SPECTRIAN CORP /CA/, S-3/A, 1997-08-14

SPECTRIAN CORP /CA/
S-3/A, 1997-08-14
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14, 1997

REGISTRATION NO. 333-32125

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

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

AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

<TABLE>
<S> <C> <C>
CALIFORNIA (PRIOR TO PROPOSED 350 WEST JAVA DRIVE 77-0023003
REINCORPORATION) SUNNYVALE, CALIFORNIA 94089 (IRS Employer
DELAWARE (IF PROPOSED (408) 745-5400 Identification Number)
REINCORPORATION IS COMPLETED) (Address, including zip code,
(State or other jurisdiction and
of incorporation or telephone number, including
organization) area code, of Registrant's
principal executive offices)
</TABLE>

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

BRUCE R. WRIGHT
EXECUTIVE VICE PRESIDENT, FINANCE AND ADMINISTRATION,
CHIEF FINANCIAL OFFICER AND SECRETARY
SPECTRIAN CORPORATION
350 W. JAVA DRIVE
SUNNYVALE, CALIFORNIA 94089
(408) 745-5400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------
COPIES TO:

<TABLE>
<S> <C>
ROBERT P. LATTA, ESQ. ROBERT V. GUNDERSON, JR., ESQ.
CHRIS F. FENNELL, ESQ. JAY K. HACHIGIAN, ESQ.
Wilson Sonsini Goodrich & Rosati Gunderson Dettmer Stough Villeneuve
Professional Corporation Franklin & Hachigian, LLP
650 Page Mill Road 155 Constitution Drive
Palo Alto, California 94304 Menlo Park, California 94025
(415) 493-9300 (415) 321-2400
</TABLE>

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

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

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, as amended (the "Securities Act") other than securities offered only in
connection with dividend or interest reinvestment plans, please 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, please 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

<TABLE>
<CAPTION>
AMOUNT PROPOSED PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE MAXIMUM OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER SHARE OFFERING PRICE(2) FEE(3)
<S> <C> <C> <C> <C>
Common Stock, no par value per share(4).......... 2,300,000 $45.25 $104,075,000 $31,538
</TABLE>

(1) Includes 300,000 shares of Common Stock issuable upon exercise of the
Underwriters' over-allotment option.
(2) Estimated solely for the purpose of computing the amount of the registration
fee. The estimate is made pursuant to Rule 457(o) of the Securities Act of
1933, as amended.

(3) Previously paid.

(4) Includes Preferred Share Purchase Rights which, prior to the occurrence of
certain events, will not be exercisable or evidenced separately from the
Common Stock.

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

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>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
FILED PURSUANT TO RULE 424A
REGISTRATION NO. 333-32125

PROSPECTUS (SUBJECT TO COMPLETION)

ISSUED AUGUST 14, 1997

2,000,000 SHARES

[LOGO]

COMMON STOCK
-----------------

ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THE COMPANY.
THE COMPANY'S COMMON STOCK IS LISTED ON THE NASDAQ NATIONAL MARKET UNDER THE
SYMBOL "SPCT." ON AUGUST 13, 1997, THE LAST SALE PRICE OF THE COMMON STOCK AS
REPORTED ON THE NASDAQ NATIONAL MARKET WAS $45 PER SHARE. SEE "PRICE RANGE
OF COMMON STOCK."

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

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 5 HEREOF.
-----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------

PRICE $ A SHARE
-----------------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
--------------------- ----------------------- -----------------------
<S> <C> <C> <C>
PER SHARE.............................. $ $ $
TOTAL (3).............................. $ $ $
</TABLE>

- ------------
(1) THE COMPANY HAS AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN
LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SEE "UNDERWRITERS."
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $500,000.
(3) THE COMPANY HAS GRANTED THE UNDERWRITERS AN OPTION, EXERCISABLE WITHIN
30 DAYS OF THE DATE HEREOF, TO PURCHASE UP TO AN AGGREGATE OF 300,000
ADDITIONAL SHARES AT THE PRICE TO PUBLIC LESS UNDERWRITING DISCOUNTS AND
COMMISSIONS FOR THE PURPOSE OF COVERING OVER-ALLOTMENTS, IF ANY. IF THE
UNDERWRITERS EXERCISE SUCH OPTION IN FULL, THE TOTAL PRICE TO PUBLIC,
UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO COMPANY WILL BE
$ , $ AND $ , RESPECTIVELY. SEE "UNDERWRITERS."
------------------------

THE SHARES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS
BY GUNDERSON DETTMER STOUGH VILLENEUVE FRANKLIN & HACHIGIAN, LLP, COUNSEL FOR
THE UNDERWRITERS. IT IS EXPECTED THAT DELIVERY OF THE SHARES WILL BE MADE ON OR
ABOUT , 1997, AT THE OFFICE OF MORGAN STANLEY & CO. INCORPORATED, NEW
YORK, N.Y., AGAINST PAYMENT THEREFOR IN IMMEDIATELY AVAILABLE FUNDS.
-------------------

MORGAN STANLEY DEAN WITTER

LEHMAN BROTHERS

OPPENHEIMER & CO., INC.

, 1997
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND IF GIVEN OR MADE, ANY SUCH INFORMATION OR
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE HEREIN MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, BY ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE ANY
SUCH OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT
TO THE DATE HEREOF.
---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Incorporation of Certain Documents by Reference......... 2
Prospectus Summary...................................... 3
The Company............................................. 4
Risk Factors............................................ 5
Use of Proceeds......................................... 15
Dividend Policy......................................... 15
Price Range of Common Stock............................. 15
Capitalization.......................................... 16
Selected Consolidated Financial Data.................... 17

<CAPTION>
PAGE
-----
<S> <C>
Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 18
Business................................................ 27
Management.............................................. 40
Description of Capital Stock............................ 43
Underwriters............................................ 44
Legal Matters........................................... 45
Experts................................................. 45
Additional Information.................................. 45
</TABLE>

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

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents heretofore filed by the Company with the Securities
and Exchange Commission (the "Commission") pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act") are incorporated herein by
reference: (1) the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1997; (2) the Company's Definitive Proxy Statement on Schedule
14A and Notice of Annual Meeting of Stockholders filed with the Commission on
June 26, 1997; (3) the Company's Quarterly Report on Form 10-Q for the quarter
ended June 28, 1997; (4) the Company's Registration Statement on Form 8-A as
declared effective by the Commission on August 2, 1994 and (5) the description
of the Company's Preferred Share Purchase Rights contained in the Registration
Statement on Form 8-A filed with the Commission on January 17, 1997.

All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Common Stock
hereunder shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of the filing of such reports and documents. The
Company hereby undertakes to provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus is delivered, upon
written or oral request of such person a copy of any or all of the foregoing
documents incorporated herein by reference (exclusive of exhibits, unless such
exhibits are specifically incorporated by reference into such documents).
Requests for such documents should be submitted in writing to the Corporate
Secretary at the corporate headquarters of the Company at 350 West Java Drive,
Sunnyvale, California 94089, by telephone at (408) 745-5400 or by electronic
mail at [email protected].

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.
---------------------

Spectrian, The Power in Wireless Communications and the Spectrian logo are
registered trademarks of Spectrian Corporation. All other trademarks or service
marks appearing in this Prospectus are the property of their respective holders.
---------------------

EXCEPT AS OTHERWISE NOTED, ALL INFORMATION IN THIS PROSPECTUS, INCLUDING
FINANCIAL INFORMATION, SHARE AND PER SHARE DATA (I) ASSUMES NO EXERCISE OF THE
UNDERWRITERS' OVER-ALLOTMENT OPTION AND (II) DOES NOT REFLECT THE PROPOSED
REINCORPORATION OF THE COMPANY AS A DELAWARE CORPORATION WHICH IS TO BE VOTED
UPON FOR APPROVAL BY THE SHAREHOLDERS OF THE COMPANY AT A CONTINUATION OF THE
COMPANY'S ANNUAL MEETING CURRENTLY SCHEDULED TO BE HELD ON SEPTEMBER 11, 1997.
SEE "THE COMPANY" AND THE SECTION IN THE DEFINITIVE PROXY STATEMENT ON SCHEDULE
14A DATED JUNE 26, 1997 ENTITLED "PROPOSAL TWO--REINCORPORATION IN DELAWARE."

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

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, SHARES OF THE COMMON STOCK IN THE OPEN MARKET.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS."
-------------------

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ STOCK MARKET IN ACCORDANCE
WITH RULE 103 OF REGULATION M. SEE "UNDERWRITERS."

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE
IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. CERTAIN
STATEMENTS SET FORTH BELOW CONSTITUTE "FORWARD LOOKING STATEMENTS" WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION
21E OF THE EXCHANGE ACT (COLLECTIVELY THE "REFORM ACT"). SEE DISCUSSION OF
FORWARD LOOKING STATEMENTS ON PAGE 5 FOR ADDITIONAL FACTORS RELATING TO SUCH
STATEMENTS.

THE COMPANY

Spectrian Corporation designs, manufactures and markets highly linear radio
frequency ("RF") power amplifiers that address the needs of wireless
infrastructure equipment suppliers and their service provider customers.
Spectrian's amplifiers deliver high linearity, are produced cost-effectively in
volume, support multiple transmission standards and demonstrate high field
reliability. These attributes enable service providers to improve spectrum
efficiency resulting in reduced cost per subscriber, to rapidly deploy new
services and to offer enhanced quality and reliability of service.

Spectrian's amplifiers achieve high linearity through the Company's
expertise in RF semiconductor technology, solid state device physics, thermal
and mechanical packaging design, advanced circuit design, amplifier linear
correction technologies, advanced signal processing techniques, control systems
and computer aided design and modeling. The Company has pursued a strategy of
vertical integration of its design and manufacturing processes, from design and
development of the semiconductor die through assembly and automated testing
using proprietary software and systems that minimize manufacturing cycle times.
This strategy results in shortened time to market, reduced unit costs, increased
quality and reliability, and rapid achievement of volume production.

The Company's products are deployed in cellular, PCS and WLL networks
worldwide and support every major domestic and international transmission
standard, including the Advanced Mobile Phone Services ("AMPS") and Total Access
Communications System ("TACS") analog standards, and the Time Division Multiple
Access ("TDMA"), Code Division Multiple Access ("CDMA") and Global System for
Mobile Communications ("GSM") digital standards. The Company's customers include
large wireless OEMs, including Northern Telecom, Nortel Matra, LG Information
and Communications Limited ("LGIC") and QUALCOMM, as well as emerging
manufacturers including Harris, Tellabs and Watkins-Johnson.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered.......................................... 2,000,000 shares(1)
Common Stock to be outstanding after the offering............. 10,357,157 shares(2)
Use of proceeds............................................... For general corporate purposes, including working capital,
capital expenditures and facilities expansion
Nasdaq National Market symbol................................. SPCT
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
FISCAL YEAR ENDED MARCH 31, -----------
----------------------------------------------------- JUNE 29,
1993 1994 1995 1996 1997 1996
--------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA(3):
Revenues........................................................ $ 24,458 $ 37,859 $ 62,478 $ 72,113 $ 88,252 $ 9,923
Operating income (loss)......................................... 2,262 118 5,252 4,760 (3,599) (5,240)
Income (loss) before income taxes............................... 2,027 (549) 5,643 5,649 (3,991) (5,314)
Net income (loss)(4)............................................ 116 (549) 5,473 5,480 (3,991) (5,314)
Net income (loss) per share(4)(5)............................... $ 0.02 $ (0.41) $ 0.74 $ 0.67 $ (0.49) $ (0.66)
Shares used in computing per share amounts(5)................... 4,849 1,325 7,435 8,193 8,152 8,039

JUNE 28,
1997
-----------
<S> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA(3):
Revenues........................................................ $ 45,766
Operating income (loss)......................................... 6,013
Income (loss) before income taxes............................... 7,524
Net income (loss)(4)............................................ 6,395
Net income (loss) per share(4)(5)............................... $ 0.72
Shares used in computing per share amounts(5)................... 8,917
</TABLE>

<TABLE>
<CAPTION>
JUNE 28, 1997
-------------------------
ACTUAL AS ADJUSTED(6)
--------- --------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA(3):
Working capital...................................................................................... $ 32,122 $ 117,122
Total assets......................................................................................... 84,547 169,547
Long term debt, net of current portion............................................................... 6,705 6,705
Shareholders' equity................................................................................. 51,131 136,131
</TABLE>

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

(1) Assumes the Underwriters' over-allotment option to purchase 300,000 shares
is not exercised. See "Underwriters."

(2) Based on the number of shares of Common Stock outstanding as of June 28,
1997. Excludes (i) 1,780,470 shares of Common Stock issuable upon exercise
of options outstanding under the Company's 1992 Stock Plan and 1994 Director
Option Plan (collectively, the "Stock Plans") at June 28, 1997 at a weighted
average exercise price of $14.61 per share and (ii) 140,811 shares of Common
Stock reserved for future grant or issuance under the Stock Plans and the
Company's 1994 Employee Stock Purchase Plan. In addition, the Company
obtained shareholder approval for a 610,000 share increase in the number of
shares reserved for issuance under the Stock Plans and the 1994 Employee
Stock Purchase Plan at the Company's Annual Meeting of Shareholders held on
July 31, 1997. See "Capitalization."

(3) The Company's fiscal year ends on March 31 and each of the Company's first
three fiscal quarters ends on the Saturday nearest the end of the respective
calendar quarter.

(4) During the fiscal year ended March 31, 1993 the Company discontinued its
military contract manufacturing operation. Income from continuing operations
for the year ended March 31, 1993 was $2,027,000.

(5) See Note 4 of Notes to Condensed Consolidated Financial Statements contained
in the Company's quarterly report on Form 10-Q for the three months ended
June 28, 1997, incorporated herein by reference, for information concerning
the per share computations. Fully diluted per share amounts were not
required to be disclosed as these amounts were not materially different from
the primary per share amounts for all periods presented except for the three
months ended June 28, 1997, for which fully diluted net income per share was
$0.68 and the number of shares used in computing fully diluted net income
per share was 9,390,000.

(6) As adjusted to reflect the sale of the 2,000,000 shares of Common Stock
offered hereby at an assumed public offering price of $45 per share and
after deducting estimated underwriting discounts and commissions and
estimated offering expenses. See "Use of Proceeds" and "Capitalization."

3
<PAGE>
THE COMPANY

The market for wireless communications services has grown significantly
during the past decade fueled by decreasing prices for wireless handsets, a more
favorable regulatory environment, increasing competition among service providers
and a greater availability of services and RF spectrum. The continuing growth of
the wireless communications market has resulted in the crowding of transmissions
within the available RF spectrum. Because the radio frequencies assigned to
transmissions are fixed, service providers are seeking new methods of more
efficiently using the RF spectrum in order to increase capacity. Wireless
carriers' ability to more effectively manage scarce spectrum resources and
accommodate a larger number of subscribers is partly dependent on their ability
to broadcast signals with high "linearity." Linearity is the degree to which
amplified signals remain within their prescribed band of spectrum with low
distortion or interference from adjacent channels. In current systems, the RF
power amplifier is generally the source of the greatest amount of signal
distortion. Consequently, obtaining RF power amplifiers with high linearity is
critical to a service provider's ability to reduce interference levels and
thereby increase system capacity.

Spectrian's amplifiers achieve high linearity through the Company's
expertise in RF power semiconductor technology, solid state device physics,
thermal and mechanical packaging design, advanced circuit design, amplifier
linear correction technologies, advanced signal processing techniques, control
systems and computer aided design and modeling. The Company has pursued a
strategy of vertical integration of its design and manufacturing processes, from
design and development of the semiconductor die through assembly and automated
testing with proprietary software and systems that minimize manufacturing cycle
times. This strategy results in shortened time to market, reduced unit costs,
increased quality and reliability, and rapid achievement of volume production.

The Company's products are deployed in cellular, PCS and WLL networks
worldwide and support every major domestic and international transmission
standard, including the Advanced Mobile Phone Services ("AMPS") and Total Access
Communications System ("TACS") analog standards, and the Time Division Multiple
Access ("TDMA"), Code Division Multiple Access ("CDMA") and Global System for
Mobile Communications ("GSM") digital standards. The Company's customers include
large wireless OEMs, including Northern Telecom, Nortel Matra, LG Information
and Communications Limited and QUALCOMM, as well as emerging manufacturers
including Harris, Tellabs and Watkins-Johnson.

The Company was incorporated in California in 1984 under the name Microwave
Modules & Devices, Inc. and changed its name to Spectrian Corporation in 1992.
Pursuant to its Definitive Proxy Statement on Schedule 14A dated June 26, 1997,
the Company is seeking the approval of its shareholders to reincorporate into
Delaware. Should the Company's shareholders approve the proposal at a
continuation of the Company's Annual Meeting of Shareholders currently scheduled
to be held on September 11, 1997, the Company intends to complete the
reincorporation through a merger with and into its wholly-owned subsidiary,
Spectrian Corporation, a Delaware corporation. Unless the context otherwise
requires, references in this Prospectus to "Spectrian" and the "Company" refer
to Spectrian Corporation, a California corporation, and to its anticipated
successor, Spectrian Corporation, a Delaware corporation. See the section in the
Definitive Proxy Statement on Schedule 14A dated June 26, 1997 incorporated
herein by reference entitled "Proposal Two--Reincorporation in Delaware." The
Company's principal executive offices are located at 350 W. Java Drive,
Sunnyvale, California 94089, and its telephone number at that address is (408)
745-5400. The Company's homepage can be located on the Internet at
http:\\www.spectrian.com. Information contained on the Company's Web site does
not constitute part of this Prospectus.

4
<PAGE>
RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS AND IN THE DOCUMENTS
INCORPORATED BY REFERENCE HEREIN, THE FOLLOWING RISK FACTORS SHOULD BE
CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE COMMON STOCK OFFERED BY
THIS PROSPECTUS. WHEN USED IN THIS PROSPECTUS, THE WORDS "EXPECTS,"
"ANTICIPATES" AND "ESTIMATES" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED. THESE RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
RISKS DISCUSSED BELOW AND ELSEWHERE IN THIS PROSPECTUS. SUCH STATEMENTS AND
DISCUSSIONS CONTAIN FORWARD LOOKING INFORMATION WITHIN THE MEANING OF THE REFORM
ACT. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD
LOOKING STATEMENTS AS A RESULT OF THE RISK FACTORS SET FORTH BELOW AND ELSEWHERE
IN THIS PROSPECTUS.

CUSTOMER CONCENTRATION; DEPENDENCE ON NORTHERN TELECOM. The wireless
infrastructure equipment market is dominated by a small number of large original
equipment manufacturers ("OEMs"), including LM Ericsson Telephone Company
("Ericsson"), Lucent Technologies, Inc. ("Lucent"), Motorola Corporation
("Motorola"), Northern Telecom Limited ("Northern Telecom"), Nortel Matra
Communications ("Nortel Matra"), in which Northern Telecom has an equity
interest, and Siemens AG ("Siemens"). The Company's revenues are derived
primarily from sales to a limited number of these OEMs, particularly Northern
Telecom and Nortel Matra. During fiscal 1996, Northern Telecom and Nortel Matra
accounted for approximately 58% and 17% of revenues, respectively. During fiscal
1997, Northern Telecom and Nortel Matra accounted for approximately 63% and 12%
of revenues, respectively. During the three months ended June 28, 1997, Northern
Telecom, Nortel Matra and LGIC accounted for approximately 55%, 22% and 18% of
revenues, respectively. Furthermore, a substantial portion of revenues from
Northern Telecom and Nortel Matra in fiscal 1996, fiscal 1997 and the three
months ended June 28, 1997 resulted from sales of a limited number of the
Company's products. The Company's business, financial condition and results of
operations have been materially adversely affected in the past by anticipated
orders failing to materialize and by deferrals or cancellations of orders as a
result of changes in OEM requirements. The Company, Northern Telecom and Nortel
Matra have an agreement, renegotiated annually, pursuant to which Northern
Telecom and Nortel Matra commit to purchase a substantial percentage of their
annual power amplifier requirements from the Company according to a tiered
pricing structure. This contract is subject to renegotiation in the Fall of 1997
and there can be no assurance that Northern Telecom and Nortel Matra will enter
into a similar contract in the future or otherwise agree to purchase the same or
similar levels of their power amplifier requirements from the Company or
purchase their power amplifier requirements on the same or similar pricing
terms. Any reduction in the level of purchases of the Company's amplifiers by
Northern Telecom and Nortel Matra, either in absolute quantities or as a
percentage of their total power amplifier needs, or any material reduction in
pricing without significant offsets, would have a material adverse effect on the
Company's business, financial condition and results of operations. Further, if
the Company were to lose Northern Telecom or any other major OEM customer as a
customer, or if orders by Northern Telecom or any other major OEM customer were
to otherwise materially decrease, the Company's business, financial condition
and results of operations would be materially adversely affected. In addition,
wireless infrastructure equipment manufacturers have come under increasing price
pressure from wireless service providers, which in turn has resulted in downward
pricing pressure on the Company's products. The Company expects to incur
increasing pricing pressures from Northern Telecom and other major OEM customers
in future periods, which could result in declining average sales prices for the
Company's products. As part of the effort to diversify its product base, in
fiscal 1997 the Company began to sell multicarrier amplifier systems directly to
service providers. The Company recognizes that these sales may be in conflict
with potential or current OEM sales and seeks to work with its OEM equipment
suppliers so that the service provider receives a Spectrian power amplifier
system directly or through the OEM. There can be no assurance, however, that the
Company's direct sales to service providers will not cause its OEM equipment
suppliers to reduce orders or terminate their relationships with the Company.
Any such reduction or termination would have a material adverse

5
<PAGE>
effect on the Company's business, financial condition and results of operations.
See "Business--OEM Customers, Sales and Marketing."

FLUCTUATIONS IN OPERATING RESULTS. The Company's quarterly and annual
results have in the past been, and will continue to be, subject to significant
fluctuations due to a number of factors, any of which could have a material
adverse effect on the Company's business, financial condition and results of
operations. In particular, the Company's quarterly and annual results of
operations are likely to vary due to the timing, cancellation, delay or
rescheduling of OEM customer orders and shipments; the timing of announcements
or introductions of new products by the Company, its competitors or their
respective OEM customers; the acceptance of such products by wireless equipment
OEMs and their customers; variations in manufacturing efficiencies, yields and
costs; competitive factors such as the pricing, availability, and demand for
competing amplification products; changes in average sales prices and product
mix; variations in operating expenses; changes in manufacturing capacity and
variations in the utilization of this capacity; shortages of key supplies; the
long sales cycles associated with the Company's customer specific products; the
timing and level of product and process development costs; and changes in
inventory levels. While the Company maintains a backlog, the Company's OEM
customers may cancel or defer orders without significant penalty. Anticipated
orders from the Company's OEM customers have in the past failed to materialize
and delivery schedules have been deferred or canceled as a result of changes in
OEM customer requirements and the Company expects this pattern to continue as
customer requirements continue to change and industry standards continue to
evolve. Reduced demand for wireless infrastructure equipment in the latter part
of fiscal 1996 and the early part of fiscal 1997, driven partly by delays in the
build-out of PCS infrastructure, caused significant fluctuations in the
Company's product sales during that period of time. There can be no assurance
that the Company will not experience such fluctuations in the future. See
"Business--OEM Customers, Sales and Marketing." In addition, the Company has in
the past experienced high manufacturing costs, due in part to rapid increases in
production, that have adversely affected the Company's business, financial
condition and results of operations. The Company's gross margins vary by product
due to specific product pricing, design characteristics, production volumes and
other factors. The Company establishes its expenditure levels for product
development and other operating expenses based on its expected revenues, and
expenses are relatively fixed in the short term. As a result, variations in
timing of revenues can cause significant variations in quarterly results of
operations. There can be no assurance that the Company will be profitable on a
quarter-to-quarter basis in the future. The Company believes that period to
period comparisons of its financial results are not necessarily meaningful and
should not be relied upon as an indication of future performance. Due to all the
foregoing factors, it is likely that in some future quarter or quarters the
Company's revenues or operating results will not meet the expectations of public
stock market analysts or investors. In such event, the market price of the
Company's Common Stock would be materially adversely affected. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

INTERNAL AMPLIFIER DESIGN AND PRODUCTION CAPABILITIES OF OEMS. The Company
believes that a majority of the present worldwide production of power amplifiers
is captive within the manufacturing operations of wireless equipment OEMs, many
of which have chosen not to purchase amplifiers from outside suppliers.
Furthermore, the Company believes that those OEMs that are willing to purchase
from third party amplifier vendors are reluctant to switch once committed to a
particular merchant vendor. Consequently, the Company has only limited
opportunities to increase revenues by replacing internal OEM amplifier
production or displacing other merchant amplifier suppliers. As a result, the
Company's future success is substantially dependent upon the extent to which
these major wireless equipment OEMs elect to purchase from outside sources
rather than manufacture their own amplifiers. Among the Company's current OEM
customers, Northern Telecom, Nortel Matra, LGIC and QUALCOMM Incorporated
("QUALCOMM") continuously evaluate whether to manufacture their own amplifiers.
There can be no assurance that the Company's major OEM customers will continue
to rely, or increase their reliance, on the Company as an external source of
supply for their power amplifiers, or that other wireless equipment OEMs will
become customers of the Company. Furthermore, the Company's OEM customers and
other

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wireless infrastructure equipment manufacturers are protective of their
intellectual property, which may contribute to their decision not to seek power
amplifiers from external sources as the compatibility of their own products with
third party amplifiers requires extensive specifications. While the Company
takes measures to ensure the confidentiality of any such intellectual property
disclosed to the Company by the OEM customers or developed by the Company for
such customers, the appearance of a close working relationship with a particular
OEM customer may adversely affect the Company's ability to establish or maintain
a relationship with, or sell products to, competitors of that OEM customer. If,
for any reason, the major wireless infrastructure equipment suppliers do not
purchase or continue to purchase their power amplifiers from merchant suppliers,
the Company's business, results of operations and financial condition will be
materially adversely affected. See "Business--OEM Customers, Sales and
Marketing."

RAPID TECHNOLOGICAL CHANGE; EVOLVING INDUSTRY STANDARDS; DEPENDENCE ON NEW
PRODUCTS. The markets in which the Company and its OEM customers compete are
characterized by rapidly changing technology, evolving industry standards and
continuous improvements in products and services. The Company's future success
depends upon the acceptance of the Company's products, which in turn depends on,
among other things, timely completion of new product designs, customization of
products to meet the needs of its OEM customers, achievement of acceptable
manufacturing yields, and wireless service provider demand for the systems
solutions provided by the Company's OEM customers. In particular, because the
Company's strategy of rapidly bringing to market products customized for
numerous and evolving RF modulation standards requires developing and achieving
volume production of a large number of distinct products, the Company's ability
to rapidly design and produce individual products for which there is significant
OEM customer demand will be a critical determinant of the Company's future
success. The Company believes this ability will become increasingly critical as
any increased adoption of Personal Communications Services ("PCS") and Wireless
Local Loop ("WLL") technology is expected to lead to the proliferation of
numerous additional RF modulation standards, including solutions customized for
individual markets. No assurance can be given that the Company's product
development efforts will be successful, that its new products will meet customer
requirements and be accepted or that its OEM customers' product offerings will
achieve customer acceptance. If a significant number of development projects do
not result in significant volume production, the Company's business, financial
condition and results of operations could be materially adversely affected. If
technologies or standards supported by the Company's or its customers' products
become obsolete or fail to gain widespread commercial acceptance, the Company's
business, financial condition and results of operations may be materially
adversely affected. In addition, the increasing demand for wireless
communications has exerted pressure on regulatory bodies worldwide to adopt new
standards for such products, generally following extensive investigation of and
deliberation over competing technologies. The delays inherent in the
governmental approval process may in the future cause the cancellation,
postponement or rescheduling of the installation of communications systems by
the Company's customers. These delays in the past have had and in the future may
have a material adverse effect on the sale of products by the Company and on its
business, financial condition and results of operations. See "Business--OEM
Customers, Sales and Marketing," "--Manufacturing" and "--Research and
Development."

RISKS ASSOCIATED WITH INTERNAL WAFER FABRICATION. The Company's operation
of its manufacturing facilities entails a number of risks, including a high
level of fixed and variable costs, the management of complex processes,
dependence on a single source of supply and a strict regulatory environment.
First, fixed costs consist primarily of occupancy costs, investment in
manufacturing equipment, repair, maintenance and depreciation costs related to
equipment and fixed labor costs related to manufacturing and process
engineering. During periods of low demand, high fixed wafer fabrication costs
are likely to have a material adverse effect on the Company's business,
financial condition and results of operations. Second, the Company's strategy of
frequently introducing and rapidly expanding the manufacture of new products to
meet evolving OEM customer and service provider needs has caused the Company to
experience high materials and manufacturing costs, including high scrap and
material waste, significant material obsolescence, labor inefficiencies and
overtime expenses, inefficient material procurement and an inability to

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recognize economies of scale. These high manufacturing costs and production
interruptions have had an adverse effect on the Company's results of operations.
In addition, the Company has made and expects to continue to make pricing
commitments to OEM customers in anticipation of achieving such manufacturing
cost reductions. Any failure to achieve such manufacturing cost reductions could
have a material adverse effect on the Company's business, financial condition
and results of operations. Third, the design and fabrication of RF
semiconductors is a complex and precise process. Such manufacturing is sensitive
to a wide variety of factors, including variations and impurities in the raw
materials, difficulties in the fabrication process, performance of the
manufacturing equipment, defects in the masks used to print circuits on a wafer
and the level of contaminants in the manufacturing environment. As a result of
these and other factors, semiconductor manufacturing yields from time to time in
the past have suffered, and there can be no assurance that the Company will be
able to achieve acceptable production yields in the future. In addition, the
Company's wafer fabrication facility represents a single point of failure in its
manufacturing process that would be costly and time-consuming to replace if its
operation were interrupted. The interruption of wafer fabrication operations or
the loss of employees dedicated to the wafer fabrication facility could have a
material adverse effect on the Company's business, financial condition and
results of operations. Any failure to maintain acceptable wafer production
levels, either from the Company's facility or from a third party wafer supplier,
will have a material adverse effect on the Company's business, financial
condition and results of operations. Finally, the Company's operation of a wafer
fabrication facility subjects the Company to a variety of local, state and
federal governmental regulations relating to the storage, discharge, handling,
emission, generation, manufacture and disposal of toxic or other hazardous
substances used to manufacture the Company's products. The Company believes that
it is currently in compliance in all material respects with such regulations and
that it has obtained all necessary environmental permits to conduct its
business. However, the failure to comply with current or future regulations
could result in the imposition of substantial fines on the Company, suspension
of production, alteration of its manufacturing processes or cessation of
operations. In addition, compliance with such regulations could require the
Company to acquire expensive remediation equipment or to incur substantial
expenses. See "Business--Manufacturing" and "--Facilities."

PRODUCT QUALITY, PERFORMANCE AND RELIABILITY. The Company expects that its
customers will continue to establish demanding specifications for quality,
performance and reliability that must be met by the Company's products. RF
semiconductors as complex as those offered by the Company often encounter
development delays and may contain undetected defects or failures when first
introduced or after commencement of commercial shipments. The Company has from
time to time in the past experienced product quality, performance or reliability
problems, although no such problems have had a material adverse effect on the
Company's business, financial condition and results of operations. In addition,
multicarrier power amplifiers have a higher probability of malfunction because
of their greater complexity. There can be no assurance that defects or failures
will not occur in the future relating to the Company's product quality,
performance and reliability that may have a material adverse effect on the
Company's business, financial condition and results of operations. If such
defects or failures occur, the Company could experience lost revenue, increased
costs (including warranty expense, costs associated with customer support and
other product liability related costs), delays in or cancellations or
rescheduling of orders or shipments and product returns or discounts, any of
which would have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Manufacturing."

SOLE OR LIMITED SOURCES OF MATERIALS AND SERVICES. The Company currently
procures from single sources certain components and services for its products
including cast housings, printed circuit boards, specialized RF components (such
as monolithic microwave integrated circuits) and specialized sub-assemblies. The
Company purchases these components and services on a purchase order basis, does
not carry significant inventories of these components and does not have any
long-term supply contracts with its sole source vendors. Although the Company is
currently identifying potential alternative sources of these components, its
reliance on sole sources entails certain risks, including reduced control over
the price, timely delivery, reliability and quality of the components. Because
certain of the Company's sole source and limited source suppliers have limited
operating histories and limited financial and other resources,

8
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they may prove to be unreliable sources of supply. If the Company were to change
any of its sole source vendors, the Company would be required to requalify the
components with each new vendor. Requalification could prevent or delay product
shipments which could materially and adversely affect the Company's business,
financial condition and results of operations. Any inability of the Company to
obtain timely deliveries of components of acceptable quality in required
quantities or a significant increase in the prices of components for which the
Company does not have alternative sources could materially adversely affect the
Company's business, financial condition and results of operations. The Company
has occasionally experienced difficulties in obtaining these components, and no
assurance can be given that shortages will not occur in the future. See
"Business--Manufacturing."

DECLINING AVERAGE SALES PRICES. The Company has experienced, and expects to
continue to experience, declining average sales prices for its products.
Wireless infrastructure equipment manufacturers have come under increasing price
pressure from wireless service providers, which in turn has resulted in downward
pricing pressure on the Company's products. Therefore, the Company expects to
incur increasing pricing pressures from Northern Telecom and its other major OEM
customers in future periods, which could result in declining average sales
prices for the Company's products. In addition, competition among merchant
suppliers has increased the downward pricing pressure on the Company's products.
Since wireless infrastructure equipment manufacturers frequently negotiate
supply arrangements far in advance of delivery dates, the Company often must
commit to price reductions for its products before it is aware of how, or if,
cost reductions can be obtained. To offset declining average sales prices, the
Company believes that in the near term it must achieve manufacturing cost
reductions, and in the longer term it must develop new products that incorporate
advanced features and can be sold at higher average sales prices. If, however,
the Company is unable to achieve such cost reductions, the Company's gross
margins will decline, and such decline will have a material adverse effect on
the Company's business, financial condition and results of operations. Also, to
the extent that new products are not developed in a timely manner, do not
achieve customer acceptance or do not generate higher sales prices and margins,
the Company's business, financial condition and results of operations would be
materially adversely affected. See "Business-- Manufacturing."

RISKS OF INTERNATIONAL SALES. Sales outside of the United States were 72%,
73% and 88% of revenues in fiscal 1996, fiscal 1997 and the three months ended
June 28, 1997, respectively. The Company expects that international sales will
continue to account for a significant percentage of the Company's total revenues
for the foreseeable future. These sales involve a number of inherent risks,
including imposition of government controls, currency exchange fluctuations,
potential insolvency of international distributors and representatives, reduced
protection for intellectual property rights in some countries, the impact of
recessionary environments in economies outside the United States, political
instability and generally longer receivables collection periods, as well as
tariffs and other trade barriers. In addition, because substantially all of the
Company's foreign sales are denominated in U.S. dollars, increases in the value
of the dollar would increase the price in local currencies of the Company's
products in foreign markets and make the Company's products relatively more
expensive and less price competitive than competitors' products that are priced
in local currencies. There can be no assurance that these factors will not have
a material adverse effect on the Company's future international sales and,
consequently, on the Company's business, financial condition and results of
operations. Furthermore, a large portion of the Company's existing customers and
potential new customers are servicing new markets in developing countries that
the Company's customers expect will deploy wireless communication networks as an
alternative to the construction of a wireline infrastructure. If such countries
decline to construct wireless communication systems, or construction of such
systems is delayed for any reason, including business and economic conditions
and changes in economic stability due to factors such as increased inflation and
political turmoil, such delays could have a material adverse effect on the
Company's business, results of operations and financial condition. See
"Business--OEM Customers, Sales and Marketing."

RELIANCE UPON GROWTH OF WIRELESS SERVICES. Sales of power amplifiers to
wireless infrastructure equipment suppliers have in the past accounted, and are
expected in the future to account, for substantially

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all of the Company's product sales. Demand for wireless infrastructure equipment
is driven by demand for wireless service. Although demand for power amplifiers
has grown in recent years, if demand for wireless services fails to increase or
increases more slowly than the Company or its OEM customers currently
anticipate, the Company's business, financial condition and results of
operations would be materially and adversely affected. The success of the
Company depends to a considerable extent upon the continued growth and increased
availability of cellular and other wireless communications services, including
PCS and WLL, in the United States and internationally. There can be no assurance
that the volume and variety of wireless communications services will continue to
grow, or that such services will create a demand for the Company's products. The
Company believes that continued growth in wireless usage depends on significant
reductions in infrastructure capital equipment cost per subscriber and
corresponding reductions in wireless service rates, which currently generally
remain substantially higher than rates charged by wireline companies. See
"Business--Industry Background."

MARKET FOR THE COMPANY'S PRODUCTS IS HIGHLY COMPETITIVE. The wireless
communications equipment industry is extremely competitive and is characterized
by rapid technological change, new product development and product obsolescence,
evolving industry standards and significant price erosion over the life of a
product. The ability of the Company to compete successfully and sustain
profitability depends in part upon the rates at which wireless equipment OEMs
incorporate the Company's products into their systems and the Company captures
market share from other merchant suppliers. The Company's major OEM customers,
including Northern Telecom, Nortel Matra, LGIC and QUALCOMM, continuously
evaluate whether to manufacture their own amplification products or purchase
them from outside sources such as the Company. There can be no assurance that
these OEM customers will incorporate the Company's products into their systems
or that in general they will continue to rely, or expand their reliance, on
external sources of supply for their power amplifiers. These customers and other
large manufacturers of wireless communications equipment could also elect to
enter the merchant market and compete directly with the Company, and at least
one OEM, NEC Corporation ("NEC"), has already done so. Such increased
competition could materially adversely affect the Company's business, financial
condition and results of operations. See "--Internal Amplifier Design and
Production Capabilities of OEMs."

The Company's principal competitors in the market for wireless amplification
products provided by merchant suppliers currently include AML Communications,
Amplidyne, Hewlett-Packard Wireless Infrastructure Division, M/A-COM (a
subsidiary of AMP), Microwave Power Devices, NEC and Powerwave Technologies.
Certain of these competitors have, and potential future competitors could have,
substantially greater technical, financial, marketing, distribution and other
resources than the Company and have, or could have, greater name recognition and
market acceptance of their products and technologies. No assurance can be given
that the Company's competitors will not develop new technologies or enhancements
to existing products or introduce new products that will offer superior price or
performance features compared to the Company's products. To the extent that OEMs
increase their reliance on external sources for their power amplification needs,
more competitors could be attracted to the market. The Company expects its
competitors to offer new and existing products at prices necessary to gain or
retain market share. The Company has experienced significant price competition,
which has in the past affected gross margins. Certain of the Company's
competitors have substantial financial resources which may enable them to
withstand sustained price competition or downturns in the power amplification
market. There can be no assurance that the Company will not be subject to
increased price competition or that the Company will be able to compete
successfully in the future. See "Business--Competition."

UNCERTAIN PROTECTION OF INTELLECTUAL PROPERTY. The Company's ability to
compete successfully and achieve future revenue growth will depend, in part, on
its ability to protect its proprietary technology and operate without infringing
the rights of others. The Company has a policy of seeking patents on inventions
resulting from its ongoing research and development activities. The Company has
been awarded 14 United States patents, and has 15 United States patent
applications pending, including one that has been allowed but not yet formally
issued. The Company also has been awarded six foreign patents and has seven
foreign patent

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applications pending. There can be no assurance that the Company's pending
patent applications will be allowed or that the issued or pending patents will
not be challenged or circumvented by competitors. Notwithstanding the Company's
active pursuit of patent protection, the Company believes that the success of
its business depends more on the collective value of its patents,
specifications, computer aided design and modeling tools, technical processes
and employee expertise. The Company generally enters into confidentiality and
non-disclosure agreements with its employees, suppliers, OEM customers,
licensees and potential customers and licensees and limits access to and
distribution of its proprietary technology. However, there can be no assurance
that such measures will provide adequate protection for the Company's trade
secrets or other proprietary information, or that the Company's trade secrets or
proprietary technology will not otherwise become known or be independently
developed by competitors. The failure of the Company to protect its proprietary
technology could have a material adverse effect on its business, financial
condition and results of operations. See "Business--Patents and Proprietary
Technology."

RISK OF THIRD PARTY CLAIMS OF INFRINGEMENT. The communications equipment
industry is characterized by vigorous protection and pursuit of intellectual
property rights or positions, which have resulted in significant and often
protracted and expensive litigation. Although there is currently no pending
intellectual property litigation against the Company, the Company or its
suppliers may from time to time be notified of claims that the Company may be
infringing patents or other intellectual property rights owned by third parties.
If it is necessary or desirable, the Company may seek licenses under such
patents or other intellectual property rights. However, there can be no
assurance that licenses will be offered or that the terms of any offered
licenses will be acceptable to the Company. The failure to obtain a license from
a third party for technology used by the Company or otherwise secure rights to
use such technology could cause the Company to incur substantial liabilities, to
suspend the manufacture of products or expend significant resources to develop
non-infringing technology. There can be no assurance that the Company would be
successful in such development or that such licenses would be available on
reasonable terms, if at all. In the event that any third party makes a
successful claim against the Company or its customers and either a license is
not made available to the Company on commercially reasonable terms or a "design
around" is not practicable, the Company's business, financial condition and
results of operations would be materially adversely affected. Furthermore, the
Company may initiate claims or litigation against third parties for infringement
of the Company's proprietary rights or to establish the validity of the
Company's proprietary rights. Litigation by or against the Company could result
in significant expense to the Company and divert the efforts of the Company's
technical and management personnel, whether or not such litigation results in a
favorable determination for the Company. In the event of an adverse result in
any such litigation, the Company could be required to pay substantial damages,
indemnify its customers, cease the manufacture, use and sale of infringing
products, expend significant resources to develop non-infringing technology,
discontinue the use of certain processes or obtain licenses to the infringing
technology. See "Business--Patents and Proprietary Technology."

GOVERNMENT REGULATION OF COMMUNICATIONS INDUSTRY. Radio frequency
transmissions and emissions, and certain equipment used in connection therewith,
are regulated in the United States, Canada and throughout the rest of the world.
Regulatory approvals generally must be obtained by the Company in connection
with the manufacture and sale of its products, and by wireless service providers
to operate the Company's products. The United States Federal Communications
Commission (the "FCC") and regulatory authorities abroad constantly review RF
emission issues and promulgate standards based on such reviews. If more
stringent RF emission regulations are adopted, the Company and its OEM customers
may be required to alter the manner in which radio signals are transmitted or
otherwise alter the equipment transmitting such signals, which could materially
adversely affect the Company's products and markets. The enactment by federal,
state, local or international governments of new laws or regulations or a change
in the interpretation of existing regulations could also materially adversely
affect the market for the Company's products. Although recent deregulation of
international communications industries along with recent radio frequency
spectrum allocations made by the FCC have increased the potential demand for the
Company's products by providing users of those products with opportunities to
establish new wireless personal communications services, there can be no
assurance that the trend toward deregulation and

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current regulatory developments favorable to the promotion of new and expanded
personal communications services will continue or that other future regulatory
changes will have a positive impact on the Company. The increasing demand for
wireless communications has exerted pressure on regulatory bodies worldwide to
adopt new standards for such products, generally following extensive
investigation of and deliberation over competing technologies. The delays
inherent in this governmental approval process have in the past caused, and may
in the future cause, the cancellation, postponement or rescheduling of the
installation of communications systems by the Company's OEM customers. These
delays have had in the past, and in the future may have, a material adverse
effect on the sale of products by the Company to such OEM customers.

ENVIRONMENTAL REGULATIONS. The Company is subject to a variety of local,
state and federal governmental regulations relating to the storage, discharge,
handling, emission, generation, manufacture and disposal of toxic or other
hazardous substances used to manufacture the Company's products. The Company
believes that it is currently in compliance in all material respects with such
regulations and that it has obtained all necessary environmental permits to
conduct its business. Nevertheless, the failure to comply with current or future
regulations could result in the imposition of substantial fines on the Company,
suspension of production, alteration of its manufacturing processes or cessation
of operations. Compliance with such regulations could require the Company to
acquire expensive remediation equipment or to incur substantial expenses.
Certain facilities formerly occupied by the Company were located near a
Superfund site in an area (the "Study Area") to be studied by the United States
Environmental Protection Agency (the "EPA") for hazardous substance
contamination. While the Company believes that the EPA has concluded that the
Company has not contributed to the contamination or release of hazardous
materials in the Superfund site or the Study Area, no assurance can be given
that the Company will not receive a notice from the EPA indicating that the
Company is liable for significant cleanup costs with respect to the Superfund
site or the Study Area which could have a material adverse effect on the
Company's business, financial condition and results of operations. Any failure
by the Company to control the use, disposal, removal or storage of, or to
adequately restrict the discharge of, or assist in the cleanup of, hazardous or
toxic substances, could subject the Company to significant liabilities,
including joint and several liability under certain statutes. The imposition of
such liabilities could materially adversely affect the Company's business,
financial condition and results of operations. See "Business--Manufacturing."

PRODUCT LIABILITY RISKS. If wireless telecommunications systems or other
systems or devices that rely on or incorporate the Company's products are
determined, perceived or alleged to create a health risk, the Company could be
named as a defendant, and held liable, in product liability lawsuits commenced
by individuals alleging that the Company's products harmed them. The occurrence
of any of such event could have a material adverse effect on the Company's
business, results of operations and financial condition. Any alleged health or
environmental risk could also lead to a delay or prohibition against the
installation of wireless networks which could have a material adverse effect on
the Company's business, results of operations and financial condition. In
addition, an inability to maintain insurance at an acceptable cost or to
otherwise protect against potential product liability could inhibit the
commercialization of the Company's products and have a material adverse effect
on the Company's business, results of operations and financial condition. Any
such delay or prohibition would have a material adverse effect on the Company's
business, results of operations and financial condition.

MANAGEMENT OF GROWTH; DEPENDENCE ON KEY PERSONNEL. The growth in the
Company's business has placed, and is expected to continue to place, a
significant strain on the Company's personnel, management and other resources.
The Company's ability to manage any future growth effectively will require it to
attract, train, motivate, manage and retain new employees successfully, to
integrate new employees into its overall operations and in particular its
manufacturing operations, to retain the continued service of its key technical,
marketing and management personnel (particularly highly skilled RF semiconductor
and amplifier design, process and test engineers), and to continue to improve
its operational, financial and management information systems. The Company's
President and Chief Executive Officer, Chief Operating

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Officer and Chief Financial Officer have each joined the Company within the last
18 months, and there can be no assurance that the new management will be able to
work effectively as a team. Although the Company has employment contracts with
several of its executive officers, these agreements do not obligate such
individuals to remain in the employment of the Company. The Company does not
maintain key man life insurance on any of its key technical personnel. The
competition for such personnel is intense, and the loss of key employees could
have a material adverse effect on the Company. See "Business--Employees" and
"Management."

RISKS ASSOCIATED WITH POTENTIAL FUTURE ACQUISITIONS. The Company frequently
evaluates strategic opportunities available to it and may pursue acquisitions of
complementary products, technologies or businesses. While no material
acquisitions are currently being negotiated or planned, future acquisitions by
the Company may result in the diversion of management's attention from the
day-to-day operations of the Company's business and may include numerous other
risks, including difficulties in the integration of the operations, products and
personnel of the acquired companies. Future acquisitions by the Company have the
potential to result in dilutive issuances of equity securities, the incurrence
of additional debt, and amortization expenses related to goodwill and other
intangible assets that may materially adversely affect the Company's business,
financial condition and results of operations.

VOLATILITY OF STOCK PRICE. The market price of the shares of Common Stock
has recently been and is likely to continue to be highly volatile, and is
affected significantly by factors such as fluctuations in the Company's
operating results, announcements of technological innovations or new products by
the Company or its competitors, announcements by the Company's customers
regarding their business or prospects, changes in analysts' expectations,
governmental regulatory action, developments with respect to patents or
proprietary rights, general market conditions and other factors. In addition,
the stock market has from time to time experienced significant price and volume
fluctuations that are unrelated to the operating performance of particular
companies. The market price of the Company's Common Stock has fluctuated
substantially in recent periods, from a low of $7.00 on December 31, 1996 to a
high of $51 5/16 on July 17, 1997. On August 13, 1997 the last reported sale
price of the Common Stock as reported on the Nasdaq National Market was $45. See
"Price Range of Common Stock."

DISCRETIONARY USE OF PROCEEDS OF THIS OFFERING. The Company has no current
specific plans for the use of the net proceeds of this offering. As a
consequence, the Company's management will retain broad discretion in the
allocation of these net proceeds. There can be no assurance that the proceeds
will be used in a manner that the shareholders deem optimal or that the proceeds
can or will be invested to yield a significant return. Upon the completion of
this offering, the Company will have $96.8 million of cash and cash equivalents
(based upon the level of cash and cash equivalents as of June 28, 1997 and
assuming a public offering price of $45 per share, and after deducting estimated
underwriting discounts and commissions and estimated offering expenses),
substantially all of which will be investment grade, interest-bearing
obligations for an indefinite period. See "Use of Proceeds."

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

13
<PAGE>

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

SHARES ELIGIBLE FOR FUTURE SALE. Upon the completion of this offering, the
Company will have outstanding 10,357,157 shares of Common Stock, of which
10,344,731 shares will be freely tradable without restriction. For a period of
90 days from the date of this Prospectus, the Company's executive officers and
directors have agreed that without the prior written consent of Morgan Stanley &
Co. Incorporated they will not (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, lend, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer, or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into a swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of the Common
Stock, other than an aggregate of 100,000 shares by all such executive officers
and directors which shall include no more than 30,000 shares by any such
individual. Thereafter, all shares can be sold in the public market subject to
certain volume and other restrictions of Rule 144 under the Securities Act of
1933, as amended (the "Securities Act"). In addition, upon completion of this
offering, there will be outstanding options to purchase a total of approximately
1,780,470 shares of the Company's Common Stock under the Company's stock option
plans. Sale of substantial amounts of such shares in the public market or the
prospect of such sales could adversely affect the market price of the Company's
Common Stock. The Company has agreed, subject to certain exceptions, in the
Underwriting Agreement that, without the prior written consent of Morgan Stanley
& Co. Incorporated, it will not issue, offer, sell, grant options to purchase or
otherwise dispose of any of the Company's equity securities or any other
securities convertible into or exchangeable with the Company's Common Stock or
other equity securities for a period of 90 days after the first date that any
shares of Common Stock are released for sale in the offering. The lock-up
agreements may be released at any time as to all or any portion of the shares
subject to such agreements at the sole discretion of Morgan Stanley & Co.
Incorporated. See "Underwriters."

14
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company hereby are estimated to be approximately
$85.0 million (approximately $97.8 million if the Underwriters' over-allotment
option is exercised in full), at an assumed public offering price of $45 per
share and after deducting estimated underwriting discounts and commissions and
estimated offering expenses. The Company expects to use approximately $15
million of the net proceeds for capital expenditures over the next twelve
months. The Company expects to use the remaining net proceeds of this offering
for general corporate purposes, including working capital and facilities
expansion. From time to time, the Company may use a portion of the net proceeds
to acquire businesses, products or technologies complementary to the Company's
current business, although it has no such commitments and no such acquisitions
are currently being negotiated or planned. Pending such uses, the Company
intends to invest funds in investment grade, interest-bearing obligations.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its capital stock
and does not anticipate paying cash dividends in the foreseeable future. The
Company is prohibited from paying cash dividends without the consent of certain
of its lenders.

PRICE RANGE OF COMMON STOCK

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

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Fiscal Year Ended March 31, 1996:
First Quarter.............................................................. $40 1/2 $26
Second Quarter............................................................. 51 1/4 33
Third Quarter.............................................................. 34 15 3/4
Fourth Quarter............................................................. 28 1/2 17

Fiscal Year Ended March 31, 1997:
First Quarter.............................................................. $25 1/2 $13
Second Quarter............................................................. 15 1/4 7
Third Quarter.............................................................. 13 7 3/8
Fourth Quarter............................................................. 14 3/8 7 5/8

Fiscal Year Ending March 31, 1998:
First Quarter.............................................................. $37 3/4 $10 3/4
Second Quarter (through August 13, 1997)................................... 51 5/16 35 1/4
</TABLE>

On August 13, 1997, the last reported sale price of the Company's Common
Stock on the Nasdaq National Market was $45 per share. As of June 28, 1997 there
were approximately 282 holders of record of the Company's Common Stock.

15
<PAGE>
CAPITALIZATION

The following table sets forth on an unaudited basis the capitalization of
the Company as of June 28, 1997 and as adjusted to give effect to the sale by
the Company of 2,000,000 shares of Common Stock offered hereby at an assumed
public offering price of $45 per share and after deducting estimated
underwriting discounts and commissions and estimated offering expenses.

<TABLE>
<CAPTION>
JUNE 28, 1997
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
Current portion of debt obligations.............................. $ 1,522 $ 1,522
--------- -----------
--------- -----------
Debt obligations, less current portion........................... $ 6,705 $ 6,705

Shareholders' equity:
Preferred Stock, no par value; 5,000,000 shares authorized;
none issued and outstanding.................................. -- --
Common Stock, no par value; 20,000,000 shares authorized;
8,357,157 shares issued and outstanding, actual; 10,357,157
shares issued and outstanding, as adjusted(1)................ 55,665 140,665
Accumulated deficit............................................ (4,534) (4,534)
--------- -----------
Total shareholders' equity................................... 51,131 136,131
--------- -----------
Total capitalization....................................... $ 57,836 $ 142,836
--------- -----------
--------- -----------
</TABLE>

- ---------

(1) Based on the number of shares of Common Stock outstanding as of June 28,
1997. Excludes (i) 1,780,470 shares of Common Stock issuable upon exercise
of options outstanding under the Company's Stock Plans at June 28, 1997 at a
weighted average exercise price of $14.61 per share and (ii) 140,811 shares
of Common Stock reserved for future grant or issuance under the Stock Plans
and the Company's 1994 Employee Stock Purchase Plan. In addition, the
Company obtained shareholder approval for a 610,000 share increase in the
number of shares reserved for issuance under the Stock Plans and the 1994
Employee Stock Purchase Plan at the Company's 1997 Annual Meeting of
Shareholders held on July 31, 1997.

16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data set forth below under the captions
"Statement of Operations Data" and "Balance Sheet Data" for, and as of the end
of, each of the years in the five-year period ended March 31, 1997, are derived
from the consolidated financial statements of Spectrian Corporation and its
subsidiaries, which financial statements have been audited by KPMG Peat Marwick
LLP, independent auditors. The consolidated financial statements as of March 31,
1996 and 1997, and for each of the years in the three-year period ended March
31, 1997, and the report thereon, are incorporated by reference herein. The
selected consolidated financial data set forth below as of June 28, 1997 and for
the three months ended June 29, 1996 and June 28, 1997 were derived from
unaudited condensed consolidated financial statements of the Company, which are
incorporated by reference herein and, in the opinion of management, reflect all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the Company's financial position at that date and results
of operations for those periods. The results for the three months ended June 28,
1997 are not necessarily indicative of the results for any future period. The
selected consolidated financial data set forth below should be read in
conjunction with the Consolidated Financial Statements and Notes thereto
incorporated by reference herein and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
FISCAL YEAR ENDED MARCH 31, -----------
----------------------------------------------------- JUNE 29,
1993 1994 1995 1996 1997 1996
--------- --------- --------- --------- --------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:(1)
Revenues............................................ $ 24,458 $ 37,859 $ 62,478 $ 72,113 $ 88,252 $ 9,923
--------- --------- --------- --------- --------- -----------
Costs and expenses:
Cost of product sales............................. 14,796 22,154 39,068 45,355 65,322 8,491
Research and development.......................... 3,461 10,058 11,374 14,548 17,230 4,293
Selling, general and administrative............... 3,939 5,529 6,784 7,450 9,299 2,379
--------- --------- --------- --------- --------- -----------
Total costs and expenses........................ 22,196 37,741 57,226 67,353 91,851 15,163
--------- --------- --------- --------- --------- -----------
Operating income (loss)......................... 2,262 118 5,252 4,760 (3,599) (5,240)
Interest income (expense), net...................... (235) (667) 391 889 (392) (74)
Other income, net................................... -- -- -- -- -- --
--------- --------- --------- --------- --------- -----------
Income (loss) before income taxes............... $ 2,027 (549) 5,643 5,649 (3,991) (5,314)
---------
---------
Income tax expense.................................. -- 170 169 -- --
--------- --------- --------- --------- -----------
Net income (loss)(2)................................ $ 116 $ (549) $ 5,473 $ 5,480 $ (3,991) $ (5,314)
--------- --------- --------- --------- --------- -----------
--------- --------- --------- --------- --------- -----------
Net income (loss) per share(2)(3)................... $ 0.02 $ (0.41) $ 0.74 $ 0.67 $ (0.49) $ (0.66)
--------- --------- --------- --------- --------- -----------
--------- --------- --------- --------- --------- -----------
Shares used in computing per share amounts(3)....... 4,849 1,325 7,435 8,193 8,152 8,039

JUNE 28,
1997
-----------

<S> <C>
STATEMENT OF OPERATIONS DATA:(1)
Revenues............................................ $ 45,766
-----------
Costs and expenses:
Cost of product sales............................. 32,051
Research and development.......................... 4,241
Selling, general and administrative............... 3,461
-----------
Total costs and expenses........................ 39,753
-----------
Operating income (loss)......................... 6,013
Interest income (expense), net...................... (19)
Other income, net................................... 1,530
-----------
Income (loss) before income taxes............... 7,524

Income tax expense.................................. 1,129
-----------
Net income (loss)(2)................................ $ 6,395
-----------
-----------
Net income (loss) per share(2)(3)................... $ 0.72
-----------
-----------
Shares used in computing per share amounts(3)....... 8,917
</TABLE>

<TABLE>
<CAPTION>
MARCH 31,
----------------------------------------------------- JUNE 28,
1993 1994 1995 1996 1997 1997
--------- --------- --------- --------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:(1)
Working capital.............................................. $ 3,355 $ 7,859 $ 28,317 $ 12,710 $ 24,062 $ 32,122
Total assets................................................. 17,115 20,965 45,070 55,922 66,633 84,547
Debt and capital lease obligations, net of current
portion(4)................................................. 1,961 3,634 -- -- 7,057 6,705
Total shareholders' equity................................... 5,953 9,765 37,056 44,838 42,466 51,131
</TABLE>

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

(1) The Company's fiscal year ends on March 31 and its first three fiscal
quarters end on the Saturday nearest the end of the calendar quarter.

(2) During the fiscal year ended March 31, 1993 the Company discontinued its
military contract manufacturing operation. Income from continuing operations
for the year ended March 31, 1993 was $2,027,000.

(3) See Note 4 of Notes to Condensed Consolidated Financial Statements contained
in the Company's quarterly report on Form 10-Q for the three months ended
June 28, 1997, incorporated herein by reference, for information concerning
the per share computations. Fully diluted per share amounts were not
required to be disclosed as these amounts were not materially different from
the primary per share amounts for all periods presented except for the three
months ended June 28, 1997, for which fully diluted net income per share was
$0.68, and the number of the shares used in computing the fully diluted net
income per share was 9,390,000. Net income per share from continuing
operations for the fiscal year ended March 31, 1993 was $0.42.

(4) See Note 4 of Notes to Consolidated Financial Statements set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended March 31,
1997 incorporated by reference herein for a description of the Company's
debt and lease obligations.

17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CERTAIN STATEMENTS IN THIS "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" ARE FORWARD LOOKING STATEMENTS.
THESE FORWARD LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO: THE STATEMENTS
IN THE SECOND PARAGRAPH OF "OVERVIEW" REGARDING THE IMPACT ON THE COMPANY OF A
LOSS OF A MAJOR OEM CUSTOMER; THE STATEMENTS IN THE ANALYSIS OF "--YEARS ENDED
MARCH 31, 1997 AND 1996" UNDER "--REVENUES" REGARDING FUTURE NRE REVENUES AND
UNDER "--COST OF PRODUCT SALES" REGARDING ANTICIPATED PRODUCT INTRODUCTIONS,
RELATED COST IMPROVEMENTS AND TRENDS OFFSETTING SUCH COST IMPROVEMENTS; THE
STATEMENTS IN THE SECOND PARAGRAPH OF "--LIQUIDITY AND CAPITAL RESOURCES"
CONCERNING RENEWAL OF THE REVOLVING LINE OF CREDIT; AND THE STATEMENTS IN THE
LAST PARAGRAPH UNDER "--LIQUIDITY AND CAPITAL RESOURCES" REGARDING THE
ANTICIPATED SPENDING FOR CAPITAL ADDITIONS IN FISCAL 1998 AND THE SUFFICIENCY OF
THE COMPANY'S AVAILABLE RESOURCES TO MEET WORKING CAPITAL AND CAPITAL
EXPENDITURE REQUIREMENTS. THE FORWARD LOOKING STATEMENTS CONTAINED HEREIN ARE
BASED ON CURRENT EXPECTATIONS AND ENTAIL VARIOUS RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN SUCH
FORWARD LOOKING STATEMENTS.

OVERVIEW

The Company designs, manufactures and markets highly linear single carrier
and multicarrier power amplifiers that support a broad range of worldwide analog
and digital wireless transmissions standards, including AMPS, TDMA, CDMA, TACS
and GSM. The Company, founded in 1984 to perform design and engineering
services, first entered the commercial amplifier market in 1988 and shipped its
first cellular power amplifiers in 1990. The Company's revenues are now derived
primarily from sales to a limited number of OEMs in the wireless infrastructure
equipment market, in particular Northern Telecom. The Company pursues a strategy
of vertical integration in its design and manufacturing processes, including the
opening of a 3-inch wafer fabrication facility in 1985 and the conversion in
1996 to an increased capacity 4-inch wafer fabrication facility. As a result,
the Company has a higher level of fixed costs and is dependent upon substantial
revenue to achieve profitability. In the third quarter of fiscal 1996 and the
first quarter of fiscal 1997, product orders fell sharply resulting in
substantial losses. In recent periods, orders have increased significantly and
the Company has returned to profitability.

During fiscal 1996, Northern Telecom and Nortel Matra accounted for
approximately 58% and 17% of revenues, respectively. During fiscal 1997,
Northern Telecom and Nortel Matra accounted for approximately 63% and 12% of
revenues, respectively. During the three months ended June 28, 1997, Northern
Telecom, Nortel Matra and LGIC accounted for approximately 55%, 22% and 18% of
revenues, respectively. The Company's business, financial condition and results
of operations have been materially adversely affected in the past by anticipated
orders failing to materialize and by deferrals or cancellations of orders as a
result of changes in OEM requirements. If the Company were to lose Northern
Telecom or any other major OEM customer, or if orders by Northern Telecom or any
other major OEM customer were to otherwise materially decrease either in unit
quantity or in price, the Company's business, financial condition and results of
operations would be materially adversely affected.

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

The market for the Company's products is becoming increasingly competitive.
The Company has recently begun selling its power amplifier products in South
Korea, as well as directly to cellular service

18
<PAGE>
providers where its competitors are already established as suppliers. In
addition, the Company competes with at least one amplifier manufacturer for
business from Northern Telecom. This competition has resulted in, and will
continue to result in reduced average selling prices for the Company's products,
which accordingly will negatively impact gross margins.

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31, THREE MONTHS ENDED
------------------------------- ------------------------
<S> <C> <C> <C> <C> <C>
JUNE 29, JUNE 28,
1995 1996 1997 1996 1997
--------- --------- --------- ----------- -----------
Revenues............................................................ 100.0% 100.0% 100.0% 100.0% 100.0%
--------- --------- --------- ----- -----
Costs and expenses:
Cost of product sales............................................. 62.5 62.9 74.0 85.6 70.0
Research and development.......................................... 18.2 20.2 19.6 43.2 9.3
Selling, general and administrative............................... 10.9 10.3 10.5 24.0 7.6
--------- --------- --------- ----- -----
Total costs and expenses........................................ 91.6 93.4 104.1 152.8 86.9
--------- --------- --------- ----- -----
Operating income (loss)......................................... 8.4 6.6 (4.1) (52.8) 13.1
Interest income (expense), net...................................... 0.6 1.2 (0.4) (0.8) --
Other income, net................................................... -- -- -- -- 3.3
--------- --------- --------- ----- -----
Income (loss) before income taxes................................. 9.0 7.8 (4.5) (53.6) 16.4
Income tax expense.................................................. 0.2 0.2 -- -- 2.4
--------- --------- --------- ----- -----
Net income (loss)............................................... 8.8% 7.6% (4.5)% (53.6 )% 14.0%
--------- --------- --------- ----- -----
--------- --------- --------- ----- -----
Gross margin on product sales....................................... 33.4% 33.3% 24.6% 11.2% 29.1%
</TABLE>

THREE MONTHS ENDED JUNE 28, 1997 AND JUNE 29, 1996

REVENUES. The Company's revenues increased by 361% to $45.8 million for the
three months ended June 28, 1997 from $9.9 million for the three months ended
June 29, 1996. This substantial increase in revenues reflects both the below
normal customer demand experienced in the quarter ended June 29, 1996 as well as
a significant increase in demand, primarily by Northern Telecom, for the
Company's existing single carrier TDMA, CDMA and GSM products and the
introduction and customer acceptance of several new single carrier products,
including second generation CDMA and GSM products.

COST OF PRODUCT SALES. Cost of product sales consists primarily of raw
materials, RF semiconductor fabrication costs, amplifier assembly and test
costs, overhead and warranty costs, and does not include costs incurred in
connection with non-recurring engineering ("NRE") revenues. The Company's cost
of product sales increased by 278% to $32.1 million for the three months ended
June 28, 1997 from $8.5 million for the three months ended June 29, 1996. Gross
margin on product sales was 29.1% for the three months ended June 28, 1997 as
compared to 11.2% for the three months ended June 29, 1996. The significant
improvement in product gross margin primarily reflects the benefits of spreading
fixed manufacturing overhead spending over a larger number of units sold for the
three months ended June 28, 1997 compared to the three months ended June 29,
1996.

RESEARCH AND DEVELOPMENT. Research and development ("R&D") expenses include
the cost of designing, developing or reducing the manufacturing cost of
amplifiers and RF semiconductors. The Company's R&D expenses decreased by 1.2%
to $4.2 million in the three months ended June 28, 1997 from $4.3 million in the
three months ended June 29, 1996. Research and development spending in the

19
<PAGE>
three months ended June 29, 1996 included development costs for the Company's
4-inch wafer fabrication facility. The slight decrease in R&D spending in the
three months ended June 28, 1997 reflects the absence of these facility
development costs offset by increased spending, primarily in semiconductor R&D.
R&D expenses as a percentage of revenues decreased to 9.3% in the three months
ended June 28, 1997 from 43.2% for the three months ended June 29, 1996,
reflecting the substantially higher revenue levels in the three months ended
June 28, 1997. Research and development expenses also include costs associated
with NRE revenues, which were not material in either three month period.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
("SG&A") expenses include compensation and benefits for sales, marketing, senior
management and administrative personnel, commissions paid to independent sales
representatives, professional fees and other expenses. The Company's SG&A
expenses increased by 45.5% to $3.5 million for the three months ended June 28,
1997 from $2.4 million for the three months ended June 29, 1996, primarily due
to increases in sales and administrative headcount, outside commissions paid for
South Korean sales and to a lesser extent the establishment of a South Korean
sales support office. SG&A expenses as a percentage of revenues decreased to
7.6% for the three months ended June 28, 1997 from 24.0% for the three months
ended June 29, 1996 as a result of the substantially higher revenue levels in
the three months ended June 28, 1997.

INTEREST INCOME (EXPENSE), NET. Interest expense, net for the three months
ended June 28, 1997 was $19,000 compared to net interest expense of $74,000 for
the three months ended June 29, 1996. The reduction in net interest expense was
primarily the result of higher interest income earned on higher cash balances.

OTHER INCOME, NET. Other income of $1.5 million was recorded during the
three months ended June 28, 1997 representing the net gain realized from the
cash sale of the Company's wholly owned subsidiary, American Microwave
Technology, Inc. ("AMT"), to the management group and employees of AMT. No other
expense or other income was recorded in the three months ended June 29, 1996.
See "Business--American Microwave Technology, Inc."

INCOME TAXES. The Company recorded an income tax expense of $1.1 million
for the three months ended June 28, 1997. The effective tax rate of 15% reflects
the use of net operating loss carryforwards for the three months ended June 28,
1997. No tax provision was made during the three months ended June 29, 1996 due
to the substantial net loss incurred in that quarter. At March 31, 1997, the
Company had federal and state net operating loss carryforwards ("NOLs") for tax
reporting purposes of approximately $29 million and $9 million, respectively.
Approximately $8.9 million of the benefit of the federal and state NOLs relate
to stock option compensation and will be credited to equity when realized. The
Company's ability to use its NOLs against taxable income may be subject to
restrictions and limitations under Section 382 of the Internal Revenue Code of
1986, as amended (the "Code"), in the event of a change in ownership of the
Company as defined therein.

YEARS ENDED MARCH 31, 1997 AND 1996

REVENUES. The Company's revenues increased by 22.4% to $88.3 million in
fiscal 1997 from $72.1 million in fiscal 1996. The increase was due primarily to
increasing volume in sales of PCS products, reflecting the build-out of the U.S.
PCS network infrastructure, and continued strong GSM product sales. These
revenue increases were partially offset by a 61.0% decrease in NRE revenues, to
$1.6 million in fiscal 1997 from $4.1 million in fiscal 1996, due to continued
reductions in the number of customer-funded research and development projects.
The Company expects NRE revenue to further decline in future years in both
absolute dollars and as a percentage of revenue.

COST OF PRODUCT SALES. The Company's cost of product sales increased by
44.0% to $65.3 million in fiscal 1997 from $45.4 million in fiscal 1996. Gross
margin on product sales in fiscal 1997 declined to 24.6% from 33.3% in fiscal
1996. During fiscal 1997 the Company introduced 14 new products into
manufacturing

20
<PAGE>
to meet customer and market demands. The need to produce many of these products
in high volumes during their manufacturing infancy resulted in much higher costs
for the related material, labor and overhead. The heavy new product volume had a
detrimental effect on the Company's fiscal 1997 gross margins and profitability.
The Company anticipates a similar number of new products will be introduced in
fiscal 1998 but will be developed primarily from existing product platforms
thereby producing some economies of scale and reducing the inefficiencies
associated with steep learning curves. Trends that may offset some of these
anticipated cost improvements are the increasingly more complex amplifier
product performance expectations from the marketplace and customer pressures to
reduce pricing as shipment volumes grow.

RESEARCH AND DEVELOPMENT. The Company's R&D expenses increased 18.4% to
$17.2 million in fiscal 1997 from $14.5 million in fiscal 1996. As a percentage
of revenues, R&D expenses declined slightly to 19.6% in fiscal 1997 from 20.2%
in fiscal 1996. The increase in R&D expenses primarily reflected nine months of
development expenses for the Company's 4-inch wafer fabrication facility as
compared to only three months in fiscal 1996 as well as increased R&D hiring and
the associated recruiting and salary costs.

SELLING, GENERAL AND ADMINISTRATIVE. The Company's SG&A expenses increased
by 24.8% to $9.3 million in fiscal 1997 from $7.5 million in fiscal 1996. SG&A
expenses as a percentage of revenues increased slightly to 10.5% in fiscal 1997
from 10.3% in fiscal 1996. The increase in SG&A expenses from fiscal 1996 to
fiscal 1997 was primarily attributable to increases in sales and marketing
headcount and the related salaries and expense benefits, as well as outside
commissions expenses required to support the Company's expanding customer base
and product portfolio.

INTEREST INCOME (EXPENSE), NET. Net interest expense for fiscal 1997 was
$392,000, compared to net interest income of $889,000 in fiscal 1996. The change
between fiscal 1997 and fiscal 1996 primarily reflects decreased interest income
as a result of lower average cash balances in fiscal 1997 and the interest
expense incurred as a result of the Company utilizing various debt financing
instruments during fiscal 1997.

INCOME TAXES. The Company did not record a provision for income taxes in
fiscal 1997 because of net losses incurred. An income tax provision of $169,000
was recorded in fiscal 1996, an effective tax rate of 3% after use of NOLs.

YEARS ENDED MARCH 31, 1996 AND 1995

REVENUES. The Company's revenues increased 15.4% to $72.1 million in fiscal
1996 from $62.5 million in fiscal 1995. The increase was principally
attributable to increases in sales of existing cellular amplifier products and
increases in sales of new amplifier products for the PCS market.

COST OF PRODUCT SALES. The Company's cost of product sales increased 16.1%
to $45.4 million in fiscal 1996 from $39.1 million in fiscal 1995. Gross margin
on product sales was 33.3% in fiscal 1996 and 33.4% in fiscal 1995, as lower
average selling prices and manufacturing inefficiencies were largely offset by
lower cost of material.

RESEARCH AND DEVELOPMENT. The Company's R&D expenses increased 27.9% to
$14.5 million in fiscal 1996 from $11.4 million in fiscal 1995. The increase in
R&D expenses resulted primarily from increased headcount and the associated
salaries expense, cost of materials for prototypes and other expenses associated
with increasingly complex semiconductor and amplifier development activities.
R&D expenses as a percentage of revenues increased to 20.2% in fiscal 1996 from
18.2% in fiscal 1995, reflecting the Company's decision to grow R&D funding at a
faster rate than the growth rate in revenues.

SELLING, GENERAL AND ADMINISTRATIVE. The Company's SG&A expenses increased
9.8% to $7.5 million in fiscal 1996 from $6.8 million in fiscal 1995. This
increase in SG&A expenses was primarily attributable to increases in headcount
and associated salaries and administrative expenses as a result of overall
growth in the Company's operations.

21
<PAGE>
INTEREST INCOME, NET. The Company earned net interest income of $889,000 in
fiscal 1996 as compared to net interest income of $391,000 in fiscal 1995. The
change between fiscal 1995 and fiscal 1996 reflected the interest income earned
for a full year period on the proceeds from the Company's initial public
offering in August 1994.

INCOME TAXES. The Company recorded a provision for income taxes of $169,000
in fiscal 1996 as compared to $170,000 in fiscal 1995, both at an effective rate
of 3% after use of NOLs.

22
<PAGE>
QUARTERLY RESULTS OF OPERATIONS

The following table presents unaudited quarterly results in dollar amounts
and as a percentage of total revenues for the last nine quarters. The
information has been prepared by the Company on a basis consistent with the
Company's audited financial statements and includes all adjustments, consisting
only of normal recurring adjustments, which management considers necessary for a
fair presentation of the information for the periods presented.
<TABLE>
<CAPTION>
FISCAL 1996 FISCAL 1997
---------------------------------------------- ---------------------------------
THREE MONTHS ENDED THREE MONTHS ENDED
---------------------------------------------- ---------------------------------
JULY 1, SEPT. 30, DEC. 30, MARCH 31, JUNE 29, SEPT. 28, DEC. 28,
1995 1995 1995 1996 1996 1996 1996
--------- ----------- --------- ----------- --------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................ $ 20,461 $ 20,951 $ 12,272 $ 18,429 $ 9,923 $ 22,272 $ 24,485
Costs and expenses:
Cost of product sales................. 13,010 12,682 8,203 11,460 8,491 16,639 17,211
Research and development.............. 3,295 3,737 3,611 3,905 4,293 3,770 4,773
Selling, general and administrative... 2,058 2,094 1,460 1,838 2,379 1,948 2,293
--------- ----------- --------- ----------- --------- ----------- ---------
Total costs and expenses............ 18,363 18,513 13,274 17,203 15,163 22,357 24,277
--------- ----------- --------- ----------- --------- ----------- ---------
Operating income (loss)............. 2,098 2,438 (1,002) 1,226 (5,240) (85) 208
Interest income (expense), net.......... 367 229 201 92 (74) (251) (70)
Other income, net....................... -- -- -- -- -- -- --
--------- ----------- --------- ----------- --------- ----------- ---------
Income (loss) before income taxes... 2,465 2,667 (801) 1,318 (5,314) (336) 138
Income taxes............................ (201) (214) 65 181 -- -- --
--------- ----------- --------- ----------- --------- ----------- ---------
Net income (loss)................... $ 2,264 $ 2,453 $ (736) $ 1,499 $ (5,314) $ (336) $ 138
--------- ----------- --------- ----------- --------- ----------- ---------
--------- ----------- --------- ----------- --------- ----------- ---------
Net income (loss) per share (1)......... $ 0.27 $ 0.29 $ (0.09) $ 0.18 $ (0.66) $ (0.04) $ 0.02
--------- ----------- --------- ----------- --------- ----------- ---------
--------- ----------- --------- ----------- --------- ----------- ---------
Shares used in computing per share
amounts (1)........................... 8,276 8,393 7,771 8,332 8,039 8,147 8,295

AS A PERCENTAGE OF REVENUES:

Revenues................................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of product sales................. 63.6 60.6 66.8 62.2 85.5 74.7 70.3
Research and development.............. 16.0 17.8 29.4 21.2 43.3 16.9 19.5
Selling, general and administrative... 10.1 10.0 11.9 10.0 24.0 8.8 9.4
--------- ----------- --------- ----------- --------- ----------- ---------
Total costs and expenses............ 89.7 88.4 108.1 93.4 152.8 100.4 99.2
--------- ----------- --------- ----------- --------- ----------- ---------
Operating income (loss)............. 10.3 11.6 (8.1) 6.6 (52.8) (0.4) 0.8
Interest income (expense), net.......... 1.8 1.1 1.6 0.5 (0.8) (1.1) (0.2)
Other income, net....................... -- -- -- -- -- -- --
--------- ----------- --------- ----------- --------- ----------- ---------
Income (loss) before income taxes... 12.1 12.7 (6.5) 7.1 (53.6) (1.5) 0.6
Income taxes............................ (1.0) (1.0) 0.5 1.0 -- -- --
--------- ----------- --------- ----------- --------- ----------- ---------
Net income (loss)................... 11.1% 11.7% (6.0%) 8.1% (53.6%) (1.5%) 0.6%
--------- ----------- --------- ----------- --------- ----------- ---------
--------- ----------- --------- ----------- --------- ----------- ---------
Gross margin on product sales........... 35.8% 34.9% 29.6% 31.0% 11.2% 24.4% 27.8%

<CAPTION>
FISCAL
1998
---------

THREE
MONTHS
ENDED
---------
MARCH 31, JUNE 28,
1997 1997
----------- ---------

<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................ $ 31,572 $ 45,766
Costs and expenses:
Cost of product sales................. 22,981 32,051
Research and development.............. 4,394 4,241
Selling, general and administrative... 2,679 3,461
----------- ---------
Total costs and expenses............ 30,054 39,753
----------- ---------
Operating income (loss)............. 1,518 6,013
Interest income (expense), net.......... 3 (19)
Other income, net....................... -- 1,530
----------- ---------
Income (loss) before income taxes... 1,521 7,524
Income taxes............................ -- (1,129)
----------- ---------
Net income (loss)................... $ 1,521 $ 6,395
----------- ---------
----------- ---------
Net income (loss) per share (1)......... $ 0.18 $ 0.72
----------- ---------
----------- ---------
Shares used in computing per share
amounts (1)........................... 8,422 8,917
AS A PERCENTAGE OF REVENUES:
Revenues................................ 100.0% 100.0%
Costs and expenses:
Cost of product sales................. 72.8 70.0
Research and development.............. 13.9 9.3
Selling, general and administrative... 8.5 7.6
----------- ---------
Total costs and expenses............ 95.2 86.9
----------- ---------
Operating income (loss)............. 4.8 13.1
Interest income (expense), net.......... 0 0
Other income, net....................... -- 3.3
----------- ---------
Income (loss) before income taxes... 4.8 16.4
Income taxes............................ -- (2.4)
----------- ---------
Net income (loss)................... 4.8% 14.0%
----------- ---------
----------- ---------
Gross margin on product sales........... 26.5% 29.1%
</TABLE>

(1) See Note 4 of Notes to Condensed Consolidated Financial Statements
contained in the Company's quarterly report on Form 10-Q for the three
months ended June 28, 1997, incorporated herein by reference, for
information concerning the per share computations. Fully diluted per share
amounts were not required to be disclosed as these amounts were not
materially different from the primary per share amounts for all periods
presented except for the three months ended June 28, 1997, for which period
fully diluted net income per share was $0.68, and the number of shares used
in computing the fully diluted net income per share was 9,390,000.

23
<PAGE>
The Company's revenues have increased in each of the last four fiscal
quarters. These increases were primarily due to increasing volume in sales of
PCS products, reflecting the build out of the U.S. PCS network infrastructure,
continued strong GSM product sales and increasing demand for the Company's
existing and new single carrier power amplifiers. As a result of the Company's
limited customer base, the Company's revenues have fluctuated and will continue
to fluctuate from quarter to quarter. For example, reduced demand for wireless
infrastructure equipment in each of the three months ended December 30, 1995 and
particularly in the three months ended June 29, 1996, driven partly by delays in
the build out of PCS infrastructure, caused significant declines in the
Company's product sales during these periods.

The Company's gross margin on product sales has been depressed in recent
quarters primarily due to manufacturing inefficiencies, scrap and high materials
costs on new products transitioning into production, as well as warranty costs
associated with the Company's first generation multicarrier products. These
inefficiencies were exacerbated by the Company's reliance on its older 3-inch
wafer fabrication facility for production prior to December 1996.

Prior to the three months ended March 31, 1997, research and development
expenses included the engineering expenses associated with the design and
qualification of the Company's new 4-inch wafer fabrication facility. The
reduction in research and development expenses in the three months ended March
31, 1997 when compared to three months ended December 28, 1996 reflected the
completion of the design and qualification of the 4-inch wafer fabrication
facility. The decreased research and development expenses in the three months
ended September 28, 1996 reflected reductions in engineering administration
headcount and lower costs associated with NRE development projects.

Selling, general and administrative expenses remained relatively constant as
a percentage of revenues in the last four quarters, ranging from 7.6% of
revenues in the three months ended June 28, 1997 to 9.4% of revenues in the
three months ended December 28, 1996. Selling, general and administrative
expenses were higher in the three months ended June 29, 1996 when compared to
the three months ended March 31, 1996 and the three months ended September 28,
1996 as a result of increased expenditures for outside services for information
systems support and employee severance costs and expenses relating to the hiring
of a new Chief Executive Officer. The increase in selling, general and
administrative expenses in absolute dollars over the last three fiscal quarters
was attributable to outside commissions paid for South Korean sales and
increased marketing expenses.

The Company's quarterly and annual results have in the past been, and will
continue to be, subject to significant fluctuations due to a number of factors,
any of which could have a material adverse effect on the Company's business,
financial condition and results of operations. In particular, the Company's
quarterly and annual results of operations are likely to vary due to the timing,
cancellation, delay or rescheduling of OEM customer orders and shipments; the
timing of announcements or introductions of new products by the Company, its
competitors or their respective OEM customers; the acceptance of such products
by wireless equipment OEMs and their customers; variations in manufacturing
efficiencies, yields and costs; competitive factors such as the pricing,
availability, and demand for competing amplification products; changes in
average sales prices and product mix; variations in operating expenses; changes
in manufacturing capacity and variations in the utilization of this capacity;
shortages of key supplies; the long sales cycles associated with the Company's
customer specific products; the timing and level of product and process
development costs; and changes in inventory levels. While the Company maintains
a backlog, the Company's OEM customers may cancel or defer orders without
significant penalty. Anticipated orders from the Company's OEM customers have in
the past failed to materialize and delivery schedules have been deferred or
canceled as a result of changes in OEM customer requirements and the Company
expects this pattern to continue as customer requirements continue to change and
industry standards continue to evolve. There can be no assurance that the
Company will not experience such fluctuations in the future. See "Business--OEM
Customers, Sales and Marketing." In addition, the Company has in the past
experienced high manufacturing costs, due in part to rapid increases in
production, that have adversely affected the Company's results of operations.
The Company's gross margins vary by product due to specific

24
<PAGE>

product pricing, design characteristics, production volumes and other factors.
The Company establishes its expenditure levels for product development and other
operating expenses based on its expected revenues, and expenses are relatively
fixed in the short term. As a result, variations in timing of revenues can cause
significant variations in quarterly results of operations. There can be no
assurance that the Company will be profitable on a quarter to quarter basis in
the future. The Company believes that period to period comparisons of its
financial results are not necessarily meaningful and should not be relied upon
as an indication of future performance. Due to all the foregoing factors, it is
likely that in some future quarter or quarters the Company's revenues or
operating results will not meet the expectations of public stock market analysts
or investors. In such event, the market price of the Company's Common Stock
would be materially adversely affected.

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its growth through its initial public offering of
Common Stock in August 1994 and through private sales of equity securities,
capital equipment leases, bank lines of credit and cash flows from operations.
Cash provided by operations was $4.4 million for the three months ended June 28,
1997, while cash used by operations in fiscal 1997 was $8.1 million. In fiscal
1996 and fiscal 1995, cash provided by operations was $9.6 million and $7.0
million, respectively. The cash used by operations in fiscal 1997 was
principally for purchasing inventory to support increased production ramps for
increasing product shipment volumes. In addition, cash from operations was
impacted by the Company's net loss in fiscal 1997 and higher receivables levels
as a result of higher shipment volumes, offset in large part by increased
depreciation expense, higher accounts payable driven by higher inventory levels
and higher accrued liabilities for warranty and employee benefits, among others.
The increase in cash provided by operations in fiscal 1996 primarily related to
improved collections of accounts receivable and management of accounts payable,
partially offset by increased inventory.

As of June 28, 1997, the Company had working capital of $32.1 million
including $11.8 million in cash and cash equivalents. In addition, the Company
has a revolving line of credit of $6.0 million with a bank secured by the
majority of the Company's assets which expires in September 1997, and a $4.0
million term loan with the same bank to be secured by a portion of the Company's
capital equipment assets as the loan is drawn down. The Company intends to renew
this revolving line of credit. Under the terms of the master agreement governing
both of these credit instruments, the Company is required to maintain certain
minimum working capital, net worth, profitability and other specific financial
ratios. As of June 28, 1997, the Company was in compliance with these financial
covenants. There were no borrowings outstanding against these lines of credit as
of June 28, 1997.

In January 1997, the Company borrowed $6.0 million under a term loan secured
by certain capital equipment. The loan, which expires in January 2002, requires
the payment of monthly principal plus interest and is subject to certain minimum
working capital, net worth and other specific financial ratios. The Company was
in compliance with these covenants as of June 28, 1997. In March 1997, the
Company also secured a $3.2 million real estate loan, which expires in April
2007, for the purchase of a light industrial building for its future facilities
expansion.

Additions to property and equipment were $3.5 million, $16.3 million, $28.2
million and $5.8 million in the three months ended June 28, 1997, fiscal 1997,
fiscal 1996 and fiscal 1995, respectively. Capital additions during fiscal 1997
included manufacturing test equipment required to support new product ramps and
increase factory capacity, equipment purchased for the new 4-inch wafer
fabrication facility, research and development test equipment to support various
development projects and the acquisition of a 39,000 square foot building
located between the Company's two existing leased facilities in Sunnyvale,
California. In November 1996, the Company completed a sale of its principal
facilities in Sunnyvale, California including its 4-inch wafer fabrication
facility, originally purchased during fiscal 1996. The proceeds from the sale of
the facilities were $16.3 million, net of fees, commissions and closing costs.

25
<PAGE>
The Company anticipates spending approximately $15 million over the next 12
months for capital additions primarily to support manufacturing capacity
requirements, development projects and facilities expansion. Based on the
Company's current working capital position, the cash flows the Company expects
to generate from fiscal 1998 operations and the available line of credit the
Company expects to renew, the Company believes that sufficient resources will be
available to meet the Company's cash requirements for at least the next twelve
months. Cash requirements for periods beyond the next twelve months depend on
the Company's profitability, timing and level of capital expenditures, working
capital requirements and rate of growth.

26
<PAGE>
BUSINESS

Spectrian Corporation designs, manufactures and markets highly linear RF
power amplifiers that address the needs of wireless infrastructure OEMs and
their service provider customers. The Company's amplifiers have been deployed in
wireless networks in over 35 countries worldwide. Spectrian's amplifiers deliver
high linearity, are cost-effectively produced in volume, support multiple
transmission standards and demonstrate high field reliability. These attributes
enable service providers to improve spectrum efficiency resulting in reduced
cost per subscriber, to rapidly deploy new services and to offer enhanced
quality and reliability of service.

INDUSTRY BACKGROUND

The market for cellular, PCS and WLL (collectively, "wireless")
communications services has grown significantly during the past decade, fueled
by decreasing prices for wireless handsets, a more favorable regulatory
environment, increasing competition among service providers and a greater
availability of services and RF spectrum. In addition, several developing
countries are installing wireless telephone networks as an alternative to
installing, expanding or upgrading traditional wireline networks. Emerging bi-
directional wireless data applications have the potential to further expand the
market for wireless communications by allowing service providers to increase
revenue generating traffic on their networks. The Strategis Group estimates that
the number of cellular and PCS subscribers in the U.S. will increase from
approximately 44 million in 1996 to approximately 107 million by 2001. The
Strategis Group projects that the number of cellular and PCS subscribers
worldwide will grow from 144 million in 1996 to 456 million in 2001.

The growth in wireless communications has required, and will continue to
require, substantial investment by service providers in infrastructure
equipment. The Yankee Group estimates that spending by wireless service
providers on infrastructure equipment was approximately $25.6 billion in 1996
and will rise to approximately $41.7 billion in 2001. A typical wireless
communications system comprises a geographic region containing a number of
cells, each of which contains a cell site (or "base station"), which are
networked to form a service provider's coverage area. Each base station houses
the equipment that receives incoming telephone calls from the switching office
of the local wireline telephone company and broadcasts calls to the wireless
users within the cell. A base station contains a fixed number of RF channels; in
a single carrier system, each separate channel requires a separate transceiver,
single channel power amplifier and tunable cavity filter, along with an antenna
to transmit the outgoing signal to the wireless telephone user. Most existing
wireless systems use single carrier power amplifiers. The power amplifier
receives a relatively weak signal from the transceiver and significantly boosts
the power of that signal so that it can be broadcast throughout the cell, which
typically covers a geographic area up to five miles in radius. The RF power
levels necessary to transmit the signal over the required range must be achieved
without distorting the modulation characteristics of the signal.

Traditional cellular systems, which are based on analog technology, are
capable of carrying only one call per channel of spectrum. The continuing growth
of the wireless communications market has resulted in the crowding of
transmissions within the available RF spectrum. Because the radio frequencies
assigned to transmissions are fixed, service providers are seeking new methods
of more efficiently using the RF spectrum in order to increase capacity. Analog
systems are being supplanted by digital systems, which convert voice
transmissions into bits of electronic information and are thereby able to use
the RF spectrum allocated to wireless transmissions more efficiently. Digital
transmission allows three to eight times as many voice conversations to occupy
the same frequency bands as analog transmission, thereby significantly
increasing the call capacity of a given wireless network. In addition to digital
cellular networks, which operate within the 800 MHz and 900 MHz bandwidths,
service providers have also begun to construct PCS networks operating within the
1800 MHz and 2000 MHz bandwidths. PCS networks generally require two to three
times as many base stations (and power amplifiers) as cellular networks. Service
providers are in the initial stages of deploying PCS networks, the number of
which the Company believes will increase

27
<PAGE>
rapidly. The implementation of digital networks, in conjunction with the
continued growth in analog networks, has resulted in an increased demand for
network infrastructure equipment.

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

Wireless carriers' ability to more effectively manage scarce spectrum
resources and accommodate a larger number of subscribers is dependent on their
ability to broadcast signals with high "linearity." Linearity is the degree to
which amplified signals remain within their prescribed band of spectrum with low
distortion or interference from adjacent channels. In current systems, the RF
power amplifier is generally the source of the greatest amount of signal
distortion. Consequently, obtaining RF power amplifiers with high linearity is
critical to a service provider's ability to reduce interference levels and
thereby increase system capacity. For example, higher linearity amplifiers are
required as the industry transitions from analog to digital technologies;
multiple conversations on a single channel would lead to unacceptable channel
interference without significant improvements in power amplifier linearity.
Consequently, high linearity is even more critical in digital networks than it
is in analog networks. Similarly, multicarrier power amplifiers, which are
critical to the use of dynamic channel allocation and microcells, require
leading edge linearity technology to function properly. Substantial investment
and technical expertise are required to design and manufacture RF power
amplifiers with high linearity.

Wireless service providers compete in dynamic markets characterized by
evolving and competing industry standards, technologies and applications, and
those wireless service providers that are able to increase the efficiency and
lower the cost of new and existing systems will compete most effectively.
Wireless service providers must anticipate evolving industry standards and
invest in infrastructure equipment that both maximizes efficiency in the
management of the limited spectrum licensed to them and is available in volume
for rapid deployment.

Service providers obtain their equipment from a concentrated group of large
OEMs. The Company believes that Lucent, Ericsson, Motorola, Northern Telecom and
Siemens supplied over 80% of the wireless infrastructure equipment installed
worldwide in 1996. Although most of these equipment manufacturers make their own
power amplifiers, in response to competition and as the performance requirements
of certain components of base stations increase, many of them rely on
independent sources for certain system components, such as power amplifiers,
that must meet unique technical requirements. To succeed in capturing orders
from these OEMs, power amplifier suppliers must rapidly bring to market products
that are highly linear can be cost-effectively produced in volume, support
multiple standards and are reliable in the field.

28
<PAGE>
THE SPECTRIAN SOLUTION

Spectrian Corporation designs, manufactures and markets highly linear RF
power amplifiers that address the needs of wireless infrastructure equipment
suppliers and their service provider customers. The Company's amplifiers provide
significant advantages to its customers, including:

HIGH LINEARITY. Spectrian has developed the multiple technology
competencies and disciplines required to achieve high linearity in its
amplifiers. These competencies and disciplines include RF semiconductor
technology, solid state device physics, thermal and mechanical packaging design,
advanced circuit design, amplifier linear correction technologies, advanced
signal processing techniques, control systems and computer aided design and
modeling. The Company believes that its combined strengths in these areas
provide it with an important competitive advantage in maintaining technological
leadership. The high degree of linearity of the Company's amplifiers enables
Spectrian's OEM customers to furnish wireless service providers with high
capacity base station equipment at low capital cost per subscriber.

RAPID TIME TO MARKET AND VOLUME MANUFACTURING. The vertical integration of
Spectrian's design and production processes is a key element of the Company's
ability to address wireless infrastructure equipment suppliers' quantity and
time to market requirements for power amplification products. The Company's
ability to design and manufacture its RF semiconductors in-house is critical to
rapidly and cost-effectively introducing new products that meet OEMs' evolving
needs. Spectrian also designs its amplifiers to be manufactured in high volumes
at low cost, which the Company believes has been a competitive advantage in
securing orders from its OEM customers because power amplifiers have
historically been difficult to manufacture in high volumes based upon the labor
intensive nature of the manufacturing process and the complexities of RF power
technology. Finally, the Company's use of automated testing reduces overall
manufacturing cycle times and enables the Company to deliver products in volume
more rapidly.

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

HIGH QUALITY AND RELIABILITY. Spectrian designs its power amplifiers to be
highly reliable in the field. Spectrian's integrated design and manufacturing
processes are important factors contributing to its ability to develop and
produce highly reliable power amplifiers. In order to further address customer
requirements for amplifier quality and reliability and to ensure process quality
control, Spectrian has implemented a continuous process improvement program
throughout the Company and is ISO 9001 certified.

MULTICARRIER FUNCTIONALITY. Spectrian develops and supplies multicarrier
amplifiers that integrate the functions of multiple single carrier power
amplifiers into a single smaller unit while simultaneously eliminating the need
for cavity filters. The Company believes that the distortion reduction
performance of its multicarrier amplifiers will provide it with an important
competitive advantage. The ability of the Company's multicarrier products to
combine multiple digital and analog channel schemes enables carriers to maintain
backward compatibility as they add digital transmission and implement dynamic
channel allocation solutions. In addition, multicarrier units can potentially
reduce service providers' equipment and maintenance costs and space
requirements, thereby facilitating the implementation of microcells.

29
<PAGE>
SPECTRIAN STRATEGY

Spectrian's objective is to strengthen its position as the leading merchant
supplier of highly linear power amplifiers to wireless infrastructure equipment
manufacturers and service providers worldwide. The Company's strategy
incorporates the following key elements:

CAPITALIZE ON VERTICAL INTEGRATION IN DESIGN AND MANUFACTURING. The Company
has pursued a strategy of vertical integration of its design and manufacturing
processes, from design and development of the semiconductor die through assembly
and automated testing with proprietary software and systems that minimize
manufacturing cycle times. The Company's control over each of these steps
further contributes to improved amplifier linearity, shortens the Company's time
to market, reduces unit costs and increases quality and reliability. In
addition, operating a wafer fabrication facility improves the Company's access
to a supply of RF semiconductors even in periods of high industry demand for
semiconductors and intense competition for wafer fabrication capacity.

EXPAND RELATIONSHIPS WITH LEADING WORLDWIDE MANUFACTURERS OF WIRELESS
INFRASTRUCTURE EQUIPMENT. The Company has developed relationships with certain
large wireless OEMs, including Northern Telecom, Nortel Matra, LGIC and
QUALCOMM, as well as certain emerging manufacturers including Harris, Tellabs
and Watkins Johnson. The Company markets its products worldwide; as of June 28,
1997, its power amplifiers had been installed in over 35 countries. In fiscal
1997, Spectrian also began to establish direct relationships with certain
wireless service providers, allowing the Company to address previously
unavailable markets. The Company's strategy is to form lasting customer
relationships by working closely with OEM customers to develop insight into
their amplifier requirements and to design specific products that meet their
needs, by rapidly delivering product designs and volume production and by
maintaining the confidentiality of customer technology.

LEVERAGE PRODUCT PLATFORMS TO PROVIDE RAPID TIME TO MARKET. The Company
provides customized or "application specific" amplification products to address
the particular technical and time to market requirements of each of its
customers. The Company leverages its modular product architecture, configurable
core technologies and product platforms, as well as its ability to design
products for all RF modulation schemes, to rapidly and cost effectively develop
and deliver application specific solutions to its customers.

PURSUE STANDARDS AND SYSTEMS INDEPENDENCE. The Company's products are
compatible with wireless communications systems provided by various
infrastructure suppliers and operate under every major domestic and
international standard. By pursuing both standards and systems independence, the
Company believes that it will benefit from the continuing growth of both
existing and emerging wireless communications systems while reducing the risks
associated with relying on the success of one or a limited number of systems or
existing or emerging industry standards. In addition to supporting every major
cellular standard, the Company has developed, and is continuing to develop,
products that address the needs of the PCS and WLL markets.

STRENGTHEN LEADERSHIP POSITION IN AMPLIFICATION TECHNOLOGY. The Company
intends to maintain and expand its technological leadership position by
continuing to invest significant resources in research and development of
amplification technology. The Company believes that its RF amplifier research
and development team is among the largest and most skilled in the merchant high
power RF industry. To maintain a technological leadership position, the Company
believes that numerous integrated technical capabilities are required, including
semiconductor design and fabrication, unique packaging concepts and components,
customized linearization and correction technologies and expert RF circuit
design. The Company's strategy is to continue to invest significant resources to
support the Company's technology leadership in amplifier linearity, power and
efficiency.

30
<PAGE>
MARKETS

Wireless systems have historically employed analog transmission formats,
certain of which have been adopted as industry standards. The need to
accommodate a growing wireless customer base within a finite amount of spectrum
has, however, encouraged a worldwide transition from analog standards to various
digital technologies which are significantly more efficient. Current analog
standards include Advanced Mobile Phone Services ("AMPS") in the Americas and
Total Access Communications System ("TACS") and Nordic Mobile Telephone ("NMT")
in Europe, and current digital standards include Time Division Multiple Access
("TDMA") and Code Division Multiple Access ("CDMA") in the Americas, Personal
Digital Cellular ("PDC") and CDMA in Japan and South Korea, and Global System
for Mobile Communications ("GSM") in most other parts of the world. Digital
standards which are used in PCS systems include TDMA, CDMA and GSM.

The Company offers amplifiers that support the AMPS and TACS analog
standards and the TDMA, CDMA and GSM digital standards for cellular systems. The
Company has elected not to support the NMT analog standard in Europe, because it
believes that NMT has a lower potential for growth than the GSM digital
standard. To date, the Company has not invested significant development
resources to incorporate the PDC standard into its product offerings, because
such standard has not developed to any great degree outside of Japan. See "Risk
Factors--Rapid Technological Change; Evolving Industry Standards; Dependence on
New Products."

In addition to the analog and digital cellular systems discussed above, the
market for PCS systems is expanding rapidly. The FCC has reallocated spectrum in
the 1.85 to 1.99 gigahertz range for the provision of PCS and has conducted six
rounds of auctions for the PCS spectrum. The success of PCS as a wireless
service will depend in part on whether infrastructure manufacturers and service
providers can reduce system manufacturing and service costs and pricing
sufficiently to increase significantly the rate of market penetration of
potential subscribers.

The following chart illustrates these existing and developing standards for
wireless communications, and the shaded areas represent markets served and
standards supported by the Company's current product offerings.
<TABLE>
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------

<CAPTION>
MAJOR WIRELESS STANDARDS BY REGION
<S> <C> <C> <C> <C>
<CAPTION>
AMERICAS EUROPE REST OF WORLD JAPAN
(MHZ) (MHZ) (MHZ) (MHZ)
<S> <C> <C> <C> <C>
------------------ ------------------------------------
ANALOG AMPS (800) NMT (450, 900) NMT (450, 900) NTT (800)
CELLULAR TACS (900) AMPS (800) JTACS (800)
AMPS (800) TACS (900)
------------------------------------------------------ ------------------
DIGITAL CDMA (800) GSM (900) CDMA (800, 900) PDC (1500)
CELLULAR TDMA (800) GSM (900) JDC (800)
TDMA (450, 800) CDMA (800)
------------------------------------------------------
PCS CDMA (1900) DCS-1800 (1800) CDMA (1900) PHS (1900)
TDMA (1900) DCS-1800 (1800)
GSM (1900) CDMA (1800)
</TABLE>

The Company believes that the potential for wireless communications in
countries without reliable or extensive wireline systems may be even greater
than in countries with developed telecommunications systems. The cost of
building and maintaining a wireless network is generally less than the cost of
building and maintaining a comparable wireline network. Thus, in many less
developed countries, wireless service may provide the primary service platform
for both mobile and fixed telecommunications. In addition, if

31
<PAGE>
technological advances and price decreases continue to occur, a market in the
United States and other developed countries for wireless service to be used in
conjunction with, or in place of, traditional wireline ("local loop") service
may emerge for a variety of applications. For example, WLL networks could
provide local loop service and direct access to the long distance carriers.

PRODUCTS

The Company designs highly linear amplifiers that address the specific
requirements of each of its OEM customers. The Company's product strategy is to
support multiple wireless systems and standards. Most existing wireless systems
use single carrier power amplifiers. The following table provides a list of
standards for which the Company provides single carrier amplifiers:
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------

<CAPTION>
SPECTRIAN SINGLE CARRIER AMPLIFIER CONFIGURATIONS
<S> <C> <C>
<CAPTION>
FREQUENCY POWER
STANDARD (MHZ) (WATTS)
<S> <C> <C>
Analog Cellular:
AMPS, CDPD 869-894 65
TACS 917-950 65
Digital Cellular:
TDMA 485-495 50
TDMA 869-894 25, 50
CDMA 869-894 25
GSM 925-960 30
PCS:
DCS-1800 1805-1880 30
CDMA 1930-1990 20, 25
GSM 1900 1930-1990 30
CDMA 1805-1870 25
</TABLE>

The Company also offers multicarrier application specific amplification
products. Multicarrier power amplifiers require significantly higher linearity
than single carrier designs. The following table provides a list of the
standards for which the Company provides multicarrier amplifiers:
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------
SPECTRIAN MULTICARRIER AMPLIFIER CONFIGURATIONS

<CAPTION>
TYPICAL
FREQUENCY POWER LINEARITY
STANDARD (MHZ) (WATTS) (DBC)*
<S> <C> <C> <C>
AMPS, TDMA, CDMA, CDPD 869-894 30-175 -70
ETACS 917-950 25 -50
CDMA 1805-1870 25-100 -65
</TABLE>

- ---------

*Carrier to Intermodulation Distortion Ratio.

The Company's amplifiers can be configured as either modules or pallets,
separate plug-in amplifier units or integrated subsystems, and range in price
from approximately $500 to $30,000. A pallet represents the lowest level of
amplifier complexity and consists of RF semiconductors mounted on a printed
circuit board without a housing. A plug-in amplifier unit consists of a cast
housing, which provides for thermal management and low cost of production and
contains a RF amplifier pallet combined with a digital control interface module.
A power amplifier subsystem consists of multiple cast housings and adds signal

32
<PAGE>
processing to enhance linearity. The Company's products are integrated into
systems by its customers, and therefore must be engineered to be compatible with
industry standards and with certain customer specifications, such as frequency,
power and linearity.

OEM CUSTOMERS, SALES AND MARKETING

The Company sells power amplifiers to a limited number of OEM customers in
North America, Europe and Asia principally through its direct sales
organization. The Company's customers include many of the world's largest
manufacturers of wireless infrastructure equipment, including Northern Telecom,
Nortel Matra, LGIC and QUALCOMM. During fiscal 1996, Northern Telecom and Nortel
Matra accounted for approximately 58% and 17%, respectively, of revenues. During
fiscal 1997, Northern Telecom and Nortel Matra accounted for approximately 63%
and 12%, respectively, of revenues. During the three months ended June 28, 1997,
Northern Telecom, Nortel Matra and LGIC accounted for approximately 55%, 22% and
18% of revenues, respectively. While Northern Telecom continues to be the
Company's dominant customer due to Northern Telecom's growth and diversification
into new markets, the products the Company supplies to Northern Telecom and the
regions in which they are deployed have become more diverse. The Company expects
that sales of its products will continue to be concentrated among a limited
number of customers. In addition, wireless infrastructure equipment
manufacturers have come under increasing price pressure from wireless service
providers, which in turn has resulted in downward pricing pressure on the
Company's products. Therefore, the Company expects to incur increasing price
pressures from Northern Telecom and its other major OEM customers in future
periods which could result in declining average sales prices for the Company's
products. The Company's business, financial condition and results of operations
have been materially adversely affected in the past by the failure of
anticipated orders to materialize and by deferrals or cancellations of orders by
its customers. If the Company were to lose Northern Telecom or any other major
customer as a customer, or if orders by Northern Telecom or any other major OEM
customer were to otherwise decrease, the Company's business, financial condition
and results of operations would be materially adversely affected. See "Risk
Factors-- Customer Concentration; Dependence on Northern Telecom."

The Company employs a customer focused, team-based direct sales approach to
satisfy the power amplification needs of its customers. Sales to large OEM
customers require close account management by Company personnel and
relationships at multiple levels of its customers' organizations, including
management, engineering and purchasing personnel. In addition, the Company's
application specific amplification products require experienced sales personnel
to match the customer's amplification requirements to the Company's product
capabilities. The Company believes that close technical collaboration with the
customer during the design phase of new communications equipment is critical to
the integration of its amplification products into the new equipment. The
Company's integrated sales approach involves a team consisting of a senior
account manager, a program manager and members of the Company's engineering
department. This sales approach allows the Company's engineering personnel to
work closely with their counterparts at the OEM customer to assure compliance of
the product to the customer's specification. The Company's executive officers
are also involved in all aspects of the Company's relationships with its major
customers and work closely with their senior management. As of June 28, 1997,
the Company had a direct sales staff of six people. The Company warrants new
products against defects in design, materials and workmanship, typically for a
period of 12 to 18 months.

As part of the effort to diversify its product base, in fiscal 1998 the
Company began to sell multicarrier amplifier systems (including filters and
combiners) directly to service providers. To date, these sales have been to
providers in the United States and Israel. The Company recognizes that these
sales may be in conflict with potential or current OEM sales and is willing to
work with its OEM equipment suppliers so that the service provider receives a
Spectrian power amplifier system directly or through the OEM. There can be no
assurance that the Company's direct sales to service providers will not cause
its OEM equipment suppliers to reduce orders or terminate their relationship
with the Company. Any such reduction or

33
<PAGE>
termination could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Risk Factors--Customer
Concentration; Dependence on Northern Telecom."

The Company markets its products overseas with the assistance of independent
sales representatives to customers in Europe, Japan, South Korea and Israel. The
Company has three sales representatives in Europe covering Austria, Finland,
France, Germany, Italy, Sweden and Switzerland, one sales representative
dedicated to each of Japan and Israel and a representative organization in South
Korea. The Company continuously evaluates whether to establish direct sales to a
particular region or customer depending upon available sales opportunities. The
Company's direct sales staff provides sales direction and support to the
international sales representatives. Sales outside of the United States
represented 72%, 73% and 88% of revenues in fiscal 1996, fiscal 1997 and the
three months ended June 28, 1997, respectively. Sales outside of the United
States are denominated in U.S. dollars in order to reduce the risks associated
with the fluctuations of foreign currency exchange rates. The Company expects
that international sales will continue to account for a significant portion of
its revenues. Sales outside of the United States involve a number of inherent
risks, including reduced protection for intellectual property rights in some
countries, the impact of recessionary environments in economies outside the
United States, generally longer receivables collection periods, unexpected
changes in regulatory requirements, tariffs and other trade barriers. There can
be no assurance that such factors will not have an adverse effect on the
Company's future international sales and, consequently, on the Company's
business, financial condition and results of operations. See "Risk
Factors--Risks of International Sales."

MANUFACTURING

The Company assembles, tests, packages and ships amplifier products at its
manufacturing facilities located in Sunnyvale, California. The Company's
manufacturing facilities consist of a 4-inch wafer fabrication and semiconductor
assembly and test facility and an amplifier assembly and test facility. The
Company's manufacturing product engineering group, comprised of 49 engineers, is
devoted to improving product manufacturability by minimizing assembly and test
cycle times, improving product test yields and reducing overall manufacturing
costs.

WAFER FABRICATION. As part of its strategy of vertical integration, the
Company operates its own wafer fabrication facility for the production of the RF
semiconductor, the most important component utilized in the Company's
amplifiers. The Company has an 11-person semiconductor process engineering group
responsible for continuous improvement of semiconductor processes. The Company
believes that control of the semiconductor manufacturing process allows it to
reduce unit costs, control quality, improve time to market delivery and most
importantly increase the linearity of the RF semiconductors used in its
amplifiers. In addition, the Company utilizes a high volume, third party
supplier to supplement wafer capacity on a subcontract basis.

The Company's operation of its manufacturing facilities entails a number of
risks, including a high level of fixed and variable costs, the management of
complex processes, dependence on a single source of supply and a strict
regulatory environment. First, fixed costs consist primarily of occupancy costs,
investment in manufacturing equipment, repair, maintenance and depreciation
costs related to equipment and fixed labor costs related to manufacturing and
process engineering. During periods of low demand, high fixed wafer fabrication
costs are likely to have a material adverse effect on the Company's results of
operations. Second, the Company's strategy of frequently introducing and rapidly
expanding the manufacture of new products to meet evolving OEM customer and
service provider needs has caused the Company to experience high materials and
manufacturing costs, including high scrap and material waste, significant
material obsolescence, labor inefficiencies and overtime expenses, inefficient
material procurement and an inability to recognize economies of scale. These
high manufacturing costs and production interruptions have had an adverse effect
on the Company's results of operations. In addition, the Company has made and
expects to continue to make pricing commitments to OEM customers in anticipation
of achieving such manufacturing cost reductions. Any failure to achieve such
manufacturing cost reductions could have a

34
<PAGE>
material adverse effect on the Company's business, financial condition and
results of operations. Third, the design and fabrication of RF semiconductors is
a complex and precise process. Such manufacturing is sensitive to a wide variety
of factors, including variations and impurities in the raw materials,
difficulties in the fabrication process, performance of the manufacturing
equipment, defects in the masks used to print circuits on a wafer and the level
of contaminants in the manufacturing environment. As a result of these and other
factors, semiconductor manufacturing yields from time to time in the past have
suffered, and there can be no assurance that the Company will be able to achieve
acceptable production yields in the future. In addition, the Company's wafer
fabrication facility represents a single point of failure in its manufacturing
process that would be costly and time-consuming to replace if its operation were
interrupted. The interruption of wafer fabrication operations or the loss of
employees dedicated to the wafer fabrication facility could have a material
adverse effect on the Company's business, financial condition and results of
operations. Any failure to maintain acceptable wafer production levels, either
from the Company's facility or from a third party wafer supplier, will have a
material adverse effect on the Company's business, financial condition and
results of operations. Finally, operation of the Company's own wafer fabrication
facility subjects it to a variety of local, state and federal governmental
regulations relating to the storage, discharge, handling, emission, generation,
manufacture and disposal of toxic or other hazardous substances used to
manufacture the Company's products. The Company believes that it is currently in
compliance in all material respects with such regulations and that it has
obtained all necessary environmental permits to conduct its business. However,
the failure to comply with current or future regulations could result in the
imposition of substantial fines on the Company, suspension of production,
alteration of its manufacturing processes or cessation of operations. In
addition, compliance with such regulations could require the Company to acquire
expensive remediation equipment or to incur substantial expenses. See "Risk
Factors--Risks Associated with Internal Wafer Fabrication."

The Company expects that its customers will continue to establish demanding
specifications for quality, performance and reliability that must be met by the
Company's products. RF semiconductors as complex as those offered by the Company
often encounter development delays and may contain undetected defects or
failures when first introduced or after commencement of commercial shipments.
The Company has from time to time in the past experienced product quality,
performance or reliability problems, although no such problems have had a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, multicarrier power amplifiers have a higher
probability of malfunction because of their greater complexity. There can be no
assurance that defects or failures will not occur in the future relating to the
Company's product quality, performance and reliability that may have a material
adverse effect on the Company's business, financial condition and results of
operations. If such defects or failures occur, the Company could experience lost
revenue, increased costs (including warranty expense, costs associated with
customer support and other product liability related costs), delays in or
cancellations or rescheduling of orders or shipments and product returns or
discounts, any of which would have a material adverse effect on the Company's
business, financial condition and results of operations. See "Risk
Factors--Product Quality, Performance and Reliability."

SEMICONDUCTOR ASSEMBLY AND TEST. Once a wafer is processed, it is tested
and diced into chips that are attached to a special ceramic package, wire bonded
and encapsulated. The packages are designed for optimal thermal and electrical
performance that are critical during high power RF operation. These processes
require precision for performance and volume manufacturing. The Company utilizes
patented packaging techniques to improve the performance and the automated
assembly of both semiconductors and amplifiers. In addition, the Company
utilizes a specialized surface mount packaging process to improve transistor
assembly while enhancing thermal performance, lowering costs and improving
reliability. See "Risk Factors--Government Regulation of Communications
Industry."

AMPLIFIER ASSEMBLY AND TEST. The Company's amplifier manufacturing
activities consist of purchasing components, assembling and testing components
and subassemblies, and integrating subassemblies into finished products. The
Company's amplifiers are comprised of a variety of subassemblies and components

35
<PAGE>
designed or specified by the Company, including housings, harnesses, cables,
packaged RF semiconductors, semiconductor integrated circuits and printed
circuit boards. Except for the RF semiconductors, these components and
subassemblies are manufactured by third parties and are shipped to the Company
for final assembly. The most critical step in the assembly process consists of
the integration of the Company's internally produced RF semiconductors with the
externally procured printed circuit boards. Each of the Company's products
receives extensive in-process and final quality inspections and tests.

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

The Company continues to initiate actions to reduce its manufacturing costs.
The Company has negotiated master purchase agreements with its vendors to have
substantially all of its parts bid on an annual basis rather than on a monthly
basis, which it believes has generated significant volume discounts. The Company
is also implementing standardized automated test processes and material handling
throughout the manufacturing area which is also designed to reduce costs. There
can be no assurance that these activities will reduce costs as quickly as
anticipated reductions in average selling prices of the Company's products. Any
failure to achieve continued manufacturing cost reductions could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Risk Factors-- Fluctuations in Operating Results" and
"--Declining Average Sales Prices."

RESEARCH AND DEVELOPMENT

The mission of the Company's research and development organization is to
rapidly design low cost, highly manufacturable RF power amplifiers with industry
leading performance. The Company's research and development staff is organized
into a semiconductor group and an amplifier group. The semiconductor group
focuses on the rapid design of RF semiconductors that are low cost and high
efficiency to provide improved RF performance. The semiconductor group also
performs advanced research in device modeling and semiconductor process
development to support the amplifier engineering group's efforts. The amplifier
engineering group focuses on rapid development of new RF power amplifiers that
are manufacturable in volume, low cost and achieve industry leading performance.
This group creates new product platforms and leverages existing ones, reuses
existing circuit topologies and introduces into production new correction,
control and amplification concepts created by the advanced research group. The
Company uses an automated design environment to model RF semiconductors and
amplifiers. This design environment, together with the Company's modular product
architecture and configurable core technologies, allow it to rapidly define,
develop and deliver on a timely basis the new and enhanced products demanded by
its OEM customers.

The Company has historically devoted a significant portion of its resources
to research and development programs and expects to continue to do so. As of
June 28, 1997, the Company had 94 people engaged in research and development.
The Company's research and development expenses in fiscal 1996, fiscal 1997 and
the three months ended June 28, 1997 were $14.5 million, $17.2 million and $4.2
million, respectively, and represented 20%, 19% and 9%, respectively, of total
revenues. The Company in the past funded a significant portion of its research
and development from NRE revenues received from customers in connection with the
design and development of application specific products. NRE revenues have
declined in the past three years and the Company expects NRE revenue to further
decline in future years due to the competitive development climate. Costs
associated with customer funded research and

36
<PAGE>
development were $4.5 million, $2.1 million and $365,000 for fiscal 1996, fiscal
1997 and the three months ended June 28, 1997, respectively.

The markets in which the Company and its customers compete are characterized
by rapidly changing technology, evolving industry standards and continuous
improvements in products and services. The Company's future success depends
upon, among other things, its ability to develop new products in a timely manner
that compete effectively on the basis of price and performance and that
adequately address the needs of its OEM customers. No assurance can be given
that the Company's product development efforts will be successful, that its new
products will achieve customer acceptance or that its customers' products will
achieve customer acceptance. In addition, as is characteristic of the wireless
communications equipment industry, the average sales prices of the Company's
products have historically decreased over the products' lives and are expected
to continue to do so. To offset declining average sales prices, the Company
believes that in the near term it must develop new products that incorporate
advanced features and can be sold at higher average sales prices. To the extent
that new products are not developed in a timely manner, do not achieve customer
acceptance or do not generate higher sales prices and margins, the Company's
business, financial condition and results of operations would be materially
adversely affected. See "Risk Factors--Rapid Technological Change; Evolving
Industry Standards; Dependence on New Products" and "--Declining Average Sales
Prices."

PATENTS AND PROPRIETARY TECHNOLOGY

The Company's ability to compete successfully and achieve future revenue
growth will depend, in part, on its ability to protect its proprietary
technology and operate without infringing the rights of others. The Company has
a policy of seeking patents on inventions resulting from its ongoing research
and development activities. The Company has been awarded 14 United States
patents, and has 15 United States patent applications pending, including one
that has been allowed but not yet formally issued. The Company also has been
awarded six foreign patents and has seven foreign patent applications pending.
There can be no assurance that the Company's pending patent applications will be
allowed or that the issued or pending patents will not be challenged or
circumvented by competitors. Notwithstanding the Company's active pursuit of
patent protection, the Company believes that the success of its business depends
more on the collective value of its patents, specifications, computer aided
design and modeling tools, technical processes and employee expertise. The
Company generally enters into confidentiality and non-disclosure agreements with
its employees, suppliers, OEM customers, licensees and potential customers and
licensees and limits access to and distribution of its proprietary technology.
However, there can be no assurance that such measures will provide adequate
protection for the Company's trade secrets or other proprietary information, or
that the Company's trade secrets or proprietary technology will not otherwise
become known or be independently developed by competitors. The failure of the
Company to protect its proprietary technology could have a material adverse
effect on its business, financial condition and results of operations. See "Risk
Factors--Uncertain Protection of Intellectual Property."

The communications equipment industry is characterized by vigorous
protection and pursuit of intellectual property rights or positions, which have
resulted in significant and often protracted and expensive litigation. Although
there is currently no pending intellectual property litigation against the
Company, the Company or its suppliers may from time to time be notified of
claims that the Company may be infringing patents or other intellectual property
rights owned by third parties. If it is necessary or desirable, the Company may
seek licenses under such patents or other intellectual property rights. However,
there can be no assurance that licenses will be offered or that the terms of any
offered licenses will be acceptable to the Company. The failure to obtain a
license from a third party for technology used by the Company or otherwise
secure rights to use such technology could cause the Company to incur
substantial liabilities, to suspend the manufacture of products or expend
significant resources to develop non-infringing technology. There can be no
assurance that the Company would be successful in such development or that such
licenses would be available on reasonable terms or a "design around" is not

37
<PAGE>
practicable, if at all. In the event that any third party makes a successful
claim against either the Company or its customers and a license is not made
available to the Company on commercially reasonable terms, the Company's
business, financial condition and results of operations would be materially
adversely affected. Furthermore, the Company may initiate claims or litigation
against third parties for infringement of the Company's proprietary rights or to
establish the validity of the Company's proprietary rights. Litigation by or
against the Company could result in significant expense to the Company and
divert the efforts of the Company's technical and management personnel, whether
or not such litigation results in a favorable determination for the Company. In
the event of an adverse result in any such litigation, the Company could be
required to pay substantial damages, indemnify its customers, cease the
manufacture, use and sale of infringing products, expend significant resources
to develop non-infringing technology, discontinue the use of certain processes
or obtain licenses to the infringing technology. See "Risk Factors--Risk of
Third-Party Claims of Infringement."

COMPETITION

The wireless communications equipment industry is extremely competitive and
is characterized by rapid technological change, new product development and
product obsolescence, evolving industry standards and significant price erosion
over the life of a product. The ability of the Company to compete successfully
and sustain profitability depends in part upon the rates at which wireless
equipment OEMs incorporate the Company's products into their systems and the
Company captures market share from other merchant suppliers. The Company's major
OEM customers, including Northern Telecom, Nortel Matra, LGIC and QUALCOMM,
continuously evaluate whether to manufacture their own amplification products or
purchase them from outside sources such as the Company. There can be no
assurance that these OEM customers will incorporate the Company's products into
their systems or that in general they will continue to rely, or expand their
reliance, on external sources of supply for their power amplifiers. These
customers and other large manufacturers of wireless communications equipment
could also elect to enter into the merchant market and compete directly with the
Company, and at least one OEM, NEC has already done so. Such increased
competition could materially adversely affect the Company's business, financial
condition and results of operations. See "Risk Factors--Internal Amplifier
Design and Production Capabilities of OEMs" and "--Market for the Company's
Products is Highly Competitive."

BACKLOG

The Company does not believe that its backlog as of any particular date is
representative of actual sales for any succeeding period. As part of the
Company's close working relationships with its major

38
<PAGE>
customers, such customers expect the Company to respond quickly to changes in
the volume and delivery schedule of their amplifiers, and if necessary, to
inventory products at the Company's facilities for just-in-time delivery.
Therefore, although contracts with such customers typically specify aggregate
dollar volumes of products to be purchased over an extended time period, such
contracts also provide that scheduled shipment dates of particular volumes are
generally released to the Company only a few days or weeks prior to the actual
required delivery dates. In addition, the Company's customers may cancel or
defer orders without significant penalty.

AMERICAN MICROWAVE TECHNOLOGY, INC.

In April 1997, the Company sold its wholly owned subsidiary, AMT, to the
management group and employees of AMT for approximately $4.0 million in cash,
realizing a gain of approximately $1.5 million after disposition of AMT's net
assets. The Company decided to divest AMT, which designs, develops and
manufactures RF power amplifier systems for selected wireless, scientific and
application specific markets, after concluding that AMT's market focus had
become less synergistic with the Company's core business. In fiscal 1996 and
fiscal 1997, AMT accounted for approximately 7% and 10%, respectively, of the
Company's revenues.

EMPLOYEES

As of June 28, 1997, the Company had a total of 795 regular, temporary and
contract employees, including 641 in manufacturing, 94 in research and
development, 24 in sales and 36 in administration. The Company's future success
will depend, in part, on its ability to continue to attract, retain and motivate
highly qualified technical and management personnel. None of the Company's
employees is represented by a collective bargaining agreement, nor has the
Company experienced any work stoppage. The Company considers its relations with
its employees to be good.

PROPERTIES

The Company's principal administrative, engineering and manufacturing
facilities are located in two buildings of approximately 141,000 square feet in
Sunnyvale, California. In November 1996, the Company entered into several
agreements in connection with a transaction with respect to these properties.
Pursuant to these agreements, the Company sold these properties to SPEC (CA) QRS
12-20, Inc. ("SPEC"), and pursuant to the terms of a lease agreement, SPEC
agreed to lease these properties to the Company for a term of 15 years (with two
options to extend the lease for up to an additional ten years). This lease
agreement also provides that the Company shall have the right of first refusal
to purchase the properties from SPEC upon the occurrence of certain conditions.
In addition, in March 1997, through means of a limited liability company of
which the Company owns 91.5%, the Company purchased a third building of
approximately 39,000 square feet in Sunnyvale, California located between the
Company's two occupied buildings. The Company is currently subleasing this
building to third parties under month-to-month lease arrangements.

39
<PAGE>
MANAGEMENT

The executive officers and directors of the Company and certain information
about them as of June 30, 1997 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ ----------- ---------------------------------------------------------------
<S> <C> <C>
Garrett A. Garrettson..................... 53 President, Chief Executive Officer and Director

Stephen B. Greenspan...................... 55 Executive Vice President of Operations and Chief Operating
Officer

Bruce R. Wright........................... 48 Executive Vice President, Finance and Administration, Chief
Financial Officer and Secretary

Timothy Heyboer........................... 47 Vice President, Amplifier Engineering

David Piazza.............................. 33 Vice President, Semiconductor R&D

Joseph M. Veni............................ 45 Senior Vice President, Sales and Marketing

William Zucker............................ 39 Vice President, Marketing

James A. Cole(1).......................... 54 Director

Martin Cooper(2).......................... 68 Director

Robert C. Wilson(2)....................... 77 Director

Eric A. Young(1).......................... 41 Director
</TABLE>

- ---------

(1) Member of Compensation Committee.

(2) Member of Audit Committee.

GARRETT A. GARRETTSON joined the Company in April 1996 as President, Chief
Executive Officer and director. Between March 1993 and March 1996, he served as
President and Chief Executive Officer of Censtor Corporation ("Censtor"), which
designs and sells technology related to magnetic recording heads for the disk
drive industry. From 1986 to March 1993, he served as a Vice President of
Imprimis Technology Incorporated ("Imprimis"), a wholly-owned subsidiary of
Control Data Corporation, and subsequently as a Vice President of Seagate
Technology, Inc. ("Seagate") following its acquisition of Imprimis in 1989.
Prior to 1986, Mr. Garrettson held a variety of positions with Hewlett-Packard
Company and served in the United States Navy. Mr. Garrettson also serves as a
director of Censtor and Benton Oil and Gas Company. He received his B.S. and
M.S. in Engineering Physics and a Ph.D. in Mechanical Engineering from Stanford
University.

STEPHEN B. GREENSPAN joined the Company in May 1996 as Executive Vice
President of Operations and was named Chief Operating Officer in April 1997.
From November 1991 to February 1996, he served as Senior Vice President, Quality
and Customer Service at Seagate. Mr. Greenspan also held a variety of positions
at Seagate including Vice President of Process Development and Vice President of
Domestic and Far East Operations. From March 1986 to August 1987, Mr. Greenspan
served as Vice President of Operations at Tandon Corporation, a manufacturer of
personal computers. From 1967 to 1986, Mr. Greenspan held a variety of
management positions at IBM Corporation related to circuit technologies,
personal computer manufacturing and supplier management. He received his
B.S.E.E. degree from New Jersey Institute of Technology and a M.S.E.E. degree
from Syracuse University.

BRUCE R. WRIGHT joined the Company on May 1, 1997 as Executive Vice
President of Finance and Administration, Chief Financial Officer and Secretary.
Prior to joining the Company, he was Chief Financial Officer at Tencor
Instruments from December 1991 to April 1997. From January 1988 to July 1991, he
was Chief Financial Officer at Teknekron Corporation. Mr. Wright also served
with Atlantic Richfield Company and the U.S. Air Force. He has a B.A. in Physics
from Pomona College, a B.S. in Mechanical Engineering from California Institute
of Technology and a S.M. in Management from MIT.

40
<PAGE>
TIM HEYBOER joined the Company in 1986 as Director of Engineering. In August
1996, Mr. Heyboer was named Vice President of Amplifier Engineering of the
Company, and previously served in a variety of departments including product
line management and the now discontinued military division. Prior to joining
Spectrian, Mr. Heyboer was employed at Narda Western Operations, a passive
microwave components company, most recently as director of engineering. Mr.
Heyboer received a B.S.E.E. degree and a M.S.E.E. degree from University of
Michigan, Ann Arbor.

DAVID PIAZZA joined the Company in 1990 as a Project Engineer. In September
1996, Mr. Piazza was named Vice President, Semiconductor R&D for the Company. He
has served in various management positions at the Company, including Director of
Engineering, PCS Amplifier Products, Engineering Manager, Amplifier Products and
Project Engineer. Mr. Piazza received a B.S.E.E. degree from the University of
California at Davis.

JOSEPH M. VENI joined the Company in April 1992 as Vice President of Sales
and in June 1996 was named Senior Vice President, Sales and Marketing. From 1987
to April 1992, he was Vice President of Sales and Marketing at TTI-General
Signal. From 1985 to 1987, Mr. Veni worked at Cushman Electronics, Inc. Prior to
that time, Mr. Veni was employed by Halcyon Communications, Inc., ICS Group,
Inc. and Western Union Telegraph Co. in various marketing and sales positions.
Mr. Veni received an Associates Degree in Electronics Technology from Mt. San
Antonio College.

WILLIAM ZUCKER joined the Company in October 1995 as Vice President of
Engineering. In August 1996, Mr. Zucker became Vice President of Product Line
Management. In April 1997, he was named Vice President of Marketing. Prior to
joining the Company, Mr. Zucker held several positions at AT&T/AT&T Bell Labs,
including director of product management from July 1994 to October 1995 and
director of development from November 1991 to July 1994. Mr. Zucker received a
B.S.E.E. degree from Manhattan College and a S.M. in Electrical Engineering from
MIT.

JAMES A. COLE has been a director of the Company since June 1985. He has
been a general partner of Spectra Enterprise Associates, a venture capital firm,
and a partner with New Enterprise Associates, a venture capital firm, since
1986. Prior to 1986, Mr. Cole spent twenty years in various microwave integrated
circuit companies, including Amplica Inc., where he was a co-founder and served
as Chief Operating Officer. Amplica became a public company in 1981 and was
acquired by Comsat Corporation in 1982. He presently serves on the boards of
directors of Vitesse Semiconductor Corp., a semiconductor manufacturer, and
Gigatronics Inc. ("Gigatronics"), a microwave instrument supplier.

MARTIN COOPER has been a director of the Company since January 1994. Mr.
Cooper has served as Chairman and Chief Executive Officer of ArrayComm,
Incorporated, a wireless technology manufacturer, since April 1992 and as
Chairman of Dyna, Incorporated, a consulting company, since 1986. From 1985 to
December 1992, he served as President of Cellular Pay Phone Incorporated, a
cellular pay telephone company. From 1982 to 1986, he was Chairman and Chief
Executive Officer of Cellular Business Systems, Inc., a management information
company he co-founded in 1982. From 1954 to 1983, Mr. Cooper served in a variety
of positions including Corporate Vice President, Division Manager and Corporate
Director of Research and Development of Motorola. Mr. Cooper currently serves on
the board of directors of Conductus, Inc., a superconducting products company.
He is a Fellow of the IEEE and of the Radio Club of America and a recipient of
the IEEE Centennial medal. He also serves on the Advisory Board of the
International National Electronics Consortium as well as on its Board of
Directors. He received a B.S.E.E. and a M.S.E.E. from the Illinois Institute of
Technology.

ROBERT C. WILSON has served as a director of the Company since October 1995.
Mr. Wilson has been Chairman of Wilson & Chambers, a venture capital and
consulting firm, since December 1982. Mr. Wilson served as President, Chief
Executive Officer and Chairman of the Board at Memorex Corporation from 1974
until 1980. From 1971 to 1974, Mr. Wilson served as President and Chief
Executive Officer of Collins Radio Company, a communications company. From 1969
to 1971, Mr. Wilson was employed by Rockwell International, a diversified
manufacturing company, first as President of Commercial Products and later as

41
<PAGE>
Executive Vice President. He is currently Chairman of the Board of Carco
Electronics, a precision servo controlled systems manufacturing and is a member
of the boards of directors of Gigatronics and of Resound Corporation, a hearing
device manufacturing company. Mr. Wilson received a B.S. in Engineering from the
University of California at Berkeley.

ERIC A. YOUNG has been a director of the Company since January 1991. He is a
co-founder of Canaan Partners, a venture capital investment firm, and has served
as a general partner of Canaan Partners since its inception in 1987. Prior to
such time, Mr. Young held various management positions with GE Venture Capital,
a venture capital investment firm and a subsidiary of General Electric Co. He
presently serves on the boards of directors of Visigenic Software, Inc. and
Integrated Packaging Assembly Corporation. He received a B.S. in Mechanical
Engineering at Cornell University and received a M.M. in Finance from
Northwestern University.

42
<PAGE>
UNDERWRITERS

Under the terms and subject to conditions in an Underwriting Agreement dated
the date hereof (the "Underwriting Agreement"), the Underwriters named below
(the "Underwriters"), for whom Morgan Stanley & Co. Incorporated, Lehman
Brothers Inc. and Oppenheimer & Co., Inc. are serving as Representatives (the
"Representatives"), have severally agreed to purchase, and the Company has
agreed to sell to them, severally, the respective number of shares of Common
Stock set forth opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
- --------------------------------------------------------------------------------- ----------
<S> <C>
Morgan Stanley & Co. Incorporated................................................
Lehman Brothers Inc..............................................................
Oppenheimer & Co., Inc...........................................................

----------
Total.......................................................................... 2,000,000
----------
----------
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The Underwriters are obligated to take
and pay for all of the shares of Common Stock offered hereby (other than those
covered by the over-allotment option described below) if any such shares are
taken.

The Underwriters initially propose to offer part of the shares of Common
Stock offered hereby directly to the public at the public offering price set
forth on the cover page hereof and part to certain dealers at a price that
represents a concession not in excess of $ per share under the public
offering price. Any Underwriter may allow, and such dealers may reallow, a
concession not in excess of $ per share to other Underwriters or to
certain other dealers.

Pursuant to the Underwriting Agreement, the Company has granted to the
Underwriters an option, exercisable for 30 days from the date of this
Prospectus, to purchase up to an additional 300,000 shares of Common Stock at
the public offering price set forth on the cover page hereof, less estimated
underwriting discounts and commissions and estimated offering expenses. The
Underwriters may exercise such option to purchase solely for the purpose of
covering over-allotments, if any, incurred in the sale of the shares of Common
Stock offered hereby. To the extent such option is exercised, each Underwriter
will become obligated, subject to certain conditions, to purchase approximately
the same percentage of such additional shares as the number set forth next to
such Underwriter's name in the preceding table bears to the total number of
shares of Common Stock offered hereby.

The Company, its executive officers and directors have agreed that, without
the prior written consent of Morgan Stanley & Co. Incorporated, they will not
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, lend, purchase any option or contract to sell, grant any option, right
or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any share of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter into any swap or
similar arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in the above clause (i) or (ii) is to be settled by delivery of such
Common Stock or such other securities, in cash or otherwise, for a period of 90
days after the date of this Prospectus, other than (a) the sale by the Company
to the Underwriters of the shares of Common Stock pursuant to the Underwriting
Agreement, (b) transactions by any executive officer or director of the Company
relating to shares of Common Stock or other securities acquired in open market

43
<PAGE>

transactions after the date of the Prospectus, (c) the sale of up to 100,000
shares of Common Stock, in the aggregate, currently held or hereinafter acquired
upon the exercise of options currently held by the executive officers or
directors provided no individual executive officer or director sells more than
30,000 of such shares of Common Stock or (d) the issuance by the Company of
shares of Common Stock upon exercise of options sold or granted pursuant to the
Company's Stock Plans or pursuant to the Company's 1994 Employee Stock Purchase
Plan and outstanding or reserved for issuance on the date of the Prospectus. See
"Risk Factors--Shares Eligible for Future Sale."

In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the offering, creating a short position in the Common Stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, shares of
Common Stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
Common Stock in the offering, if the syndicate repurchases previously
distributed Common Stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Common Stock above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time. The Underwriters and dealers may engage
in passive market making transactions in the Common Stock in accordance with
Rule 103 of Regulation M promulgated by the Commission. In general, a passive
market maker may not bid for, or purchase, the Common Stock at a price that
exceeds the highest independent bid. In addition, the net daily purchases made
by any passive market maker generally may not exceed 30% of its average daily
trading volume in the Common Stock during a specified two month period, or 200
shares, whichever is greater. A passive market maker must identify passive
market making bids as such on the Nasdaq electronic inter-dealer reporting
system. Passive market making may stabilize or maintain the market price of the
Common Stock above independent market levels. Underwriters and dealers are not
required to engage in passive market making and may end passive market making
activities at any time.

The Company and the Underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California. Certain legal matters in
connection with the offering will be passed upon for the Underwriters by
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, Menlo Park,
California.

EXPERTS

The consolidated financial statements and schedule of the Company as of
March 31, 1997 and 1996, and for each of the years in the three-year period
ended March 31, 1997 have been incorporated by reference herein and in the
registration statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent auditors, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
certain parts of which

44
<PAGE>
are omitted in accordance with the Rules and Regulations of the Commission. For
further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement and to the exhibits and
schedules filed therewith. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference. The Company is subject to the
information requirements of the Exchange Act, and in accordance therewith, files
reports, proxy and information statements and other information with the
Commission. Such reports, statements and other information can be inspected and
copied at the public reference facilities maintained by the Commission at its
office at Room 1034, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of such materials can be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission also maintains a
World Wide Web site that contains reports, proxy and information statements and
other information regarding registrants, such as the Company, that file
electronically with the Commission. The address of the site is
http://www.sec.gov. The Company's Common Stock is quoted on the Nasdaq National
Market. Reports, proxy statements and other information concerning the Company
can also be inspected at the National Association of Securities Dealers, Inc.,
1735 K Street N.W., Washington, D.C. 20002.

45
<PAGE>
[LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than the
estimated underwriting discount, payable by the Company in connection with the
sale of Common Stock being registered. All amounts are estimates except the SEC
registration fee, NASD filing fee and Nasdaq National Market listing fee.

<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
----------
<S> <C>
SEC registration fee.............................................................. $ 31,538
NASD filing fee................................................................... 10,908
Nasdaq National Market listing fee................................................ 17,500
Printing expenses................................................................. 100,000
Legal fees and expenses........................................................... 150,000
Accounting fees and expenses...................................................... 100,000
Blue Sky fees and expenses........................................................ 10,000
Transfer agent fees............................................................... 2,500
Miscellaneous expenses............................................................ 77,554
----------
Total........................................................................... $ 500,000
----------
----------
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

As permitted by Section 204(a) of the California General Corporation Law,
the Registrant's Articles of Incorporation eliminate a director's personal
liability for monetary damages to the Registrant and its shareholders arising
from a breach or alleged breach of the director's fiduciary duty, except for
liability arising under Sections 310 and 316 of the California General
Corporation Law or liability for (i) acts or omissions that involve intentional
misconduct or knowing and culpable violation of law, (ii) acts or omissions that
a director believes to be contrary to the best interests of the Registrant or
its shareholders or that involve the absence of good faith on the part of the
director, (iii) any transaction from which a director derived an improper
personal benefit, (iv) acts or omissions that show a reckless disregard for the
director's duty to the Registrant or its shareholders in circumstances in which
the director was aware, or should have been aware, in the ordinary course of
performing a director's duties, of a risk of serious injury to the Registrant or
its shareholders, (v) acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the
Registrant or its shareholders, (vi) interested transactions between the
corporation and a director in which a director has a material financial
interest, and (vii) liability for improper distributions, loans or guarantees.
This provision does not eliminate the directors' duty of care, and in
appropriate circumstances equitable remedies such as an injunction or other
forms of non-monetary relief would remain available under California law.

Sections 204(a) and 317 of the California General Corporation Law authorize
a corporation to indemnify its directors, officers, employees and other agents
in terms sufficiently broad to permit indemnification (including reimbursement
for expenses) under certain circumstances for liabilities arising under the
Securities Act. The Registrant's Articles of Incorporation and Bylaws contain
provisions covering indemnification to the maximum extent permitted by the
California General Corporation Law of corporate directors, officers and other
agents against certain liabilities and expenses incurred as a result of
proceedings involving such persons in their capacities as directors, officers
employees or agents, including proceedings under the Securities Act or the
Exchange Act. The Company has entered into Indemnification Agreements with its
directors and executive officers.

II-1
<PAGE>
In connection with its reincorporation in Delaware, the Company will be
subject to Section 145 of the Delaware General Corporation Law which authorizes
a court to award or a corporation's Board of Directors to grant indemnification
to directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. Upon
shareholder approval of such reincorporation, Article VI, Section 1, of the
Registrant's Bylaws will provide for mandatory indemnification of its directors
and officers and permissible indemnification of employees and other agents to
the maximum extent permitted by the Delaware General Corporation Law. The
Registrant's Certificate of Incorporation will provide that, pursuant to
Delaware law, its directors shall not be liable for monetary damages for breach
of the directors' fiduciary duty as directors to the Company and its
stockholders. This provision in the Certificate of Incorporation does not
eliminate the directors' fiduciary duty, and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law. In addition, each director will continue to
be subject to liability for breach of the director's duty of loyalty to the
Company for acts or omission not in good faith or involving international
misconduct, for knowing violations of law, for actions leading to improper
personal benefit to the director, and for payment of dividends or approval of
stock repurchases or redemptions that are unlawful under Delaware law. The
provision also does not affect a director's responsibilities under any other
law, such as the federal securities laws or state or federal environmental laws.
The Registrant has entered into Indemnification Agreements with its officers and
directors, a form of which was attached as Appendix D to the Company's
Definitive Proxy Statement on Schedule 14A filed with the Commission on June 26,
1997 and incorporated herein by reference. The Indemnification Agreements
provide the Registrant's officers and directors with further indemnification to
the maximum extent permitted by the Delaware General Corporation Law. Reference
is made to Section 8 of the Underwriting Agreement contained as Exhibit 1.1
hereto, indemnifying officers and directors of the Registrant against certain
liabilities.

In addition to the foregoing, the Underwriting Agreement provides for
indemnification by the Underwriters of the Registrant, its directors and
officers, and by the Registrant of the several Underwriters, against certain
liabilities, including liabilities arising under the Securities Act.

At present, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Registrant in which
indemnification is being sought, nor is the Registrant aware of any threatened
litigation that may result in a claim for indemnification by any director,
officer, employee or other agent of the Registrant.

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------------------------------------
<C> <S>
1.1+ Form of Underwriting Agreement

5.1+ Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation

23.1 Consent of KPMG Peat Marwick LLP, independent auditors (see page II-5).

23.2+ Consent of Counsel (included in Exhibit 5.1).

24.1+ Power of Attorney.
</TABLE>

- ---------

+ Previously filed.

ITEM 17. UNDERTAKINGS

Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 15 of
this Registration Statement, the Underwriting Agreement or otherwise, the

II-2
<PAGE>
Registrant has been advised that in the opinion of the Commission 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 hereunder, 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 of 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.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
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 Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

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

(3) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the Prospectus, to each person to whom the Prospectus is
sent or given, the latest annual report to security holders that is
incorporated by reference in the Prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act;
and, where interim financial information required to be presented by Article
3 of Regulation S-X are not set forth in the Prospectus, to deliver, or
cause to be delivered to each person to whom the Prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the Prospectus to provide such interim financial information.

(4) For the purpose of determining 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.

II-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant 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 Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Sunnyvale, State of
California, on the 14th day of August, 1997.

SPECTRIAN CORPORATION

By: /s/ GARRETT A. GARRETTSON
-----------------------------------------
Garrett A. Garrettson
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
DIRECTOR

POWER OF ATTORNEY

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:

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- ------------------

President, Chief Executive
/s/ GARRETT A. GARRETTSON Officer and Director
- ------------------------------ (Principal Executive
Garrett A. Garrettson Officer) August 14, 1997

Executive Vice President,
Finance and
/s/ BRUCE R. WRIGHT Administration, Chief
- ------------------------------ Financial Officer and
Bruce R. Wright Secretary (Principal
Financial and Accounting
Officer) August 14, 1997

/s/ JAMES A. COLE*
- ------------------------------ Director
James A. Cole August 14, 1997

/s/ ROBERT C. WILSON*
- ------------------------------ Director
Robert C. Wilson August 14, 1997

/s/ ERIC A. YOUNG*
- ------------------------------ Director
Eric A. Young August 14, 1997

/s/ MARTIN COOPER*
- ------------------------------ Director
Martin Cooper August 14, 1997

*By: /s/ BRUCE R. WRIGHT
-------------------------
(Bruce R. Wright)
(ATTORNEY-IN-FACT)

II-4

<PAGE>
EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Spectrian Corporation:

We consent to the use of our reports incorporated herein by reference and to
the references to our firm under the headings "Selected Consolidated Financial
Data" and "Experts" in the Prospectus.

/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP

San Jose, California
August 12, 1997

II-5