UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-Q
-------------------
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934

For the quarterly period ended March 31, 2001

- ----- Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

Commission File Number: 000-28276

SAWTEK INC.
(Exact name of registrant as specified in its charter)

Florida 59-1864440
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1818 South Highway 441
Apopka, Florida 32703
(Address of principal executive offices)

Telephone Number (407) 886-8860
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:

Yes X No
------ -------

As of April 26, 2001, there were 42,287,586 shares of the Registrant's
Common Stock outstanding, par value $.0005.

Sawtek Inc.
TABLE OF CONTENTS

Part I. Financial Information Page Number

Item 1. Financial Statements (unaudited)

Consolidated Balance Sheets as of March 31, 2001
and September 30, 2000................................ 3

Consolidated Statements of Income for the three
months and six months ended March 31, 2001 and 2000... 4

Consolidated Statements of Cash Flows for the six
months ended March 31, 2001 and 2000.................. 5

Notes to Consolidated Financial Statements............ 6

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................10

Item 3. Quantitative and Qualitative Disclosure of Market
Risk..................................................30

Part II. Other Information

Item 1. Legal Proceedings.....................................31

Item 2. Changes in Securities.................................31

Item 3. Defaults Upon Senior Securities.......................31

Item 4. Submission of Matters to a Vote of Security Holders...31

Item 5. Other Information.....................................32

Item 6. Exhibits and Reports on Form 8-K .....................32

Signatures...............................................................33

Exhibit Index ...........................................................34

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SAWTEK INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

March 31, September 30,
2001 2000
--------- -------------
(unaudited)

Assets
Current assets:
Cash, cash equivalents and short-term investments $ 166,210 $ 144,343
Accounts receivable, net 20,648 30,661
Inventories, net 19,385 18,588
Deferred income taxes 1,320 1,320
Other current assets 3,268 2,157
--------- ---------
Total current assets 210,831 197,069
Property, plant and equipment, net 63,326 62,368
Other assets 1,051 51
--------- ---------
Total assets $ 275,208 $ 259,488
========= =========

Liabilities and shareholders' equity Current liabilities:
Accounts payable $ 2,604 $ 3,656
Accrued liabilities 3,111 6,003
--------- ---------
Total current liabilities 5,715 9,659

Deferred income taxes 7,002 6,393

Shareholders' equity:
Common stock; $.0005 par value; 120,000,000 authorized shares; 42,668,194
issued shares; 42,264,236 and 42,632,776 outstanding
shares at March 31, 2001 and September 30, 2000, respectively 21 21
Capital surplus 76,417 78,531
Unearned ESOP compensation (586) (586)
Retained earnings 195,962 166,612
Less common stock held in treasury at cost; 403,958 shares at
March 31, 2001 and 35,418 at September 30, 2000 (9,323) (1,142)
--------- ---------
Total shareholders' equity 262,491 243,436
--------- ---------
Total liabilities and shareholders' equity $ 275,208 $ 259,488
========= =========

See accompanying notes to consolidated financial statements.

SAWTEK INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

Three Months Ended Six Months Ended
March 31, March 31,
-------------------- ---------------------
2001 2000 2001 2000
---- ---- ---- ----
(dollars in thousands, except per share data)

Net sales $ 28,370 $ 37,612 $ 76,120 $ 69,410
Cost of sales 13,379 14,930 32,827 28,424
-------- -------- -------- --------
Gross profit 14,991 22,682 43,293 40,986

Operating expenses:
Selling expenses 1,367 1,497 3,423 2,736
General & administrative expenses 1,550 1,229 3,186 2,466
Research & development expenses 2,654 2,195 4,829 3,873
-------- -------- -------- --------
Total operating expenses 5,571 4,921 11,438 9,075
-------- -------- -------- --------
Operating income 9,420 17,761 31,855 31,911

Other income, net 2,210 1,580 4,613 3,036
-------- -------- -------- --------
Income before taxes 11,630 19,341 36,468 34,947
Income taxes 2,361 6,721 7,118 12,144
-------- -------- -------- --------
Net income $ 9,269 $ 12,620 $ 29,350 $ 22,803
======== ======== ======== ========
Net income per share:
Basic $ 0.22 $ 0.30 $ 0.69 $ 0.54
Diluted $ 0.22 $ 0.29 $ 0.68 $ 0.52

Shares used in per share calculation:
Basic 42,414 42,470 42,509 42,396
Diluted 42,969 43,724 43,032 43,668

See accompanying notes to consolidated financial statements.

SAWTEK INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Six Months Ended
March 31,
---------------------
2001 2000
---- ----
(in thousands)

Operating activities:
Net income $ 29,350 $ 22,803
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 6,112 4,143
Deferred income taxes 609 3,890
Loss on disposal of equipment - 365
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 10,013 (4,975)
Inventories (797) (5,882)
Other assets (1,111) (193)
Increase (decrease) in liabilities:
Accounts payable (1,052) 1,968
Accrued liabilities (2,892) (1,230)
Income taxes payable - 3,374
--------- ---------
Net cash provided by operating activities 40,232 24,263

Investing activities:
Purchase of property, plant and equipment, net (7,070) (18,414)
Purchase of long-term investments (1,000) -
Short-term investments 41,783 11,230
--------- ---------
Net cash provided by (used in) investing activities 33,713 (7,184)

Financing activities:
Principal payments on long-term debt - (234)
Issuance of common stock 1,197 872
Stock option income tax benefits 933 2,076
Purchase of common stock for treasury (12,425) -
--------- ---------
Net cash provided by (used in) financing activities (10,295) 2,714
--------- ---------

Increase in cash and cash equivalents 63,650 19,793
Cash and cash equivalents at beginning of period 69,536 50,640
Short-term investments 33,024 53,404
--------- ---------
Cash, cash equivalents and short-term investments $ 166,210 $ 123,837
========= =========

Supplemental disclosures:
Interest paid $ - $ 69
Income taxes paid $ 7,980 $ 2,450

See accompanying notes to consolidated financial statements.

SAWTEK INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended March 31, 2001 and 2000

NOTE 1 BASIS OF PRESENTATION

The accompanying unaudited, consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information in response to the requirements
of Article 10 of Regulation S-X. Accordingly, they do not contain all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. In the opinion of
management, the accompanying unaudited, consolidated financial statements
reflect all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation of the Company's financial position
as of March 31, 2001, and the results of its operations and its cash flows for
the three and six months ended March 31, 2001 and 2000. These financial
statements should be read in conjunction with our audited financial statements
as of September 30, 2000, including the notes thereto, and the other information
set forth therein included in our most recent annual report on Form 10-K for the
year ended September 30, 2000 (File No. 000-28276), which was filed with the
Securities and Exchange Commission, or SEC, on November 13, 2000. The following
discussion may contain forward looking statements which are subject to the risk
factors set forth in "Risks and Uncertainties" as stated in Item 2 of this Form
10-Q.

We maintain our records on a fiscal year ending on September 30 of each
year and all references to a year refer to the year ending on that date. Our
first, second and third quarters normally end on the Sunday closest to the last
day of the last month of such quarter, which was April 1, 2001, for the second
quarter of fiscal 2001. However, for convenience, the financial statements are
dated as of March 31, 2001. There were no material transactions from March 31,
2001 through April 1, 2001.

Operating results for the three and six months ended March 31, 2001 are not
necessarily indicative of the operating results that may be expected for the
year ending September 30, 2001. Certain historical accounts have been restated
to conform to the current year presentation.

Certain references made in this Form 10-Q to "Sawtek", "we", "our", and
"us" refer to Sawtek Inc., a Florida corporation.

NOTE 2 EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted
earnings per share in accordance with the Statement of Financial Accounting
Standard Number 128:

Three Months Ended Six Months Ended
March 31, March 31,
------------------- ------------------
2001 2000 2001 2000
---- ---- ---- ----
(in thousands, except per share data)

Numerator:
Net income available to common stockholders $ 9,269 $12,620 $29,350 $22,803
======= ======= ======= =======
Denominator:
Denominator for basic earnings per share:
Weighted average shares 42,414 42,470 42,509 42,396
Effect of dilutive securities:
Employee stock options 555 1,254 523 1,272
------- ------- ------- -------
Denominator for diluted earnings per share:
Adjusted weighted average shares and
Assumed conversions 42,969 43,724 43,032 43,668
======= ======= ======= =======
Earnings per share:
Basic $ 0.22 $ 0.30 $ 0.69 $ 0.54
======= ======= ======= =======
Diluted $ 0.22 $ 0.29 $ 0.68 $ 0.52
======= ======= ======= =======

NOTE 3 INVENTORIES

Net inventories consist of the following:

March 31, 2001 September 30, 2000
-------------- ------------------
(in thousands)

Raw material $10,442 $11,750
Work in process 3,394 3,662
Finished goods 5,549 3,176
------- -------
Total $19,385 $18,588
======= =======

NOTE 4 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

March 31, 2001 September 30, 2000
-------------- ------------------
(in thousands)

Land and Improvements $ 830 $ 830
Buildings 22,295 16,541
Production and Test Equipment 69,562 62,680
Computer Equipment 4,336 4,036
Furniture and Fixtures 3,070 2,943
Construction in Progress 3,936 9,929
--------- ---------
104,029 96,959
Less accumulated depreciation 40,703 34,591
--------- ---------
Total $ 63,326 $ 62,368
========= =========

NOTE 5 SHAREHOLDERS' EQUITY

The consolidated changes in shareholders' equity for the six months ended
March 31, 2001 are as follows:

Unearned
Common Stock Treasury Stock Capital ESOP Retained
Shares Amount Shares Amount Surplus Compensation Earnings Total
------ ------ ------ ------ ------- ------------ -------- -----
(in thousands)

Balance at September 30, 2000 42,668 $21 35 $(1,142) $78,531 $(586) $166,612 $243,436
Net proceeds from exercise of stock
options (129) 4,244 (3,047) 1,197
Compensatory stock option tax
benefit 933 933
Purchase of treasury stock 498 (12,425) (12,425)
Net income for the six months ended
March 31, 2000 29,350 29,350
------ --- ---- ------- ------- ----- -------- --------
Balance at March 31, 2001 42,668 $21 404 $(9,323) $76,417 $(586) $195,962 $262,491
====== === ==== ======= ======= ===== ======== ========

NOTE 6 RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Instruments and Hedging Activities, and its
amendments Statements 137 and 138, in June 1999 and June 2000, respectively. The
Statement requires the Company to recognize all derivatives on the balance sheet
at fair value. Derivatives that are not hedges must be adjusted to fair value
through income. If the derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of derivatives are either offset against the
change in fair value of assets, liabilities, or firm commitments through
earnings, or recognized in other comprehensive income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's change in fair
value will be immediately recognized in earnings. The Company's principal
hedging activities relate to hedges of firm commitments. This type of hedging
generally relates to purchases of equipment or materials, denominated in foreign
currencies. The Company evaluates whether to hedge or not based on the currency,
time, amount and other factors. In this type of hedging, both the hedging
instrument and the change in the fair value of the firm commitment to the extent
of the hedge instrument are recognized on the balance sheet as part of the fair
value hedge relationship. The Company adopted FAS No. 133 on October 1, 2000. At
March 31, 2001, the Company had no hedges on firm commitments outstanding.

NOTE 7 RELATED PARTY TRANSACTIONS

In March 2001, the Company completed a $1,000,000 investment in Xytrans,
Inc. In return, Sawtek received an approximately eight percent equity ownership
and one seat on the Board of Directors of Xytrans. The Company's former Chief
Executive Officer and current Chairman of its Board of Directors, Steven P.
Miller, will serve as the Chairman of Xytrans. In addition, Mr. Miller and Dr.
Neal Tolar, a former senior vice-president of Sawtek and current member of
Sawtek's board, also have an equity interest in Xytrans. Xytrans is a spin-off
company from Lockheed Martin and is a developer of millimeter wave, wireless
data communication products.

NOTE 8 RECLASSIFICATIONS

Certain amounts in prior years have been reclassified to conform to current
year presentation.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion and analysis should be read in conjunction with
our Consolidated Financial Statements and Notes thereto included elsewhere in
this Form 10-Q. Except for the historical information contained herein, the
discussion in this Form 10-Q contains certain forward looking statements such as
statements of our plans, objectives, expectations, projections and intentions
that involve risks and uncertainties. The cautionary statements made herein
should be read as being applicable to all related forward looking statements
wherever they appear. Our actual results could differ materially from those
discussed here. Factors that could cause or contribute to such differences
include those discussed in "Risks and Uncertainties," as well as those discussed
elsewhere.

Overview

Sawtek designs, develops, manufactures and markets a broad range of
electronic signal processing components based on surface acoustic wave, or SAW,
technology primarily for use in the wireless communications industry. Our
primary products are custom-designed, high performance bandpass filters,
resonators, oscillators and SAW-based subsystems. These products are used in a
variety of microwave and RF systems, such as CDMA and GSM digital wireless
communications systems, digital microwave radios, wireless local area networks,
cable television equipment, Internet infrastructure, various defense and
satellite systems, and sensors.

We have a wide range of customers, but a significant percentage of our
revenue is derived from a limited number of customers. Our top three customers
during the six months ended March 31, 2001 and 2000, accounted for approximately
41% and 43%, respectively, of total net sales. It is not uncommon for our top
three customers to change from quarter to quarter. In addition, we have
experienced significant growth in international markets over the last five
years, with international sales accounting for approximately 67% and 62% of net
sales during the first six months of fiscal years 2001 and 2000, respectively.

Results of Operations

The following tables set forth, for the periods indicated, information
derived from our statements of operations for those periods expressed as a
percentage of net sales, and the percentage change in such items from the
comparable prior year period. Any trends illustrated in the following table are
not necessarily indicative of future results.

Percent Increase
Over the Prior Period
-------------------------------
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
2001 2000 2001 2000 2001 vs. 2000 2001 vs. 2000
---- ---- ---- ---- ------------- -------------

Net sales 100.0% 100.0% 100.0% 100.0% (24.6%) 9.7%
Cost of sales 47.2 39.7 43.1 41.0 (10.4%) 15.5%
----- ----- ----- -----
Gross profit 52.8 60.3 56.9 59.0
Operating expenses:
Selling expenses 4.8 4.0 4.5 3.9 (8.7%) 25.1%
General &
administrative expenses 5.5 3.3 4.2 3.6 26.1% 29.2%
Research & development
expenses 9.3 5.8 6.3 5.6 20.9% 24.7%
----- ----- ----- -----
Total operating expenses 19.6 13.1 15.0 13.1 13.2% 26.0%
----- ----- ----- -----
Operating income 33.2 47.2 41.9 45.9 (47.0%) (0.2%)
Other income - net 7.8 4.2 6.0 4.4 39.7% 51.9%
----- ----- ----- -----
Income before taxes 41.0 51.4 47.9 50.3 (39.7%) 4.4%
Income taxes 8.3 17.8 9.3 17.4 (64.9%) (41.4%)
----- ----- ----- -----
Net income 32.7% 33.6% 38.6% 32.9% (26.6%) 28.7%
===== ===== ===== =====

Percent Increase
Over the Prior Period
----------------------------
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
March 31, March 31, March 31, March 31,
2001 2000 2001 2000 2001 vs. 2000 2001 vs. 2000
---- ---- ---- ---- ------------- -------------

Revenue by markets:
Communication:
Base stations 32.8% 34.6% 32.7% 34.0% (28.5%) 5.3%
Handsets 35.3 36.8 35.5 38.6 (27.7%) 0.8%
Broadband access 6.1 2.2 6.9 2.7 106.9% 186.9%
Data communications 6.4 9.7 7.1 8.0 (50.5%) (2.6%)
All other communications 0.4 1.7 1.1 1.7 (82.4%) (27.7%)
----- ----- ----- -----
Sub-total communication 81.0 85.0 83.3 85.0
Military and space 6.8 3.8 5.6 4.1 36.4% 50.2%
All other 12.2 11.2 11.1 10.9 (17.5%) 11.8%
----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0% (24.6%) 9.7%
===== ===== ===== =====

Revenue by architecture:
GSM 15.0% 24.2% 22.5% 19.2% (53.4%) 28.7%
CDMA 46.1 41.4 41.5 46.9 (16.1%) (3.0%)
All other 38.9 34.4 36.0 33.9 (14.5%) 16.4%
----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====

Revenue by product line:
Handset
CDMA IF filters 29.0% 18.2% 22.9% 24.7% 20.1% 1.4%
RF and GSM IF filters 6.3 18.6 12.6 13.9 (74.6%) (0.4%)
----- ----- ----- -----
Sub-total Handset 35.3 36.8 35.5 38.6 (27.7%) 0.8%
Base Station
CDMA 17.8 23.9 19.2 22.6 (43.8%) (6.7%)
GSM 15.0 10.7 13.4 11.5 5.6% 28.8%
----- ----- ----- -----
Sub-total Base Station 32.8 34.6 32.6 34.1 (28.5%) 5.3%

All other 31.9 28.6 31.9 27.3 (15.8%) 27.7%
----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====

Revenue by geographic region:
North America 44.6% 39.2% 42.6% 42.3% (14.6%) 10.3%
Europe 16.5 21.7 19.1 18.2 (42.5%) 15.1%
Pacific Rim (excluding 9.4 10.6 15.2 7.1 (32.8%) 135.5%
S. Korea)
South Korea 27.2 25.5 19.3 28.6 (19.8%) (25.9%)
Other 2.3 3.0 3.8 3.8 (42.1%) 11.1%
----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0%
===== ===== ===== =====

Net Sales. Net sales decreased 24.6% from $37.6 million in the quarter
ended March 31, 2000, to $28.4 million in the quarter ended March 31, 2001. Net
sales for the six months ended March 31, 2001, increased by $6.7 million or 9.7%
to $76.1 million from the comparable period in 2000.

The decrease in revenues during the second quarter of 2001, were primarily
the result of decreased shipments of bandpass filters for code division multiple
access, or CDMA, base stations, decreased shipments of bandpass filters for
global system for mobile communication, or GSM, mobile phones and a lower level
of sales from our data communication related products.

We believe that the current slowdown in the wireless and communications
markets will continue into the third and fourth quarter of fiscal 2001 and we
will be significantly affected by this slowdown. We are projecting our revenue
will be down by approximately 15% to 20% for fiscal 2001, compared to fiscal
2000, and net income, exclusive of one-time tax gains recorded in fiscal 2000,
to be down slightly more than the decline in revenue. The decline in revenue is
projected to be across most of our major product lines.

Reasons for the continued reduced revenue outlook include a slowing economy
resulting in a reduced demand for cellular phones, excess inventory at one of
our major customers relating to one of our products, a slower adoption rate of
2.5G and 3G platforms and a more competitive marketplace resulting in slightly
lower average selling prices than originally anticipated.

A significant percentage of our revenues continue to be generated from
international markets. Sales to international customers accounted for
approximately 67% and 62% of total revenues during the six months ended March
31, 2001 and 2000, respectively. During the three-month period ended March 31,
2001, sales to our international customers declined approximately 27% as
compared to the quarter ended March 31, 2000. Additionally, sales to our
international customers declined approximately 45% from the first quarter of
2001 to the second quarter of 2001.

Revenues generated from Asian customers accounted for approximately 37% and
36% of total revenues during the quarters ended March 31, 2001 and 2000,
respectively, and accounted for approximately 34% and 36% of total revenues
during the six months ended March 31, 2001 and 2000, respectively. We believe
that financial turmoil or instability in international markets, specifically,
the Asian market, could reoccur and impact us in the future. Revenues generated
from Asian customers continue to vary significantly from quarter to quarter and
could decline substantially with little or no advance notice.

During the quarters ended March 31, 2001 and 2000, the percentage of our
Asian revenue generated from South Korea was approximately 74% and 71%,
respectively. The percentage of our Asian revenue generated from South Korean
customers during the first six months of fiscal 2001 and for the fiscal year
2000 was 56% and 80%, respectively. During our fiscal year 2000, the South
Korean government reduced subsidies for the purchase of cellular phones in the
South Korean market. As a result of this governmental action, we experienced
delays in orders and some push out of orders to South Korean customers. At
present, we are uncertain what the near or mid-term impact of this action will
be on our revenues from these customers.

Our growth in revenue is highly dependent on the overall growth of the
wireless telecommunications market and on our ability to offer new and improved
products for this market. Recently, we expanded our product line of SAW filters
for this market to include SAW RF filters for handsets, intermediate frequency,
or IF, filters for GSM handsets and SAW duplexers for cellular CDMA handsets.
There is no assurance, however, that we will continue to be successful in
introducing new products for the wireless telecommunications market.

Finally, we believe that prices for filters for CDMA base stations will
decline in the future due to the transition to smaller surface mount packages
which would reduce revenues and gross margins on these products. Sales of CDMA
base station filters accounted for approximately 17.8% and 23.9% of total
revenues during the quarters ended March 31, 2001 and 2000, respectively. CDMA
base station filter sales accounted for approximately 19.2% and 22.6% of total
revenues during the six-month periods ended March 31, 2001 and 2000,
respectively.

Gross Margin. Gross profit margins decreased from 60.3% in the quarter
ended March 31, 2000, to 52.8% in the quarter ended March 31, 2001. Gross
margins for the six-months ended March 31, 2001 was 56.9% compared to 59.0% for
the comparable period in 2000.

The gross margin decrease primarily resulted from a continuing competitive
marketplace, resulting in lower average selling prices, coupled with a lower
revenue base to absorb our fixed manufacturing overhead.

During fiscal 2001, we plan to produce a significantly higher volume of RF
and GSM IF filters for wireless phones, both of which have lower average selling
prices, lower gross profit margins compared to our other products and are
subject to more competitive pricing pressure than our other products. As a
result, we believe that our gross profit margin percentage will decrease in 2001
compared to 2000. We are projecting our gross margins will be between 50% and
54% for the remainder of fiscal 2001. However, due to certain risks and
uncertainties detailed in the risk factor section of this Form 10-Q, no
assurances can be provided that our gross profit margins will not fall below
this range.

Selling Expenses. Selling expenses decreased 8.7% from $1.5 million in the
quarter ended March 31, 2000 to $1.4 million in the quarter ended March 31,
2001. Selling expenses for the six months ended March 31, 2001, increased 25.1%
to $3.4 million from the comparable period in 2000.

As a percentage of net sales, selling expenses increased from 4.0% during
the quarter ended March 31, 2000, to 4.8% in the quarter ended March 31, 2001,
and increased from 3.9% during the six months ended March 31, 2000, to 4.5%
during the six months ended March 31, 2001. This increase in selling expenses as
a percentage of net sales is attributable to a lower level of sales to customers
where historically, no sales commission has been paid, resulting in a higher
percentage of sales where sales commissions are paid.

General and Administrative Expenses. General and administrative expenses
increased 26.1% from $1.2 million in the quarter ended March 31, 2000 to $1.5
million in the quarter ended March 31, 2001. General and administrative expenses
for the six months ended March 31, 2001, increased 29.2% to $3.2 million from
the comparable period in 2000.

As a percentage of net sales, general and administrative expenses increased
from 3.3% during the quarter ended March 31, 2000, to 5.5% in the quarter ended
March 31, 2001, and increased from 3.6% during the six months ended March 31,
2000, to 4.2% during the six months ended March 31, 2001. The increase in
general and administrative expenses as a percentage of net sales is attributable
to the lower level of sales made during the second quarter 2001 as compared to
the second quarter 2000, while general and administrative expenses increased. In
response to our continued reduced revenue outlook, we have adjusted our spending
plans, reduced headcount at our plant in Costa Rica, reduced working hours and
have encouraged employees to take early retirement in the event this slowdown
continues for a longer period of time.

Research and Development Expenses. Research and development expenses
increased 20.9% from $2.2 million in the quarter ended March 31, 2000 to $2.7
million in the quarter ended March 31, 2001. Research and development expenses
for the six months ended March 31, 2001, increased 24.7% to $4.8 million from
the comparable period in 2000.

As a percentage of net sales, research and development expenses increased
from 5.8% during the quarter ended March 31, 2000, to 9.3% in the quarter ended
March 31, 2001, and increased from 5.6% during the six months ended March 31,
2000, to 6.3% during the six months ended March 31, 2001. The increase in
research and development expenses as a percentage of net sales is the result of
a higher level of new product development combined with declining sales. Despite
the current industry slowdown, we are aggressively recruiting engineers and
continue to invest in new products and technologies.

Other Income. Other income increased 39.7% and 51.9% from $1.6 million and
$3.0 million during the three and six months ended March 31, 2000, respectively,
to $2.2 million and $4.6 million during the three and six months ended March 31,
2001, respectively. These increases are the result of higher interest income
being earned on increased levels of cash, cash equivalents and short-term
investments.

Other income decreased 8.2% from $2.4 million during the first quarter 2001
to $2.2 million during the second quarter 2001. This decrease is the result of
lower interest rates and a shift in our investment portfolio to tax advantaged
securities.

Income Tax Expense. The provision for income taxes as a percentage of
income before income taxes was 20% and 35% for the three and six months ended
March 31, 2001 and 2000, respectively.

This decrease was primarily due to adjusting our income taxes for our Costa
Rican subsidiary. In the fourth quarter of 2000, we completed a significant
expansion to our Costa Rican operation and adjusted the income taxes for this
subsidiary. The Costa Rican subsidiary operates in a free trade zone and is
currently exempt from taxes in Costa Rica. As a result, effective in the fourth
quarter of 2000, we no longer record income taxes for this subsidiary as it is
now considered to be a permanent investment. We believe that our effective tax
rate for 2001 will range from 19% to 24%. However, due to certain risks and
uncertainties detailed in the risk factor section of this Form 10-Q, no
assurances can be provided that our effective tax rate will not exceed this
range.

Liquidity and Capital Resources

To date, we have financed our business through cash generated from
operations, bank borrowings, lease financing, the private sale of securities,
our May 1, 1996 initial public offering and the July 1, 1997 follow-on public
offering. We require capital principally for equipment, financing of accounts
receivable and inventory, investment in product development activities and new
technologies, expansion of our operations in Orlando and Costa Rica and
potential acquisitions of new technologies or compatible companies. For the six
months ended March 31, 2001, we generated net cash from operating activities of
approximately $40.2 million. Cash generated from operations consisted primarily
of net income of $29.4 million, $6.1 million of depreciation and amortization
and a decrease in accounts receivable of $10.0 million. These increases were
partially offset by an increase in other assets of approximately $1.1 million,
an increase in inventory of approximately $0.8 million and a decrease in
accounts payable and accrued liabilities of approximately $3.9 million.

We have a revolving credit agreement totaling $30.0 million from SunTrust
Bank, Central Florida, N.A. available through January 31, 2002. There were no
borrowings against the line of credit as of March 31, 2001.

During the three and six months ended March 31, 2001, we spent
approximately $3.6 million and $7.1 million, respectively, on new equipment and
facilities. We intend to spend an additional $8 million to $12 million during
the remainder of fiscal year 2001 on capital equipment and facilities to
increase capacity. It is also our intention to order additional equipment during
the remainder of 2001, which will utilize next generation manufacturing
techniques.

In the fourth quarter of 1998, the Board of Directors authorized us to
repurchase up to 2,000,000 shares of common stock. As of March 31, 2001,
1,655,952 shares have been repurchased under this program. During the first six
months of fiscal 2001, we repurchased 497,500 shares for approximately $12.4
million. We expect to continue to repurchase shares of common stock from time to
time in the future. The repurchased shares will be used to satisfy stock option
exercises and issuance of shares under other stock related benefit programs.

We believe that our present cash position and funds expected to be
generated from operations will be sufficient to meet our projected working
capital and other cash requirements through the next twelve months. Thereafter,
we may require additional equity or debt financing to address our working
capital needs or to provide funding for capital expenditures. There can be no
assurance that events in the future will not require us to seek additional
capital sooner or, if so required, that it will be available on acceptable
terms, if at all.

Foreign Operations, Export Sales and Foreign Currency

We established a subsidiary in Costa Rica in 1996. As of March 31, 2001, we
had a net investment in fixed assets of approximately $30.6 million in this
operation. During the three and six months ended March 31, 2001, we recorded net
sales of approximately $16.5 million and $45.3 million, respectively, with
operating profits of approximately $4.1 million and $15.3 million, respectively.
The functional currency for the Costa Rican subsidiary is the U.S. dollar since
sales and most material cost and equipment are U.S. dollar denominated. The
effects of currency fluctuations of the local Costa Rican currency are not
considered significant and are not hedged.

In 1996, we established a "foreign sales corporation" pursuant to the
applicable provisions of the Internal Revenue Code to take advantage of income
tax reductions on export sales. The cost to operate this subsidiary is nominal.

In 1999, we opened a sales and service office in Seoul, South Korea to
assist in our Asian sales efforts. The cost to operate this subsidiary is
nominal.

International sales are denominated in U.S. dollars. During the six months
ended March 31, 2001 and 2000, international sales accounted for approximately
67% and 62% of net sales, respectively. Sales to the European market accounted
for approximately 19% and 18% of net sales for these same periods, respectively,
and sales to the Asian and Pacific Rim markets, principally to South Korea, were
approximately 34% and 36% of net sales, respectively, for these same periods.

Over the past several years, the value of many foreign currencies have
fluctuated relative to the U.S. dollar. The Korean won and Japanese yen, in
particular, have fluctuated in value due in part to the economic events
experienced by these countries over the past year. A stronger U.S. dollar makes
it more difficult for us to sell our products to customers in these countries
and makes it more difficult for us to compete against SAW producers based in
these countries. A weaker U.S. dollar may make it more expensive for us to buy
certain raw materials and equipment from Japanese suppliers.

The new common European currency, the euro, made its debut in January 1999.
During the three and six months ended March 31, 2001, approximately 17% and 19%,
respectively, of our sales were to European customers. To date, no customers or
suppliers have requested us to transact business in the euro. At this time, the
impact of this new currency is not determinable.

Recently Issued Accounting Standards

Please see Note 6 to the Consolidated Financial Statements included in this
report and Note 1 to the Consolidated Financial Statements included in our
report on Form 10-K for the year ended September 30, 2000, for a discussion of
new pronouncements.

Impact of Inflation

We believe that inflation has not had a material impact on operating costs
and earnings.

Impact of the Year 2000

We completed our plan to address Year 2000 (Y2K) computer issues in
calendar year 1999 and we did not experience any significant problems related to
computer hardware, software or other applications, nor do we expect to
experience any Y2K issues in the future.

Risk Factors and Uncertainties

This Form 10-Q contains certain forward-looking statements, which are made
pursuant to the Safe Harbor provisions of the Private Securities Litigation Act
of 1995. Investors are cautioned that forward-looking statements such as
statements of the Company's plans, objectives, expectations and intentions
involve risks and uncertainties. The cautionary statements made in this report
should be read as being applicable to all related forward-looking statements
wherever they appear. Statements containing terms such as "believes," "does not
believe," "no reason to believe," "expects," "plans," "intends," "estimates" or
"anticipates" are considered to contain uncertainty and are forward-looking
statements. The Company's actual results could differ materially from those
discussed. Factors that could cause or contribute to such differences include
the following:

A decline either in the growth of wireless communications or in the continued
acceptance of CDMA technology would have an adverse impact on us.

During the three and six months ended March 31, 2001, the percentage of
total revenues generated from the sale of SAW devices was 68% and 69%,
respectively, for applications in wireless communications systems, specifically
wireless phones and base stations. Approximately 72%, 74% and 74% of our net
sales for 2000, 1999 and 1998, respectively, were derived from sales of SAW
devices for applications in wireless communications systems, specifically
wireless phones and base stations.

The growth rate for the unit sales of wireless phones has been over 40% for
the past several years, but has slowed recently. At the beginning of calendar
year 2001, forecasts by Ericsson, Motorola and Nokia, three leading
manufacturers of wireless phones, placed the projected unit sales of wireless
phones to be between 525 million and 575 million, compared to approximately 408
million phones for calendar year 2000. These projections have recently been
revised with Ericsson, Motorola and Nokia all cutting their forecasts for global
handset sales for calendar year 2001. Consensus estimates now range between 425
million and 500 million global handset sales for calendar year 2001,
representing a growth rate of approximately 15%. Any economic, technological or
other development resulting in a reduction in demand for wireless services and
products would have a material adverse effect on our business, financial
condition and results of operations.

Sales of our products for CDMA-based systems, including filters for base
stations and wireless phones, accounted for approximately 46% and 41% of our net
sales during the three and six months ended March 31, 2001. During fiscal 2000
and 1999, approximately 45% and 56%, respectively, of our net sales were
generated from sales for CDMA-based systems. CDMA technology is relatively new
to the marketplace and there can be no assurance that emerging markets will
adopt this technology. Our business and financial results would be adversely
impacted if CDMA technology does not continue to gain acceptance.

Because we depend on a few large customers, our operating results would be
adversely affected by the loss of any of these customers.

A few large customers have accounted for a significant portion of our net
sales. During the first six months of fiscal 2001, sales to our top 5 and 10
customers accounted for approximately 54% and 75% or our total net sales,
respectively. Sales to our top 10 customers accounted for approximately 72%, 70%
and 76% of net sales in 2000, 1999 and 1998, respectively.

Motorola, our largest customer, accounted for approximately 19% and 26% of
our total net sales during the three and six months ended March 31, 2001, and we
believe it will continue to account for a high percentage of net sales during
the remainder of fiscal 2001. Motorola accounted for 25% and 23% of net sales in
2000 and 1999, respectively.

In a conference call with the investment community on April 11, 2001,
senior management from Motorola stated that they expect revenue and operating
income from their sales of wireless phones to decline in the quarter ending June
30, 2001. Additionally, during the same conference call, Motorola cut its
forecast for global handset sales to approximately 425 million to 475 million
units from its previous guidance of 525 million units. Motorola's recent
forecast is at the low end of most analysts' current projections. A decline in
Motorola's handset revenues combined with a reduction in the global forecast for
handset sales in calendar year 2001 could adversely affect our sales and revenue
growth in the future.

We expect that sales of our products to a limited number of customers will
continue to account for a high percentage of our net sales in the foreseeable
future. Our future success depends largely upon the decisions of our current
customers to continue to purchase our products, as well as the decisions of
prospective customers to develop and market systems that incorporate our
products.

New competitive products and technologies have been announced which could reduce
demand for our products.

Our business is dependent upon the application of SAW-based technology.
Competing technologies, including digital filtering technology, direct
conversion or any other technology that could be developed, could replace or
reduce the use of SAW filters for certain applications. Direct conversion is a
process that converts an RF signal to baseband without the need for a SAW IF
filter. Qualcomm Inc. of San Diego, California, Analog Devices, Inc. of Norwood,
Massachusetts, Agilient Technologies, Inc. of Palo Alto, California and RF Micro
Devices of Greensboro, North Carolina, each produce integrated circuits for use
in wireless phones and have announced products or plans to produce products that
utilize direct conversion or other technologies that could reduce or eliminate
SAW filters in certain applications. Other companies, as well, may from time to
time, announce products, patents or other claims relating to direct conversion
or such other technologies that may reduce or eliminate certain SAW filters.

The product introduced by Analog Devices, Inc. may have some application in
certain GSM phones, which, if proven successful, could impact sales of our GSM
IF filters for wireless phones. Our sales of SAW filters for GSM wireless phones
accounted for approximately 9% of revenues for the six months ended March 31,
2001, and approximately 8% of revenues for the year ended September 30, 2000. We
believe that revenues generated from handset filters for GSM phones could
account for up to 10% of our total revenues for all of fiscal 2001.

Qualcomm Inc., on December 18, 2000, announced a new product based on a
direct conversion concept that could eliminate a SAW IF filter in certain CDMA
phones. Qualcomm expects to sample this product in late calendar year 2001. Our
sales of IF filters for CDMA phones accounted for approximately 23% of revenues
for the six months ended March 31, 2001 and approximately 22% of revenues for
the year ended September 30, 2000. We believe that revenues generated from IF
filters for CDMA phones could account for up to 25% of our total revenues for
all of fiscal 2001. If Qualcomm's product is successful in the market, it could
reduce or eliminate our revenues from IF filters for CDMA phones.

Agilent Technologies, Inc. recently announced an alternative solution to
SAW-based technology for potential use as a duplexer in certain PCS wireless
phone applications. To date, we have not sold any SAW-based duplexers, but we
have targeted this application for future revenue growth.

Lastly, RF Micro Devices, on January 22, 2001, announced a direct
conversion modulator for multi-mode wireless phones that could reduce the need
for certain transmit filters for GSM and potentially other architectures.
Production for this product is scheduled for the second half of calendar year
2001. Currently, most phone OEM's do not use SAW filters in the transmit path
for GSM phones and we do not derive any revenue from this application. At this
time we are unable to assess the impact, if any, of this announcement on our
future revenue and growth.

Any development of a cost-effective technology that replaces SAW filtering
technology or reduces the need for SAW filtering technology could have a
material adverse effect on our business, financial condition and results of
operations.

If we are unable to successfully develop and bring new products to market, our
operating results will be adversely affected.

During fiscal 2000, we announced our intent to offer an expanded line of
SAW filters for the wireless phone market, including RF and GSM IF filters.
Expanding our product line and sales of these filters is an important part of
our growth strategy. There is no assurance that we will be successful in our
efforts to introduce these and other new filters for the wireless
telecommunications market.

Sustained growth of our business is dependent on our ability to develop new
or improved SAW devices in a timely fashion. Our product development resources
are limited, requiring us to allocate resources among a limited number of
product development projects. Failure by us to properly allocate our product
development resources to products that meet market needs could have a material
adverse effect on our future growth. The success of new products also depends on
timely completion of new product designs, quality of new products and market
acceptance of these products.

If we are unable to successfully increase our production capacity, we will not
be able to grow our revenue as planned.

During the first six months of fiscal 2001, we spent approximately $7.1
million on capital expenditures to increase our manufacturing capacity. We have
not completed our capacity expansion plans and intend to spend an additional $8
million to $12 million during the remainder of fiscal year 2001 on new
equipment. During fiscal 2000 we incurred approximately $27 million in capital
expenditures to increase our manufacturing output to enable us to grow our
revenue. Expansion plans for fiscal year 2001 include new wafer fabrication
capacity and capability in Orlando and new assembly capacity in Orlando and
Costa Rica. Any delay in increasing our capacity will have a material adverse
impact on our ability to meet the anticipated demand for our new products and on
our ability to grow revenue.

Because we rely on a limited number of suppliers, our operating results would be
adversely affected if a few suppliers were unable to meet our needs.

We have a limited number of suppliers for certain critical raw materials,
components, services and equipment. There are only a few ceramic package
manufacturers and wafer producers worldwide who have the expertise and capacity
necessary to satisfy our requirements. Most of these suppliers are based in
Japan. At times in the past, we have experienced difficulty in obtaining ceramic
surface mount packages used in the production of bandpass filters. A failure by
us to anticipate demand for materials, or of our suppliers to provide sufficient
quantities of material, could result in raw material shortages. There can be no
assurance that we will be able to secure adequate supplies of materials,
components, services or equipment. If we were unable to satisfy our requirements
for raw materials or to obtain and maintain appropriate equipment, our business,
financial condition and results of operations would be materially adversely
affected.

Risks associated with international sales could adversely affect our operating
results.

During the three and six months ended March 31, 2001, net sales to our
international customers accounted for approximately 64% and 67% of total net
sales, respectively. Our net sales to international customers accounted for
approximately 61%, 41% and 37% of total net sales for 2000, 1999 and 1998,
respectively. The sale of products in foreign countries involves a number of
risks that can arise from international trade transactions, local business
practices and cultural considerations, including:

o currency exchange rate fluctuations and restrictions;

o import-export regulations;

o customs requirements;

o ability to secure credit and funding;

o longer payment cycles;

o foreign collection problems;

o political and transportation risks; and

o economic turmoil.

Some of our major customers are relying on growth in international markets,
including Asia and Latin America, for sales of their products. The demand for
our products will be reduced if the economies in these regions decline or do not
meet anticipated growth expectations.

We have grown our net sales over the past several years partly from
shipments to South Korean customers. During the three and six months ended March
31, 2001, net sales to our South Korean customers accounted for approximately
27% and 19% of total net sales, respectively. For fiscal 2000, our net sales to
South Korean customers was approximately $32.9 million or 20.6% of total net
sales, and in 1999 it was approximately $16.8 million, or 16.8% of net sales.
However, net sales to South Korean customers fluctuates greatly as experienced
in the last quarter of 1998 when those net sales declined to $1.1 million, or
approximately 5% of total net sales, compared to $4.8 million, or approximately
18% of total net sales, in the immediately preceding quarter. The South Korean
economy and the economies of many other countries in Asia and around the world
have experienced economic turmoil and recession during the past 24 months and
may continue to face economic problems which would adversely impact our sales in
these regions. In addition, the South Korean government recently reduced
subsidies for the purchase of wireless phones in the South Korean market, which
could adversely impact future sales of our products into this market.

Our manufacturing facilities are located in areas prone to natural disasters.

We have manufacturing and production facilities located in Orlando, Florida
and in San Jose, Costa Rica. Hurricanes, tropical storms, flooding, tornadoes,
and other natural disasters are common events for the southeastern part of the
United States and in Central America. Additionally, our Costa Rican facility
could also be affected by mud slides, earthquakes and volcanic eruptions. Any
disruptions from these or other events would have a material adverse impact on
our operations and financial results.

Though we have manufacturing and assembly capabilities in both Orlando and
San Jose, we are only capable of fabricating wafers in our Orlando facility. As
a result, any disruption to our Orlando facility would have a material adverse
impact on our operations and financial results.

A disruption in our Costa Rican operations would have an adverse impact on our
operating results.

As discussed in a previous risk factor, we have a production facility
located in Costa Rica, which is prone to natural disasters. In addition to the
potential risk of a natural disaster occurring, operating a facility in Costa
Rica presents additional risks of disruption such as government intervention,
currency fluctuations, labor disputes, limited supplies of labor, power
interruption and war. Any such disruptions could have a material adverse effect
on our business, results of operations and financial condition.

During the three and six months ended March 31, 2001, net sales from our
Costa Rican operation accounted for approximately 58% and 60% of total net
sales, respectively, and 27% and 48% of our operating income, respectively.
During fiscal years 2000 and 1999, net sales from our Costa Rican operation
accounted for approximately 51% and 47% of our total net sales, respectively,
and approximately 37% and 40% of our operating income, respectively. We expect
our Costa Rican operations to continue to account for a significant proportion
of our overall operations in the future.

A change in our favorable tax status in Costa Rica would have an adverse impact
on our operating results.

Our subsidiary in Costa Rica operates in a free trade zone and will receive
a 100% exemption from Costa Rican income taxes through 2003 and a 50% exemption
through 2007. During the three and six months ended March 31, 2001, this tax
exemption provided tax saving of approximately $1.6 million and $5.7 million.
During fiscal 2000, this tax exemption provided tax savings of approximately
$10.0 million, excluding the one-time gain of $16.7 million related to adjusting
the prior year's deferred income taxes, and increased our diluted earnings per
share by approximately $0.23.

The Costa Rican government is reviewing its policy on granting tax
exemptions to companies located in free trade zones. To date, no changes have
been made and it is uncertain if any changes will be made to the current tax
structure. Any adverse change in the tax structure for our Costa Rican
subsidiary made by the local government would have a negative impact on our net
income.

A continued decline in selling prices for some of our key products could have an
adverse impact on our operating results.

Selling prices for our products have declined due to competitive pricing
pressures and to the use of newer surface mount package devices that are smaller
and less expensive than previous generation filters. We have experienced
declines in prices for filters for GSM base stations due to the use of surface
mount packages, and this has also begun to occur in filters for CDMA base
stations. In addition, we expect prices for wireless phone filters to continue
to decline as they become smaller and as competitive pricing pressure increases.
A continued decline in prices could have a material adverse impact on both our
revenues and our net income.

If we experience a decline in our manufacturing yields, our operating results
will be adversely affected.

The manufacture of SAW devices involves complex processes that may result
in reduced yields from time to time, the causes of which are often difficult to
determine. A reduction in yields at any stage of the manufacturing process would
have a material adverse effect on our ability to meet our quoted delivery times
and on our cost of production, which would have an adverse impact on our
operations and profitability.

If one or more customers cancel or terminate purchase orders or delay deliveries
with short notice, our operating results would be adversely affected.

Our customers' orders are typically subject to cancellation or modification
with very short notice. In addition, purchase orders for our products may be
large and intended to satisfy customers' long-term needs. Accordingly, our
backlog is not necessarily indicative of future product sales, and a delay or
cancellation of a small number of purchase orders may adversely impact our
operations. In addition, our expense levels are based, in part, on our
expectations of future product sales and therefore are relatively fixed in the
short term. If we were unable to reduce our expense levels correspondingly with
a reduction in sales levels, our results of operations would be further harmed.

We expect competition to increase, which could result in lower selling prices
and have an adverse effect on our operating results.

Competition in the markets for our products is intense. We compete against
large international companies that have substantially greater financial,
technical, sales, marketing, distribution and other resources than us. In
addition, we may face competition from companies that currently manufacture SAW
devices for their own internal requirements, as well as from a number of our
customers that have the potential to develop an internal supply capability for
SAW devices. We expect competition to increase from both established and
emerging competitors, as well as from internal capabilities developed by certain
customers. Our ability to compete effectively in our target markets depends on a
variety of factors both within and outside of our control, including timing and
success of new product introductions, availability of manufacturing capacity,
the rate at which customers incorporate our components into their products, our
ability to respond to competitive pricing pressures, availability of technical
personnel, sufficient supplies of raw materials, the quality, reliability and
price of products and general economic conditions. There can be no assurance
that we will be able to compete successfully in the future.

If we are not able to protect our intellectual property or if we infringe on the
intellectual property of others, our business and operating results could be
adversely affected.

We rely on a combination of patents, copyrights and trade secrets to
establish and protect our intellectual property rights. There can be no
assurance that patents will issue from any of our pending applications or that
any claims allowed from existing or pending patents will be sufficiently broad
to protect our technology. In addition, there can be no assurance that any
patents issued to us will not be challenged, invalidated or circumvented, or
that the rights granted will provide proprietary protection. Litigation may be
necessary to enforce our patents, trade secrets and other intellectual property
rights, to determine the validity and scope of the proprietary rights of others
or to defend against claims of infringement. Such litigation could result in
substantial costs and diversion of resources and could have a material adverse
effect on our business, results of operations and financial condition regardless
of the final outcome of the litigation. We are not currently engaged in any
patent infringement suits, nor have we been threatened with any such suits. In
January 2000, we received a letter from a large Canadian telephone equipment
manufacturer claiming that it believes we are infringing on a patent it owns
that issued in 1987 and offering a license on preferred terms. It is our
position that this patent is unenforceable because we sold devices commercially
utilizing the invention claimed in the patent at least two years before the
application for this patent was filed and because the patent owner did not
attempt to exercise its rights to enforce this patent for over 12 years. If we
are incorrect in our position in this matter and this patent is found to be
enforceable, we could be required to pay a license fee or to pay damages related
to sales of devices utilizing this invention sold over the past seven years and
we could be enjoined from further infringement, either of which could have a
material adverse effect on our operating results. Despite our efforts to
maintain and safeguard our proprietary rights, there can be no assurances that
we will be successful in doing so or that our competitors will not independently
develop or patent technologies that are substantially equivalent to or superior
to our technologies. If any of the holders of these patents assert claims that
we are infringing such patents, we could be forced to incur substantial
litigation expenses. In addition, if we were found to infringe, we would be
required to pay substantial damages, pay royalties in the future or be enjoined
from infringing on such patents in the future.

A failure to attract and retain qualified individuals for critical positions
could have an adverse impact on our business, financial condition and results of
operations.

Our success depends, in part, on the performance of a number of key
management and technical personnel. The loss of a key employee could have a
material adverse effect on our business. Our success also depends, in part, on
our ability to attract and retain qualified professional, technical, production,
managerial and marketing personnel, both domestically and internationally.
Competition for such personnel in our industry is very intense. While we have
not yet experienced significant problems in recruiting or retaining qualified
personnel, we cannot be certain that such problems will not arise in the future.

Our operating results could be adversely affected by fluctuations in the value
of foreign currencies.

Our international sales are generally denominated in U.S. dollars. However,
we may be required in the future to denominate sales in the foreign currencies
of certain countries or in the euro for some of our European customers. As a
result, fluctuations in currency exchange rates may have a significant effect on
our sales, even in the absence of an increase or decrease in unit sales to
foreign customers. A strong U.S. dollar could make our products more expensive
for foreign customers, which could have a material adverse effect on our ability
to compete internationally. We also purchase most of our key raw materials and
equipment from foreign countries, primarily Japan. A weak U.S. dollar could make
our purchases more expensive.

Over the past two years, the valuations of many foreign currencies have
fluctuated significantly relative to the U.S. dollar. The Korean won and
Japanese yen, in particular, have fluctuated in value due in part to the
economic problems experienced by these countries.

To date, we have engaged in limited hedging transactions for our foreign
exchange risks. If any of our future international sales or purchases are
denominated in foreign currencies, we may find it necessary to engage in
substantial rate hedging activities with respect to exchange rate risks. There
can be no assurance that such exchange rate hedging will successfully protect us
against such exchange rate risk.

We could be subject to fines, suspension of production or cessation of
operations if we fail to comply with the many laws and government regulations
applicable to our business.

We are subject to a variety of federal, state and local laws, rules and
regulations relating to the discharge and disposal of toxic, volatile and other
hazardous chemicals used in our manufacturing processes and to export controls.
A failure by us to comply with present or future regulations could result in the
imposition of fines, suspension of production or a cessation of operations. Such
regulations could require us to acquire significant equipment or to incur
substantial expense in order to comply with such regulations. Any past or future
failure to control the use of or the discharge of toxic or hazardous substances
or to comply with export regulations could subject us to future liabilities and
could have a material adverse effect on our business, results of operations and
financial condition.

A number of factors affecting our customers may result in the cancellation of
orders or delays in deliveries of our products to these customers.

The increasing demand for wireless communications has exerted pressure on
regulatory bodies worldwide to adopt new standards for wireless communications
products and services. The delays inherent in this governmental approval process
have in the past, and may in the future, cause the cancellation, postponement or
rescheduling of the installation of communications systems by our customers. Any
such delays may have a material adverse effect on the sale of our products to
these customers. In addition, our customers may have difficulty in obtaining
parts from other suppliers, causing these customers to cancel or delay orders
for our products.

Our stock price has been volatile.

There has been significant volatility in the market price of our common
stock, as well as in the market price of securities of technology-based
companies and the U.S. stock markets overall. Some of the factors that could
affect our stock price include:

o variations in our operating results or the operating results of our
customers or competitors, or other technology companies;

o announcements of new products by us or by our competitors;

o gain or loss of significant contracts;

o announcements of technological innovations;

o acquisitions by us or our competitors;

o changes in analysts' estimates of our financial performance;

o government regulatory action;

o developments or disputes regarding proprietary rights;

o general trends in the industry; and

o general economic or stock market conditions.

Additionally, in the past, securities class action litigation often has
been brought against companies following periods of volatility in the market
price of their securities. We may be the target of similar litigation in the
future. Securities litigation could result in substantial costs and damages and
divert management's attention and resources.

The increased use of consignment inventories makes it more difficult for us to
accurately forecast our quarterly revenues.

We have experienced an increase in the dollar value of our products sold
through consignment inventory or hub agreements. Under these agreements, we ship
finished goods to warehouse sites located near our customers' facilities and the
customer then withdraws this inventory at their discretion. We do not recognize
revenue until our customers withdraw the inventory for their use. As a result of
not knowing the exact usage of inventory at these sites until late each quarter,
our estimates of quarterly revenues may fluctuate from our projections. At March
31, 2001, we had approximately $95,000 in consignment inventory at offsite
locations and approximately 1.2% and 5.0% of our total revenue during the three
and six months ended March 31, 2001, respectively, was generated through these
types of agreements. Approximately 10% of our total revenue came from these
agreements in fiscal 2000. We expect these amounts to increase during the
remainder of fiscal 2001.

Certain considerations could make it more difficult for others to acquire us.

Certain anti-takeover provisions of the Florida Business Corporation Act
could have the effect of making it more difficult for a third party to acquire
us or of discouraging a third party from attempting to acquire us. These
anti-takeover measures could result in a lower value to be received by our
shareholders if our Board of Directors did not approve an acquisition. Such
provisions could limit or depress the price that certain investors might be
willing to pay in the future for shares of our stock. We are also authorized to
issue preferred stock, with rights senior to our common stock, without the
necessity of shareholder approval. We have no present plans to issue shares of
preferred stock. However, issuance of preferred stock could have the effect of
making it more difficult for a third party to acquire a majority of our
outstanding voting stock.

In addition, the Sawtek Employee Stock Ownership and 401(k) Plan, or the
ESOP, owns approximately 21% of our outstanding common stock. The ESOP trustee
has the right to vote all of these shares. The ESOP trustee generally votes the
shares allocated to participants' accounts in accordance with their voting
directions and votes in its sole discretion with respect to the unallocated
shares. If the ESOP trustee were to vote against or oppose a proposed
acquisition of us, a potential acquirer might be discouraged from acquiring us
even though the holders of a majority of the shares of our common stock were in
favor of the acquisition.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to minimal market and interest rate risk. We manage the
sensitivity of our results of operations to these risks by maintaining a
conservative investment portfolio, which is comprised solely of highly rated,
short-term investments. We do not hold or issue derivative securities,
derivative commodity instruments or other financial instruments for trading
purposes. We are exposed to currency exchange fluctuations since we sell our
products internationally and we purchase raw materials and equipment from
foreign suppliers. We are also exposed to currency fluctuations associated with
our Costa Rican operation. We manage the sensitivity of our international sales,
purchases of raw materials and equipment and our Costa Rican operation by
denominating most transactions in U.S. dollars. We do engage in limited foreign
currency hedging transactions, principally to lock in the cost of purchase
commitments that are not denominated in U.S. dollars.

We do not have any outstanding debt, therefore, we are not exposed to
interest rate risk on debt and we do not plan to use debt-based financing to
fund capital expenditures over the next 12 months

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not subject to any legal proceedings that, if adversely
determined, would cause a material adverse effect on the Company's financial
condition, business or results of operations.

ITEM 2. CHANGES IN SECURITIES

Not applicable.

ITEM 3. DEFAULTS IN SECURITIES

Not applicable.

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

On January 30, 2001 at the Company's annual meeting of shareholders, the
following members were elected to the Board of Directors:

Nominee to Board Votes For Votes Withheld Abstain
---------------- --------- -------------- -------

Steven P. Miller 34,735,948 420 533,888
Neal J. Tolar 34,735,948 420 533,888
Robert C. Strandberg 34,735,948 420 533,888
Bruce S. White 34,735,948 1,650 533,888
Willis C. Young 34,735,948 1,450 533,888

Approval of amendments to the Sawtek Inc. Second Stock Option Plan:

Votes For 28,044,651
Votes Withheld 2,059,255
Abstain 204,538

Approval of amendments to the Sawtek Inc. Second Stock Option Plan for Acquired Companies:

Votes For 29,403,059
Votes Withheld 671,887
Abstain 233,498

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits

Index to Exhibits

Exhibit
Number
- -------

10.20 2000 Modified ESOP Loan Agreement for the Sawtek Inc. Employee Stock
Ownership and 401(K) Plan and Trust as of December 14, 2000.

10.22 2000 Renewal ESOP Note dated as of December 14, 2000.

10.23 2000 Implementation Agreement as of December 14, 2000 by and between
Sawtek Inc., HSBC Bank and the Sawtek Inc. Employee Stock Ownership
and 401(K) Plan and Trust.

10.39 Renewal of unsecured $30,000,000 credit line agreement with SunTrust
Bank, extending agreement maturity date to January 31, 2002.

b) Reports on Form 8-K

On February 26, 2001, we filed with the Commission a Current Report on
Form 8-K regarding the press release issued by us dated February 26,
2001, announcing a mid-quarter update for the quarter ending March 31,
2001.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Dated: April 26, 2001

SAWTEK INC.
(Registrant)

/S/ Raymond A. Link
Raymond A. Link
Senior Vice President Finance, Chief Financial Officer
(Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit Number Description of Exhibits
- -------------- -----------------------

10.20 2000 Modified ESOP Loan Agreement for the Sawtek Inc.
Employee Stock Ownership and 401(K) Plan and Trust as
of December 14, 2000.

10.22 2000 Renewal ESOP Note dated as of December 14, 2000.

10.23 2000 Implementation Agreement as of December 14, 2000
by and between Sawtek Inc., HSBC Bank and the Sawtek
Inc. Employee Stock Ownership and 401(K) Plan and
Trust.

10.39 Renewal of unsecured $30,000,000 credit line
agreement with SunTrust Bank, extending agreement
maturity date to January 31, 2002.

Exhibit 10.20

2000 MODIFIED
ESOP LOAN AGREEMENT

This 2000 MODIFIED ESOP LOAN AGREEMENT (the "Agreement") is made and
entered into on December 14, 2000 in Apopka, Orange County, Florida between
SAWTEK INC., a Florida corporation (the "Company") and HSBC BANK, as successor
trustee (the "Trustee") of the SAWTEK INC. EMPLOYEE STOCK OWNERSHIP AND 401(k)
PLAN AND TRUST (the "KSOP" and the "Trust") (formerly known as the Employee
Stock Ownership Plan and Trust for Employees of Sawtek Inc. (the "ESOP")).

BACKGROUND INFORMATION

A. Effective October 1, 1990, the Company established the ESOP for the
benefit of its participants and beneficiaries. The ESOP was amended and
restated, and combined with the Company's 401(k) profit sharing plan, on July
16, 1997, to become the KSOP.

B. On January 11, 1991, the Company and certain shareholders thereof sold
Shares of common stock of the Company to the Trust.

C. In order to finance the acquisition of the Shares, the Trust entered
into the 1991 ESOP Loan with the Company in the principal amount of $4,000,000,
as evidenced by the 1991 ESOP Loan Agreement.

D. The Trust acquired 17,777,760 Shares (as adjusted to reflect a 1996, 20
for 1 stock split and the year 2000, 2 for 1 stock split) in conjunction with
the 1991 ESOP Loan Agreement and placed such Shares in a suspense account within
the ESOP for release in accordance with the 1991 ESOP Pledge Agreement and
applicable ERISA regulations.

E. As of the date of this Agreement, the Trust remains indebted to the
Company from the 1991 ESOP Loan in the principal amount of $585,597, and there
remains 2,312,932 Shares in the suspense account of the KSOP for allocation to
the participants and beneficiaries of the KSOP.

F. As stated and memorialized in the 2000 Implementation Agreement, the
Company and the Trustee have agreed to extend the amortization of the 1991 ESOP
Loan (as previously extended and modified on September 26, 1997) in exchange for
the additional consideration to be provided by the Company to the Trust in
accordance with the 2000 Implementation Agreement. The Company and the Trustee
have agreed that the 1991 ESOP Loan, as modified herein, continues to be
primarily for the benefit of the participants and beneficiaries of the KSOP.

ARTICLE I
DEFINITIONS

SECTION 1.01. Definitions. The following terms, as used herein, have the
following meanings:

"Agreement" means this modification of the 1991 ESOP Loan Agreement, as
modified on September 26, 1997, between the Company and the Trustee.

"Business Day" means any day except a Saturday, Sunday or other day on
which banks in Orlando, Florida are authorized or required by law to close.

"Company" means Sawtek Inc., a Florida corporation that sponsors the KSOP,
and its successor.

"Code" means the Internal Revenue Code of 1986, as amended or replaced from
time to time.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended or replaced from time to time.

"ESOP" means the Employee Stock Ownership Plan and Trust for Employees of
Sawtek, Inc. prior to its amendment and restatement as of July 16, 1997.

"Event of Default" means the events of default provided in Article VI of
this Agreement.

"KSOP" means the Sawtek Inc. Employee Stock Ownership and 401(k) Plan and
Trust dated as of July 16, 1997.

"1991 ESOP Loan" means the $4,000,000 loan by the Company to the Trust on
January 11, 1991, as evidenced by the 1991 ESOP Note.

"1991 ESOP Loan Agreement" means the ESOP Loan Agreement between the
Trustee and the Company dated as of January 11, 1991.

"1991 ESOP Note" means the Trust's ESOP Note in the principal amount of
$4,000,000 dated as of January 11, 1991.

"1991 ESOP Pledge Agreement" means the ESOP Pledge Agreement between the
Trustee and the Company dated as of January 11, 1991.

"1997 Modified ESOP Pledge Agreement" means the 1991 ESOP Pledge Agreement,
as modified by the Modified ESOP Pledge Agreement dated as of September 26,
1997."

"Shares" means the shares of common stock of the Company acquired by the
Trust pursuant the 1991 ESOP Loan.

"Trust" means the Sawtek Inc. Employee Stock Ownership and 401(k) Trust
dated as of July 16, 1997.

"Trustee" means HSBC Bank, as successor trustee of the Trust, and any
successor thereto.

"2000 Implementation Agreement" means the agreement between the Company and
the Trustee of even date herewith that provides the overall agreement between
the Company and the Trustee with respect to the modification of the 1991 ESOP
Loan Agreement and 1991 ESOP Pledge Agreement, as modified September 26, 1997.

"2000 Modified ESOP Loan Documents" means collectively this Agreement, and
the 2000 Renewal ESOP Note.

"2000 Renewal ESOP Note" means the renewal of the 1991 ESOP Note, as
modified September 26, 1997, and now in the principal amount of $585,597.00,
dated as of December 14, 2000.

"Unallocated Shares" means Shares being held in suspense in the Trust,
pending allocation to participants pursuant to the terms of the KSOP.

SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principals. In the event of ambiguities or changes
in GAAP, the more conservative principal or interpretation shall be used.

ARTICLE II
THE LOAN

SECTION 2.01. Commitment to Extend Loan. On the terms and subject to the
conditions of this Agreement, the Company and the Trustee hereby agree that the
amortization of the repayment of the 1991 ESOP Loan shall be extended to
September 30, 2007. Furthermore, the Company and the Trustee acknowledge and
agree that as of the date of this Agreement, the unpaid principal balance of the
1991 ESOP Loan, as modified, from the Company to the Trust is $585,597.00, and
2,312,932 Shares remain in the suspense account of the Trust pending allocation
to the participants and beneficiaries of the KSOP.

SECTION 2.02. Effect on Agreements. Except with respect to the termination
of the 1997 Modified ESOP Pledge Agreement as provided in Section 3 of the 2000

Implementation Agreement, nothing in this Agreement shall be interpreted or
construed to affect the rights and obligations of the Company and the Trust
under the 1991 ESOP Loan Agreement and the 1991 ESOP Note, as such agreements
and documents were modified on September 26, 1997 and as existed prior to the
date of this Agreement. As of the date of the Agreement, the rights and
obligations of the Company and the Trust under the 1991 ESOP Note, 1991 ESOP
Loan Agreement and 1991 ESOP Pledge Agreement, all as previously modified on
September 26, 1997, shall be as provided in this Agreement and the 2000 Renewal
ESOP Note.

SECTION 2.03. ESOP Note: Payment of Principal and Interest. The continuing
obligation of the Trust to repay the 1991 ESOP Loan, as previously modified,
shall be evidenced by the 2000 Renewal ESOP Note. The 2000 Renewal ESOP Note
shall be payable in seven (7) annual installments of principal plus accrued
interest, payable each year on September 30, with the first installment due on
September 30, 2001, and the final installment due on September 30, 2007. The
2000 Renewal ESOP Note shall be without recourse to the Trust.

SECTION 2.04. Interest Rate. Interest shall accrue from the date hereof on
the outstanding principal amount of the 2000 Renewal ESOP Note at the fixed,
annual rate of 7.5016%.

SECTION 2.05. Prepayments. The Trust may, without premium or penalty,
prepay the 2000 Renewal ESOP Note in whole or in part, at any time, upon payment
of the principal amount being prepaid together with accrued interest thereon to
the date of prepayment. Any prepayment of the 2000 Modified ESOP Note shall be
applied to the principal installments thereof in the inverse order of their
maturities.

SECTION 2.06. General Provisions as to Payments.

(a) The Trust shall make each payment of principal and interest hereunder
under the 2000 Renewal ESOP Note not later than 11:00 a.m. (Orlando, Florida
time) on the date when due in lawful money of the United States of America to
the Company at its address referred to in the signature section of this
Agreement in immediately available funds. Whenever any payment of principal of,
or interest on, the 2000 Renewal ESOP Note is due on a day which is not a
Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day.

(b) Interest shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding the
last day). If the due date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.

SECTION 2.07. Special Limitations. Notwithstanding any other provision in
the 2000 Modified ESOP Loan Documents, the obligations of the Trust and the

rights of the Company under the 2000 Modified ESOP Loan Documents are subject to
and limited by any specific limitations that may now or in the future be
explicitly required by law to qualify the 1991 ESOP Loan (as modified herein)
for an exemption from any prohibition relating to transactions with an employee
stock ownership plan by a "disqualified person" or "party in interest" under
Code Section 4975 or ERISA Sections 406 and 408, respectively, or any similar or
successor provision of applicable law, but only to the extent, and for so long
as, such prohibitions specifically would be applicable to the 1991 ESOP Loan (as
modified herein), and no exemption is available for such limitations. The
Trustee shall comply with any reasonable request from the Company for assistance
in establishing the inapplicability of such a prohibition or the qualification
for such an exemption.

SECTION 2.08. Maximum Interest Rate.

(a) Nothing contained in this Agreement or the 2000 Renewal ESOP Note shall
require the Trust to pay interest at a rate exceeding the maximum rate permitted
by applicable law.

(b) If the amount of interest payable to the Company on any interest
payment date in respect of the immediately preceding interest computation
period, computed pursuant to Section 2.06, would exceed the maximum amount
permitted by such applicable law to be charged by the Company, the amount of
interest payable on such interest payment date automatically shall be reduced to
such maximum permissible amount.

ARTICLE III
CONDITIONS TO MODIFICATION

SECTION 3.01. Conditions. The modification of the 1991 ESOP Loan, as
previously modified on September 26, 1997, shall be subject to the satisfaction
of the following conditions:

(a) execution by the Company and the Trustee of this Agreement;

(b) execution by the Trustee of the 2000 Renewal ESOP Note;

(d) execution by the Company and the Trustee of the 2000 Implementation
Agreement;

(e) cancellation of the 1997 ESOP Note, as modified by the 1997 Renewal
ESOP Note; and

(f) the fact that all of the representations and warranties of the Trust
contained in any of the 2000 Modified ESOP Loan Documents shall be true and
correct on and as of the date of such modification in all material respects.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

The Trustee represents and warrants, on behalf of the Trust, to and with
the Company the following:

SECTION 4.01. Authorization: Assuming that the Company (i) submits the KSOP
and Trust to the Internal Revenue Service with an application for a favorable
determination letter that the KSOP meets the requirements of Code Sections
401(a) and 4975(e)(7), (ii) obtains a favorable determination letter from the
Internal Revenue Service on such application, and (iii) promptly adopts any
amendments to the KSOP and Trust that are required by the Internal Revenue
Service as a condition to the issuance of its favorable determination letter,
then, to the best knowledge of the Trustee, the transactions contemplated hereby
do not constitute prohibited transactions under the Code or ERISA. The Trust
forming a part of the KSOP has been duly constituted in accordance with valid
and binding trust instruments, is validly existing and is qualified under Code
Sections 401(a) and 501(a).

SECTION 4.02. Binding Effect. Each of the 2000 Modified ESOP Loan Documents
constitutes a valid and binding agreement of the Trust, and the 2000 Renewal
ESOP Note, when executed and delivered in accordance with this Agreement, will
continue to be a valid and binding obligation of the Trust.

SECTION 4.03. Debt. The Trust has no debt other than debt incurred pursuant
to this Agreement and the 1991 ESOP Loan Agreement, as previously modified on
September 26, 1997.

SECTION 4.04. Litigation. To the best knowledge of the Trustee, there is no
action, suit or proceeding pending against, threatened against or affecting the
KSOP or Trust before any court or arbitrator or any governmental body, agency or
official in which there is a reasonable possibility of an adverse decision which
would adversely affect the KSOP and Trust, taken as a whole, or the ability of
the Trust to perform its obligations under this Agreement, or which in any
manner questions the validity of any of the 2000 Modified ESOP Loan Documents.

ARTICLE V
COVENANTS

The Trustee agrees that, so long as any amount payable under the 2000
Renewal ESOP Note remains unpaid or any obligation of the Trust to the Company
remains unperformed or unfulfilled:

SECTION 5.01. Plan Documents and Information. The Trustee will deliver to
the Company:

(a) any consent, acknowledgment or other document that reasonably may be
requested by the Company in order to establish the qualified and exempt status
of the KSOP and Trust and the 2000 Renewal ESOP Loan; and

(b) from time to time such additional information in the Trustee's
possession regarding the status or financial position of the KSOP and Trust,
including copies of all documents and correspondence relating to the KSOP and
Trust or the transactions contemplated hereby, to or from the Internal Revenue
Service, the U.S. Department of Labor or any other competent authority, as the
Company may reasonably request.

SECTION 5.02. Benefit to Participants. The Trustee has engaged, consulted
with and has relied and will rely upon the advice of such advisers as it deems
appropriate, and based upon said investigations and advice, the Trustee has
determined and will determine that this modification of the 1991 ESOP Loan,
together with the 2000 Implementation Agreement, is primarily for the benefit of
the KSOP's participants and beneficiaries as contemplated by United States
Department of Labor Regulations Section 2550.408b-3 and Treasury Regulation
Section 54.4975-7.

SECTION 5.03. Relating to Company. The Company shall make contributions to
the KSOP and Trust at such times, in such amounts, and within the limits
specified in the applicable provisions of the Code, as may be necessary to
enable the KSOP and Trust to meet all of its debt and other obligations as
provided in the 2000 Modified ESOP Loan Documents. The Company shall take any
and all actions necessary or appropriate to maintain the tax qualified status of
the KSOP and Trust under the Internal Revenue Code.

ARTICLE VI
DEFAULTS

SECTION 6.01. Events of Default. If one or more of the following events
shall have occurred and be continuing:

(a) the failure or omission of the Trust to pay when due any installment of
principal or interest on the 2000 Renewal ESOP Note (but only to the extent the
Company is in compliance with its covenants contained in Section 5.03);

(b) the Trust shall fail to observe or perform any covenant contained in
Section 5.02 of this Agreement;

(d) any representation, warranty, certification or statement made by the
Trust in any of the 2000 Modified ESOP Loan Documents is false in a material
way; or,

(e) an event of default shall occur under any of the 2000 Modified ESOP
Loan Documents;

then, and in every such event, the Company may take any action permitted to be
taken upon the occurrence of an Event of Default under this Agreement and the
other 2000 Modified ESOP Loan Documents.

Notwithstanding anything contained herein to the contrary, if an Event of
Default shall occur and be continuing, the Company shall have no rights to
assets of the KSOP and Trust other than contributions (other than contributions
of employer securities) that are made by the Company to enable the KSOP and
Trust to meet its obligations hereunder and earnings attributable to the
investment of such contributions.

ARTICLE VII
MISCELLANEOUS

SECTION 7.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, fax, or similar
writing) and shall be given to such party at its address or fax number set forth
on the signature pages hereof or such other address or fax number as such party
may hereafter specify for the purpose by notice to the Trustee and the Company.
Each such notice, request or other communication shall be effective (i) if given
by fax, when such fax is transmitted to the fax number specified in this Section
and the appropriate answer back is received, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section.

SECTION 7.02. Survival. All representations and warranties made by the
Trust in any of the 2000 Modified ESOP Loan Documents, or in any document
delivered in connection herewith or therewith shall survive the execution of
this Agreement and the 2000 Modified ESOP Loan Documents.

SECTION 7.03. Amendments and Waivers. Any provision of any of the 2000
Modified ESOP Loan Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Company and the Trustee.

SECTION 7.04. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns (including any successor trustees of the
KSOP), except that the KSOP and Trust may not assign or otherwise transfer any
of its rights under this Agreement. The Company may at any time sell, assign,

transfer, pledge, grant security interests or participations in, or otherwise
dispose of, its rights under any of the 2000 Modified ESOP Loan Documents, in
whole or in part.

SECTION 7.05. Florida Law. To the extent not superceded by federal law,
each of the 2000 Modified ESOP Loan Documents shall be construed in accordance
with and governed by the law of the State of Florida.

SECTION 7.06. Counterparts: Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.

SECTION 7.07. No Waivers. The obligations of the KSOP and Trust hereunder
shall not in any way be modified or limited by reference to any other ESOP or
KSOP loan document, instrument or agreement. All of the rights of the Company
hereunder are separate from and in addition to any rights that it may have under
the terms of the 2000 Renewal ESOP Note, the 2000 Implementation Agreement or
otherwise. No failure or delay by the Company in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law or otherwise. No failure or delay by the Company in exercising
any right, power or privilege under or in respect of any of the 2000 Modified
ESOP Loan Documents shall affect the rights, powers or privileges hereunder or
shall operate as a limitation or waiver thereof.

SECTION 7.08. Term of the Agreement. The term of this Agreement shall be
until the payment in full of all principal and interest on the 2000 Renewal ESOP
Note and all sums payable to the Company pursuant to this Agreement, whichever
is earlier.

SECTION 7.09. Severability. If any provision of this Agreement shall be
held to be invalid, illegal or unenforceable under any applicable law, the
validity, legality and enforceability of the remaining provisions hereof shall
not be affected or impaired thereby.

SECTION 7.10. Titles and Contents. The Section headings and table of
contents are inserted for convenience of reference only and are not a part of
this Agreement and shall not be used to limit, expand or otherwise interpret or
construe the provisions hereof.

IN WITNESS WHEREOF, the parties hereto have caused this 2000 Modified ESOP
Loan Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.

COMPANY:

SAWTEK INC.

By: /S/ Raymond A. Link
Raymond A. Link
Senior Vice President Finance
Chief Financial Officer
1818 South Highway 441
Apopka, Florida 32703
(407) 886-7061 (Fax)

TRUSTEE:

HSBC BANK USA, NOT IN ITS INDIVIDUAL CAPACITY BUT
SOLELY AS TRUSTEE OF THE SAWTEK INC. EMPLOYEE STOCK
OWNERSHIP AND 401(k) PLAN AND TRUST

By: /S/ Stephen J. Hartman, Jr.
Stephen J. Hartman, Jr.
Senior Vice President
HSBC Bank USA
452 Fifth Avenue, 17th Floor
New York, N.Y. 10018-2706
(212) 525-2396 (Fax)

Exhibit 10.22

2000 RENEWAL ESOP NOTE
$ 585,597.00 Apopka, Florida
December 14, 2000

This is the 2000 Renewal ESOP Note modifying the terms of the Renewal ESOP
Note dated September 26, 1997, in the principal amount of $1,366,392.35 (the
"1997 Note"). All required documentary stamp taxes, if any, on the 1997 Note
have been fully paid. This 2000 Renewal ESOP Note is intended to comply with the
provisions of Florida Statutes ss.201.09 (dealing with documentary stamp taxes
on renewal notes). This 2000 Renewal ESOP Note modifies the term and interest
rate of the 1997 Note.

For value received, HSBC Bank USA, as successor trustee of the Sawtek Inc.
Employee Stock Ownership and 401(k) Plan and Trust (the "Borrower") (formerly
known as the Employee Stock Ownership Plan and Trust for Employees of Sawtek
Inc.), promises to pay to the order of Sawtek Inc. (the "Company") at 1818 South
Highway 441, Apopka, Florida 32703, or at such other location as may hereafter
be designated by the Company, the principal sum of Five Hundred Eighty-Five
Thousand, Five Hundred Ninety-Seven Dollars, ($585,597) plus interest at 7.5016%
per annum, in seven annual installments of principal and interest as follows:

Due Date Principal Interest Total
-------- --------- -------- -----

September 30, 2001 $106,071 $43,929 $150,000
September 20, 2002 91,528 35,972 127,500
September 20, 2003 83,394 29,106 112,500
September 20, 2004 82,150 22,850 105,000
September 20, 2005 80,812 16,688 97,500
September 20, 2006 71,875 10,625 82,500
September 20, 2007 69,766 5,234 75,000

All such payments of principal and interest shall be made in lawful money
of the United States in immediately available funds in the manner specified in
the 2000 Modified ESOP Loan Agreement. The Borrower also shall pay all costs of
collection, including court costs and attorneys' fees, if collection proceedings
are brought with respect to this 2000 Renewal ESOP Note. The Borrower may prepay
all or any portion of this 2000 Renewal ESOP Note without penalty or premium.

This is the 2000 Renewal ESOP Note referred to in the 2000 Modified ESOP
Loan Agreement dated as of December 14, 2000, between the Borrower and the
Company (as the same may be amended from time to time, the "2000 Modified ESOP
Loan Agreement"). The provisions of the 2000 Modified ESOP Loan Agreement are
incorporated herein by reference.

This Note shall be without recourse to the Borrower. Notwithstanding
anything contained herein to the contrary, the Company shall not take any action
or fail to act in any manner that would cause the loan represented by this 2000
Renewal ESOP Note to fail to qualify as an exempt loan as defined in Section
54.4975-7 of the Treasury Regulations. This 2000 Renewal ESOP Note shall be
interpreted so as to qualify as an exempt loan.

Time is of the essence hereunder. The failure or forbearance of the Company
to exercise any right hereunder, or otherwise granted by law or another
agreement, shall not affect or release the liability of the Borrower, and shall
not constitute a waiver of such right unless so stated by the Company in
writing. The Borrower agrees that the Company shall have no responsibility for
the collection or protection of any property securing this 2000 Renewal ESOP
Note, and expressly consents that the Company may from time to time, without
notice, extend the time for payment of this 2000 Renewal ESOP Note, or any part
thereof, and waive its rights with respect to any property or indebtedness.

The Borrower hereby expressly waives presentment and notice of dishonor of
this 2000 Renewal ESOP Note.

SAWTEK INC. EMPLOYEE STOCK
OWNERSHIP AND 401(k) PLAN AND TRUST

ATTEST: By: HSBC Bank USA, Trustee, Not in its
Individual Capacity, but solely as Trustee

_________________________ By: /S/ Stephen J. Hartman, Jr.
Stephen J. Hartman, Jr.
Senior Vice President

Exhibit 10.23

2000 IMPLEMENTATION AGREEMENT

This 2000 IMPLEMENTATION AGREEMENT is entered into effective December 14,
2000, by and between SAWTEK INC., a Florida corporation (the "Company") and HSBC
BANK, as successor trustee (the "Trustee") of the trust (the "Trust") that forms
a part of the SAWTEK INC. EMPLOYEE STOCK OWNERSHIP AND 401(k) PLAN AND TRUST
(the "Plan").

BACKGROUND INFORMATION

A. Effective October 1, 1990, the Company established the Employee Stock
Ownership Plan and Trust (the "Prior Plan") for the benefit of its eligible
employees.

B. The Prior Plan was amended and restated and combined with the Company's
401 (k) profit sharing plan in the form of the Plan effective July 16, 1997.

C. On January 11, 1991, the Company and certain shareholders thereof sold
17,777,760 shares (adjusted to reflect a 1996 20 for 1 stock split, and a year
2000 2 for 1 stock split) of common stock of the Company (the "Shares") to the
Trust.

D. In order to finance the acquisition of the Shares, the Trust entered
into an exempt loan (the "1991 Exempt Loan") with the Company in the principal
amount of $4,000,000, as evidenced by the ESOP Loan Agreement dated as of
January 11, 1991 (the "1991 Loan Agreement").

E. The Shares were placed in a suspense account within the Prior Plan for
release in accordance with the ESOP Pledge Agreement dated as of January 11,
1991 (the "1991 Pledge Agreement") and applicable regulations under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").

F. As of September 26, 1997, the Company and the Trustee entered into an
Implementation Agreement (the "1997 Implementation Agreement") for the purpose
of modifying the 1991 Loan Agreement, 1991 Pledge Agreement, and the January 11,
1991 ESOP Note. Such documents were modified in consideration of an incremental
contribution set forth in the 1997 Implementation Agreement.

G. As of the date of this agreement, the Trust remains indebted to the
Company from the 1991 Exempt Loan (as modified) in the principal amount of
$585,597 and there remains 2,312,932 of the Shares (after all stock split
adjustments) in the suspense account of the Plan for allocation to the
participants and beneficiaries of the Plan.

H. The Trustee has made the determination to enter into this Agreement and
other documents related to the modification of the 1991 ESOP Loan including the
2000 Modification of ESOP Loan Agreement between the Company and the Trust dated
as of the date hereof, attached as Exhibit A (the "2000 Modified ESOP Loan
Agreement"), and the 2000 Renewal ESOP Note dated as of the date hereof,
attached as Exhibit B.

I. It is intended that the loan made under the 2000 Modified ESOP Loan
Agreement and evidenced by the 2000 Renewal ESOP Note (the "2000 Modified ESOP
Loan") will be primarily for the benefit of the Plan participants and
beneficiaries and will constitute an "exempt loan" within the meaning of section
4975(d)(3) of the Internal Revenue Code 1986, as amended (the "Code"), Treasury
Regulation ss.54.4975-7(b), Section 408(b)(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), Department of Labor Regulation
ss.2550.408b-3, and Section 5.5 of the Plan.

J. The Company has agreed to enter into this Agreement in consideration for
the Trustee entering into the 2000 Modified ESOP Loan Agreement and the 2000
Renewal ESOP Note.

AGREEMENT

In consideration of the premises and the mutual covenants and agreements
herein contained, and other good and valuable consideration (the receipt,
adequacy and sufficiency of which each party hereto respectively acknowledges by
its execution hereof), the parties hereto intending legally to be bound do
hereby agree to the implementation of their understanding as follows:

1. Representation. The Company represents that (i) the execution, delivery
and performance of this Agreement are within the Company's powers, and have been
duly authorized by all necessary action by the Board of Directors of the
Company, and (ii) this Agreement constitutes the Company's valid and legally
binding obligation, enforceable against the Company in accordance with its
terms.

2.Incremental Contribution. For the fiscal years ended September 30, 2001
through and including September 30, 2007, the Company shall contribute to the
Trust an amount equal to the lesser of (i) one hundred percent (100%) of each
Plan participant's salary deferral contributions not to exceed three percent
(3%) of such participant's compensation (as defined in the Plan), and (ii) five
percent (5%) of the Company's accumulated net, after-tax profits, calculated in
accordance with generally accepted accounting principals, minus any accrual for
the Company's contribution for that plan year.

The Company's contribution under the foregoing paragraph is referred to as
the "Incremental Contribution." The Company, in its sole discretion, may make
the Incremental Contribution in the form of cash, shares of common stock of the
Company ("Common Stock"), or a combination thereof. The value of a contribution
in the form of shares of Common Stock shall be determined by multiplying the
number of shares contributed to the Plan by the average (as defined herein) of
the last sale prices of a share of Common Stock, as reported on NASDAQ at the
close of trading on the ten (10) consecutive trading days ending on its third
business day prior to the date of the contribution to the Plan (the "Value
Calculation"). "Average" shall mean the sum of the ten (10) last sale prices
determined as specified above divided by ten (10), with the result rounded to
the nearest ten-thousandth. The Company and the Trustee agree that the Value
Calculation will be adjusted, as mutually agreeable, in the even that such
calculation is deemed at some future date to constitute a prohibited transaction
under section 4975 of the Code or Section 406 of ERISA.

3. Termination of 1997 ESOP Pledge Agreement. The Company hereby agrees to
release from the 1997 ESOP Pledge Agreement all Shares that were pledged
pursuant to the 1991 Pledge Agreement, as modified by the 1997 ESOP Pledge
Agreement. As a result of the release of the pledge, no portion of the proceeds
from the sale of any Shares held in the Suspense Account (as defined in Section
1.7 of the Plan) may be applied to the repayment of the 1991 Exempt Loan, as
modified by the 2000 Renewal ESOP Note.

4. Acceleration of Repayment. The Company and Trustee hereby agree that in
the event a "Change of Control" of the Company occurs at any time in which
Shares remain unallocated pursuant to the "Revised Allocation Schedule" set
forth below in Section 5, then such remaining Shares shall be allocated pursuant
to the "Current Allocation Schedule" set forth in Section 5 below, and as of the
date of the Change of Control, all Shares that would have been allocated if the
"Current Allocation Schedule" had remained in effect shall be allocated as of
that date to the individuals who are then active participants in the Plan as of
the date immediately prior to the Change of Control. In the event there is a
Change of Control of the Company and the Plan is terminated, all remaining
Shares immediately shall be released from suspense and allocated to the
individuals who are then active participants in the Plan as of the date of the
termination of the Plan.

In the event of a Change of Control, the repayment schedule for the 2000
Renewal ESOP Note may not be extended in any event, and neither the "Current
Allocation Schedule" nor the "Revised Allocation Schedule" may be extended (but
may be accelerated) for any reason, even if both the Company and the Trustee
agree to such extension.

For purposes of this Agreement, a "Change of Control" means any of the
following events:

(a) any person (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, (the "Exchange Act")) or group (as
such term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act), other than a subsidiary of the Company or any employee benefit
plan (or any related trust) of the Company or a subsidiary, becomes
the beneficial owner of fifty percent (50%) or more of the Company's
outstanding voting shares and other outstanding voting securities of
the Company that are entitled to vote generally in the election of
directors of the Company ("Voting Securities");

(b) individuals who, as of the effective date of this Agreement
constitute the Board ("Incumbent Board"), cease for any reason to
constitute a majority of the members of the Board; provided that any
individual who becomes a director after the effective date whose
election or nomination for election by the Company's shareholders was
approved by a majority of the members of the Incumbent Board (other
than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened
"election contest" relating to the election of the directors of the
Company (as such terms are used in Rule 14a-11 under the Exchange
Act), "tender offer" (as such term is used in Section 14(d) of the
Exchange Act) or a proposed Merger (as defined below)) shall be deemed
to be members of the Incumbent Board; or

(i) merger, reorganization, consolidation or similar transaction
(any of the foregoing, a "Merger") as a result of which the
persons who were the respective beneficial owners of the
outstanding Common Stock and/or the Voting Securities immediately
before such Merger are not expected to beneficially own,
immediately after such Merger, directly or indirectly, more than
50% of, respectively, the outstanding voting shares and the
combined voting power of the voting securities resulting from
such merger in substantially the same proportions as immediately
before such Merger; or

(ii) a plan of liquidation of the Company or a plan or agreement
for the sale or other disposition of all or substantially all of
the assets of the Company.

5. Allocation Schedule. Effective immediately, the Share allocation
schedule shall be modified to the "Revised Allocation Schedule" set forth below:

Plan Year End Current Revised
September 30 Allocation Schedule Allocation Schedule
------------- ------------------- -------------------

2001 819,264 462,586
2002 770,978 393,198
2003 722,690 346,940
2004 -0- 323,810
2005 -0- 300,681
2006 -0- 254,423
2007 -0- 231,293
2,312,932 2,312,932

In the event the foregoing "Revised Allocation Schedule" shall violate
either ERISA, the Code or any regulation thereunder, such schedule shall be
revised to be in compliance with provisions.

6. Dividends. In the event the Company shall pay a dividend prior to the
repayment in full of the 2000 Modified ESOP Note, such dividends paid on the
Shares shall not be applied to the repayment of the 2000 Modified ESOP Note, but
instead shall be allocated to the "Participant's ESOP Investment Accounts" of
all KSOP participants, retired participants and terminated participants who then
had "Participant's Company Stock Accounts" in the KSOP on the relative basis of
the "Participant's Company Stock Accounts" of all such KSOP participants,
retired participants and terminated participants in the KSOP on the record date
of the dividend.

7. Repayment of ESOP Loan. The Company agrees that under the terms of the
2000 Modified ESOP Loan Agreement it is obligated to contribute sufficient
monies to the Trust to repay the 2000 Modified ESOP Loan and the Trustee agrees
that it is obligated to use these monies to repay its loan from the Company. The
Company agrees that no Shares held in the Trust will be used to repay the 2000
Modified ESOP Loan.

8. Amendment. This Agreement may not be amended, waived or modified in any
manner without the advance written consent of both the parties. See also Section
3 in the event of a Change of Control.

9. Notices. All notices or other communications given or made hereunder
shall be duly given when received if delivered in person or by telex, facsimile,
registered or certified mail, return receipt requested, postage prepaid to any
party at the address and to the addresses for such party set forth on the
signature page of this Agreement or such other address or addressees as the
party to whom notice is to be given furnishes in writing to the other party in
the manner set forth above.

10. Governing Law. This Agreement shall be construed in accordance with and
governed by the internal laws of the State of Florida applicable to contracts
made and performed in the State of Florida.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective representatives thereunto duly
authorized as of the date first hereinbefore appearing.

SAWTEK INC. EMPLOYEE STOCK OWNERSHIP AND 401(k) TRUST
HSBC BANK USA, solely in its capacity as Trustee and
not in its individual or corporate capacity

By:/S/ Stephen J. Hartman, Jr.
Stephen J. Hartman, Jr.
Senior Vice President

Address: 452 Fifth Avenue, 17th Floor
New York, New York 10018-2706

SAWTEK, INC.

By:/S/ Raymond A. Link
Raymond A. Link
Senior Vice President and
Finance Chief Financial Officer

Address: P.O. Box 609501
Orlando, Florida 32860-9501

Exhibit 10.39

February 22, 2001

Mr. Raymond A. Link
Senior Vice President/Chief Financial Officer
Sawtek, Inc.
P.O. Box 609501
Orlando, Florida 32860-9501

Dear Ray:

I am pleased to inform you that your $30,000,000 unsecured line of credit has
been renewed for an additional year with an expiry date of January 31, 2002. An
unused fee of 10 basis points shall only apply to the $11.5 million currently
evidenced by the note dated December 9, 1996. All other terms and conditions
shall remain in effect.

As a reminder, we only have documentation in place to fund up to $11.5 million.
Should you ever anticipate a need that would exceed $11.5 million, please call
me in advance so that I can get the necessary documents in place.

Please sign below evidencing your acceptance and agreement with this renewal.

Best regards,

/S/ William C. Barr, III
William C. Barr, III
Director

Agreed to:

/S/ Raymond A. Link
Raymond A. Link
Senior Vice President/Chief Financial Officer
Sawtek, Inc.