on
demand, so customers only pay for what they use. As a result,
point-to-multipoint systems can provide cost effective last mile access
to customers that do not have as much traffic as a point-to-point
customer.

- Satellite-to-multipoint wireless. The current generation of
satellite-based multipoint systems are implemented with networks using
very small aperture terminals, or VSATs. These networks are deployed for
a wide range of business data applications such as point-of-sale
transactions and inventory management. Recently, VSAT networks have been
adapted for cost effective use in rural telephony applications, primarily
in countries that do not have fully developed land line telephone
networks. Recent advances in satellite digital processing and component
and device technology, based on a newly licensed frequency spectrum
called the Ka band, are being used in the development of broadband
satellite networks such as Teledesic and Hughes Spaceway. These next
generation satellite networks are designed to provide

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broadband access to residential and business users for applications such
as high speed Internet access, videoconferencing and other data rich
applications.

FREQUENCY ALLOCATIONS BY THE FCC AND INTERNATIONAL AGENCIES MAY LEAD TO
WIRELESS INFRASTRUCTURE EXPANSION. In response to the increasing demand for
wireless communications services, regulatory bodies like the FCC and other
international agencies continue to allocate new frequency spectrum. For example,
the FCC has recently licensed several frequency bands, including bands for local
multipoint distribution systems, or LMDS, and multichannel multipoint
distribution systems, or MMDS, for two-way broadband wireless data services. The
FCC has also adopted orders to allocate additional spectrum through auctions
during 2000 which can be used by high speed data transmission service providers.
It is anticipated that these frequencies could be used to deliver fixed wireless
Internet access to business and residential customers. To take advantage of
these licenses, network operators must deploy new infrastructures specific to
the licensed frequency band. Each frequency band requires unique transmission
equipment designed to work with the technical requirements of the particular
band. Thus, as additional frequencies are allocated by regulatory agencies
around the world, wireless infrastructure equipment must be deployed to
commercialize these licenses.

WIRELESS INFRASTRUCTURE OEMS RELY ON SUBSYSTEM PROVIDERS. In order to meet
the demand for mobile wireless and fixed access broadband wireless services,
service providers are turning to systems integrators or OEMs to build out
infrastructure quickly, efficiently and in accordance with exacting performance
specifications. OEMs, in turn, are looking to outsource the design and
manufacture of highly integrated, reliable subsystems in a cost-effective
manner. This permits OEMs to accelerate their time to market and allows them to
leverage their core competencies of full system design and integration. By
outsourcing subsystems, OEMs promote competition among developers and
manufacturers, which leads to technological innovations in wireless
infrastructure equipment. Concurrently, OEMs are seeking to select a core group
of subsystem and component providers in order to reduce the supply and
management risks associated with the currently fragmented supplier base.

THE REMEC SOLUTION

We are a leading designer and manufacturer of high frequency subsystems and
integrated components used in the transmission of voice, video and data traffic
over wireless communications networks and in defense applications. We market our
products to OEMs of wireless communications networks and network services
providers as well as to prime contractors in the defense industry.

We believe that our core competencies enable us to better address the
existing and emerging opportunities in the wireless communications
infrastructure equipment and defense markets. These core competencies include
the following:

INTEGRATION EXPERTISE. We design high performance subsystems over a broad
range of RF, microwave and millimeter frequencies, which require sophisticated
component integration. By effectively integrating a number of required microwave
functions into a single package, we are able to:

- improve performance and reduce cost through reduction in product size and
parts count;

- enhance performance through optimal partitioning and implementation of
functional elements; and

- reduce cost by minimizing "over engineering" through avoiding the use of
higher performance, more costly components than are necessary in order to
compensate for performance degradation resulting from inefficiencies due
to combining stand alone components that are not designed to be
integrated into one system.

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CONCURRENT ENGINEERING. We streamline and optimize the product development
cycle by employing "concurrent engineering," which includes the following
elements:

- joint participation with our customers at the conceptual design stage,
allowing us to suggest an architecture/design that reduces cost and
increases performance at the integrated subsystem level;

- participation by our suppliers in the design process, thereby optimizing
material and device selections; and

- consideration of manufacturing constraints and limitations while
developing a product design in order to expedite the implementation of
the manufacturing process.

VERTICAL INTEGRATION OF DESIGN AND MANUFACTURING. Vertical integration of
design and manufacturing reduces product time to market and unit costs. With
vertical integration, we retain control of each step of the design and
manufacturing process while minimizing the use of outside sources and
subcontractors for key manufacturing processes and services. This vertical
integration also improves quality control, reliability and our ability to
implement volume production. We have enhanced our vertical integration
capability with recent acquisitions. These acquisitions include a surface mount
board assembly manufacturer, as well as several microwave component companies
that provide key functional capabilities to be used in the design of our
integrated subsystems.

BROAD FREQUENCY RANGE. Our technologies support the range of frequencies
utilized for mobile wireless and broadband wireless applications. Our microwave
technology expertise covers the full range of the frequency spectrum used for
existing wireless communications. Many of our subsystem competitors only address
select frequency bands in the subsystems they design, which makes them
vulnerable to technological advances in products that use frequency bands they
do not address. By being able to design and manufacture products across the
breadth of the wireless communications market, we can better address our
customers' needs and capitalize on our overall design and manufacturing
capabilities.

STRATEGY

Our objective is to build on the strength of our core competencies to be
the supplier of choice of OEMs in the wireless infrastructure equipment industry
and prime contractors in the defense electronics industry. Our strategy includes
the following key elements:

LEVERAGE TECHNOLOGY LEADERSHIP. Through seventeen years of leadership in
high frequency applications in the defense and commercial industries, we believe
that we have one of the most advanced portfolios of products using RF, microwave
and millimeter wave technologies. The skills that we developed in the defense
industry and honed in the commercial wireless market have enabled us to develop
solutions to achieve substantial reductions in the size and cost of wireless
infrastructure equipment. We intend to continue to integrate additional
functions into smaller packaging with fewer parts while meeting the reliability
and performance specifications of next generation wireless infrastructure
equipment.

CONTINUE TO DEVELOP STRONG STRATEGIC ALLIANCES WITH CUSTOMERS. Our strategy
includes forming lasting customer relationships by working closely with
customers to develop insight into their requirements and to design specific
products that meet their needs. We intend to continue to expand our key customer
alliances with leading infrastructure OEMs, such as Motorola, Digital Microwave
and Nokia, as well as working with emerging wireless equipment suppliers such as
SpectraPoint. In addition, we intend to expand our participation in significant
defense programs with key prime contractors, such as Raytheon, Northrop Grumman
and Lockheed Martin. We will concentrate our efforts on the commercial customers
we believe will be the most successful selling their systems to service
providers that require high volume production.

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SUPPLY INTEGRATED MICROWAVE SUBSYSTEMS TO OEMS' WORLDWIDE OPERATIONS AND
EXPAND OUR INTERNATIONAL PRESENCE. Historically, we have been primarily a
supplier to the domestic operations of OEMs. Some of these and other OEMs also
have a significant global presence, including operations in Europe and Asia.
There is an opportunity to become the supplier for these OEMs in all of their
global markets. We believe that we are one of only a few microwave subsystem
companies that have the breadth of expertise in wireless communications
technology necessary to service these OEMs' worldwide operations. In addition to
servicing OEMs' worldwide operations, with our acquisition of United
Kingdom-based Airtech, we intend to increase our operations in Europe, initially
focusing on the mobile wireless market. We also intend to expand our existing
sales offices in Kuala Lumpur, Malaysia and Beijing, China to increase our sales
and distribution capabilities in Asia. Additional international activities may
include entering into strategic partner relationships with local marketing or
manufacturing companies in Asia.

SUPPLY NICHE PRODUCTS DIRECTLY TO NETWORK SERVICE PROVIDERS. We intend to
expand our marketing efforts to sell certain niche mobile wireless products
directly to network service providers. Although we do not intend to enter into
direct competition with our OEM customers, there are several niche microwave
transmission products that are not being marketed aggressively by OEMs,
including base station tower top products and mobile wireless coverage
enhancement products. We intend to expand our efforts to market these products
to network service providers when we can do so without competing directly with
our OEM customers.

ENHANCE HIGH VOLUME MANUFACTURING CAPABILITY. We intend to continue to
implement process manufacturing automation and believe that our ability to
develop a high level of automated product alignment and test capability will
help us to further improve our cost-effectiveness and time to market. We also
intend to expand our foreign manufacturing operations, particularly in Costa
Rica, when appropriate, in order to lower our costs or to access an available
workforce. In addition, we intend to offer our manufacturing services to OEMs
and subsystem and component developers or manufacturers who need high volume
manufacturing of their own products either because of capacity constraints or
lack of manufacturing expertise.

PURSUE STRATEGIC ACQUISITIONS. We intend to continue to augment our
existing technology base by acquiring specialized technology firms that
complement our product offerings and market strategies. We believe that
expansion of our core competencies through the acquisition of such specialized
technology firms, when combined with our technological and manufacturing skills,
will allow us to achieve improved levels of integration.

PRODUCTS

Virtually every wireless system contains a microwave transport subsystem
that performs the function of transforming modulated voice, data and/or video
from an intermediate frequency, or IF, signal into a microwave frequency signal
for transmission and/or converting an incoming signal from microwave frequencies
back into an IF modulated voice, data and/or video signal. A microwave transport
subsystems may consist of a completely integrated unit or of several
interconnected modules and single function components.

MOBILE WIRELESS PRODUCTS. In this market, we sell multi-function microwave
modules, including delay filter assemblies, filter/low noise amplifier
assemblies and filter panel assemblies. We also supply components, including
filters, amplifiers, voltage controlled oscillators, or VCOs, and mixers that
are used by OEMs in base station infrastructure equipment. We also sell complete
microwave subsystems for network coverage enhancement applications, including
tower mounted amplifiers and tower mounted boosters directly to service
providers. These products eliminate the cables between the radio at the bottom
of the base station and the antenna at the top of the base station by filtering
and amplifying the transmit/receive signals at the base station tower top. These
tower top base stations

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may extend coverage by up to 30% to 40% through this design change. As fully
integrated microwave "front ends," these products provide the circuitry of the
radio that enables signals to be transmitted and received at microwave
frequencies and that can be used as the front end of low power transceiver
units. Active antenna and remote RF head products that allow IF, RF, microwave
or fiber optic backhaul are currently being developed to provide levels of
integration similar to that of the fixed wireless access and broadband satellite
access products. To address the niche, but high growth in-building coverage
market, we have also developed in-building coverage products, including
repeaters, bi-directional amplifiers, multicarrier combiners/amplifiers and
fiber optic distribution modules. Our selling prices for mobile wireless
subsystems and components range from approximately $20 to $3,500.

POINT-TO-POINT BROADBAND WIRELESS PRODUCTS. We develop and supply high
(OC-3) and medium (T1 to 8T1) capacity point-to-point wireless transport
equipment deployed by network operators for backhaul of a variety of
communications traffic. Our products are utilized in systems that provide a
cost-effective approach to data transport where land line access to T1 lines or
fiber optic cable is not deployed or otherwise unavailable. For this market, we
manufacture microwave transport subsystems including radios, outdoor units, or
ODUs, as well as the individual microwave modules, including antennas,
diplexers, transceivers, synthesizers, power conditioning, that provide the
microwave transport functionality. As the market has become more horizontally
segmented, there has been a significant trend towards outsourcing the entire
ODU, thereby allowing our customers to focus on system engineering and network
software. Using our broad microwave engineering capabilities, we have been able
to supply complete microwave transport subsystems, thereby aiding our customers
in achieving their cost reduction and time to market objectives. Our selling
prices for point-to-point broadband wireless subsystems and components range
from approximately $80 to $10,000.

POINT-TO-MULTIPOINT BROADBAND WIRELESS PRODUCTS. For this market, we
manufacture microwave transport subsystems, such as radios, customer premise
equipment and coverage enhancement products, as well as the individual microwave
modules that provide the microwave transport functionality. These modules
include antennas, diplexers, transceivers, synthesizers and power supplies.
Network systems integrators in this market typically outsource the entire radio
and, in many cases, the entire customer premises equipment. This outsourcing
allows these integrators to focus on their core competencies of system
engineering and network architecture. Our network service provider customers in
this market typically require specialized solutions to network-wide functional
needs. An example is our coverage enhancement product used in LMDS to solve
line-of-sight obstructions between base stations and potential customer sites,
which frequently impair transmission performance of our customers' LMDS
networks. Our selling prices for point-to-point multipoint subsystems and
components range from approximately $300 to $5,000.

SATELLITE-TO-MULTIPOINT BROADBAND PRODUCTS. Like the point-to-point and
point-to-multipoint markets, we have focused our VSAT and broadband satellite
business on ODU and customer premises equipment. We also provide microwave
modules such as power amplifiers to ODU integrators. Our satellite-to-
multipoint subsystems and components sell for less than $1,000.

DEFENSE PRODUCTS. We focus our efforts in the defense electronics industry
on providing communication systems, subsystems and integrated components to
defense programs which we believe have the highest probability of follow-on
production. Our products are integrated into various defense tactical aircraft,
satellites, missile systems and smart weapons comprise the majority of the
platforms of our customers. The systems, subsystems and integrated components
are comprised of specialized combinations of components that perform a variety
of microwave functions, including filters, couplers, power dividers, switches,
amplifiers, VCOs, mixers and multipliers, among others. Defense industry
programs for which we provide communication systems, subsystems and integrated
components include the following:

- the F-22 Stealth Tactical Fighter Aircraft program for the U.S. Air Force
for which we are developing switch amplifiers, switch filters, integrated
switch modules, power amplifiers, frequency generators, frequency
converters and frequency multipliers for three different microwave
subsystems (communication, navigation and intelligence, or CNI, RADAR and
electronic warfare);

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<PAGE> 34

- the Integrated Defensive Electronic Countermeasure System (IDECM) for the
U.S. Navy for which we have developed and produced multi-function
components such as frequency modulators;

- the Advanced Medium Range Air to Air Missile (AMRAAM) program for the
U.S. Air Force for which we have developed and produced frequency
multipliers, converters and filters;

- the Longbow Missile and Radar programs for the U.S. Army for which we
have developed and are producing converters, amplifiers, VCOs and
filters; and

- the Standard Missile for the U.S. Navy for which we have developed and
are producing converters, amplifiers, receivers, VCOs and filters.

Our selling prices for defense subsystems and components range from
approximately $100 to $200,000.

CUSTOMERS

We sell our commercial wireless communications products primarily to OEMs,
that in turn integrate our products into wireless infrastructure equipment
solutions sold to network service providers. In addition, we sometimes sell
certain niche products directly to network service providers. Our customers for
commercial wireless subsystems include the following:

- Motorola
- General Instrument
- Alcatel
- P-COM
- SpectraPoint
- Digital Microwave
- Nokia
- Lucent Technologies
- STM Wireless
- Nortel Networks

We also sell our wireless communications equipment to the major U.S.
defense prime contractors for integration into larger systems. Our customers for
defense communications equipment include the following:

- Raytheon
- ITT Industries
- TRW
- Northrop Grumman
- Lockheed Martin
- Boeing

SALES AND MARKETING

We use a team-based sales approach to facilitate close management of
relationships at multiple levels of a customer's organization, including
management, engineering and purchasing personnel. Our integrated sales approach
involves a team consisting of a senior executive, a business development
specialist, members of our engineering department and, occasionally, a local
technical sales representative. In particular, the use of experienced
engineering personnel as part of the sales effort enables close technical
collaboration with the customer during the design and qualification phase of new
communications equipment which, we believe, is critical to the integration of
our products into our customers' equipment. Our executive officers are also
involved in all aspects of our relationships with our major customers and work
closely with their senior management. To identify sales opportunities, we
primarily utilize a direct sales force that is supplemented by a group of
manufacturer sales representatives.

We are rapidly expanding our international sales presence with direct sales
offices in Europe and Asia. Sales to customers residing outside of the U.S.
represented 15%, 13% and 17% of net sales in fiscal years ended January 31, 1998
and 1999 and the nine months ended October 29, 1999, respectively. Our
international sales do not include products sold to foreign end users by our
domestic customers.

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<PAGE> 35

MANUFACTURING

With the precise specifications required by our customers, we believe that
process expertise and discipline are key elements of successful high volume
production of wireless subsystems. We assemble, test, package and ship products
at our manufacturing facilities located in the following cities:

- San Diego, Poway, Escondido, San Jose, Santa Clara and Milpitas,
California;

- West Palm Bay, Florida;

- Waco, Texas;

- Toronto, Canada;

- San Jose, Costa Rica;

- Tijuana, Mexico; and

- Aylesbury, United Kingdom.

Since inception, we have been manufacturing products for defense programs
in compliance with the stringent MIL-Q-9858 specifications. We received ISO-9001
certification from the Defense Electronics Supply Center for our facilities at
Microwave. Other REMEC facilities that are ISO-9001 qualified include Wireless,
Humphrey, Q-bit, and Airtech. In addition, facilities at Veritek and REMEC Costa
Rica facilities are ISO-9002 qualified. ISO-9001 and ISO-9002 are standards
established by the International Organization for Standardization that provide a
methodology by which manufacturers can obtain quality certification. To assure
the highest product quality and reliability and to maximize control over the
complete manufacturing cycle and costs, we seek to achieve vertical integration
in the manufacturing process wherever appropriate.

Historically, the volume of our production requirements in the defense
markets was not sufficient to justify the widespread implementation of automated
manufacturing processes. As a result of expected growth in our commercial
wireless business, we are significantly increasing our manufacturing capacity.
Accordingly, we have introduced automated manufacturing techniques for product
assembly and testing and anticipate significant capital expenditures for this
purpose in the future.

We attempt to utilize standard parts and components that are available from
multiple vendors. However, certain components used in our products are currently
available only from single sources, and other components are available from only
a limited number of sources. Despite the risks associated with purchasing
components from single sources or from a limited number of sources, we have made
the strategic decision to select single source or limited source suppliers in
order to obtain lower pricing, receive more timely delivery and maintain quality
control. In 1997, we acquired Veritek which provides surface mount capabilities
and expertise. We also rely on contract manufacturers for circuit board
assembly. We generally order components and circuit boards from our suppliers
and contract manufacturers by purchase order on an as needed basis.

COMPETITION

The markets for our products are extremely competitive and are
characterized by rapid technological change, new product development, product
obsolescence and evolving industry standards. In addition, price competition is
intense, and the market prices and margins of our products may decline if
competitors begin making similar products. We face some competition from
component manufacturers who have integration capabilities, but we believe that
our primary competition is from the captive manufacturing operations of large
wireless communications OEMs, including all of the major telecommunications
equipment providers, and defense prime contractors. We believe that our future
success depends largely upon the extent to which these OEMs and defense prime
contractors elect to purchase subsystems and integrated components from outside

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<PAGE> 36

sources such as us. OEMs and defense prime contractors could develop greater
internal capabilities and manufacture these products exclusively in-house,
rather than outsourcing them, which would have a negative impact on our sales.

RESEARCH AND DEVELOPMENT

Our core competencies, including our emphasis on concurrent engineering,
rely heavily on our research and development capabilities. These capabilities,
including our breadth of engineering skills, have allowed us to develop products
that operate at the full range of existing frequencies used in commercial
wireless communications. Research and development expenses recorded by us for
the fiscal years ended January 31, 1997, 1998 and 1999 and for the nine months
ended October 29, 1999 were approximately $6.3 million, $7.9 million, $10.9
million and $10.4 million, respectively. We expect that as our commercial
business expands, research and development expenses will increase in amount and
as a percentage of sales. Our research and development efforts in the defense
industry are conducted in direct response to the unique requirements of a
customer's order and, accordingly, are included in cost of sales and the related
funding in net sales. We believe that to remain competitive in the future we
will need to invest significant financial resources in research and development.

GOVERNMENT REGULATIONS

Our products are incorporated into commercial wireless communications
systems that are subject to regulation domestically by the FCC and
internationally by other government agencies. Although typically the equipment
operators and not us are responsible for compliance with these regulations,
regulatory changes, including changes in the allocation of available frequency
spectrum, could negatively affect our business by restricting development
efforts by our customers, making current products obsolete or increasing the
opportunity for additional competition. In addition, the increasing demand for
wireless telecommunications has exerted pressure on regulatory bodies worldwide
to adopt new standards for these products, generally following extensive
investigation of and deliberation over competing technologies. The delays
inherent in this governmental approval process have in the past caused and may
in the future cause the cancellation, postponement or rescheduling of the
installation of communications systems by our customers.

We are also subject to a variety of local, state, federal and foreign
governmental regulations relating to the storage, discharge, handling, emission,
generation, manufacture and disposal of toxic or other hazardous substances used
to manufacture our products. The failure to comply with current or future
regulations could result in the imposition of substantial fines on us,
suspension of production, alteration of our manufacturing processes or cessation
of operations.

Because of our participation in the defense industry, we are subject to
audit from time to time for our compliance with government regulations by
various agencies, including the Defense Contract Audit Agency, the Defense
Investigative Service, the Office of Federal Control Compliance Programs and the
Office of Defense Supply Center (Columbus). These and other governmental
agencies may also, from time to time, conduct inquiries or investigations that
may cover a broad range of our business activity. Responding to any governmental
audits, inquiries or investigations may involve significant expense and divert
management attention. Also, an adverse finding in any such audit, inquiry or
investigation could involve penalties.

We believe that we operate our business in material compliance with
applicable government regulations.

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INTELLECTUAL PROPERTY

We do not presently hold any patents on our significant products. In order
to protect our intellectual property rights, we rely on a combination of trade
secrets, copyrights and trademarks and employee and third-party nondisclosure
agreements. We also limit access to and distribution of proprietary information.
The steps that we have taken to protect our intellectual property rights may not
be adequate to prevent misappropriation of our technology or to preclude
competitors from independently developing similar technology. Furthermore, in
the future, third parties may assert infringement claims against us or with
respect to our products. As to some of our products, we have agreed to indemnify
our customers against possible claims by third parties that the products
infringe their intellectual property rights. Asserting our rights or defending
against third party claims could involve substantial costs and diversion of
resources. If a third party was successful in a claim that one of our products
infringed the third party's proprietary rights, we may have to pay substantial
royalties or damages or remove that product from the marketplace. We might also
have to expend substantial financial and engineering resources in order to
modify the product so that it would no longer infringe on those proprietary
rights.

LITIGATION

On April 19, 1999, a class action lawsuit was filed against us, some of our
officers and directors and the investment bankers who served as the
representatives of the underwriters of our public offering completed in February
1998. Three of the underwriters named in that lawsuit are representatives of the
underwriters of this offering. The lawsuit was filed by the law firm Milberg
Weiss Bershad Hynes and Lerach and its colleagues in the United States District
Court for the Southern District of California as counsel for Charles Vezzetti
and all others similarly situated. The lawsuit alleges violations of the
Securities Exchange Act of 1934 by us and the other defendants between December
1, 1997 and June 12, 1998. Specifically, the complaint alleges that we made
falsely positive statements which artificially inflated the price of our stock
prior to a secondary offering completed in February 1998 in which REMEC and some
of our officers and directors sold stock, and that our stock price fell on a
series of adverse disclosures in late May and early June 1998. The complaint in
the lawsuit does not specify an amount of claimed damages. Since the lawsuit was
filed, the underwriters have been dismissed without prejudice. We believe that
the lawsuit is without merit and we have been defending against it vigorously
through a motion to dismiss and otherwise. In addition, we believe the ultimate
resolution will not have a material adverse effect on our business, financial
condition or results of operations. However, if the plaintiffs are successful in
pursuing their claims against us and our officers and directors, such a result
could have a significant negative effect on our business and financial
condition.

EMPLOYEES

As of January 31, 2000, we had a total of 2,388 employees, including 1,622
in manufacturing and operations, 305 in research, development and engineering,
140 in quality assurance, 59 in sales and marketing and 262 in administration
and material procurement. We believe our future performance will depend in large
part on our ability to attract and retain highly skilled employees. None of our
employees is represented by a labor union and we have not experienced any work
stoppage. We consider our employee relations to be good.

FACILITIES

Our principal administrative, engineering and manufacturing facilities are
located in ten buildings aggregating approximately 262,000 square feet in the
Southern California area. Our Southern California operations consist of five
facilities owned by us and five leased facilities located in San Diego,
Escondido and Poway, California. The leases of these facilities expire on
various dates

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<PAGE> 38

beginning in June 2000 through February 2010. Our Northern California operations
are located in four leased buildings aggregating approximately 80,000 square
feet in San Jose, Milpitas, Burlingame and Santa Clara, California. These leases
expire on various dates beginning in November 2000 through October 2004. Q-bit
owns a 51,000 square foot building located in West Palm Bay, Florida. REMEC S.A.
owns a 50,000 square foot building located in San Jose, Costa Rica. Nanowave
leases approximately 25,000 square feet in three buildings located in Toronto,
Canada, under leases that expire in September 2001. WACOM owns a 31,000 square
foot building located in Waco, Texas. Airtech owns a 33,000 square foot building
located in Aylesbury, England. We believe that our existing facilities are
adequate to meet our current needs and that suitable additional or alternative
space will be available on commercially reasonable terms as needed.

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<PAGE> 39

MANAGEMENT

OFFICERS AND DIRECTORS

Our executive officers and directors, and their ages as of January 31,
2000, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Ronald E. Ragland(1)..... 58 Chairman of the Board and Chief Executive Officer
Errol Ekaireb............ 61 President, Chief Operating Officer and Director
Jack A. Giles............ Executive Vice President, President Defense Group and
57 REMEC Microwave and Director
Joseph T. Lee............ Executive Vice President, President -- Chief
45 Strategic Officer and Director
James Mongillo........... Executive Vice President and President Broadband
61 Wireless Group and REMEC Magnum
Nicholas J.S. Randall.... Executive Vice President, President Cellular and PCS
Group and Executive Chairman, REMEC Europe plc and
48 REMEC Airtech Ltd.
Denny E. Morgan.......... 46 Senior Vice President, Chief Engineer and Director
Tao Chow................. 48 Senior Vice President and President REMEC CSH
Michael D. McDonald...... Senior Vice President, Chief Financial Officer and
46 Secretary
H. Clark Hickock......... 44 Senior Vice President, Business Operations
Jon E. Opalski........... Senior Vice President, General Manager Integrated RF
37 Solution Group and Managing Director, REMEC Airtech
Jerry B. Collum.......... 62 Senior Vice President and President Metal Fab Center
Justin Miller............ Vice President and President REMEC Canada and REMEC
50 Nanowave
Mark D. Dankberg(3)...... 44 Director
Thomas A. Director
Corcoran(1)(2)......... 55
William H. Gibbs(1)(2)... 56 Director
Andre R. Horn(3)......... 71 Director
Jeffrey M. Nash(2)(3).... 52 Director
</TABLE>

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

(1) Member of the Nominating Committee
(2) Member of the Compensation Committee
(3) Member of the Audit Committee

RONALD E. RAGLAND was a founder of REMEC and has served as our Chairman of
the Board and Chief Executive Officer since January 1983. Prior to founding
REMEC, he was General Manager of KW Engineering and held program management
positions with Ford Aerospace Communications Corp., E-Systems, Inc. and United
Telecommunications, Inc. Mr. Ragland was a Captain in the United States Army and
holds a B.S.E.E. degree from Missouri University at Rolla and an M.S.E.E. degree
from St. Louis University.

ERROL EKAIREB has served as President and Chief Operating Officer of REMEC
since 1990 and as a director since 1985. Mr. Ekaireb served as Vice President of
REMEC from 1984 to 1987 and as Executive Vice President and Chief Operating
Officer from 1987 to 1990. Prior to joining us, he spent 23 years with Ford
Aerospace Communications Corp. Mr. Ekaireb holds B.S.E.E. and B.S.M.E. degrees
from West Coast University and has completed the University of California, Los
Angeles Executive Program.

JACK A. GILES joined REMEC in 1984. He was elected as a director in 1984,
Vice President in 1985, Executive Vice President in 1987, President of REMEC
Microwave in 1994 and President Defense Group in 1999. Prior to joining us, he
spent approximately 19 years with Texas Instruments in program management and
marketing. Mr. Giles holds a B.S.M.E. degree from the University of Arkansas and
is a graduate of Defense Systems Management College.

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<PAGE> 40

JOSEPH T. LEE has been a director and Executive Vice President of REMEC
since the completion of our acquisition of Magnum in September 1996. He served
as President of our Northern California Operations from December 1997 until he
was elected Chief Strategic Officer in September, 1999. Prior to our acquisition
of Magnum, he was Chairman of the Board, President and Chief Executive Officer
of Magnum. Mr. Lee holds a B.S.E.E. degree from the University of Michigan and
M.S.E.E. and ENGINEER degrees from Stanford University.

JAMES MONGILLO joined REMEC as a Senior Vice President in February 1997,
following the completion of our acquisition of Radian Technology. In June 1999,
Mr. Mongillo was elected Executive Vice President and named President of the
REMEC Wireless Broadband Group. Mr. Mongillo also serves as President of REMEC
Magnum. Prior to the acquisition of Radian Technology, he was the Chairman of
the Board, President and Chief Executive Officer of Radian. Mr. Mongillo holds a
B.S.E.E. degree from Brown University.

NICHOLAS J.S. RANDALL joined REMEC as Executive Vice President, President
Cellular and PCS Group and Executive Chairman, REMEC Europe plc and REMEC
Airtech Ltd. in April 1999, following the completion of our acquisition of
Airtech. Prior to the acquisition, Mr. Randall served as Executive Chairman of
Airtech from the time he purchased the original Airtech business in 1998. From
1980 to 1988, he served as Managing Director of Oxford Technology Ltd., a start
up operation within Oxford Instruments Group. From 1977 to 1980, he was an
Operations Director for EMI Medical, Inc., and prior to that he worked for
Perkins Elmer, Inc. for ten years. Mr. Randall holds a Higher National Diploma
in mechanical engineering from High Wycombe College in England and an M.B.A.
from the University of Connecticut.

DENNY E. MORGAN was a founder of REMEC and has served as Senior Vice
President, Chief Engineer and a director of REMEC since January 1983. Prior to
joining us, he worked with KW Engineering, Micromega, General Dynamics
Corporation and Pacific Aerosystems, Inc. Mr. Morgan holds a B.S.E.E. degree
from the Massachusetts Institute of Technology and was the Four Year
Chancellor's Intern Fellowship Recipient at the University of California, Los
Angeles.

TAO CHOW has served as the President and a director of REMEC CSH and Senior
Vice President of REMEC since the completion of our acquisition of C&S Hybrid in
July 1997. Mr. Chow was a founder of C&S Hybrid and served as its President and
as a director from September 1984 until its acquisition by us. Mr. Chow has also
served as a director and the President and Chief Financial officer of Custom
Micro Machining, Inc. since 1990, and as a director of Applied Thin-Film
Products since April 1995. Mr. Chow holds a B.S.E.E. degree from National
Chiao-Tung University in Taiwan and a M.S.E.E. degree from the University of
California, Los Angeles.

MICHAEL D. MCDONALD was appointed Senior Vice President, Chief Financial
Officer and Secretary in December 1997. Prior to our acquisition of Magnum, he
had been Vice President and Chief Financial Officer of Magnum. Prior to joining
Magnum in 1984, he worked at Watkins-Johnson Company. Mr. McDonald holds a B.S.
degree from the University of San Francisco and an M.B.A. degree from California
Polytechnic State University at San Luis Obispo.

H. CLARK HICKOCK has served as Senior Vice President, Business Operations
since 1998 and Vice President, Business Operations since 1994. Mr. Hickock is
also currently serving as Acting Vice President, Human Resources. Prior to
joining REMEC, he was with E-Systems Garland Division for 16 years. Mr. Hickock
holds a B.A. in Economics and Finance from the University of Texas.

JOE E. OPALSKI has served in a variety of positions with REMEC since 1984.
He was elected Senior Vice President, General Manager Integrated RF Solutions
Group and Managing Director, REMEC Airtech in August 1999, and prior to that he
served as Senior Vice President, Marketing and Strategic Planning and President,
General Manager, REMEC Wireless. He holds a B.S.E.E. from Massachusetts
Institute of Technology.

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<PAGE> 41

JERRY B. COLLUM has served in a variety of positions with REMEC since July
1984. He was elected Senior Vice President and President, Metal Fab Center in
December 1999, and prior to that he served as Vice President and General Manager
Operations Support Division. From February 1968 to July 1984, Mr. Collum was
employed by Texas Instruments. Mr. Collum holds a B.S. in mechanical engineering
from Lamar University.

JUSTIN MILLER has served as President and director of REMEC Nanowave and
REMEC Canada and Vice President of REMEC since October 1997. Prior to our
Nanowave acquisition, he was a founder of Nanowave and served as its President
and a director since 1992. Prior to that, he served as Vice
President -- Engineering of Microwave Technologies, a division of Lucas
Industries plc. Dr. Miller holds a Ph.D. from the University of Warwick.

MARK D. DANKBERG joined REMEC as a director in September, 1999. Mr.
Dankberg was a founder of, and has served as Chairman of the Board, President
and Chief Executive Officer of ViaSat, Inc. since its inception in May 1986. Mr.
Dankberg also serves as a director of Connected Systems, a privately held
company that develops and manufacturers digital voice messaging systems. Prior
to founding ViaSat, he was Assistant Vice President of M/A-COM Linkabit, a
manufacturer of satellite telecommunications equipment, from 1979 to 1986 and
Communications Engineer for Rockwell International from 1977 to 1979. Mr.
Dankberg holds B.S.E.E. and M.E.E. degrees from Rice University.

THOMAS A. CORCORAN was elected a director of REMEC in May, 1996. Mr.
Corcoran has been the President and Chief Executive Officer of Allegheny
Technologies Incorporated since October 1999. Prior to that, Mr. Corcoran was a
Vice President and the President and Chief Operating Officer of the Space and
Strategic Missiles sector of Lockheed Martin Corporation from October 1998 to
September 1999. From March 1995 to September 1998, he was the President and
Chief Operating Officer of the Electronics sector of Lockheed Martin. From 1993
to 1995 Mr. Corcoran was President of the Electronics Group of Martin Marietta
Corporation, and from 1983 to 1993 he held various management positions with the
Aerospace segment of General Electric Company. Mr. Corcoran is Chairman of the
Board of Teledyne Technologies, Inc., and a director of Allegheny Technologies,
L-3 Communications Holdings, Inc. and Lincoln Electric Holdings, Inc. Mr.
Corcoran is a member of the Board of Trustees of Worcester Polytechnic
Institute, the Board of Trustees of Stevens Institute of Technology and the
Board of Governors of the Electronic Industries Association and a Director of
the U.S. Navy Submarine League.

WILLIAM H. GIBBS was elected a director of REMEC in May, 1996. Mr. Gibbs
was the President and Chief Executive Office of DH Technology, Inc. from
November 1985 to January 1998 and was Chairman Board of Directors of DH
Technology, Inc. from March 1987 through October 1997. From August 1983 to
November 1985, he held various positions, including those of President and Chief
Operating Officer, with Computer and Communications Technology, a supplier of
rigid disc magnetic recording heads to the peripheral equipment segment of the
computer industry.

ANDRE R. HORN has been a director of REMEC since 1988. Mr. Horn is the
retired Chairman of the Board of Joy Manufacturing Company. From 1985 to 1991,
Mr. Horn served as the Chairman of the Board of Needham & Company, Inc., which
is serving as one of the representatives of the underwriters in the offering
made by this prospectus. He currently holds the honorary position of Chairman
Emeritus of Needham & Company, Inc. Mr. Horn is a director of Western Digital
Corporation, a computer equipment manufacturer, and Varco International, Inc., a
manufacturer of petroleum industry equipment.

JEFFREY M. NASH has been a director of REMEC since 1988. From 1995 to 1998,
he was the President, Chief Executive Officer and a Director of TransTech
Information Management Systems, Inc. Since 1994, Dr. Nash has been Chairman,
Chief Executive Officer and President of Digital

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<PAGE> 42

Perceptions, Inc., and, from 1989 to 1994, he was the Chief Executive Officer
and President of Visqus as well as Conner Technology, Inc., both subsidiaries of
Conner Peripherals, Inc. Dr. Nash is currently a director of ViaSat, Inc., a
manufacturer of satellite communication equipment, and several private
companies, including Prisa Networks, Orincon Corporation, StoragePont.Com and
Tiernan Communications Inc.

Members of our Board of Directors are each elected for one year terms at
the annual shareholders meeting. Officers are elected at the first Board of
Directors meeting following the shareholders meeting at which directors are
elected and serve at the discretion of the Board of Directors.

The Board of Directors has a standing Compensation Committee, Audit
Committee and Nominating Committee. The Compensation Committee provides
recommendations to the Board concerning salaries and incentive compensation for
our officers and approves equity grants to our officers. The Audit Committee
recommends our independent auditors and reviews the results of and scope of
audits and other accounting-related services provided by our auditors. The
Nominating Committee reviews potential candidates for service on the Board.

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<PAGE> 43

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of our common stock as of January 31, 2000 and as adjusted to reflect
the sale of the shares offered by this prospectus, by: (i) each of our directors
and each named executive officer listed in the compensation section of our proxy
statement; (ii) all directors and executive officers as a group; (iii) each
person who is known by us to own beneficially more than 5% of our common stock;
and (iv) the selling shareholders.

The percentage of ownership prior to offering for each shareholder is based
on 25,430,429 shares of common stock outstanding as of January 31, 2000,
together with applicable options for such shareholders. Applicable percentage of
ownership after offering for each shareholder is based on 28,930,429 shares of
common stock, including shares sold in this offering and assuming exercise of
the underwriter's over-allotment option, together with applicable options for
such shareholders. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission, and includes voting and
investment power with respect to the shares. Shares of common stock subject to
outstanding options are deemed outstanding for computing the percentage of
ownership of the person holding such options, but are not deemed outstanding for
computing the percentage ownership of any other person. Except pursuant to
applicable community property laws or as indicated in the footnotes to the
table, to our knowledge, each shareholder identified in the table possesses sole
voting and investment power with respect to all shares of common stock shown as
beneficially owned by the shareholder.

The shares offered by each selling shareholder other than Mr. Lee will only
be offered if the underwriters exercise the over-allotment option. The number of
shares to be sold by each selling shareholder other than Mr. Lee assumes that
the underwriters exercise the over-allotment in full. If the underwriters do not
exercise the over-allotment option in full, the number of shares to be sold by
each selling shareholder other than Mr. Lee will be cut back proportionately
based on the aggregate number of shares proposed to be sold by the shareholder.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER
SHARES BENEFICIALLY OFFERING ASSUMING
OWNED PRIOR TO EXERCISE OF THE OVER-
OFFERING ALLOTMENT OPTION
------------------- NUMBER OF ---------------------
NUMBER PERCENT SHARES OFFERED NUMBER PERCENT
--------- ------- -------------- ---------- --------
<S> <C> <C> <C> <C> <C>
State of Wisconsin Investment Board(1)........... 1,992,000 7.83% -- 1,992,000 6.76%
Ronald E. Ragland(2)............................. 1,037,544 4.05 163,144 874,400 3.00
Tao Chow(3)...................................... 649,410 2.55 102,113 547,297 1.89
Nick Randall..................................... 489,061 1.92 76,900 412,161 1.42
Joseph T. Lee(4)................................. 404,547 1.59 250,000 154,547 *
Denny Morgan(5).................................. 351,968 1.38 35,000 316,968 1.09
Jack A. Giles(6)................................. 252,121 * 39,644 212,477 *
Jerry Collum(7).................................. 210,132 * 33,041 177,091 *
James Mongillo(8)................................ 202,031 * 31,767 170,264 *
Errol Ekaireb(9)................................. 185,550 * 29,176 156,374 *
Justin Miller(10)................................ 167,986 * -- 167,986 *
Jon Opalski(11).................................. 102,541 * 16,124 86,417 *
Michael McDonald(12)............................. 85,050 * -- 85,050 *
Clark Hickock(13)................................ 47,402 * 7,454 39,948 *
Jeffrey R. Nash(14).............................. 46,536 * 7,317 39,948 *
Thomas A. Corcoran(15)........................... 32,580 * 5,123 27,457 *
William H. Gibbs(16)............................. 29,330 * -- 29,330 *
Andre R. Horn(17)................................ 24,586 * 3,866 20,720 *
Mark D. Dankberg(18)............................. 2,589 * -- 2,589 *
All directors and executive officers as a group
(18 persons)(19)............................... 4,320,964 16.57 800,669 3,520,295 11.90
Keith Butler(20)................................. 36,149 * 5,684 30,465 *
Harold Kries(21)................................. 29,611 * 2,200 27,411 *
David Schmitz(22)................................ 25,103 * 3,947 21,156 *
</TABLE>

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

* Less than one percent of the outstanding shares of common stock.

Footnotes continue on following page.

40
<PAGE> 44

(1) Based on a Schedule 13G filed with the SEC on February 2, 2000. This
shareholder's address is 121 East Wilson Street, Madison, Wisconsin 53707.

(2) Includes 23,400 shares held by Mr. Ragland's minor children, 3,750 shares
held by Mr. Ragland's spouse and 197,400 shares issuable upon exercise of
outstanding options that are exercisable on or before April 1, 2000.

(3) Includes 616,560 shares held in the Tao Chow & Ying Chow Trust and 32,850
shares issuable upon exercise of outstanding options that are exercisable
on or before April 1, 2000.

(4) Includes 69,250 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000.

(5) Includes 42,000 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000. All other shares beneficially
owned by Mr. Morgan are held in the Morgan Trust, of which Mr. Morgan and
his spouse act as co-trustees.

(6) Includes 11,625 shares held by Mr. Giles' spouse and 28,750 shares issuable
upon exercise of outstanding options that are exercisable on or before
April 1, 2000.

(7) Includes 19,862 shares held by Mr. Collum's spouse and 18,120 shares
issuable upon exercise of outstanding options that are exercisable on or
before April 1, 2000.

(8) Includes 11,850 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000. All other shares beneficially
owned by Mr. Mongillo are held in the Mongillo Family Trust.

(9) Includes 10,000 shares held by Mr. Ekaireb's spouse and 68,500 shares
issuable upon exercise of outstanding options that are exercisable on or
before April 1, 2000.

(10) Includes 137,183 shares issuable upon conversion of dividend access shares
of REMEC Canada, our subsidiary and 28,560 shares issuable upon exercise of
outstanding options that are exercisable on or before April 1, 2000.

(11) Includes 2,511 shares held by Mr. Opalski's spouse and 29,875 shares
issuable upon exercise of outstanding options that are exercisable on or
before April 1, 2000.

(12) Includes 20,010 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000.

(13) Includes 19,875 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000.

(14) Includes 14,580 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000.

(15) Includes 24,330 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000.

(16) Includes 24,330 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000.

(17) Includes 14,580 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000.

(18) Includes 2,589 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000.

(19) Includes 647,449 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000.

(20) Includes 8,670 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000; Keith Butler is President of
REMEC Veritek, Inc.

(21) Includes 11,650 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000; Harold Kries is President of
Humphrey, Inc.

(22) Includes 12,250 shares issuable upon exercise of outstanding options that
are exercisable on or before April 1, 2000; David Schmitz is President of
REMEC Q-bit, Inc.

41
<PAGE> 45

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below, for whom Needham & Company, Inc., CIBC World Markets
Corp., Dain Rauscher Incorporated and A.G. Edwards & Sons, Inc. are acting as
representatives, have severally agreed to purchase an aggregate of 3,750,000
shares of common stock from us and the selling shareholder at the public
offering price less the underwriting discount set forth on the cover page of
this prospectus, in the amounts set forth opposite their names below. We are
selling 3,500,000 shares and the selling shareholder is selling 250,000 shares.

<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- ---- ----------------
<S> <C>
Needham & Company, Inc................................
CIBC World Markets Corp...............................
Dain Rauscher Incorporated............................
A.G. Edwards & Sons, Inc. ............................
---------
Total............................................ 3,750,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the
underwriters are subject to specified conditions precedent and that the
underwriters will purchase all shares of common stock offered by this prospectus
if any of those shares are purchased.

The representatives have advised us that the underwriters propose to offer
the shares of common stock directly to the public at the public offering price
set forth on the cover page of this prospectus, and to various securities
dealers at a price less a concession of not more than $ per share. The
underwriters may allow, and those dealers may reallow, a concession of not more
than $ per share to various other dealers. After the shares of common stock
are released for sale to the public, the offering price and other selling terms
may from time to time be varied by the underwriters. No change in those terms
shall change the amount of the proceeds we will receive, as set forth on the
cover page of this prospectus. The common stock is listed on the Nasdaq National
Market.

The selling shareholders have granted to the underwriters an option,
exercisable within 30 days after the date of this prospectus, to purchase up to
562,500 additional shares of common stock at the public offering price less the
underwriting discount set forth on the cover page of this prospectus. The
underwriters may exercise the option solely to cover over-allotments, if any,
made in connection with the sale of common stock offered by this prospectus. To
the extent that the underwriters exercise the over-allotment option, each
underwriter will be committed, subject to specified conditions, to purchase a
number of additional shares of common stock which is proportionate to that
underwriter's initial commitment as set forth in the table above.

Our executive officers and directors have agreed that, during the period
beginning from the date of this prospectus and continuing to and including the
date 90 days after the date of this prospectus, without the prior written
consent of Needham & Company, Inc., they will not sell, contract to sell, or
otherwise dispose of any shares of common stock, options to acquire common stock
or securities exchangeable for or convertible into common stock, except for the
shares of common stock offered in connection with this offering. We have agreed,
with certain limited exceptions, not to offer, sell, contract to sell, grant any
option to purchase, transfer or otherwise dispose of, any shares of common stock
for a period of 90 days after the date of this prospectus.

42
<PAGE> 46

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

We have agreed to indemnify the underwriters against specified liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments that the underwriters may be required to make in respect thereof.

In connection with the offering, various underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the common stock.
Those transactions may include stabilization transactions effected in accordance
with the Securities Exchange Act of 1934 pursuant to which such persons may bid
for or purchase common stock for the purpose of stabilizing its market price.
The underwriters also may create a short position for the account of the
underwriters by selling more common stock in connection with the offering than
they are committed to purchase from us, and in such case may purchase common
stock in the open market following completion of the offering to cover all or a
portion of those shares of common stock or may exercise the underwriters'
over-allotment option referred to above. In addition, the representatives, on
behalf of the underwriters, may impose "penalty bids" under the contractual
arrangements with the underwriters whereby the representatives may reclaim from
an underwriter (or dealer participating in the offering), for the account of
other underwriters, the selling concession with respect to common stock that is
distributed in the offering but subsequently purchased for the account of the
underwriters in stabilization or syndicate covering transactions or otherwise.
Any of these activities may stabilize or maintain the market price of the common
stock at a level above that which might otherwise prevail in the open market.
None of the transactions described in this paragraph is required, and if they
are undertaken, they may be discontinued at any time.

The following table summarizes the compensation we and the selling
shareholders will pay to the underwriters:

<TABLE>
<CAPTION>
TOTAL WITHOUT TOTAL WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
--------- -------------- --------------
<S> <C> <C> <C>
Underwriting discounts and commissions we will
pay............................................ $ $ $
Underwriting discounts and commissions the
selling shareholders will pay..................
</TABLE>

Underwriting discounts and commissions are calculated on a percentage basis
of the offering price equal to %. Expenses of the offering, exclusive of
underwriting discounts and commissions, include the SEC filing fee, the NASD
filing fee, the Nasdaq National Market application fee, printing expenses, legal
fees and expenses, accounting fees and expenses, blue sky fees and expenses,
transfer agent and register fees and other miscellaneous fees. We will pay all
of the expenses of the offering, estimated to be $400,000, other than
underwriting discounts and commissions to be paid by the selling shareholders
with respect to the shares sold by them.

43
<PAGE> 47

LEGAL MATTERS

The validity of our common stock offered by this prospectus will be passed
upon for us by Heller Ehrman White & McAuliffe LLP, Los Angeles, California.
Certain legal matters relating to the offering will be passed upon for the
underwriters by Gray Cary Ware & Freidenrich LLP, San Diego, California.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule for the years ended January 31, 1999, 1998 and
1997, included in our Annual Report on Form 10-K/A which is incorporated by
reference in reliance on Ernst & Young LLP's report (which, as to the years
ended January 31, 1999 and 1998, is based in part on the report of Arthur
Andersen, independent auditors, and as to the year ended January 31, 1997, is
based in part on the reports of Ireland San Filippo LLP, independent auditors,
Bray, Beck & Koetter, independent auditors) and Binder Hamlyn, independent
auditors, given on their authority as experts in accounting and auditing.

44
<PAGE> 48

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Our filings are
available to the public over the Internet at the SEC's web site at
"http://www.sec.gov." You can read and copy any document that we file with the
SEC at the following SEC public reference facilities:

<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661
</TABLE>

You can also obtain copies of the documents at prescribed rates by writing
to the SEC's Public Reference Section at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call 1-800-SEC-0330 for further information on the operation
of the SEC's public reference facilities. You also can inspect copies of our
filings at The Nasdaq Stock Market at 1735 K Street, N.W., Washington, D.C.
20006.

The SEC allows us to "incorporate by reference" into this prospectus the
information we file with the SEC. This means that we can disclose important
information to you by referring you to those documents. Information incorporated
by reference is part of this prospectus. Information that we later file with the
SEC will automatically update and supersede this information.

We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until this offering is completed:

- Our Annual Report on Form 10-K for the year ended January 31, 1999;

- Our Amendment to Annual Report on Form 10-K/A for the year ended January
31, 1999;

- Our Quarterly Report on Form 10-Q for the quarter ended April 30, 1999;

- Our Quarterly Report on Form 10-Q for the quarter ended July 1, 1999;

- Our Quarterly Report on Form 10-Q for the quarter ended October 29, 1999;
and

- The description of our common stock contained in our Registration
Statement on Form 8-A, filed with the Commission on December 13, 1995.

You may request a copy of these filings, at no cost, by contacting us in
writing or by telephone or email at the following address:

REMEC, Inc.
9404 Chesapeake Drive
San Diego, California 92123
(858) 560-1301
email: [email protected]

This prospectus is part of a registration statement that we filed with the
SEC. This prospectus does not contain all of the information included in the
registration statement. We have omitted certain parts of the registration
statement in accordance with the rules and regulations of the SEC. For further
information, we refer you to the registration statement, including its exhibits
and schedules.

45
<PAGE> 49

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

REMEC LOGO

UNTIL , 2000, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 50

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

REMEC will pay all expenses incident to the offering and sale to the public
of the shares being registered other than any commissions and discounts of
underwriters, dealers or agents and any transfer taxes. Such expenses are set
forth in the following table. All of the amounts shown are estimates except the
SEC Registration Fee, the NASD Filing Fee and the Nasdaq National Market
Additional Listing Fee.

<TABLE>
<CAPTION>
REMEC
--------
<S> <C>
SEC registration fee........................................ $ 36,933
NASD filing fee............................................. 14,393
Nasdaq National Market Additional Listing fee............... 17,500
Blue Sky qualification fees and expenses.................... 8,000
Transfer Agent and Registrar fees........................... 5,000
Printing and Engraving...................................... 90,000
Legal fees and expenses..................................... 150,000
Accounting fees and expenses................................ 50,000
Miscellaneous expenses...................................... 28,174
--------
Total............................................. $400,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The registrant has the power to indemnify its officers and directors
against liability for certain acts pursuant to Section 317 of the General
Corporation Law of California. Article Fifth of the registrant's Amended and
Restated Articles of Incorporation provides as follows:

"Fifth: This Corporation is authorized to provide indemnification of
agents (as defined in Section 317 of the California Corporations Code) for
breach of duty to this Corporation and its shareholders through bylaw
provisions, or through agreements with the agents, or otherwise, in excess
of the indemnification otherwise permitted by Section 317 of the California
Corporations Code, subject to the limits on such excess indemnification set
forth in Section 204 of the Code."

In addition, Article V of the registrant's Bylaws provides that the
registrant shall indemnify its directors and executive officers to the fullest
extent not prohibited by California General Corporation Law and provides for the
advancement of expenses upon a receipt of an undertaking to repay such amounts
if the person is determined ultimately not to be entitled to indemnification.

The registrant has entered into Indemnification Agreements with its
officers and directors.

II-1
<PAGE> 51

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.*
5.1 Opinion of Heller Ehrman White & McAuliffe LLP.*
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Ireland San Filippo, LLP, Independent Public
Accountants.
23.3 Consent of Bray, Beck & Koetter, Independent Public
Accountants.
23.4 Consent of Arthur Andersen, Independent Auditors.
23.5 Consent of Binder Hamlyn, Independent Auditors.
23.6 Consent of Counsel (included in Exhibit 5.1).*
24.1 Power of Attorney (included on page II-4).
</TABLE>

- -------------------------
* To be filed by amendment.

ITEM 17. UNDERTAKINGS.

A. FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

B. UNDERTAKING IN RESPECT OF INDEMNIFICATION.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

C. UNDERTAKING IN RESPECT OF RULE 430A.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this registration statement as of
the time it was declared effective.

II-2
<PAGE> 52

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-3
<PAGE> 53

SIGNATURE

Pursuant to the requirements of the Securities Act of 1933, REMEC, Inc.
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on February 29, 2000.

REMEC, INC.

By: /s/ RONALD E. RAGLAND
------------------------------------
Ronald E. Ragland
Chairman of the Board and
Chief Executive Officer

POWERS OF ATTORNEY

Each person whose signature appears below constitutes and appoints Ronald
E. Ragland, Errol Ekaireb and Michael McDonald his true and lawful
attorneys-in-fact and agents, each acting alone, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to the registration statement, and to sign any registration statement for the
same offering covered by this registration statement that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and all post-effective amendments thereto, and to file the same, with
all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone, or his
or her substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------- -------- ----
<S> <C> <C>
/s/ RONALD E. RAGLAND Chairman of the Board and February 29, 2000
- --------------------------------------------------- Chief Executive Officer
Ronald E. Ragland (Principal Executive
Officer)

/s/ ERROL EKAIREB President, Chief Operating February 29, 2000
- --------------------------------------------------- Officer and Director
Errol Ekaireb

/s/ JACK A. GILES Executive Vice President, February 29, 2000
- --------------------------------------------------- President of REMEC
Jack A. Giles Microwave, Inc. and
Director
</TABLE>

II-4
<PAGE> 54

<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- --------- -------- ----
<S> <C> <C>
/s/ DENNY MORGAN Senior Vice President, February 29, 2000
- --------------------------------------------------- Chief Engineer and
Denny Morgan Director

/s/ JOSEPH T. LEE Executive Vice President February 29, 2000
- --------------------------------------------------- and Director
Joseph T. Lee

/s/ MICHAEL MCDONALD Senior Vice President, February 29, 2000
- --------------------------------------------------- Chief Financial Officer
Michael McDonald and Secretary (Principal
Financial and Accounting
Officer)

/s/ MARK D. DANKBERG Director February 29, 2000
- ---------------------------------------------------
Mark D. Dankberg

/s/ THOMAS A. CORCORAN Director February 29, 2000
- ---------------------------------------------------
Thomas A. Corcoran

/s/ WILLIAM H. GIBBS Director February 29, 2000
- ---------------------------------------------------
William H. Gibbs

/s/ ANDRE R. HORN Director February 29, 2000
- ---------------------------------------------------
Andre R. Horn

/s/ JEFFREY M. NASH Director February 29, 2000
- ---------------------------------------------------
Jeffrey M. Nash
</TABLE>

II-5
<PAGE> 55

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.*
5.1 Opinion of Heller Ehrman White & McAuliffe LLP.*
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Ireland San Filippo, LLP, Independent Public
Accountants.
23.3 Consent of Bray, Beck & Koetter, Independent Public
Accountants.
23.4 Consent of Arthur Andersen, Independent Auditors
23.5 Consent of Binder Hamlyn, Independent Auditors
23.6 Consent of Counsel (included in Exhibit 5.1).*
24.1 Power of Attorney (included on page II-4).
</TABLE>

- -------------------------
* To be filed by Amendment

<PAGE> 1

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of REMEC, Inc. for the
registration of shares of its common stock and to the incorporation by reference
therein of our report dated February 26, 1999, except for the first paragraph of
Note 2, as to which the date is April 29, 1999, with respect to the consolidated
financial statements and schedule, as amended, of REMEC, Inc. included in the
Annual Report on Form 10-K/A for the year ended January 31, 1999, filed with the
Securities and Exchange Commission.

/s/ ERNST & YOUNG LLP
-------------------------------
Ernst & Young LLP

San Diego, California
February 28, 2000

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the reference to our
firm under the caption "Experts" in the Registration Statement on Form S-3 and
related Prospectus of REMEC, Inc. for the registration of shares of its common
stock and to the incorporation by reference therein of our report dated March 6,
1997, on the financial statements of Radian Technology, Inc. as of December 27,
1996, and for the three years then ended included in the Annual Report on Form
10-K/A for the year ended January 31, 1999, filed with the Securities and
Exchange Commission.

/s/ IRELAND SAN FILIPPO, LLP
- ----------------------------
Ireland San Filippo, LLP

February 24, 2000

<PAGE> 1

EXHIBIT 23.3

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the reference to our
firm under the caption "Experts" in the Registration Statement (Form S-3) and
related Prospectus of REMEC, Inc. for the registration of shares of its common
stock and to the incorporation by reference therein of our report, dated
February 28, 1997, on the financial statements of Q-bit Corporation as of
December 31, 1996 and December 31, 1995, and for the two years ended December
31, 1996.

/s/ BRAY, BECK & KOETTER
------------------------
Bray, Beck & Koetter

Melbourne, Florida
February 25, 2000

<PAGE> 1

EXHIBIT 23.4

ARTHUR ANDERSEN

CONSENT OF INDEPENDENT AUDITORS

As independent auditors, we hereby consent to the reference to our firm under
the caption "Experts" in the Registration Statement (Form S-3) and related
Prospectus of REMEC, Inc. for the registration of shares of its common stock and
to the incorporation by reference therein of our report, dated 24 March 1999
with respect to the financial statements of Airtech plc as of 31 December 1998
and 1997 and for the years then ended.

/s/ ARTHUR ANDERSEN
- --------------------------------
Arthur Andersen
Chartered Accountants
St. Albans, England
29 February 2000

<PAGE> 1

EXHIBIT 23.5

BINDER HAMLYN

CONSENT OF INDEPENDENT AUDITORS

------------------------------
Andersen Worldwide

------------------------------
20 Old Bailey
London EC4M 78H

As independent auditors, we hereby consent to the reference to our firm
under the caption "Experts" in the Registration Statement (Form S-3) and
related Prospectus of REMEC, Inc. for the registration of shares of its common
stock and to the incorporation by reference therein of our report, dated
26 March 1997, except for Notes 28 and 29 as to which the date is 24 March 1999,
with respect to the financial statements of Airtech plc for the year ended
31 December 1996.

/s/ BINDER HAMLYN
- --------------------------------
Binder Hamlyn
Chartered Accountants
London, England
29 February 2000