##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-K

|    |  |                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------
|[x] |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

| |  |   
| |  | --
| |  | OR

|     |  |                                                                                                                                                     
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|[  ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ___________

Commission File Number 0-25699



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PLX TECHNOLOGY, INC.

(Exact Name of Registrant as Specified in its Charter)




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|                                                                       |  |                                                  
|---------------------------------------------------------------------- |  | -------------------------------------------------
|Delaware(State or Other Jurisdiction of
Incorporation or Organization) |  | 94-3008334(I.R.S. Employer
Identification Number)

870 Maude Avenue
Sunnyvale, California 94085
(408) 774-9060(Address, including zip code, and telephone number, including area code,
of registrants principal executive offices)

Securities Registered Pursuant to Section 12(g) of the Act:
Common stock, $0.001 par value per share

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. [ X ] Yes [   ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]

The aggregate market value of the voting stock held by non-affiliates of
the registrant, based upon the closing sale price of the registrants common
stock on February 28, 2002, as reported on the Nasdaq National Market, was
approximately $185,804,436. Shares of common stock held by each executive
officer and director and by each person who to the registrants knowledge owns
5% or more of the outstanding voting stock have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.

The number of shares of common stock outstanding at February 28, 2002 was
23,461,979.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Report on Form 10-K incorporates information by reference from
the registrants Proxy Statement for its 2002 Annual Meeting of Stockholders
Items 10, 11, 12 and 13.





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TABLE OF CONTENTS



|              |                                                                                               |                                                 |  |  |  |  |  | 
|------------- | --------------------------------------------------------------------------------------------- | ----------------------------------------------- |  |  |  |  |  | 
|PART I       
|              | ITEM 1: BUSINESS                                                                             
|              | ITEM 2: PROPERTIES                                                                           
|              | ITEM 3: LEGAL PROCEEDINGS                                                                    
|              | ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS                                  
|PART II      
|              | ITEM 5: MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                
|              | ITEM 6: SELECTED FINANCIAL DATA                                                              
|              | ITEM 7: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|              | ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|              | ITEM 8: CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                             
|              | ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III     
|              | ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|              | ITEM 11: EXECUTIVE COMPENSATION                                                              
|              | ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|              | ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|PART IV      
|              | ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                    
|              |                                                                                               | CONSOLIDATED BALANCE SHEETS                    
|              |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS          
|              |                                                                                               | CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
|              |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS          
|              |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS     
|SIGNATURES   
|EXHIBIT INDEX
|EXHIBIT 21.1 
|EXHIBIT 23.1 



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##### Table of Contents






PART I




ITEM 1: BUSINESS

Overview

PLX Technology, Inc., established in May 1986 (PLX or the Company),
develops and supplies semiconductor devices that accelerate and manage the
transfer of data in networking and telecommunications, enterprise storage,
imaging and industrial equipment. This equipment is typically controlled by
internal computers, commonly referred to as embedded systems. We offer a
complete solution consisting of three related types of products: semiconductor
devices, software development kits and hardware design kits. Our semiconductor
devices simplify the development of data transfer circuits in high-performance
embedded systems and are compatible with microprocessors such as IBMs PowerPC,
Motorolas PowerPC, Intels i960 and StrongArm, Hitachis SH, and DSPs from
companies such as Texas Instruments and Analog Devices. Our software
development kits and hardware design kits promote sales of our semiconductor
devices by lowering customers development costs and by accelerating their
ability to bring new products to market.

Demand for networking, telecommunications and other equipment that
transmits, stores and processes information rapidly has dramatically increased
due to:



| |  |  | growth of the Internet,                 
| | - |  | ----------------------------------------
|
| |  |  | deployment of high-speed networking, and
|
| |  |  | proliferation of multimedia.            

Suppliers of this equipment are changing the way they design their
products to reduce product development time and to use their scarce engineering
resources more efficiently. Until recently, these suppliers typically
developed their own system components and the connections between the
components. Now, however, they are increasingly building their equipment based
on industry standard connection methods, and they are purchasing components
supplied by other companies that comply with these standards. By doing so,
they reduce the time and resources required for product development.
Consequently, there is a growing demand for standards-based components that
connect systems together, such as our semiconductor devices. The majority of
our products are based on Peripheral Component Interconnect, or PCI, an
interconnect standard that is widely used in our markets. PLX is an active
member of many of the trade associations that define current and future
interconnect standards including PCI, Compact PCI, 3GIO, RapidIO,
HyperTransport and Infiniband.

Our objective is to expand our advantages in data transfer technology by:



| |  |  | focusing on high-growth markets,                                                                                        
| | - |  | ------------------------------------------------------------------------------------------------------------------------
|
| |  |  | delivering comprehensive solutions, including semiconductor
devices, software development kits and hardware design kits,
|
| |  |  | extending our technology advantages by incorporating new functions and technologies,                                    
|
| |  |  | driving industry standards, and                                                                                         
|
| |  |  | strengthening and expanding our industry relationships.                                                                 

Industry Background

Embedded systems are found in many common products and offer varying
levels of performance depending on each products requirements. These products
range from low performance devices such as electronic toys and kitchen
appliances to very complex, high-performance electronic equipment such as
network routers and

1



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switches. High-performance embedded systems offer increased data
processing capabilities and typically utilize one or more 32-bit or 64-bit
microprocessors, fast memories and peripherals, and sophisticated operating
systems or control code.

The communications infrastructure has significantly increased the demand
for high performance embedded systems of all types. This demand has been
fueled by the growth of the Internet; the deployment of high-speed networking
systems to transmit, store, and process data; and the proliferation of data
types in the network, including voice traffic and multimedia.

Markets for electronic equipment that rely on high-performance embedded
systems include the following:



| | Networking and Telecommunications. Networking and telecommunications
applications include digital telephony, multimedia gateways, wireless
base stations, remote access servers, routers, switches and cable modem
equipment. This market segment is growing rapidly due to the rise of the
Internet and the proliferation of high bandwidth communication
technologies such as Fast Ethernet, Gigabit Ethernet, Asynchronous
Transfer Mode, or ATM, cable modems, Digital Subscriber Line, or xDSL,
and Voice-over-IP or VoIP.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | Enterprise Storage. Enterprise storage applications include disk storage
subsystems, automated tape libraries and file servers. The growing use
of multimedia applications and storage networks is driving corporate
demand for increased data storage capacity.                                                                                                                                                                                                                                                               
|
| | Imaging. Imaging applications include printers, copiers, medical
instrumentation and video and graphics equipment. The demand for better
image quality and higher performance, as well as connection of these
applications to high-speed networks, have increased their data processing
requirements.                                                                                                                                                                                                                          
|
| | Industrial. Industrial applications include a wide range of process
control computers and factory automation equipment. These products have
high data transfer rate requirements, are used to monitor and control
complex processes in real-time and are being increasingly attached to
networks.                                                                                                                                                                                                                              

Manufacturers of products that rely on high-performance embedded systems
seek to maximize the performance and minimize the cost of their increasingly
complex products. In addition, these manufacturers must develop and bring new
products to market quickly to keep pace with technological advancements.

The I/O Subsystem

A typical embedded system can be described in terms of four primary
functions: the host microprocessor, the memory, the peripherals and the
input/output, or I/O, subsystem. The host microprocessor is the primary
control center for the system. The memory acts as a storage area for
instructions to be executed and data to be processed. The peripherals enable
connections between the system and other external devices such as network
components, printers and storage systems. The I/O subsystem is the
interconnect circuitry and software that connects these three other functions
and allows for the transfer of instructions and data among these functions.
The I/O subsystem includes the system bus or switch fabric, which is a physical
connection between these different functions. High-performance electronic
equipment can contain multiple embedded systems, each requiring a separate I/O
subsystem.

To enable increased performance and functionality from computer systems,
semiconductor suppliers have historically focused on improving the operation of
peripherals, microprocessors and memories. The interconnect silicon in the I/O
subsystem must also improve to keep pace with these improvements by
transferring more information at faster speeds.

In parallel with the increased performance demands of customers and their
data traffic, the reliability of these systems is under constant pressure to
improve. This is especially true as the networking and telecommunications
disciplines merge through use of the Internet to carry all types of traffic.
Highly available systems are required to meet the expectations of customers.

2



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As data transfer requirements for the I/O subsystem have increased, so has
the complexity of its interface components such as processors, logic and
related software. Until a few years ago, most embedded systems used simple I/O
subsystems that contained no processors, limited logic and rudimentary
software, if any. Complex I/O subsystem components such as processors,
elaborate control logic and advanced software were costly, and therefore their
use was confined to very high-end equipment such as mainframe computers.
Furthermore, the lack of widely accepted I/O standards impeded the use of
complex I/O subsystems in other than high-end applications. However, advances
in semiconductor technology combined with the widespread adoption of standards
in embedded systems have enabled the development of highly integrated
semiconductor devices that can better manage I/O subsystem performance at lower
cost.

Penetration of I/O Standards in Embedded Systems

Until a few years ago, embedded systems manufacturers relied on a wide
variety of proprietary solutions and a fragmented set of industry standard I/O
architectures. For example, many networking, imaging, storage and industrial
applications employed proprietary architectures to meet their specific
performance and cost requirements. A mix of standard buses such as VMEbus,
Multibus and ISA was used in some industrial, telecommunications and military
applications. Embedded system software was even more fragmented with many
proprietary and application specific software architectures in use. While
embedded developers could take advantage of many standard microprocessor,
memory and peripheral components supplied by external vendors, the lack of
acceptable I/O standards forced many to develop custom I/O subsystems
internally, placing a heavy demand on development resources.

The deployment of the PCI standard was one of the catalysts for the
widespread adoption of I/O standards in embedded systems. In the early 1990s,
PC manufacturers developed PCI, a new standard hardware architecture to connect
the major components of a PC at high speed. It offered up to a one hundred
times improvement in I/O data transfer rates over the previous architectures.
By the mid-1990s, PCI became the most widely used bus architecture in the PC
market. Consequently, most suppliers of peripheral semiconductor components
used in PCs adopted PCI as the standard system interface. PCI is now emerging
as a standard I/O architecture for many high-performance embedded systems
because it allows the use of low cost and state-of-the-art peripheral
semiconductor components developed for the PC market and provides a foundation
for embedded system interoperability. PCI also offers equivalent or superior
performance to the in-house developed standards of many embedded equipment
suppliers. Furthermore, the use of PCI enables faster time to market, lower
development cost and the ability to quickly integrate new I/O components.

Although the PCI standard has resolved many development issues relating to
I/O hardware architectures, software remains a challenge. The lack of
standards for I/O control software and the wide use of proprietary operating
systems place a significant demand on development resources. Consequently,
embedded developers are increasingly adopting standard operating systems with
well-defined I/O structures as opposed to developing their own software
internally. Examples include VxWorks, Linux, pSOS, Windows CE, and Windows NT.

Need for Standard I/O Interconnect Products and Comprehensive I/O Solutions

Even with standard I/O specifications, design teams must still create the
circuitry and related software that implements these specifications. Designers
must also update their I/O subsystems to include frequent improvements in these
specifications.

Instead of developing all the hardware and software technology internally,
embedded systems developers seek to focus their scarce engineering resources on
the proprietary features of their products. By using standard semiconductor
devices in the I/O subsystem instead of using custom-designed devices they are
able to implement the basic framework of the system more easily and thereby
reduce the I/O subsystem design effort, providing faster time-to-market and
lower development cost. Standard products allow the design teams to
concentrate their efforts on differentiating hardware and software features.
In addition to standard interconnect semiconductor devices, embedded designers
can benefit from several other design elements, such as data control software,
hardware design kits and third-party development tools to complete their
development work in a timely manner. These additional elements simplify
development and improve time to market. They provide the design team with
proven hardware and software design examples and the tools to adapt these
examples to the embedded designers needs.

3



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Due to the availability and adoption of I/O standards by embedded
developers, there is now a large demand for I/O subsystem components based on
these standards.

The PLX Solution

PLX develops and supplies interconnect semiconductor devices and
supporting hardware and software platforms that accelerate and manage the
transfer of data in high-performance embedded systems.

Our solution consists of three related products:



| |  |  | interconnect semiconductor devices,                                                                                   
| | - |  | ----------------------------------------------------------------------------------------------------------------------
|
| |  |  | software development kits which assist in developing systems
that incorporate our semiconductor devices, and          
|
| |  |  | hardware design kits that allow development of a system using
our semiconductor devices and software development kits.

Development tools provided by third parties support these three related
products. These development tools are used for the design of other parts of
the embedded system but also work with our products.

Our products are designed for use in a variety of high-performance
embedded applications including networking and telecommunications, enterprise
storage, imaging and industrial. We focus on I/O accelerators, Switched-PCI
controllers and I/O processors, which are highly integrated, cost-effective
semiconductor devices that optimize the flow of data and simplify the
development of high-performance I/O subsystems. Our software development kits
and hardware design kits promote sales of our semiconductor devices by lowering
customers development costs and allowing them to bring new products to market
more quickly.

PLX products provide I/O connectivity solutions for PCI and other industry
standards. As new I/O standards evolve, we expect to support them where
appropriate. More than 1,000 electronic equipment manufacturers use PLX
semiconductor devices in a wide variety of embedded systems applications.
Customers that shipped systems in 2001 that incorporate our products include
Accton Technology, Alcatel, Artesyn Technologies, Cisco Systems, Compaq
Computer, Hewlett-Packard, Hitachi Cable, IBM, Intel, Lucent Technologies,
Marconi and Siemens.

Strategy

Our objective is to continue to expand our market position as a developer
and supplier of I/O connectivity solutions for high-performance embedded
systems. Key elements of our strategy include the following:

Focus on High-Growth Markets.We focus on the high-growth communications
infrastructure equipment market. Within this market, there are many highly
differentiated applications with different design criteria such as product
function, performance, cost, power consumption, software, size limitations and
design support. The requirements of many of these differentiated applications
are addressed by our products, and we target those applications where we
believe we can attain a leadership position.

Deliver Comprehensive Solutions.Our products provide embedded systems
developers with a comprehensive, proven development environment to simplify I/O
subsystem design, enhance performance, reduce development costs and accelerate
time-to-market. This solution consists of semiconductor devices, software
development kits and hardware design kits. These design elements are supported
by development tools provided by third parties.

Extend I/O Subsystem Technology.We offer our customers highly integrated
semiconductor devices and related software that incorporate many of the latest
advances in I/O interconnect technology. Our semiconductor devices and
software are designed to enable quick adoption of new I/O technologies and
enhancements to existing

4



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I/O standards. We seek to integrate additional I/O-related functions into
our semiconductor devices to provide our customers with increasing
functionality at the same or lower costs. For example, our GigaBridge
Switched-PCI solution combines a fully compliant PCI interface with a
high-speed switch fabric controller, and provides the logic necessary to
translate the data between these two ports. We employ a team of engineers with
considerable expertise in embedded systems architectures, product definition,
semiconductor and software design and engineering to maintain our I/O subsystem
technology advantages.

Drive I/O Subsystem Standards for Embedded Applications.We believe that
our understanding of I/O technology trends and market requirements allows us to
bring to market more quickly new products that support the latest I/O
technologies. Through our participation in key industry groups responsible for
standards such as the PCI Special Interest Group, the PCI Industrial Computer
Manufacturers Group (PICMG), Infiniband Trade Association, PCI-X
Manufacturers Group, RapidIO Trade Association, HyperTransport Consortium, and
the Arapahoe Working Group (3GIO), we have taken an active role in defining new
I/O standards.

Strengthen and Expand Industry Relationships.We work with industry
leaders in developing hardware and software development tools and marketing
programs that promote the use of each companys products and promoting industry
standards. Partners include Bustronics, IBM, Intel, Jungo, Kaparel, Mentor
Graphics, Meta Ware, Microsoft, Motorola, Pigeon Point, Synopsys, Tasking,
Texas Instruments and Wind River. As a result of these relationships, we
enable embedded systems designers to choose the best products for their
particular applications while still employing our product as the core of their
I/O subsystem design.

Customers

We supply our products to customers for a wide variety of high-performance
communications infrastructure applications including networking,
telecommunications, and enterprise storage. We also have sales in other
markets such as the imaging, industrial, personal computer, and server and
consumer markets. The typical product life cycle of a high performance
embedded system is one to two years or more of product development and initial
marketing activity followed by two to five years or more of volume production,
assuming the product is successful in the market. The embedded system design
team typically selects the sole-source hardware and software components early
in the design cycle. Generally, the embedded system will incorporate these
same components throughout its product life because changes require an
expensive re-engineering effort. Therefore, when our products are designed
into an embedded system, they are likely to be used in that system throughout
its two to five year or more production life.

Our products are standard semiconductor devices that may be incorporated
into equipment used in several of our target markets. More than 1000
electronic equipment manufacturers incorporate our semiconductor devices in
their products.

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The following table lists representative customers that purchased directly
or through distributors more than $100,000 of our products in 2001.

|                         |  |                              
|------------------------ |  | -----------------------------
|Networking and           |  |                              
|Telecommunications       |  | Enterprise Storage           
|                         |  |                              
|Accton Technology        |  | Compaq                       
|Artesyn Technologies     |  | IBM                          
|Alcatel                  |  | Storage Technology           
|Avaya                    |  |                              
|Cisco Systems            |  | Imaging/Industrial/Medical   
|Delta Electronics        |  | Adlink Technology            
|Digi International       |  | EFI (Electronics For Imaging)
|Eicon Technology         |  | GTech                        
|Global Sun Technology    |  | Hewlett-Packard              
|Hewlett-Packard          |  | Kaiser                       
|Hitachi Cable            |  | Kodak                        
|IBM                      |  | Kofax Image Products         
|Intel                    |  | Moxa Technologies            
|Lucent Technologies      |  | OCE                          
|Marconi                  |  | Pinnacle Systems             
|Octal                    |  | Siemens                      
|Performance Technologies |  | SBS Technologies             
|Prediwave                |  |                              
|Radisys                  |  |                              
|SBS Technologies         |  |                              
|Siemens                  |  |                              

Products

Our products consist of interconnect semiconductor devices, software
development kits and hardware design kits. Development tools provided by third
parties support these three design elements. Our semiconductor device products
include I/O accelerators, I/O processors, and Switched-PCI products, which are
designed to simplify the development of high-performance I/O subsystems. The
sales of these semiconductor devices account for a substantial majority of our
revenues. We generate less than two percent of our revenues from sales of our
software and hardware design kits. The other layers of our solution promote
sales of our semiconductor devices by lowering customers development costs and
allowing them to bring new products to market more quickly.

I/O Accelerators and I/O Processors. Our I/O accelerators are
semiconductor devices that accelerate movement of data across a PCI bus and
between one or more devices or subsystems that need to communicate across the
PCI bus. These products incorporate the Data Pipe Architecture technology, a
set of circuits and features that enable efficient flow of data within systems
with minimal supervision from the system processor. Our I/O accelerators
address a range of applications and provide flexible interfaces that allow them
to connect to a wide variety of semiconductor devices, including processors
such as IBMs and Motorolas PowerPC, Intels i960 and Strong ARM, Hitachis
SH, IDTs MIPS, and Motorolas 68K series. Customers also use these
semiconductor devices in connection with digital signal processors, or DSPs,
which are specialized microprocessors, from Texas Instruments, Analog Devices
and others. The I/O accelerators can be connected with a wide range of
peripheral devices, including LAN, WAN, disk control and graphics.

An I/O processor is a microprocessor designed to manage I/O tasks and move
data efficiently. The I/O processor enhances overall system performance by
maximizing data flow and off-loading more I/O tasks from the host processor,
compared with an I/O accelerator. It integrates, in one cost and space-saving
device, many of the circuit elements required for I/O management. By combining
several functions into one semiconductor device, the I/O processor enables a
more compact, power-efficient design, compared with designs that use several
semiconductor devices to achieve these functions.

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Switched-PCI Products.The PLX family of GigaBridge Switched-PCI products
provide scalability, high availability, and higher performance to devices that
use the popular PCI interconnect standard. These innovative products allow
current PCI and CompactPCI users to extend the capability of their existing
systems while remaining compatible with their hardware and software platforms.
The GigaBridge products provide this ability by combining a fully compliant PCI
interconnection with a high speed, robust switch fabric. The value of the
GigaBridge products is further enhanced, and the user is enabled to create real
systems quickly, by a third-party support program that adds backplane hardware
and high availability software to the features already embedded in the
Switched-PCI chip itself.

Software Development Kits. Our software development kits, or SDKs, are
designed to simplify and accelerate the development of systems that incorporate
our semiconductor devices. Support is provided for several industry-leading
operating systems, including VxWorks from Wind River, Linux, and Microsoft
Windows as well as generic applications and other operating systems. The SDKs
include an application programming interface, or API, that enables developers
to execute complex transactions with simple commands. This programming
interface allows customers to migrate their designs, with the same software
interface, from our existing 32 bit I/O accelerators to our 64 bit I/O
accelerators and I/O processor products. This common interface allows
customers to preserve their software investment even as their designs evolve in
complexity and as new I/O architectures are deployed.

Hardware Design Kits. We offer hardware design kits that support the
development of systems incorporating PLX semiconductor devices. We call our
hardware design kits rapid development kits, or RDKs. Designers use the RDKs
to evaluate our semiconductor devices and to simplify and accelerate product
development. Each hardware design kit includes a development circuit board
that designers can use to evaluate the PLX products and also design their own
system. These hardware design kits also include technical drawings,
documentation and other design assistance tools.

To offer additional design support, we work with third party companies
that provide development tools for our customers. Although we receive no
revenue directly from these development tools, they promote sales of our
semiconductor devices because these tools often make it easier to develop
embedded systems incorporating our products. Examples include software
development tools from Green Hills Software, IBM, Jungo, Mentor Graphics,
MetaWare, Microsoft, Pigeon Point, Tasking, and Wind River and software
modeling tools from Synopsys.

Our principal product offerings and functions include the following:

|                               |  |                                                  |  |             |  |                                                                                                                                                                                                     
|------------------------------ |  | ------------------------------------------------ |  | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Category                       |  | Product                                          |  | Description
|                               |  |                                                  |  |            
|Semiconductor Devices         
|                              
|32-bit Target I/O Accelerators |  | PCI 9030
PCI 9052
PCI 9050                       |  |            |  | Enables connection of 8-,
16- and 32-bit peripherals
and personal computer
adapters to PCI.                                                                                                         
|                              
|32-bit Master I/O Accelerators |  | PCI 9054
PCI 9080
PCI 9060SD
PCI 9060ES
PCI 9060 |  |            |  | Provides the flexibility
to connect with a wide
range of processors,
peripherals and memory
including Motorola
PowerQUICC, Intel i960, IBM
PowerPC, Hitachi SH, IDT
MIPs and Texas Instruments
DSPs.
|                              
|32-bit I/O Processors          |  | IOP 480                                          |  |            |  | Incorporates PowerPC
microprocessor and memory
controller in addition to a
32-bit master I/O
accelerator.                                                                                           

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|                                      |  |                   |  |             |  |                                                                                                                                                                                                                        
|------------------------------------- |  | ----------------- |  | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Category                              |  | Product           |  | Description
|                                      |  |                   |  |            
|Semiconductor Devices                
|                                     
|32 and 64-bit/66 MHz I/O
Accelerators |  | PCI 9056
PCI 9656 |  |            |  | Provides the flexibility
to connect with a wide
range of microprocessors,
peripherals and memory
including Motorola
PowerQUICC, PowerQUICCII,
Intel i960, IBM PowerPC,
Hitachi SH, IDT MIPs and
Texas Instruments DSPs.

|                          |  |                  |  |   |  |                                                                           
|------------------------- |  | ---------------- |  | - |  | --------------------------------------------------------------------------
|Software Development Kits
|                         
|                          |  |                  |  |  |  | Provides tools for
accelerating design of data
transport software.        
|PCI Software              |  | SDK-Pro
SDK-Lite |  |  |  | Includes development and
debugging utilities, sample
firmware and drivers.

|                       |  |                                                   |  |   |  |                                                                                                             
|---------------------- |  | ------------------------------------------------- |  | - |  | ------------------------------------------------------------------------------------------------------------
|Hardware Design Kits  
|                      
|Rapid Development Kits |  | More than ten
kits supporting
a range
of products |  |  |  | Include development
circuit boards, SDK
software, documentation and
schematics to assist system
development.

Technology

We believe that supplying high-performance connectivity solutions for I/O
subsystems requires expertise in four areas:



| |  |  | semiconductor design,
| | - |  | ---------------------
|
| |  |  | software technology, 
|
| |  |  | system design, and   
|
| |  |  | industry standards.  

Semiconductor Design.Our engineers have substantial expertise in
semiconductor design and have developed a comprehensive library of complex
functional blocks for use in semiconductor devices for I/O connectivity. As a
result of this expertise, we offer both innovative architectures and high
levels of functionality. For example, our proprietary Data Pipe Architecture
technology allows the system developer a high degree of control over the PCI
bus in order to address specific design needs. In high-performance systems,
the Data Pipe Architecture technology enables data throughput that is several
times faster than typical approaches. We continue to integrate more
functionality in our semiconductor devices to reduce cost, improve performance,
reduce size and simplify the customers design effort.

Software Technology.We devote substantial engineering resources to the
development of software technology used to assist the system developer in
debugging hardware and creating data control software. The quality and
availability of these tools are key differentiating factors between PLX and
competing alternatives. We continue to enhance and expand our software
development kits, which contain a set of programming interfaces that simplify
the development of software. Our software expertise provides us with valuable
insights into our customers software development issues, which aids the
definition and development of future semiconductor devices.

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System Design.We employ a team of system level design engineers that are
dedicated to the development of hardware design kits. These kits are
high-performance adapters and embedded systems that customers can use to assist
development of their products. Each of these hardware design kits is a system
or adapter similar in complexity to those built by our customers. The system
design experience provides us valuable insights which we can use to improve
future semiconductor device and software products.

Industry Standards.Through our participation in the key industry groups
responsible for interconnect standards we take an active role in defining new
I/O standards such as PCI-X, RapidIO, HyperTransport, and 3GIO. In addition,
we are closely monitoring other new I/O technologies to determine their
applicability to our embedded market customer base.

Competition

Competition in the semiconductor industry is intense. If our main target
market, the embedded systems market, continues to grow, the number of
competitors may increase significantly. In addition, new semiconductor
technology may lead to new products that can perform similar functions as our
products.

Competition in the various markets we serve comes from companies of
various sizes, many of which are significantly larger and have greater
financial and other resources than we do and thus can better withstand adverse
economic or market conditions than we can. Our principal products compete with
standard products from companies such as Applied Micro Circuits, Cypress
Semiconductor, Marvel Technology Group, and Tundra Semiconductor.

In addition, two alternative devices can perform some or all of the
functions of our semiconductor devices. The first is the Application Specific
Integrated Circuit, or ASIC. With the ASIC approach, a customer creates a
custom semiconductor device for a particular application. Because the customer
buys the ASIC directly from the semiconductor foundry, this approach may lead
to lower unit production costs. However, this approach entails a large initial
investment in developing the custom device. The second alternative device is
the Field Programmable Gate Array, or FPGA. The FPGA is a semiconductor device
whose logic function can be programmed by the system manufacturer. This
requires less design effort than the ASIC approach. However, because of the
additional circuitry required to enable the device to be programmed, this
approach entails higher unit production costs which can be prohibitive compared
to ASICs or standard semiconductor devices. Accordingly, we also experience
indirect competition from leading ASIC suppliers, including IBM, LSI Logic,
NEC, and Toshiba as well as from FPGA suppliers, including Altera, Atmel,
Lattice, Quicklogic, Vantis, and Xilinx. With I/O processor products, we
compete with established embedded microprocessor companies including Hitachi,
IBM, IDT, Intel, Motorola and others. Many of these indirect competitors and
processor companies are large companies that have significantly greater
financial, technical, marketing and other resources than PLX. With our
Switched-PCI controllers we compete with Stargen, a company marketing a
competing standard product, as well as solutions developed by our customers
using ASICs, FPGAs, and standard networking components.

We believe that the principal factors of competition in our business
include functionality, product performance, price, product innovation,
availability of development tools, customer service and reliability. We
believe that we compete favorably with respect to each of these factors. We
differentiate our products from those of our competitors by incorporating
innovative features that allow our customers to build systems based on industry
standards that are more efficient and higher in performance. Furthermore, in
general, our software and hardware development tools are more comprehensive
than competing solutions. However, we cannot assure you that we will be able
to compete successfully in the future against existing or new competitors, and
increased competition may adversely affect our business.

Sales, Marketing and Technical Support

Our sales and marketing strategy is to achieve design wins at leading
embedded systems companies in high-growth market segments. We market and sell
our products in the United States through a combination of direct regional
sales managers and a network of independent manufacturers representatives. We
maintain United States direct sales offices in California, Connecticut,
Florida, New Hampshire, North Carolina, Texas and Wisconsin.

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Outside the United States, we have engaged a team of manufacturers
representatives, stocking representatives and distributors to sell and market
our products. Our international network includes representatives in Australia,
Belgium, Canada, Denmark, France, Germany, Hong Kong, Israel, Japan, Korea,
Norway, Singapore, South Africa, Sweden, Taiwan, The Netherlands, and the
United Kingdom. We maintain a direct sales office in the United Kingdom to
service customers in Europe and the Middle East and in Japan and Hong Kong to
service Japan, Southeast Asia, and China.

As of December 31, 2001, we employed 40 individuals in sales and
marketing. Sales in North America represented 56%, 61%, and 65% of product
revenues for 2001, 2000, and 1999, respectively. All sales to date have been
denominated in U.S. dollars.

Net revenues through distributors accounted for approximately 54%, 65%,
and 58% of our net revenues for 2001, 2000, and 1999, respectively. In 2001,
sales to a European distributor, A2M, accounted for 14% of our revenues and
sales to our exclusive United States distributor, Unique Technologies,
accounted for 11% of our revenues. In March 2001, we decided to terminate our
relationship with Unique Technologies and service all of our U.S. customers
directly or through manufacturers representatives. Despite this change,
revenues related to sales through distributors are expected to continue to
account for a significant portion of our total revenues. See Risk Factors 
A Large Portion of Our Revenues Is Derived from Sales to Third-Party
Distributors Who May Terminate Their Relationships with Us at Any Time.

In 2001, sales to Prediwave, IBM and Cisco Systems directly or through
distributors accounted for 18%, 14% and 11%, respectively. In 2000, sales to
Cisco Systems and IBM directly or through distributors accounted for 17% and
11%, respectively. In 1999, sales to Cisco Systems and IBM directly or through
distributors accounted for 12% and 11%, respectively. No other customer
accounted for more than 10% of net revenues in any period presented.

Technical support to customers is provided through field and factory
applications engineers, technical marketing personnel and, if necessary,
product design engineers. Local field support is provided in person or by
telephone. We also use our World Wide Web site to provide product
documentation and technical support information. We believe that providing
customers with comprehensive product support is critical to remaining
competitive in the markets we serve. In addition, our close contact with
customer design engineers provides valuable input into existing product
enhancements and next generation product specifications.

Research and Development

Our future success will depend to a large extent on our ability to rapidly
develop and introduce new products and enhancements to our existing products
that meet emerging industry standards and satisfy changing customer
requirements. We have made and expect to continue to make substantial
investments in research and development and to participate in the development
of new and existing industry standards.

Our research and development has been focused in three main areas:
semiconductor devices, hardware design kits and software development kits. The
majority of our engineers are involved in semiconductor device design and
verification, with the remaining engineers working on software and reference
design hardware. Before development of a new product commences, our marketing
managers work closely with research and development engineers and customers to
develop a comprehensive requirements specification. In addition, our marketing
managers and engineers review the applicable industry standards and incorporate
desired changes into the new product specification. After the product is
designed and commercially available, our engineers continue to work with
various customers on specific design issues to understand emerging requirements
that may be incorporated into future product generations or product upgrades.

Our research and development expenditures totaled $18.8 million in 2001,
$16.4 million in 2000, and $7.3 million in 1999. Research and development
expenses consist primarily of salaries and related costs of employees engaged
in research, design, and development activities. In addition, expenses for
outside engineering consultants and non-recurring engineering at our
independent foundries are included in research and development expenses. As of
December 31, 2001, there were 53 employees engaged in research and development.
We perform our research and development activities at our headquarters in
Sunnyvale, California and in Salt Lake City, Utah. We are seeking

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to hire additional skilled development engineers, who are currently in
short supply. Our business could be adversely affected if we encounter delays
in hiring additional engineers. See Certain Factors That May Affect Future
Operating Results  Failure to Hire Additional Personnel and to Improve Our
Operations Will Limit Our Growth.

Our future performance depends on a number of factors, including our
ability to identify emerging technology trends in our target markets, define
and develop competitive new products in a timely manner, enhance existing
products to differentiate them from those of competitors and bring products to
market at competitive prices. The technical innovations and product
development required for us to remain competitive are inherently complex and
require long development cycles. We typically must incur substantial research
and development costs before the technical feasibility and commercial viability
of a product can be ascertained. We must also continue to make significant
investments in research and development in order to continually enhance the
performance and functionality of our products to keep pace with competitive
products and customer demands for improved performance. Revenues from future
products or product enhancements may not be sufficient to recover the
development costs associated with these products or enhancements. The failure
to successfully develop new products on a timely basis could have a material
adverse effect on our business. See Certain Factors That May Affect Future
Operating Results  Rapid Technological Change Could Make Our Products
Obsolete.

Manufacturing

We have adopted a fabless semiconductor manufacturing model and
outsource all of our semiconductor manufacturing, assembly and testing. This
approach allows us to focus our resources on the design, development and
marketing of products and significantly reduces our capital requirements. We
subcontract substantially all of our semiconductor manufacturing to IBM in the
United States, Samsung in Korea, Seiko-Epson Semiconductor in Japan, and Taiwan
Semiconductor Manufacturing Corporation in Taiwan. None of our products is
currently manufactured by more than one supplier, and all of our products are
expected to be single-source manufactured for the foreseeable future. We must
place orders two to four months in advance of expected delivery of finished
goods. We maintain inventory levels based on current lead times from foundries
plus safety stock to account for anticipated fluctuations in demand. Our
inventory comprises a large portion of our working capital. As a result, we
have limited ability to react to fluctuations in demand for our products, which
could cause us to have an excess or a shortage of inventory of a particular
product and reduced product revenues.

In the event of a loss of, or a decision by us to change, a key supplier
or foundry, qualifying a new supplier or foundry and commencing volume
production would likely involve delay and expenses, resulting in lost revenues,
reduced operating margins and possible detriment to customer relationships.
Since we place our orders on a purchase order basis and do not have a long-term
volume purchase agreement with any of our existing suppliers, any of these
suppliers may allocate capacity to the production of other products while
reducing deliveries to us on short notice. While we believe we currently have
good relationships with our foundries and adequate capacity to support our
current sales levels, there can be no assurance that adequate foundry capacity
will be available in the future on acceptable terms, if at all. See Certain
Factors That May Affect Future Operating Results  Our Independent
Manufacturers May Not Be Able To Meet Our Manufacturing Requirements.

Our semiconductor devices are currently fabricated using a range of
semiconductor manufacturing processes. We must continuously develop our
devices using more advanced processes to remain competitive on a cost and
performance basis. Migrating to new technologies is a challenging task
requiring new design skills, methods and tools. We believe that the transition
of our products to smaller geometries will be important for us to remain
competitive. Our business could be materially adversely affected if any
transition to new processes is delayed or inefficiently implemented. See
Certain Factors That May Affect Future Operating Results  Defects in Our
Products Could Increase Our Costs and Delay Our Product Shipments.

Intellectual Property

Our future success and competitive position depend upon our ability to
obtain and maintain the proprietary technology used in our principal products.
Most of our current products include implementations of the PCI industry
standard, which is available to other companies. We currently have no patents
on any of our accelerator or I/O processor products and rely instead on trade
secret protection. We hold two patents on technology which are used in our
Switched-PCI products that expire in December 2016. In addition, we have two
patents on technology

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in our other products that expire in September 2007 and September 2014.
In the future, we plan to seek patent protection when we believe it is
necessary.

Our existing or future patents may be invalidated, circumvented,
challenged or licensed to others. The rights granted thereunder may not
provide competitive advantages to us. In addition, our future patent
applications may not be issued with the scope of the claims sought by us, if at
all. Furthermore, others may develop technologies that are similar or superior
to our technology, duplicate our technology or design around the patents owned
or licensed by us. In addition, effective patent, trademark, copyright and
trade secret protection may be unavailable or limited in foreign countries
where we may need this protection. We cannot be sure that steps taken by us to
protect our technology will prevent misappropriation of our technology.

The semiconductor industry is characterized by vigorous protection and
pursuit of intellectual property rights or positions. This often results in
significant and often protracted and expensive litigation. There is no
intellectual property litigation currently pending against us. However, we may
from time to time receive notifications of claims that we may be infringing
patents or other intellectual property rights owned by other third parties. If
it is necessary or desirable, we may seek licenses under these third party
patents or intellectual property rights. However, we cannot be sure that
licenses will be offered or that the terms of any offered licenses will be
acceptable to us.

The failure to obtain a license from a third party for technology used by
us could cause us to incur substantial liabilities and to suspend the
manufacture or shipment of products or our use of processes requiring the
technology. Litigation could result in significant expenses to us, adversely
affect sales of the challenged product or technology and divert the efforts of
our technical and management personnel, whether or not the litigation is
determined in our favor. In the event of an adverse result in any litigation,
we could be required to pay substantial damages, cease the manufacture, use,
sale or importation of infringing products, expend significant resources to
develop or acquire non-infringing technology, and discontinue the use of
processes requiring the infringing technology or obtain licenses to the
infringing technology. We may not be successful in the development or
acquisition, or the necessary licenses may not be available under reasonable
terms, and any development, acquisition or license could require expenditures
by us of substantial time and other resources. Any of these developments would
have a material adverse effect on our business. See Certain Factors That May
Affect Future Operating Results  Our Limited Ability to Protect Our
Intellectual Property and Proprietary Rights Could Adversely Affect Our
Competitive Position.

Employees

As of December 31, 2001, we employed a total of 116 full-time employees,
including 53 engaged in research and development, 40 engaged in sales and
marketing, 8 engaged in manufacturing operations and 15 engaged in general
administration activities. We also from time to time employ part-time
employees and hire contractors. Our employees are not represented by any
collective bargaining agreement, and we have never experienced a work stoppage.
We believe that our employee relations are good.

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Executive Officers and Directors

Our executive officers and directors, their ages and their positions as of
December 31, 2001, are as follows:

|                     |  |     |    |          |  |                                                               
|-------------------- |  | --- | -- | -------- |  | --------------------------------------------------------------
|Name                 |  | Age |    | Position
|                     |  |     |    |         
|Michael J. Salameh   |  |     | 47 |          |  | President and Director                                        
|Rafael Torres        |  |     | 33 |          |  | Vice President, Finance, Chief Financial Officer
and Secretary
|Lawrence Chisvin     |  |     | 47 |          |  | Vice President, Marketing                                     
|Michael A. Hopwood   |  |     | 39 |          |  | Vice President, Worldwide Sales                               
|Raymond M. Holzworth |  |     | 46 |          |  | Vice President, Operations                                    
|Jack Regula          |  |     | 53 |          |  | Vice President, Chief Technology Officer                      
|D. James Guzy        |  |     | 65 |          |  | Chairman of the Board of Directors                            
|Eugene Flath         |  |     | 64 |          |  | Director                                                      
|Timothy Draper       |  |     | 43 |          |  | Director                                                      
|Young K. Sohn        |  |     | 45 |          |  | Director                                                      
|John H. Hart         |  |     | 56 |          |  | Director                                                      

Michael J. Salamehco-founded PLX and has served as our President and as a
member of the Board of Directors since PLXs inception in May 1986. From 1980
through 1986, Mr. Salameh was employed in various marketing management
positions with Hewlett-Packard Company. Mr. Salameh received a B.S. in
Engineering and Applied Science from Yale University and an M.B.A. from Harvard
Business School.

Rafael Torreshas served as our Vice President of Finance and Chief
Financial Officer since November 2000. From May 1999 to November 2000, Mr.
Torres served as our Corporate Controller. From September 1998 to May 1999,
Mr. Torres was employed by OnCommand Corporation, an on demand video company,
as Accounting Manager. From June 1997 to September 1998, Mr. Torres was
employed by Silicon Valley Group, a semiconductor equipment company, as Manager
of Financial Reporting and Analysis. From September 1994 to June 1997, Mr.
Torres was employed with PriceWaterhouse LLP, a public accounting firm, as
senior auditor. Mr. Torres received a B.S. in Accounting from Santa Clara
University. Mr. Torres is a Certified Public Accountant.

Lawrence Chisvinhas served as our Vice President of Marketing since May
2000. From September 1998 through May 2000, Mr. Chisvin was employed by
Neomagic, a semiconductor company, as Director of Marketing. From May 1996
through September 1998, Mr. Chisvin was employed by LSI Logic, a semiconductor
company, as Director of Marketing. Prior to LSI Logic, Mr. Chisvin was
employed in a variety of marketing and engineering positions at S3, Philips,
Western Digital, and Digital Equipment Corporation. Mr. Chisvin received a
B.S. in Electrical Engineering from Northeastern University and an M.S. in
Electrical Engineering from Worcester Polytechnic Institute.

Michael A. Hopwoodhas served as our Vice President of Worldwide Sales
since 1995. From 1989 to 1995, he held a variety of other sales management
positions with our Company. From 1984 until 1989, Mr. Hopwood held various
sales positions at Intel Corporation, a semiconductor manufacturer. Mr.
Hopwood received a B.S. in Physics Engineering from Pacific Lutheran
University.

Raymond M. Holzworthhas served as our Vice President of Operations since
November 2000. From July 1998 through November 2000, Mr. Holzworth was
employed by Triscend, a semiconductor company, as Vice President of Operations.
From March 1995 to July 1998, Mr. Holzworth was employed by ISD, a
semiconductor company, as Foundry Director. From June 1986 to March 1995, Mr.
Holzworth was employed by Advanced Micro Devices, a semiconductor company, as
Program Manager. Mr. Holzworth received a B.A. in Chemistry, Math, and Physics
from Erskine College, an M.S. in Mechanical Engineering from the University of
Florida, an M.S. in Electrical Engineering from Stanford University, and an
M.B.A. from San Jose State University.

Jack Regulahas served as our Vice President, Chief Technology Officer
since October 2001. From May 2000 to October 2001, Mr. Regula served as our
Chief Scientist. Mr. Regula founded Sebring Systems, a semiconductor company,
in 1996 and was Sebrings Chairman and Chief Technology Officer from 1996 until
its acquisition by PLX in May 2000. Prior to Sebring Systems, Mr. Regula was
employed in a variety of engineering

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management positions at Sunscoop Corporation, Force Computers, and
Ironics, Inc. Mr. Regula received a B.S. in Electrical Engineering and an M.S.
in Electrical Engineering, both from Rensselaer Polytechnic Institute.

D. James Guzyhas been a director of PLX since 1986. Mr. Guzy has served
as the President of the Arbor Company, a limited partnership involved in the
electronics and computer industry, since 1969. Mr. Guzy is also a director of
Cirrus Logic, Inc., Intel Corporation, Micro Component Technology, Inc.,
Novellus Systems, Inc., Davis Selected Group of Mutual Funds and Alliance
Capital Management Technology Fund, and a member of the board of directors of
several private technology companies. Mr. Guzy received a B.S. from the
University of Minnesota and an M.S. from Stanford University.

Eugene Flathhas been a director of PLX since May 1989. Mr. Flath has
been a Special General Partner of Applied Technology Investors since July 1994.
Mr. Flath also serves on the board of directors of several private companies.
Mr. Flath received a B.S. in Electrical Engineering and a B.S. in Naval Science
from the University of Wisconsin and an M.S. in Electrical Engineering from the
University of New Hampshire.

Timothy Draperhas been a director of PLX since 1986. Mr. Draper has been
a Managing Director of Draper Fisher Jurvetson, an investment company, since
1992. Mr. Draper managed Draper Associates LP from 1986 to 1992. Mr. Draper
received a B.S. in Electrical Engineering from Stanford University and an
M.B.A. from Harvard Business School.

Young K. Sohnhas been a director of PLX since April 1999. Mr. Sohn has
served as CEO of Oak Technology, a semiconductor manufacturer, since February
1999. From January 1993 until February 1999, Mr. Sohn held various executive
management positions at Quantum Corporation, a disk drive manufacturer,
including President of the Hard Disk Drive Business. Prior to joining Quantum,
Mr. Sohn was employed for nine years at Intel as a Marketing and Sales
Executive and Director of Worldwide Channel Marketing in Intels Reseller
Channel organization. Mr. Sohn received a B.S. in Electrical Engineering from
the University of Pennsylvania and an M.B.A. from MITs Sloan School of
Management.

John H. Harthas been a director of PLX since April 1999. Mr. Hart is
currently a 3Com fellow and serves on the board of directors of two other
companies. In September of 2000, he retired as Senior Vice President and Chief
Technical Officer of 3Com Corporation, a position he had held since August
1996. From the time Mr. Hart joined 3Com in September 1990 until July 1996, he
was Vice President and Chief Technical Officer. Prior to joining 3Com, Mr.
Hart worked for Vitalink Communications Corporation for seven years, where his
most recent position was Vice President of Network Products. Mr. Hart received
a B.S. in Mathematics from the University of Georgia.

Backlog

PLXs backlog at any particular date is not necessarily indicative of
actual sales for any succeeding period. This results from expected changes in
product delivery schedules and cancellation of product orders. In addition,
PLXs sales will often reflect orders shipped in the same quarter that they are
received.




ITEM 2: PROPERTIES

We own one facility in Sunnyvale, California, which has approximately
55,000 square feet. This facility comprises our headquarters and includes our
research and development, sales and marketing and administration departments.
In addition, we have leases for an engineering design center in Utah and sales
offices in Florida and Texas as well as another facility in Sunnyvale,
California. Internationally, we lease sales offices in Hong Kong and Japan.
These leases comprise approximately 34,000 square feet and have terms expiring
on or prior to April 2006. We believe that our current facilities will be
adequate through 2002.




ITEM 3: LEGAL PROCEEDINGS

None.

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ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

No matters were submitted to a vote of security holders during the three
months ended December 31, 2001.




PART II




ITEM 5: MARKET FOR REGISTRANTS COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS

The Companys common stock is traded on The Nasdaq Stock Market and has
been quoted on the Nasdaq National Market under the symbol PLXT since its
initial public offering on April 5, 1999. The following table sets forth, for
the periods indicated, the range of quarterly high and low bid information for
the Companys common stock as reported on the Nasdaq National Market:

|               |  |          |       |         |  |   |       | 
|-------------- |  | -------- | ----- | ------- |  | - | ----- | 
|2000           |  | High Bid |       | Low Bid
|               |  |          |       |        
|First Quarter  |  | $        | 40.75 |         |  | $ | 15.50 | 
|Second Quarter |  |          | 43.81 |         |  |   | 14.50 | 
|Third Quarter  |  |          | 51.25 |         |  |   | 23.06 | 
|Fourth Quarter |  |          | 30.62 |         |  |   | 4.34  | 

|               |  |          |       |         |  |   |      | 
|-------------- |  | -------- | ----- | ------- |  | - | ---- | 
|2001           |  | High Bid |       | Low Bid
|               |  |          |       |        
|First Quarter  |  | $        | 10.56 |         |  | $ | 4.25 | 
|Second Quarter |  |          | 9.18  |         |  |   | 3.19 | 
|Third Quarter  |  |          | 10.30 |         |  |   | 4.50 | 
|Fourth Quarter |  |          | 15.77 |         |  |   | 4.91 | 

As of February 28, 2002, there were approximately 151 holders of record of
the Companys common stock. As of February 28, 2002, the last reported sales
price of our common stock was $12.14.

The Company has never paid cash dividends on its common stock. The
Company currently intends to retain earnings, if any, for use in its business
and does not anticipate paying any cash dividend in the foreseeable future.
Any future declaration and payment of dividends will be subject to the
discretion of the Companys Board of Directors, will be subject to applicable
law and will depend upon the Companys results of operations, earnings,
financial condition, contractual limitations, cash requirements, future
prospects and other factors deemed relevant by the Companys Board of
Directors.




ITEM 6: SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements and related notes
thereto and Managements Discussion and Analysis of Financial Condition and
Results of Operations appearing elsewhere in this Annual Report on Form 10-K.
The selected consolidated statement of operations data for each of the three
fiscal years ended December 31, 2001, 2000 and 1999 and selected consolidated
balance sheet data as of December 31, 2001 and 2000 are derived from, and
qualified by reference to, the audited consolidated financial statements
included elsewhere in this Annual Report on Form 10-K. The selected
consolidated statement of operations data for the fiscal year ended December
31, 1998 and 1997 and selected consolidated balance sheet data as of December
31, 1999, 1998 and 1997 are derived from audited financial statements not
included in this Annual Report.

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|                                                         |  |                                       |        |          |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|-------------------------------------------------------- |  | ------------------------------------- | ------ | -------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ |  |  | - | ------ | 
|                                                         |  | Years Ended December 31,             
|                                                         |  |                                      
|                                                         |  | 2001                                  |        | 2000 (1) |  | 1999 |        | 1998 |  | 1997
|                                                         |  |                                       |        |          |  |      |        |      |  |     
|                                                         |  | (In thousands, except per share data)
|Consolidated Statement of Operations Data:               |  |                                       |        |          |  |      |        |      |  |      |        |  |  |   |        |  |  |   |        | 
|Net revenues                                             |  | $                                     | 44,128 |          |  | $    | 65,351 |      |  | $    | 40,699 |  |  | $ | 26,276 |  |  | $ | 17,534 | 
|Gross margin                                             |  |                                       | 28,521 |          |  |      | 45,983 |      |  |      | 27,831 |  |  |   | 16,605 |  |  |   | 10,558 | 
|Operating income (loss)                                  |  |                                       | (9,147 | )        |  |      | (3,108 | )    |  |      | 9,994  |  |  |   | 3,383  |  |  |   | 1,991  | 
|Net income (loss)                                        |  |                                       | (6,537 | )        |  |      | (7,042 | )    |  |      | 7,231  |  |  |   | 2,766  |  |  |   | 1,924  | 
|Basic earnings (loss) per share                          |  | $                                     | (0.28  | )        |  | $    | (0.31  | )    |  | $    | 0.43   |  |  | $ | 0.77   |  |  | $ | 0.58   | 
|Shares used to compute basic earnings
(loss) per share   |  |                                       | 23,258 |          |  |      | 22,560 |      |  |      | 17,007 |  |  |   | 3,601  |  |  |   | 3,293  | 
|Diluted earnings (loss) per share                        |  | $                                     | (0.28  | )        |  | $    | (0.31  | )    |  | $    | 0.33   |  |  | $ | 0.15   |  |  | $ | 0.11   | 
|Shares used to compute diluted earnings
(loss) per share |  |                                       | 23,258 |          |  |      | 22,560 |      |  |      | 21,849 |  |  |   | 18,405 |  |  |   | 17,758 | 

|                                 |                |              |        |      |  |      |         |      |  |      |        |  |  |   |        |  |  |   |       | 
|-------------------------------- | -------------- | ------------ | ------ | ---- |  | ---- | ------- | ---- |  | ---- | ------ |  |  | - | ------ |  |  | - | ----- | 
|                                 |                | December 31,
|                                 |                |             
|                                 |                | 2001         |        | 2000 |  | 1999 |         | 1998 |  | 1997
|                                 |                |              |        |      |  |      |         |      |  |     
|                                 | (In thousands)
|Consolidated Balance Sheet Data: |                |              |        |      |  |      |         |      |  |      |        |  |  |   |        |  |  |   |       | 
|Cash and cash equivalents        |                | $            | 9,631  |      |  | $    | 16,621  |      |  | $    | 8,636  |  |  | $ | 5,638  |  |  | $ | 2,701 | 
|Working capital                  |                |              | 21,859 |      |  |      | 21,762  |      |  |      | 32,827 |  |  |   | 6,116  |  |  |   | 3,591 | 
|Total assets                     |                |              | 75,229 |      |  |      | 113,479 |      |  |      | 52,055 |  |  |   | 11,766 |  |  |   | 8,013 | 
|Long-term debt                   |                |              |       |      |  |      | 28,500  |      |  |      |       |  |  |   |       |  |  |   |      | 
|Total stockholders equity       |                | $            | 70,553 |      |  | $    | 73,198  |      |  | $    | 46,402 |  |  | $ | 7,760  |  |  | $ | 4,889 | 



|(1) |  | Results of operations for 2000 include a $14.3 million charge for
in-process research and development.
|--- |  | ------------------------------------------------------------------------------------------------------




ITEM 7: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following Managements Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those set forth under Certain Factors That May Affect Future
Operating Results and elsewhere in this report. The following discussion
should be read in conjunction with our Consolidated Financial Statements and
related notes thereto included elsewhere in this report.

Overview

PLX was founded in 1986, and since 1994 we have focused on development of
I/O interface semiconductors and related software and development tools that
are used in systems incorporating the PCI standard. In 1994 and 1995, a
significant portion of our revenues was from the sale of semiconductor devices
that perform similar functions as our current products, except they were based
on a variety of industry standards. Our revenues since 1996 have been derived
predominantly from the sale of semiconductor devices based on the PCI standard
to a large number of customers in a variety of applications including
networking and telecommunications, enterprise storage, imaging, industrial and
other embedded applications as well as in related adapter cards. We generate a
small portion of our revenues from sales of our software and development tools.

We utilize a fabless semiconductor business model whereby we purchase
packaged and tested semiconductor devices from independent manufacturing
foundries. This approach allows us to focus on defining, developing, and
marketing our products and eliminates the need for us to invest large amounts
of capital in manufacturing facilities and work-in-process inventory.

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We rely on a combination of direct sales personnel and distributors and
manufacturers representatives throughout the world to sell a significant
portion of our products. We pay manufacturers representatives a commission on
sales while we sell products to distributors at a discount from the selling
price. We generally recognize revenue at the time of title passage.
Recognition of sales to distributors, including international distributors, is
deferred until the product is resold by the distributors to end users. See
Certain Factors That May Affect Future Operating Results  A Large Portion of
Our Revenues Is Derived From Sales to Third-Party Distributors Who May
Terminate Their Relationships with Us at Any Time.

Our gross margins have fluctuated in the past and are expected to
fluctuate in the future due to changes in product mix, the position of our
products in their respective life cycles, and specific product manufacturing
costs.

The time period between initial customer evaluation and design completion
can range from six to twelve months or more. Furthermore, there is typically
an additional six to twelve month or greater period after design completion
before a customer commences volume production of equipment incorporating our
products. Due to these lengthy sales cycles, we may experience significant
fluctuations in new orders from month to month. In addition, we typically make
inventory purchases prior to receiving customer orders. Consequently, if
anticipated sales and shipments in any quarter do not occur when expected,
expenses and inventory levels could be disproportionately high, and our results
for that quarter and potentially future quarters would be materially and
adversely affected.

In May 2000, we purchased Sebring Systems, a development stage company,
which was developing a Switched-PCI product. In connection with this
acquisition, we issued an aggregate of 960,931 shares of our common stock in
return for the capital stock of Sebring Systems. In addition, outstanding
options of Sebring Systems were converted into options to purchase our common
stock. The transaction was accounted for using the purchase method of
accounting.

Our long-term success will depend on our ability to introduce new
products. While new products typically generate little or no revenues during
the first twelve months following their introduction, our revenues in
subsequent periods depend upon these new products. Due to the lengthy sales
cycle and additional time for customers to commence volume production,
significant revenues from our new products typically occur only twelve to
twenty-four months after product introduction. As a result, revenues from
newly introduced products have, in the past, produced a small percentage of our
total revenues in the year the product was introduced. See Certain Factors
That May Affect Future Operating Results  Our Lengthy Sales Cycle Can Result
in Uncertainty and Delays with Regard to Our Expected Revenues.

Results of Operations

The following table summarizes historical results of operations as a
percentage of net revenues for the periods shown.

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|                                                                                    |                                                          |                          |       |                                |      |      |       |      |      |  |       |      |      | 
|----------------------------------------------------------------------------------- | -------------------------------------------------------- | ------------------------ | ----- | ------------------------------ | ---- | ---- | ----- | ---- | ---- |  | ----- | ---- | ---- | 
|                                                                                    |                                                          |                          |       | Fiscal Year Ended December 31,
|                                                                                    |                                                          |                          |       |                               
|                                                                                    |                                                          |                          |       | 2001                           |      | 2000 |       | 1999
|                                                                                    |                                                          |                          |       |                                |      |      |       |     
|Net revenues                                                                        |                                                          |                          | 100.0 | %                              |      |      | 100.0 | %    |      |  | 100.0 | %   
|Cost of revenues                                                                    |                                                          |                          | 35.4  |                                |      |      | 29.6  |      |      |  | 31.6  |     
|                                                                                    |                                                          |                          |       |                                |      |      |       |      |      |  |       |     
|Gross profit                                                                        |                                                          |                          | 64.6  |                                |      |      | 70.4  |      |      |  | 68.4  |     
|Expenses:                                                                           |                                                          |                          |       |                                |      |      |       |      |      |  |       |     
|                                                                                    | Research and development                                 |                          |       | 42.6                           |      |      |       | 25.0 |      |  |       | 17.8 |     
|                                                                                    | Selling, general and administrative                      |                          |       | 33.3                           |      |      |       | 24.3 |      |  |       | 26.0 |     
|                                                                                    | Amortization of goodwill and purchased intangible assets |                          |       | 9.4                            |      |      |       | 3.9  |      |  |       |     |     
|                                                                                    | In-process research and development                      |                          |       |                               |      |      |       | 21.9 |      |  |       |     |     
|                                                                                    |                                                          |                          |       |                                |      |      |       |      |      |  |       |     
|                                                                                    |                                                          | Total operating expenses |       |                                | 85.3 |      |       |      | 75.1 |  |       |      | 43.8 | 
|                                                                                    |                                                          |                          |       |                                |      |      |       |      |      |  |       |     
|Operating income (loss)                                                             |                                                          |                          | (20.7 | )                              |      |      | (4.7  | )    |      |  | 24.6  |     
|Interest income and other, net                                                      |                                                          |                          | 1.7   |                                |      |      | 3.0   |      |      |  | 3.6   |     
|                                                                                    |                                                          |                          |       |                                |      |      |       |      |      |  |       |     
|Income (loss) before income taxes and equity in net loss of
unconsolidated investee |                                                          |                          | (19.0 | )                              |      |      | (1.7  | )    |      |  | 28.2  |     
|Provision (benefit) for income taxes                                                |                                                          |                          | (4.2  | )                              |      |      | 9.0   |      |      |  | 9.6   |     
|                                                                                    |                                                          |                          |       |                                |      |      |       |      |      |  |       |     
|Income (loss) before equity in net loss of unconsolidated investee                  |                                                          |                          | (14.8 | )                              |      |      | (10.7 | )    |      |  | 18.6  |     
|Equity in net loss of unconsolidated investee                                       |                                                          |                          |      |                                |      |      |      |      |      |  | (0.8  | )   
|                                                                                    |                                                          |                          |       |                                |      |      |       |      |      |  |       |     
|Net income (loss)                                                                   |                                                          |                          | (14.8 | )%                             |      |      | (10.7 | )%   |      |  | 17.8  | %   
|                                                                                    |                                                          |                          |       |                                |      |      |       |      |      |  |       |     

Comparison of Years Ended December 31, 2001, 2000, and 1999

Increasing overall end customer demand during 1999 and 2000 resulted in
capacity constraints and increasing order lead times for semiconductor
suppliers. Longer lead times and concern about availability of semiconductor
components resulted in increased order rates for standard products during 2000
compared to 1999, resulting in increased order backlog. Orders from OEM
customers and contract manufacturers serving the network and telecommunications
market were especially strong in 2000 as these customers attempted to secure
semiconductor components to meet their projected end demand. However, the
supply of semiconductors can quickly and unexpectedly match or exceed demand
because end customer demand can change very quickly and semiconductor suppliers
can rapidly increase production output. This can lead to a sudden oversupply
situation and a subsequent reduction in order rates as customers adjust their
inventories to true demand rates. Customers continuously adjust their
inventories resulting in frequent changes in demand for our products. The
volatility of customer demand limits our ability to predict future levels of
sales and profitability.

The semiconductor industry experienced significant changes in the supply
and demand situation during 2001. Shipments to our customers declined in 2001
compared to 2000 as these customers attempted to align inventories with revised
demand projections. In 2001, our customers and the contract manufacturing
firms that serve them, adjusted their inventories to lower demand projections,
resulting in cancellations and rescheduling of previously placed orders. This
activity, combined with the overall slowing of economic growth in the North
American economy, led to lower order rates and a reduction in order backlog in
2001 compared with 2000.

Net Revenues.Revenues consist of product revenues generated principally
by sales of our semiconductor devices. Revenues for 2001 were $44.1 million, a
decrease of $21.3 million or 32% from 2000. Revenues for 2000 were $65.4
million, an increase of $24.7 million or 61% from 1999. In 2001, the decrease
was primarily due to lower unit shipments resulting from the economic slowdown
in the technology sector. In 2000, the increase was primarily due to higher
volume shipments of PCI products.

Gross Profit.Gross profit represents net revenues less the cost of
revenues. Cost of revenues includes the cost of purchasing semiconductor
devices from our independent foundries, additional assembly and testing costs,
our operating costs associated with the procurement, storage and shipment of
products. Gross profit for 2001 was $28.5 million, a decrease of $17.5 million
or 38% from 2000. Gross profit for 2000 was $46.0 million, an increase of
$18.2 million or 65% from 1999. Gross profit as a percentage of revenues was
64.6% in 2001, 70.4 % in 2000, and 68.4% in 1999. In 2001, the decrease in
absolute dollars was primarily due to lower volume shipments of PCI

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products. In 2000, the increase in absolute dollars was primarily due to
higher volume shipments of PCI products. Gross profit as a percentage of
revenues decreased in 2001 from 2000 primarily due to net inventory write-downs
of approximately $1.2 million above those recorded in fiscal 2000. These
write-downs related to excess inventory. In addition, gross profit decreased
due to a shift in our product mix to lower margin products. Gross profit as a
percentage of revenues increased in 2000 from 1999 primarily due to lower
product costs.

Research and Development Expenses. Research and development expenses
consist primarily of salaries and related costs of employees engaged in
research, design, and development activities. In addition, expenses for
outside engineering consultants and non-recurring engineering at our
independent foundries are included in research and development expenses.
Research and development expenses for 2001 were $18.8 million, an increase of
$2.4 million or 15% from 2000. Research and development expenses for 2000 were
$16.4 million, an increase of $9.1 million or 125% from 1999. Research and
development expenses as a percentage of revenues were 42.6% in 2001, 25.0% in
2000, and 17.8% in 1999. The increase in research and development expenses as
a percentage of revenues from 2000 to 2001 was primarily due to lower revenues
and amortization of deferred compensation in 2001 associated with the May 2000
acquisition of Sebring Systems. The increase in research and development
expenses as a percentage of revenues from 1999 to 2000 was primarily due to the
amortization of deferred compensation associated with the acquisition of
Sebring Systems, a one-time compensation charge related to a severance
agreement, and increased headcount and higher costs to support our continuing
efforts to develop new products. The increase in absolute dollars in 2001 was
primarily due to the development of new products and the enhancement of
existing products. The increase in absolute dollars in 2000 was primarily due
to the addition of personnel for the development of new product and the
enhancement of existing products, as well as payments to outside consultants
where specific resources were needed in the development process. We expect
that research and development expenses in absolute dollars will likely increase
in future periods.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses consist primarily of employee related expenses,
professional fees, trade show and other promotional expenses, as well as sales
commissions to manufacturers representatives. Selling, general and
administrative expenses for 2001 were $14.7 million, a decrease of $1.2 million
or 7% from 2000. Selling, general and administrative expenses for 2000 were
$15.9 million, an increase of $5.3 million or 50% from 1999. Selling, general
and administrative expenses as a percentage of revenues were 33.3% in 2001,
24.3% in 2000, and 26.0% in 1999. In 2001, the decrease in absolute dollars
was primarily due to a decrease in sales commissions to manufacturers
representatives as a result of lower revenues and a decrease in discretionary
spending. In 2000, the increase in absolute dollars primarily reflected higher
personnel related costs resulting from an increase in sales and marketing
personnel as well as increased sales commissions from higher product revenues.
We expect that selling, general and administrative expenses in absolute dollars
will likely increase in future periods.

Amortization of Goodwill and Purchased Intangible Assets. Amortization of
goodwill and purchased intangible assets in 2001 was $4.2 million, an increase
of $1.6 million or 65% from 2000. The increase was due to the fact that
Sebring Systems was purchased in May 2000 and therefore, a full year of
amortization was recorded in 2001 compared to seven months in 2000.
Amortization of goodwill and purchased intangible assets includes the
amortization of goodwill and other purchased intangible assets relating to the
May 2000 acquisition of Sebring Systems. Effective January 1, 2002, in
accordance with SFAS No. 142, we will cease amortization of goodwill and
indefinite lived intangibles. We will continue to amortize patents through May
2004. For a more detailed description of SFAS No. 142 and its effect on us,
see Recent Accounting Pronouncements.

In-process Research and Development. In May 2000, we acquired Sebring Systems,
a development stage company, that was developing the SebringRing , a
Switched-PCI interconnect solution. We wrote off approximately $14.3 million
of acquired in-process research and development associated with this
acquisition in fiscal 2000. This write-off was necessary because the acquired
technology had not yet reached technological feasibility and there was no
alternative future use.

We estimate that the project was 100% complete as of December 31, 2001.
The product was taped out successfully and is currently being sampled. We
expect the acquired in-process technology to be developed into commercially
feasible products. However, there are no assurances that this will occur. If
we fail to complete the product in its entirety, or in a timely manner, our
sales and profitability could be adversely impacted, and the value of the other
acquisition related intangible assets may become impaired.

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The $14.3 million fair value of the acquired in-process technology was
determined by a valuation specialist. The value was determined by estimating
the expected cash flows from the project once commercially viable, discounting
the net cash flows to their present value, and then applying the percentage of
completion to the calculated value. The discount rate utilized was 25% and was
based on the cost of capital for well-managed venture capital funds which
typically have similar risks and returns on investments. The cash flows
utilized were based on estimates of revenues, cost of sales, research and
development costs, selling, general and administrative costs, royalty costs and
income taxes from the project. The research and development costs excluded
costs to bring the acquired in-process project to technological feasibility.
The estimated revenues were based on management projections of the acquired
in-process project. The business projections were compared with and found to
be in line with industry analysts forecasts of growth in substantially all of
the relevant markets. Estimated total revenues from the acquired in-process
technology product were assumed to peak in fiscal 2003 and decline in fiscal
2004 as other new products were expected to become available. These
projections were based on estimates of market size and growth, expected trends
in technology, and the nature and expected timing of our new product
introductions, as well as competitors new product introductions.

The assumptions and projections discussed for the technology acquired were
based on information available at the time and should not be taken as
indications of actual results, which could vary materially based on the risks
and uncertainties identified in the risk factors set forth in this Form 10-K.

Deferred Compensation. In connection with the grant of restricted stock
and options to our employees during 1997 and 1998, we recorded aggregate
deferred compensation of $361,000, representing the difference between the
deemed value of our common stock for accounting purposes and the restricted
stock purchase price or stock option exercise price at the date of grant. The
amount of deferred compensation is presented as a reduction of stockholders
equity and amortized ratably over the vesting period of the applicable stock
grants. We also recorded deferred compensation of $12.3 million related to
stock options granted below fair market value to employees in relation to the
acquisition of Sebring Systems in May 2000. Additionally, we recorded deferred
compensation of $3.5 million in connection with the grant of stock options
below fair market value to our employees in September 2000. Amortization of
deferred compensation recorded in 2001, 2000, and 1999 was $2,906,000,
$2,272,000, and $91,000, respectively. Substantially all of these amounts are
included in research and development expenses. We expect to record
compensation expenses related to deferred compensation of approximately
$700,000 per quarter through September 30, 2003.

Interest Income. Interest income reflects interest earned on average
cash, cash equivalents and short-term and long-term investment balances.
Interest income decreased to $1.5 million in 2001 from $2.3 million in 2000.
Interest income increased to $2.3 million in 2000 from $1.5 million in 1999.
The decrease from 2000 to 2001 was primarily due to interest earned on lower
cash and investments balances and lower interest rates. The increase from 1999
to 2000 was primarily due to interest earned on higher levels of short-term
investments, long-term investments, and cash balances.

Interest Expense. Interest expense reflects interest charges relating to
our November 2000 loan of $28.5 million from Wells Capital Management in
connection with our purchase of the Sunnyvale, California facility. Interest
expense increased to $1.3 million in 2001 from $0.3 million in 2000. The
increase was due to 2001 containing seven months of interest expense compared
to only two months of interest expense in 2000.

Other Income (Expense). Other income (expense) reflects rental income of
$511,000 offset with other expenses. Other income (expense) was $478,000 in
2001 compared to an expense of $42,000 in 2000 and an expense of $6,000 in
1999. The increase from 2000 to 2001 was primarily due to rental income from
two tenants in our new facility.

Provision for Income Taxes. Income tax benefit for the period ended
December 31, 2001 was $1.9 million on a pretax loss of $8.4 million, compared
to income tax expense of $5.9 million on pretax loss of $1.1 million and income
tax expense of $3.9 million on pretax income of $11.5 million for the periods
ended December 31, 2000 and 1999, respectively. Our 2001 income tax benefit
differs from the expected benefit derived by applying the applicable U.S.
federal statutory rate to the loss from operations primarily due to
non-deductible charges for the amortization of goodwill and deferred
compensation partially offset by tax benefits related to prior years of
$975,000. Our 2000 income tax expense differs from the expected benefit
derived by applying the applicable U.S.

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federal statutory rate to the loss from operations primarily due to
non-deductible charges for the amortization of goodwill and purchased
intangible assets partially offset by the benefit of research and development
tax credits. Our 1999 income tax expense differs from the expected expense
derived by applying the applicable U.S. federal statutory rate to income from
operations primarily due to state taxes offset by the benefit of research and
development tax credits.

Equity in Net Loss of Unconsolidated Investee. Equity in net loss of
unconsolidated investee represents losses recognized under the equity method of
accounting for the investment in Sebring Systems in the fourth quarter of 1999.
In May 2000, we purchased the remaining interest in Sebring Systems and
consolidated its results from the date of acquisition.

Liquidity and Capital Resources

Since inception, we have financed our operations through a combination of
sales of equity securities and cash generated by operations. At December 31,
2001, we had $21.9 million in working capital including $9.6 million in cash
and cash equivalents. Our operating activities used cash of $1.6 million in
2001 and provided cash of $13.2 million and $5.1 million in 2000 and 1999,
respectively. The $1.6 million of cash used in operations was primarily
attributable to our net loss of $6.5 million, a decrease in accounts payable of
$3.2 million, a decrease in deferred revenue of $1.1 million and a decrease in
other accrued expenses of $0.9 million, partially offset by non-cash charges of
$9.8 million.

Our investing activities provided cash of $18.4 million in 2001 and used
cash of $31.2 million and $33.3 million in 2000 and 1999, respectively. The
$18.4 million in cash provided by investing activities was primarily attributed
to the liquidation of short-term and long-term securities in connection with
the repayment of the $28.5 million loan from Wells Capital Management,
partially offset by purchases of $23.3 million in short-term and long-term
investments and $5.0 million in property and equipment. Cash used in financing
activities was approximately $23.7 million in 2001, while cash provided by
financing activities was $26.0 million in 2000 and $31.2 million in 1999. Cash
used in financing activities in 2001 was primarily due to the repayment of our
$28.5 million loan.

In August 2001, we paid all amounts owed under the loan from Wells Capital
Management, an aggregate amount of $28.5 million. This loan was secured with
approximately $33.4 million in restricted cash and investments. We liquidated
these restricted cash and investments in order to repay the loan.
Approximately $5 million became available to us for operating working capital
after the repayment of the loan.

In January 2001, our Board of Directors approved a stock repurchase
program whereby up to 2,000,000 shares of our common stock may be purchased in
the open market or in privately negotiated transactions. As of December 31,
2001, 10,000 shares had been repurchased under this program.

As of December 31, 2001, we had no material purchase commitments
outstanding.

We believe that our existing resources, together with cash generated from
our operations will be sufficient to meet our capital requirements for at least
the next twelve months. Our future capital requirements will depend on many
factors, including the inventory levels we maintain, the level of investment we
make in new technologies and improvements to existing technologies and the
levels of monthly expenses required to launch new products. To the extent that
existing resources and future earnings are insufficient to fund our future
activities, we may need to raise additional funds through public or private
financings. Additional funds may not be available or, if available, we may not
be able to obtain them on terms favorable to us and our stockholders.

As of December 31, 2001, we had no off-balance sheet financing
arrangements or activities other than minimal levels of operating leases for
facilities and equipment.

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Critical Accounting Policies

Inventory Write-downs.We evaluate the write-downs for inventory based on
a combination of factors. Based on the life of the product, sales history,
obsolescence and sales forecast, we record write-downs ranging from 0% to 100%.

Allowance for Doubtful Accounts.We evaluate the collectibility of our
accounts receivable based on length of time the receivables are past due. We
record reserves for bad debts against amounts due to reduce the net recognized
receivable to the amount we reasonably believe will be collected.

Goodwill and Other Intangibles.Goodwill is recorded when the
consideration paid for acquisitions exceeds the fair value of identifiable net
tangible and intangible assets acquired. Goodwill and other
acquisition-related intangibles are amortized on a straight-line basis over 4
years. Goodwill and other intangibles are reviewed for recoverability
periodically or whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. The carrying amount is compared to our
undiscounted cash flows. Should the review indicate that these intangibles are
not recoverable, their carrying amount would be reduced by the estimated
shortfall of those cash flows. No impairment has been indicated to date.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Financial
Instruments and Hedging Activities (SFAS 133), which provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. We adopted SFAS 133, as amended, effective
January 1, 2001 and it did not have an impact on our results of operations or
financial position, as we hold no derivative financial instruments and do not
currently engage in hedging activities.

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 141, Business Combinations, and
SFAS No. 142, Goodwill and Other Intangible Assets. These standards become
effective for fiscal years beginning after December 15, 2001. SFAS No. 141
requires all business combinations to be accounted for using the purchase
method of accounting and is effective for all business combinations initiated
after June 30, 2001. Under the new rules, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be subject
to annual impairment tests in accordance with the SFAS 142. Other intangibles
will continue to be amortized over their useful lives. We will adopt SFAS No.
142 beginning in the first quarter of 2002. As a result of the discontinuance
of the amortization of goodwill and indefinite lived intangibles, excluding the
impact of potential impairment charges, the application of SFAS No. 142 is
expected to result in an increase in our operating income of approximately $3.6
million per year. During the first six months of 2002, we will test goodwill
and indefinite lived intangibles for impairment under the new rules, applying a
fair-value-based test. We do not expect to have impairment at the date of
adoption of this standard.

In October 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 144, Accounting for Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of, and addresses financial accounting and reporting for the
impairment and disposal of long-lived assets. This statement is effective for
fiscal years beginning after December 15, 2001. Adoption of this statement is
not expected to have a material impact on our financial position or results of
operations.

CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

The statements contained in this Report on Form 10-K that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including, without limitation, statements regarding the Companys
expectations, objectives, anticipations, plans, hopes, beliefs, intentions or
strategies regarding the future. Forward-looking statements include, without
limitation, the statements regarding (a) the growing demand for standards-based
components such as the Companys

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semiconductor devices that connect systems together; (b) the Companys
objective to expand its advantages in data transfer technology, under the
heading Item 1, Business  Overview; the statements regarding (a) the
Companys objective to continue to expand its market position as a developer
and supplier of I/O connectivity solutions for the high-growth communications
infrastructure equipment market, (b) the Companys plan to target those
applications where the Company believes it can attain a leadership position,
(c) the Companys belief that its understanding of I/O technology trends and
market requirements allows it to bring to market more quickly new products that
support the latest I/O technology, under the heading Item 1, Business -
Strategy; the statements regarding (a) the Companys belief with respect to
the principal factors of competition in the business, (b) the Companys belief
that it competes favorably with respect to each of those factors, under the
heading Item 1, Business  Competition; the statements regarding (a) the
Companys belief that providing customers with comprehensive product support is
critical to remaining competitive in the markets it serves, (b) the Companys
belief that its close contact with customer design engineers provides valuable
input into existing product enhancements and next generation product
specifications, under the heading Item 1, Business  Sales, Marketing and
Technical Support; the Companys belief that the transition of its products to
smaller geometries will be important for the Company to remain competitive
under the heading Item 1, Business  Manufacturing; the Companys belief that
its current facility will be adequate through 2002 under the heading Item 2,
Properties; the statement regarding the Companys intention to retain earnings
for use in its business and not to pay any cash dividend in the foreseeable
future under the heading Item 5, Market for Registrants Common Equity and
Related Stockholder Matters; the Companys belief that its long-term success
will depend on its ability to introduce new products under the heading Item 7
- Managements Discussion and Analysis of Financial Condition and Results of
Operations  Overview; the statements regarding (a) the Companys expectation
that research and development expenses, selling, general and administrative
expenses in absolute dollars will likely increase in future periods, (b) the
Companys expectation that the acquired in-process technology will be developed
into commercially feasible products, and (c) the Companys expectation to
record amortization of deferred compensation related to the stock grants of
approximately $700,000 per quarter through September 30, 2003 under the heading
Item 7  Managements Discussion and Analysis of Financial Condition and
Results of Operations  Results of Operations; the Companys belief that its
existing resources, together with cash expected to be generated from its
operations, will be sufficient to meet its capital requirements for at least
the next twelve months under the heading Item 7  Managements Discussion and
Analysis of Financial Condition and Results of Operations  Liquidity and
Capital Resources; and statements regarding the Companys expectation that the
application of SFAS No. 142 will result in an increase in the Companys
operating income of approximately $3.6 million per year, excluding the impact
of potential impairment charges, that during 2002, the Company will test
goodwill and indefinite lived intangibles for impairment under the new rules,
applying a fair-value-based test, and that adoption of SFAS No. 144 will not
have a material impact on the Companys financial position or results of
operations under the heading Item 7  Managements Discussion and Analysis of
Financial Condition and Results of Operations  Recent Accounting
Pronouncements.

All forward-looking statements included in this document are based on
information available to the Company on the date hereof, and the Company
assumes no obligation to update any such forward-looking statements. It is
important to note that the Companys actual results could differ materially
from those included in such forward-looking statements. These cautionary
statements should be considered in the context of the factors listed below, as
well as those disclosed from time to time in the Companys Reports on Forms
10-Q and 8-K.

Risks and uncertainties that could cause actual results to differ materially
from those described herein include the following:

Our Operating Results May Fluctuate Significantly Due To Factors Which Are Not Within Our Control

Our quarterly operating results have fluctuated significantly in the past
and are expected to fluctuate significantly in the future based on a number of
factors, many of which are not under our control. Our operating expenses,
which include product development costs and selling, general and administrative
expenses, are relatively fixed in the short-term. If our revenues are lower
than we expect because we sell fewer semiconductor devices, delay the release
of new products or the announcement of new features, or for other reasons, we
may not be able to quickly reduce our spending in response.

Other circumstances that can affect our operating results include:



| |  |  | general economic conditions,
| | - |  | ----------------------------

23



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| |  |  | political climate,                                                                                                                           
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our ability to develop, introduce and market new products and technologies on a timely basis,                                                
|
| |  |  | the timing of significant orders, order cancellations and reschedulings,                                                                     
|
| |  |  | changes in our pricing policies or those of our competitors
or suppliers, including decreases in unit average selling prices of
our products,
|
| |  |  | introduction of products and technologies by our competitors,                                                                                
|
| |  |  | shifts in our product mix toward lower margin products,                                                                                      
|
| |  |  | the availability of production capacity at the fabrication
facilities that manufacture our products, and                                     
|
| |  |  | the availability and cost of materials to our suppliers.                                                                                     

These factors are difficult to forecast, and these or other factors could
adversely affect our business. Any shortfall in our revenues would have a
direct impact on our business. In addition, fluctuations in our quarterly
results could adversely affect the market price of our common stock in a manner
unrelated to our long-term operating performance.

We Are Exposed To General Economic And Market Conditions

Our business is subject to the effects of general economic conditions in
the United States and globally, and, in particular, market conditions in the
communications and networking industries. In recent quarters, our operating
results have been adversely affected as a result of unfavorable economic
conditions and reduced capital spending in the United States, Europe, and Asia.
If the economic conditions in the United States and globally do not improve,
or if we experience a worsening in the global economic slowdown, we may
continue to experience material adverse impacts on our business, operating
results, and financial condition, including reduced revenue.

Our Lengthy Sales Cycle Can Result In Uncertainty And Delays With Regard To Our Expected Revenues

Our customers typically perform numerous tests and extensively evaluate
our products before incorporating them into their systems. The time required
for test, evaluation and design of our products into a customers equipment can
range from six to twelve months or more. It can take an additional six to
twelve months or more before a customer commences volume shipments of equipment
that incorporates our products. Because of this lengthy sales cycle, we may
experience a delay between the time when we increase expenses for research and
development and sales and marketing efforts and the time when we generate
higher revenues, if any, from these expenditures.

In addition, the delays inherent in our lengthy sales cycle raise
additional risks of customer decisions to cancel or change product plans. When
we achieve a design win, there can be no assurance that the customer will
ultimately ship products incorporating our products. Our business could be
materially adversely affected if a significant customer curtails, reduces or
delays orders during our sales cycle or chooses not to release products
incorporating our products.

Rapid Technological Change Could Make Our Products Obsolete

We operate in an industry that is subject to evolving industry standards,
rapid technological changes, rapid changes in customer demands and the rapid
introduction of new, higher performance products with shorter product life
cycles. As a result, we expect to continue to make significant investments in
research and development. However, we may not have adequate funds from
operations or otherwise to devote to research and development, forcing us to
reduce our research and development efforts. Also, we must manage product
transitions successfully, since announcements or introductions of new products
by us or our competitors could adversely affect sales of our

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existing products because these existing products can become obsolete or
unmarketable for specific purposes. There can be no assurance that we will be
able to develop and introduce new products or enhancements to our existing
products on a timely basis or in a manner which satisfies customer needs or
achieves widespread market acceptance. Any significant delay in releasing new
products could adversely affect our reputation, give a competitor a
first-to-market advantage or allow a competitor to achieve greater market
share. The failure to adjust to rapid technological change could harm our
business, financial condition, results of operations and cash flows.

Failure Of Our Products To Gain Market Acceptance Would Adversely Affect Our Financial Condition

We believe that our growth prospects depend upon our ability to gain
customer acceptance of our products and technology. Market acceptance of
products depends upon numerous factors, including compatibility with existing
manufacturing processes and products, perceived advantages over competing
products and the level of customer service available to support such products.
Moreover, manufacturers often rely on a limited number of equipment vendors to
meet their manufacturing equipment needs. As a result, market acceptance of
our products may be adversely affected to the extent potential customers
utilize a competitors manufacturing equipment. There can be no assurance that
growth in sales of new products will continue or that we will be successful in
obtaining broad market acceptance of our products and technology.

We expect to spend a significant amount of time and resources to develop
new products and refine existing products. In light of the long product
development cycles inherent in our industry, these expenditures will be made
well in advance of the prospect of deriving revenues from the sale of any new
products. Our ability to commercially introduce and successfully market any
new products is subject to a wide variety of challenges during this development
cycle, including start-up bugs, design defects and other matters that could
delay introduction of these products to the marketplace. In addition, since
our customers are not obligated by long-term contracts to purchase our
products, our anticipated product orders may not materialize, or orders that do
materialize may be cancelled. As a result, if we do not achieve market
acceptance of new products, we may not be able to realize sufficient sales of
our products in order to recoup research and development expenditures. The
failure of any of our new products to achieve market acceptance would harm our
business, financial condition, results of operation and cash flows.

We Must Make Significant Research And Development Expenditures Prior To Generating Revenues From Products

To establish market acceptance of a new semiconductor device, we must
dedicate significant resources to research and development, production and
sales and marketing. We incur substantial costs in developing, manufacturing
and selling a new product, which often significantly precede meaningful
revenues from the sale of this product. Consequently, new products can require
significant time and investment to achieve profitability. Investors should
note that our efforts to introduce new semiconductor devices or other products
or services may not be successful or profitable. In addition, products or
technologies developed by others may render our products or technologies
obsolete or noncompetitive.

We record as expenses the costs related to the development of new
semiconductor devices and other products as these expenses are incurred. As a
result, our profitability from quarter to quarter and from year to year may be
adversely affected by the number and timing of our new product launches in any
period and the level of acceptance gained by these products.

Our Independent Manufacturers May Not Be Able To Meet Our Manufacturing Requirements

We do not manufacture any of our semiconductor devices. Therefore, we are
referred to in the semiconductor industry as a fabless producer of
semiconductors. Consequently, we depend upon third party manufacturers to
produce semiconductors that meet our specifications. We currently have third
party manufacturers that can produce semiconductors which meet our needs.
However, as the semiconductor industry continues to progress to smaller
manufacturing and design geometries, the complexities of producing
semiconductors will increase. Decreasing geometries may introduce new problems
and delays that may affect product development and deliveries. Due to the
nature of the semiconductor industry and our status as a fabless
semiconductor company, we could encounter fabrication related problems that may
affect the availability of our semiconductor devices, may delay our shipments
or may increase our costs.

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Our Reliance On Single Source Manufacturers Of Our Semiconductor Devices Could
Delay Shipments And Increase Our Costs

None of our semiconductor devices is currently manufactured by more than
one supplier. We place our orders on a purchase order basis and do not have a
long term purchase agreement with any of our existing suppliers. In the event
that the supplier of a semiconductor device was unable or unwilling to continue
to manufacture this product in the required volume, we would have to identify
and qualify a substitute supplier. Introducing new products or transferring
existing products to a new third party manufacturer or process may result in
unforeseen device specification and operating problems. These problems may
affect product shipments and may be costly to correct. Silicon fabrication
capacity may also change, or the costs per silicon wafer may increase.
Manufacturing-related problems may have a material adverse effect on our
business.

Intense Competition In The Markets In Which We Operate May Reduce The Demand
For Or Prices Of Our Products

Competition in the semiconductor industry is intense. If our main target
market, the embedded systems market, continues to grow, the number of
competitors may increase significantly. In addition, new semiconductor
technology may lead to new products that can perform similar functions as our
products. Some of our competitors and other semiconductor companies may
develop and introduce products that integrate into a single semiconductor
device the functions performed by our semiconductor devices. This would
eliminate the need for our products in some applications.

In addition, competition in our markets comes from companies of various
sizes, many of which are significantly larger and have greater financial and
other resources than we do and thus can better withstand adverse economic or
market conditions. Also, as we start to sell our processor products, we will
compete with established embedded microprocessor companies and others. Many of
these indirect competitors and microprocessor companies have significantly
greater financial, technical, marketing and other resources than PLX.
Therefore, we cannot assure you that we will be able to compete successfully in
the future against existing or new competitors, and increased competition may
adversely affect our business. See Business  Competition, and  
Products.

Failure To Have Our Products Designed Into The Products Of Electronic Equipment
Manufacturers Will Result In Reduced Sales

Our future success depends on electronic equipment manufacturers that
design our semiconductor devices into their systems. We must anticipate market
trends and the price, performance and functionality requirements of current and
potential future electronic equipment manufacturers and must successfully
develop and manufacture products that meet these requirements. In addition, we
must meet the timing requirements of these electronic equipment manufacturers
and must make products available to them in sufficient quantities. These
electronic equipment manufacturers could develop products that provide the same
or similar functionality as one or more of our products and render these
products obsolete in their applications.

We do not have purchase agreements with our customers that contain minimum
purchase requirements. Instead, electronic equipment manufacturers purchase
our products pursuant to short-term purchase orders that may be canceled
without charge. We believe that in order to obtain broad penetration in the
markets for our products, we must maintain and cultivate relationships,
directly or through our distributors, with electronic equipment manufacturers
that are leaders in the embedded systems markets. Accordingly, we will often
incur significant expenditures in order to build relationships with electronic
equipment manufacturers prior to volume sales of new products. If we fail to
develop relationships with additional electronic equipment manufacturers, to
have our products designed into new embedded systems or to develop sufficient
new products to replace products that have become obsolete, our business would
be materially adversely affected.

Lower Demand For Our Customers Products Will Result In Lower Demand For Our Products

Demand for our products depends in large part on the development and
expansion of the high-performance embedded systems markets including networking
and telecommunications, enterprise storage, imaging and

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industrial applications. The size and rate of growth of these embedded
systems markets may in the future fluctuate significantly based on numerous
factors. These factors include the adoption of alternative technologies,
capital spending levels and general economic conditions. Demand for products
that incorporate high-performance embedded systems may not grow.

Because A Substantial Portion Of Our Net Sales Is Generated By A Small Number
Of Large Customers, If Any Of These Customers Delays Or Reduces Its Orders, Our
Net Sales And Earnings Will Be Harmed

Historically, a relatively small number of customers have accounted for a
significant portion of our net sales in any particular period. In 2001, sales
to Prediwave, IBM and Cisco Systems directly or through distributors accounted
for 18%, 14% and 11%, respectively. In 2000, sales to Cisco Systems and IBM
directly or through distributors accounted for 17% and 11%, respectively. In
1999, sales to Cisco Systems and IBM directly or through distributors accounted
for 12% and 11%, respectively. No other customer accounted for more than 10%
of net revenues in any period presented. We have no long-term volume purchase
commitments from any of our significant customers. We cannot be certain that
our current customers will continue to place orders with us, that orders by
existing customers will continue at the levels of previous periods or that we
will be able to obtain orders from new customers. In addition, some of our
customers supply products to end-market purchasers and any of these end-market
purchasers could choose to reduce or eliminate orders for our customers
products. This would in turn lower our customers orders for our products.

We anticipate that sales of our products to a relatively small number of
customers will continue to account for a significant portion of our net sales.
Due to these factors, the following have in the past and may in the future
reduce our net sales or earnings:



| |  |  | the reduction, delay or cancellation of orders from one or more of our significant customers;  
| | - |  | -----------------------------------------------------------------------------------------------
|
| |  |  | the selection of competing products or in-house design by one or more of our current customers;
|
| |  |  | the loss of one or more of our current customers; or                                           
|
| |  |  | a failure of one or more of our current customers to pay our invoices.                         

Defects In Our Products Could Increase Our Costs And Delay Our Product
Shipments

Our products are complex. While we test our products, these products may
still have errors, defects or bugs that we find only after commercial
production has begun. We have experienced errors, defects and bugs in the past
in connection with new products.

Our customers may not purchase our products if the products have
reliability, quality or compatibility problems. This delay in acceptance could
make it more difficult to retain our existing customers and to attract new
customers. Moreover, product errors, defects or bugs could result in
additional development costs, diversion of technical and other resources from
our other development efforts, claims by our customers or others against us, or
the loss of credibility with our current and prospective customers. In the
past, the additional time required to correct defects has caused delays in
product shipments and resulted in lower revenues. We may have to spend
significant amounts of capital and resources to address and fix problems in new
products.

We must continuously develop our products using new process technology
with smaller geometries to remain competitive on a cost and performance basis.
Migrating to new technologies is a challenging task requiring new design
skills, methods and tools and is difficult to achieve.

Failure to Hire Additional Personnel And To Improve Our Operations Will Limit
Our Growth

We have experienced rapid growth which places a significant strain on our
limited personnel and other resources. To manage our expanded operations
effectively, we will need to further improve our operational, financial and
management systems. We will also need to successfully hire, train, motivate
and manage our

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employees. We may not be able to manage our growth effectively, which
could have a material adverse effect on our business.

We Could Lose Key Personnel Due To Competitive Market Conditions And Attrition

Our success depends to a significant extent upon our senior management and
key technical and sales personnel. The loss of one or more of these employees
could have a material adverse effect on our business. We do not have
employment contracts with any of our executive officers.

Our success also depends on our ability to attract and retain qualified
technical, sales and marketing, customer support, financial and accounting, and
managerial personnel. Competition for such personnel in the semiconductor
industry is intense, and we may not be able to retain our key personnel or to
attract, assimilate or retain other highly qualified personnel in the future.
In addition, we may lose key personnel due to attrition, including health,
family and other reasons. We have experienced, and may continue to experience,
difficulty in hiring and retaining candidates with appropriate qualifications.
If we do not succeed in hiring and retaining candidates with appropriate
qualifications, our business could be materially adversely affected.

A Large Portion Of Our Revenues Is Derived From Sales to Third-Party
Distributors Who May Terminate Their Relationships With Us At Any Time

We depend on distributors to sell a significant portion of our products.
In 2001, net revenues through distributors accounted for approximately 54% of
our net revenues. Some of our distributors also market and sell competing
products. Distributors may terminate their relationships with us at any time.
Our future performance will depend in part on our ability to attract additional
distributors that will be able to market and support our products effectively,
especially in markets in which we have not previously distributed our products.
We may lose one or more of our current distributors or may not be able to
recruit additional or replacement distributors. For example, in March 2001, we
decided to terminate our relationship with Unique Technologies, our U.S.
distributor that accounted for 11% of our fiscal year 2001 revenues, and
service all of our U.S. customers directly or through manufacturers
representatives. The loss of one or more of our major distributors could have
a material adverse effect on our business as we may not be successful in
servicing our customers directly or through manufacturers representatives.

The Demand For Our Products Depends Upon Our Ability To Support Evolving
Industry Standards

Substantially all of our revenues are derived from sales of products,
which rely on the PCI standard. If the embedded systems markets move away from
this standard and begin using new standards, we may not be able to successfully
design and manufacture new products that use these new standards. There is
also the risk that new products we develop in response to new standards may not
be accepted in the market. In addition, the PCI standard is continuously
evolving, and we may not be able to modify our products to address new PCI
specifications. Any of these events would have a material adverse effect on
our business.

The Successful Marketing And Sales Of Our Products Depend Upon Our Third Party
Relationships, Which Are Not Supported By Written Agreements

When marketing and selling our semiconductor devices, we believe we enjoy
a competitive advantage based on the availability of development tools offered
by third parties. These development tools are used principally for the design
of other parts of the embedded system but also work with our products. We will
lose this advantage if these third party tool vendors cease to provide these
tools for existing products or do not offer them for our future products. This
event could have a material adverse effect on our business. We have no written
agreements with these third parties, and these parties could choose to stop
providing these tools at any time.

Our Limited Ability To Protect Our Intellectual Property And Proprietary Rights
Could Adversely Affect Our Competitive Position

Our future success and competitive position depend upon our ability to
obtain and maintain proprietary technology used in our principal products.
Currently, we have limited protection of our intellectual property in the

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form of patents and rely instead on trade secret protection. Our existing
or future patents may be invalidated, circumvented, challenged or licensed to
others. The rights granted thereunder may not provide competitive advantages
to us. In addition, our future patent applications may not be issued with the
scope of the claims sought by us, if at all. Furthermore, others may develop
technologies that are similar or superior to our technology, duplicate our
technology or design around the patents owned or licensed by us. In addition,
effective patent, trademark, copyright and trade secret protection may be
unavailable or limited in foreign countries where we may need protection. We
cannot be sure that steps taken by us to protect our technology will prevent
misappropriation of the technology.

We may from time to time receive notifications of claims that we may be
infringing patents or other intellectual property rights owned by third
parties. While there is currently no intellectual property litigation pending
against us, litigation could result in significant expenses to us and adversely
affect sales of the challenged product or technology. This litigation could
also divert the efforts of our technical and management personnel, whether or
not the litigation is determined in our favor. In addition, we may not be able
to develop or acquire non-infringing technology or procure licenses to the
infringing technology under reasonable terms. This could require expenditures
by us of substantial time and other resources. Any of these developments would
have a material adverse effect on our business.

The Cyclical Nature Of The Semiconductor Industry May Lead To Significant
Variances In The Demand For Our Products

In the last year, the semiconductor industry has been characterized by
significant downturns and wide fluctuations in supply and demand. Also, during
this time, the industry has experienced significant fluctuations in
anticipation of changes in general economic conditions, including economic
conditions in Asia. This cyclicality has led to significant variances in
product demand and production capacity. It has also accelerated erosion of
average selling prices per unit. We may experience periodic fluctuations in
our future financial results because of industry-wide conditions.

Because We Sell Our Products To Customers Outside Of North America And Because
Our Products Are Incorporated With Products Of Others That Are Sold Outside Of
North America We Face Foreign Business, Political And Economic Risks

Sales outside of North America accounted for 44%, 39%, and 35% of our
revenues in 2001, 2000, and 1999, respectively. We anticipate that these sales
may increase in future periods and may account for an increasing portion of our
revenues. In addition, equipment manufacturers who incorporate our products
into their products sell their products outside of North America, thereby
exposing us indirectly to foreign risks. Further, most of our semiconductor
products are manufactured outside of North America. Accordingly, we are
subject to international risks, including:



| |  |  | difficulties in managing distributors,                                         
| | - |  | -------------------------------------------------------------------------------
|
| |  |  | difficulties in staffing and managing foreign subsidiary and branch operations,
|
| |  |  | political and economic instability,                                            
|
| |  |  | foreign currency exchange fluctuations,                                        
|
| |  |  | difficulties in accounts receivable collections,                               
|
| |  |  | potentially adverse tax consequences,                                          
|
| |  |  | timing and availability of export licenses,                                    
|
| |  |  | changes in regulatory requirements, tariffs and other barriers,                

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| |  |  | difficulties in obtaining governmental approvals for telecommunications and other products, and
| | - |  | -----------------------------------------------------------------------------------------------
|
| |  |  | the burden of complying with complex foreign laws and treaties.                                

Because sales of our products have been denominated to date exclusively in
United States dollars, increases in the value of the United States dollar will
increase the price of our products so that they become relatively more
expensive to customers in the local currency of a particular country, which
could lead to a reduction in sales and profitability in that country.

Our Potential Future Acquisitions May Not Be Successful Because Of Our
Limited Experience With Acquisitions In The Past

There have been a significant number of mergers and acquisitions in the
semiconductor industry in the past. As part of our business strategy, we
expect to review acquisition prospects that would complement our existing
product offerings, improve market coverage or enhance our technological
capabilities. In May 2000, we acquired Sebring Systems. We have no current
agreements or negotiations underway with respect to any acquisitions, and we
may not be able to locate suitable acquisition opportunities. Future
acquisitions could result in any or all of the following:



| |  |  | potentially dilutive issuances of equity securities,                                                                                    
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | large one-time write-offs,                                                                                                              
|
| |  |  | the incurrence of debt and contingent liabilities or
amortization expenses related to goodwill and other intangible
assets,             
|
| |  |  | difficulties in the assimilation of operations, personnel,
technologies, products and the information systems of the acquired
companies,
|
| |  |  | diversion of managements attention from other business
concerns,                                                                       
|
| |  |  | risks of entering geographic and business markets in which we
have no or limited prior experience, and                                  
|
| |  |  | potential loss of key employees of acquired organizations.                                                                              

We have had limited experience with acquisitions in the past and may not
be able to successfully integrate any businesses, products, technologies or
personnel that may be acquired in the future. Our failure to do so could have
a material adverse effect on our business.

Our Principal Stockholders Have Significant Voting Power And May Take Actions
That May Not Be In The Best Interests Of Our Other Stockholders

Our executive officers, directors and other principal stockholders, in the
aggregate, beneficially own a substantial amount of our outstanding common
stock. Although these stockholders do not have majority control, they
currently have, and likely will continue to have, significant influence with
respect to the election of our directors and approval or disapproval of our
significant corporate actions. This influence over our affairs might be
adverse to the interests of other stockholders. In addition, the voting power
of these stockholders could have the effect of delaying or preventing a change
in control of PLX.

The Anti-Takeover Provisions In Our Certificate of Incorporation Could
Adversely Affect The Rights Of The Holders Of Our Common Stock

Anti-takeover provisions of Delaware law and our Certificate of
Incorporation may make a change in control of PLX more difficult, even if a
change in control would be beneficial to the stockholders. These provisions
may allow the Board of Directors to prevent changes in the management and
control of PLX.

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As part of our anti-takeover devices, our Board of Directors has the
ability to determine the terms of preferred stock and issue preferred stock
without the approval of the holders of the common stock. Our Certificate of
Incorporation allows the issuance of up to 5,000,000 shares of preferred stock.
There are no shares of preferred stock outstanding. However, because the
rights and preferences of any series of preferred stock may be set by the Board
of Directors in its sole discretion without approval of the holders of the
common stock, the rights and preferences of this preferred stock may be
superior to those of the common stock. Accordingly, the rights of the holders
of common stock may be adversely affected. Consistent with Delaware law, our
Board of Directors may adopt additional anti-takeover measures in the future.




ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have an investment portfolio of fixed income securities, including
those classified as cash equivalents, short and long-term investments of
approximately $11.3 million at December 31, 2001. These securities are subject
to interest rate fluctuations and will decrease in market value if interest
rates increase.

The primary objective of the Companys investment activities is to
preserve principal while at the same time maximizing yields without
significantly increasing risk. The Company invests primarily in high-quality,
short-term and long-term debt instruments. A hypothetical 100 basis point
increase in interest rates would result in less than $0.2 million decrease
(less than 1%) in the fair value of the Companys available-for-sale
securities.




ITEM 8: CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item is contained in the financial
statements and schedule set forth in Item 14 (a) of this Form 10-K.




ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

There has been no change of accountants nor any disagreements with
accountants on any matter of accounting principles or practices or financial
statement disclosure required to be reported under this Item.




PART III




ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item is incorporated herein by reference
to the Companys Proxy Statement for the 2002 Annual Meeting of Stockholders.




ITEM 11: EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference
to the Companys Proxy Statement for the 2002 Annual Meeting of Stockholders.




ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item is incorporated herein by reference
to the Companys Proxy Statement for the 2002 Annual Meeting of Stockholders.




ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated herein by reference
to the Companys Proxy Statement for the 2002 Annual Meeting of Stockholders.

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PART IV




ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K



| | (a) |  | 1.   Consolidated Financial Statements
| | --- |  | --------------------------------------

For the following financial information included herein, see Index on page
32:



| |  | Report of Ernst & Young LLP, Independent Auditors.                                                                
| |  | ------------------------------------------------------------------------------------------------------------------
|
| |  | Consolidated Balance Sheets as of December 31, 2001 and 2000.                                                     
|
| |  | Consolidated Statements of Operations for each of the three years
in the period ended December 31, 2001.          
|
| |  | Consolidated Statements of Stockholders Equity for each of the
three years in the period ended December 31, 2001.
|
| |  | Consolidated Statements of Cash Flows for each of the three years
in the period ended December 31, 2001.          
|
| |  | Notes to Consolidated Financial Statements.                                                                       
|

| |  |  | 2.   Financial Statement Schedule
| |  |  | ---------------------------------

The financial statement schedules of the Company are included in Part IV
of this report: For the three years
ended December 31, 2001II Valuation and Qualifying Accounts. All other
schedules have been omitted because they are not applicable.



| |  |  | 3.  Exhibits Index
| |  |  | ------------------

See Exhibit Index immediately following the signature page for a list of
exhibits filed or incorporated by reference as a part of this report.



| | (b) |  | Reports on Form 8-K
| | --- |  | -------------------

No reports on Form 8-K were filed by the Company during the fourth quarter
ended December 31, 2001.



| | (c) |  | Exhibits
| | --- |  | --------

The Company hereby files, as exhibits to this Form 10-K, those exhibits
listed on the Exhibit Index referenced in Item 14 (a) (3) above.

32



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##### Table of Contents



PLX TECHNOLOGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                  |  |      |    | 
|----------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                  |  | Page
|                                                                                                                  |  |     
|Report of Ernst & Young LLP, Independent Auditors                                                                 |  |      | 34 | 
|Consolidated Balance Sheets as of December 31, 2001 and 2000                                                      |  |      | 35 | 
|Consolidated Statements of Operations for each of the three years in the
period ended December 31, 2001           |  |      | 36 | 
|Consolidated Statements of Stockholders Equity for each of the three
years in the period ended December 31, 2001 |  |      | 37 | 
|Consolidated Statements of Cash Flows for each of the three years in the
period ended December 31, 2001           |  |      | 38 | 
|Notes to Consolidated Financial Statements                                                                        |  |      | 39 | 

33



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##### Table of Contents



Report of Ernst & Young LLP, Independent Auditors

The Board of Directors and Stockholders
PLX Technology, Inc.

We have audited the accompanying consolidated balance sheets of PLX
Technology, Inc. as of December 31, 2001 and 2000, and the related consolidated
statements of operations, stockholders equity and cash flows for each of the
three years in the period ended December 31, 2001. Our audits also included
the financial statement schedule listed in the Index at Item 14(a). These
consolidated financial statements and schedule are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
consolidated financial statements and schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of PLX Technology, Inc. as of December 31, 2001 and 2000, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.



| | /s/ Ernst & Young LLP
| | ---------------------

San Jose, California
January 22, 2002

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##### Table of Contents



PLX TECHNOLOGY, INC.




CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

ASSETS

|                                                                                |                                                                                                                                 |              |                                                          |        |        |                          |         |        |         |   |  | 
|------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------- | ------------ | -------------------------------------------------------- | ------ | ------ | ------------------------ | ------- | ------ | ------- | - |  | 
|                                                                                |                                                                                                                                 |              |                                                          |        |        | Years Ended December 31,
|                                                                                |                                                                                                                                 |              |                                                          |        |        |                         
|                                                                                |                                                                                                                                 |              |                                                          |        |        | 2001                     |         | 2000  
|                                                                                |                                                                                                                                 |              |                                                          |        |        |                          |         |       
|Current assets:                                                                 |                                                                                                                                 |              |                                                          |        |        |                          |         |       
|                                                                                | Cash and cash equivalents                                                                                                       |              | $                                                        | 9,631  |        |                          | $       | 16,621 |        
|                                                                                | Short-term investments                                                                                                          |              |                                                          | 6,000  |        |                          |         | 3,340  |        
|                                                                                | Accounts receivable, less allowance for doubtful
accounts of $202 in 2001 and $318 in 2000                                      |              |                                                          | 4,073  |        |                          |         | 4,772  |        
|                                                                                | Inventories                                                                                                                     |              |                                                          | 4,586  |        |                          |         | 4,521  |        
|                                                                                | Deferred tax assets                                                                                                             |              |                                                          | 1,557  |        |                          |         | 2,999  |        
|                                                                                | Income tax receivable                                                                                                           |              |                                                          | 185    |        |                          |         |       |        
|                                                                                | Other current assets                                                                                                            |              |                                                          | 503    |        |                          |         | 1,290  |        
|                                                                                |                                                                                                                                 |              |                                                          |        |        |                          |         |       
|Total current assets                                                            |                                                                                                                                 |              | 26,535                                                   |        |        |                          | 33,543  |       
|Goodwill, net of amortization of $5,341 in 2001 and $2,031 in 2000              |                                                                                                                                 |              | 7,998                                                    |        |        |                          | 11,308  |       
|Other intangible assets, net of amortization of $1,374 in 2001 and $506 in 2000 |                                                                                                                                 |              | 2,097                                                    |        |        |                          | 2,964   |       
|Property and equipment, net                                                     |                                                                                                                                 |              | 33,579                                                   |        |        |                          | 31,277  |       
|Long-term investments                                                           |                                                                                                                                 |              | 3,089                                                    |        |        |                          |        |       
|Deferred tax assets                                                             |                                                                                                                                 |              | 1,637                                                    |        |        |                          | 1,100   |       
|Restricted cash and investments                                                 |                                                                                                                                 |              |                                                         |        |        |                          | 33,146  |       
|Other assets                                                                    |                                                                                                                                 |              | 294                                                      |        |        |                          | 141     |       
|                                                                                |                                                                                                                                 |              |                                                          |        |        |                          |         |       
|                                                                                |                                                                                                                                 | Total assets |                                                          | $      | 75,229 |                          |         | $      | 113,479 |  
|                                                                                |                                                                                                                                 |              |                                                          |        |        |                          |         |       
|LIABILITIES AND STOCKHOLDERS EQUITY                                           
|Current liabilities:                                                            |                                                                                                                                 |              |                                                          |        |        |                          |         |       
|                                                                                | Accounts payable                                                                                                                |              | $                                                        | 1,855  |        |                          | $       | 5,064  |        
|                                                                                | Accrued compensation and benefits                                                                                               |              |                                                          | 808    |        |                          |         | 1,491  |        
|                                                                                | Deferred revenues                                                                                                               |              |                                                          | 281    |        |                          |         | 1,430  |        
|                                                                                | Income tax payable                                                                                                              |              |                                                          |       |        |                          |         | 833    |        
|                                                                                | Accrued commissions                                                                                                             |              |                                                          | 310    |        |                          |         | 345    |        
|                                                                                | Deferred tax liability                                                                                                          |              |                                                          | 830    |        |                          |         | 1,100  |        
|                                                                                | Other accrued expenses                                                                                                          |              |                                                          | 592    |        |                          |         | 1,518  |        
|                                                                                |                                                                                                                                 |              |                                                          |        |        |                          |         |       
|Total current liabilities                                                       |                                                                                                                                 |              | 4,676                                                    |        |        |                          | 11,781  |       
|Long-term notes payable                                                         |                                                                                                                                 |              |                                                         |        |        |                          | 28,500  |       
|Commitments                                                                     |                                                                                                                                 |              |                                                          |        |        |                          |         |       
|Stockholders equity:                                                           |                                                                                                                                 |              |                                                          |        |        |                          |         |       
|                                                                                | Preferred stock, $.001 par value:                                                                                               |              |                                                          |        |        |                          |         |        |        
|                                                                                |                                                                                                                                 |              | Authorized5,000,000 shares: none issued and outstanding |        |        |                         |         |        |         |  | 
|                                                                                | Common stock, $.001 par value: authorized 30,000,000 shares: issued and outstanding 23,345,994
in 2001 and 23,168,895 in 2000 |              |                                                          | 23     |        |                          |         | 23     |        
|                                                                                | Additional paid-in capital                                                                                                      |              |                                                          | 78,328 |        |                          |         | 79,715 |        
|                                                                                | Deferred compensation                                                                                                           |              |                                                          | (3,929 | )      |                          |         | (9,312 | )      
|                                                                                | Notes receivable for employee stock purchases                                                                                   |              |                                                          | (63    | )      |                          |         | (50    | )      
|                                                                                | Accumulated other comprehensive income (loss)                                                                                   |              |                                                          | (37    | )      |                          |         | 54     |        
|                                                                                | Retained earnings (accumulated deficit)                                                                                         |              |                                                          | (3,769 | )      |                          |         | 2,768  |        
|                                                                                |                                                                                                                                 |              |                                                          |        |        |                          |         |       
|Total stockholders equity                                                      |                                                                                                                                 |              | 70,553                                                   |        |        |                          | 73,198  |       
|                                                                                |                                                                                                                                 |              |                                                          |        |        |                          |         |       
|Total liabilities and stockholders equity                                      |                                                                                                                                 | $            | 75,229                                                   |        |        | $                        | 113,479 |       
|                                                                                |                                                                                                                                 |              |                                                          |        |        |                          |         |       

See accompanying notes to consolidated financial statements.

35



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PLX TECHNOLOGY, INC.




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

|                                                                                                            |                                                          |   |                          |        |      |   |        |        |  |   |        |        | 
|----------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | - | ------------------------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                                                                                                            |                                                          |   | Years Ended December 31,
|                                                                                                            |                                                          |   |                         
|                                                                                                            |                                                          |   | 2001                     |        | 2000 |   | 1999  
|                                                                                                            |                                                          |   |                          |        |      |   |       
|Net revenues                                                                                                |                                                          | $ | 44,128                   |        |      | $ | 65,351 |        |  | $ | 40,699 |       
|Cost of revenues                                                                                            |                                                          |   | 15,607                   |        |      |   | 19,368 |        |  |   | 12,868 |       
|                                                                                                            |                                                          |   |                          |        |      |   |        |        |  |   |        |       
|Gross margin                                                                                                |                                                          |   | 28,521                   |        |      |   | 45,983 |        |  |   | 27,831 |       
|Operating expenses                                                                                         
|                                                                                                            | Research and development                                 |   |                          | 18,783 |      |   |        | 16,350 |  |   |        | 7,268  | 
|                                                                                                            | Selling, general and administrative                      |   |                          | 14,709 |      |   |        | 15,862 |  |   |        | 10,569 | 
|                                                                                                            | In process research and development                      |   |                          |       |      |   |        | 14,342 |  |   |        |       | 
|                                                                                                            | Amortization of goodwill and purchased intangible assets |   |                          | 4,176  |      |   |        | 2,537  |  |   |        |       | 
|                                                                                                            |                                                          |   |                          |        |      |   |        |        |  |   |        |       
|Total operating expenses                                                                                    |                                                          |   | 37,668                   |        |      |   | 49,091 |        |  |   | 17,837 |       
|                                                                                                            |                                                          |   |                          |        |      |   |        |        |  |   |        |       
|Operating income (loss)                                                                                     |                                                          |   | (9,147                   | )      |      |   | (3,108 | )      |  |   | 9,994  |       
|Interest income                                                                                             |                                                          |   | 1,536                    |        |      |   | 2,330  |        |  |   | 1,479  |       
|Interest expense                                                                                            |                                                          |   | 1,270                    |        |      |   | 322    |        |  |   |       |       
|Other income (expense)                                                                                      |                                                          |   | 478                      |        |      |   | (42    | )      |  |   | (6     | )     
|                                                                                                            |                                                          |   |                          |        |      |   |        |        |  |   |        |       
|Income (loss) before provision (benefit) for income taxes
and equity in net loss of unconsolidated investee |                                                          |   | (8,403                   | )      |      |   | (1,142 | )      |  |   | 11,467 |       
|Provision (benefit) for income taxes                                                                        |                                                          |   | (1,866                   | )      |      |   | 5,900  |        |  |   | 3,896  |       
|                                                                                                            |                                                          |   |                          |        |      |   |        |        |  |   |        |       
|Income (loss) before equity in net loss of unconsolidated
investee                                          |                                                          |   | (6,537                   | )      |      |   | (7,042 | )      |  |   | 7,571  |       
|Equity in net loss of unconsolidated investee                                                               |                                                          |   |                         |        |      |   |       |        |  |   | (340   | )     
|                                                                                                            |                                                          |   |                          |        |      |   |        |        |  |   |        |       
|Net income (loss)                                                                                           |                                                          | $ | (6,537                   | )      |      | $ | (7,042 | )      |  | $ | 7,231  |       
|                                                                                                            |                                                          |   |                          |        |      |   |        |        |  |   |        |       
|Basic earnings (loss) per share                                                                             |                                                          | $ | (0.28                    | )      |      | $ | (0.31  | )      |  | $ | 0.43   |       
|                                                                                                            |                                                          |   |                          |        |      |   |        |        |  |   |        |       
|Shares used to compute basic per share amounts                                                              |                                                          |   | 23,258                   |        |      |   | 22,560 |        |  |   | 17,007 |       
|                                                                                                            |                                                          |   |                          |        |      |   |        |        |  |   |        |       
|Diluted earnings (loss) per share                                                                           |                                                          | $ | (0.28                    | )      |      | $ | (0.31  | )      |  | $ | 0.33   |       
|                                                                                                            |                                                          |   |                          |        |      |   |        |        |  |   |        |       
|Shares used to compute diluted per share amounts                                                            |                                                          |   | 23,258                   |        |      |   | 22,560 |        |  |   | 21,849 |       
|                                                                                                            |                                                          |   |                          |        |      |   |        |        |  |   |        |       



See accompanying notes to consolidated financial statements.

36



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##### Table of Contents



PLX TECHNOLOGY, INC.




CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(in thousands, except share amounts)



|                             |                                                                                    |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |        |   | 
|---------------------------- | ---------------------------------------------------------------------------------- | ------------------------------ | --------- | --------------- | - | ------------ | - | ---------- | - | ------ | ---------- | ---------- | - | - | -- | -- | - | - | ------ | ------ | - | 
|                             |                                                                                    |                                |           | Redeemable      |   |              |   |            |   |        |            |            |   |   |    |   
|                             |                                                                                    |                                |           | Convertible     |   |              |   |            |   |        |            |            |   |   |    |   
|                             |                                                                                    |                                |           | Preferred Stock |   | Common Stock |   | Additional
|                             |                                                                                    |                                |           |                 |   |              |   | Paid In   
|                             |                                                                                    |                                |           | Shares          |   | Amount       |   | Shares     |   | Amount |            | Capital   
|                             |                                                                                    |                                |           |                 |   |              |   |            |   |        |            |           
|Balance at January 1, 1999   |                                                                                    |                                | 4,579,636 |                 |   | $            | 5 |            |   |        | 4,626,643  |            |   | $ | 5  |    |   | $ | 5,617  |       
|                             | Issuance of common stock, net of
issuance costs                                    |                                |           |                |   |              |   |           |   |        |            | 3,795,000  |   |   |    | 4  |   |   |        | 30,997 |  
|                             | Conversion of redeemable convertible
preferred stock to common stock               |                                |           | (4,579,636      | ) |              |   | (5         | ) |        |            | 13,738,908 |   |   |    | 13 |   |   |        | (8     | )
|                             | Issuance of stock pursuant to exercise
of stock options                            |                                |           |                |   |              |   |           |   |        |            | 22,950     |   |   |    |   |   |   |        | 106    |  
|                             | Payments on stockholder notes
receivable                                           |                                |           |                |   |              |   |           |   |        |            |           |   |   |    |   |   |   |        |       |  
|                             | Repurchase of common stock                                                         |                                |           |                |   |              |   |           |   |        |            | (174,692   | ) |   |    |   |   |   |        | (30    | )
|                             | Compensation related to stock options
issued to non-employees                      |                                |           |                |   |              |   |           |   |        |            |           |   |   |    |   |   |   |        | 146    |  
|                             | Amortization of deferred compensation                                              |                                |           |                |   |              |   |           |   |        |            |           |   |   |    |   |   |   |        |       |  
|                             | Comprehensive income:                                                              |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |        |  
|                             |                                                                                    | Unrealized loss on investments |           |                 |  |              |   |            |  |        |            |            |  |   |    |    |  |   |        |        |  | 
|                             |                                                                                    | Net income                     |           |                 |  |              |   |            |  |        |            |            |  |   |    |    |  |   |        |        |  | 
|                             |                                                                                    |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |       
|                             | Total comprehensive income                                                         |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |        |  
|                             |                                                                                    |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |       
|Balance at December 31, 1999 |                                                                                    |                                |          |                 |   |              |  |            |   |        | 22,008,809 |            |   |   | 22 |    |   |   | 36,828 |       
|                             | Issuance of common stock related to
acquisition of Sebring Systems                 |                                |           |                |   |              |   |           |   |        |            | 960,931    |   |   |    | 1  |   |   |        | 28,867 |  
|                             | Deferred compensation on options
issued related to acquisition of
Sebring Systems  |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        | 13,434 |  
|                             | Issuance of stock pursuant to exercise
of stock options                            |                                |           |                |   |              |   |           |   |        |            | 267,393    |   |   |    |   |   |   |        | 1,532  |  
|                             | Stockholder notes receivable                                                       |                                |           |                |   |              |   |           |   |        |            |           |   |   |    |   |   |   |        |       |  
|                             | Repurchase of common stock                                                         |                                |           |                |   |              |   |           |   |        |            | (68,238    | ) |   |    |   |   |   |        | (28    | )
|                             | Reversal of deferred compensation on
options associated with employee
terminations |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        | (4,409 | )
|                             | Deferred compensation on stock options
issued to employees                         |                                |           |                |   |              |   |           |   |        |            |           |   |   |    |   |   |   |        | 3,491  |  
|                             | Amortization of deferred compensation                                              |                                |           |                |   |              |   |           |   |        |            |           |   |   |    |   |   |   |        |       |  
|                             | Comprehensive loss:                                                                |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |        |  
|                             |                                                                                    | Unrealized gain on investments |           |                 |  |              |   |            |  |        |            |            |  |   |    |    |  |   |        |        |  | 
|                             |                                                                                    | Net loss                       |           |                 |  |              |   |            |  |        |            |            |  |   |    |    |  |   |        |        |  | 
|                             |                                                                                    |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |       
|                             | Total comprehensive loss                                                           |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |        |  
|                             |                                                                                    |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |       
|Balance at December 31, 2000 |                                                                                    |                                |          |                 |   |              |  |            |   |        | 23,168,895 |            |   |   | 23 |    |   |   | 79,715 |       
|                             | Issuance of stock pursuant to exercise
of stock options                            |                                |           |                |   |              |   |           |   |        |            | 192,400    |   |   |    |   |   |   |        | 883    |  
|                             | Stockholder notes receivable interest                                              |                                |           |                |   |              |   |           |   |        |            |           |   |   |    |   |   |   |        |       |  
|                             | Tax benefit from employee stock option
plans                                       |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        | 281    |  
|                             | Repurchase of common stock                                                         |                                |           |                |   |              |   |           |   |        |            | (15,301    | ) |   |    |   |   |   |        | (91    | )
|                             | Reversal of deferred compensation on
options associated with employee
terminations |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        | (2,477 | )
|                             | Deferred compensation on stock options
issued to consultants                       |                                |           |                |   |              |   |           |   |        |            |           |   |   |    |   |   |   |        | 17     |  
|                             | Amortization of deferred compensation                                              |                                |           |                |   |              |   |           |   |        |            |           |   |   |    |   |   |   |        |       |  
|                             | Comprehensive loss:                                                                |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |        |  
|                             |                                                                                    | Unrealized loss on investments |           |                 |  |              |   |            |  |        |            |            |  |   |    |    |  |   |        |        |  | 
|                             |                                                                                    | Translation adjustments        |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |        |   | 
|                             |                                                                                    | Net loss                       |           |                 |  |              |   |            |  |        |            |            |  |   |    |    |  |   |        |        |  | 
|                             |                                                                                    |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |       
|                             | Total comprehensive loss                                                           |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |        |  
|                             |                                                                                    |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |       
|Balance at December 31, 2001 |                                                                                    |                                |          |                 |   | $            |  |            |   |        | 23,345,994 |            |   | $ | 23 |    |   | $ | 78,328 |       
|                             |                                                                                    |                                |           |                 |   |              |   |            |   |        |            |            |   |   |    |    |   |   |        |       

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                             |                                                                                    |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |        |        |  
|---------------------------- | ---------------------------------------------------------------------------------- | ------------------------------ | ------ | ------------ | - | --------------- | ---- | ------------- | - | ------------ | --- | ------------- | --- | ----- | ------ | - | ------ | - | ------ | ------ | ------ | -
|                             |                                                                                    |                                |        |              |   |                 |      | Notes         |   |              |     |               |     |       |        |   |        |   |        |       
|                             |                                                                                    |                                |        |              |   |                 |      | Receivable    |   | Accumulated  |     | Retained      |     |       |        |  
|                             |                                                                                    |                                |        |              |   |                 |      | For           |   | Other        |     | Earnings      |     | Total
|                             |                                                                                    |                                |        | Deferred     |   | Employee        |      | Comprehensive |   | (Accumulated |     | Stockholders'
|                             |                                                                                    |                                |        | Compensation |   | Stock Purchases |      | Income (Loss) |   | Deficit)     |     | Equity       
|                             |                                                                                    |                                |        |              |   |                 |      |               |   |              |     |              
|Balance at January 1, 1999   |                                                                                    | $                              | (283   | )            |   | $               | (163 | )             |   | $            |    |               |     | $     | 2,579  |   |        | $ | 7,760  |       
|                             | Issuance of common stock, net of
issuance costs                                    |                                |        |             |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | 31,001 |       
|                             | Conversion of redeemable convertible
preferred stock to common stock               |                                |        |             |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        |       |       
|                             | Issuance of stock pursuant to exercise
of stock options                            |                                |        |             |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | 106    |       
|                             | Payments on stockholder notes
receivable                                           |                                |        |             |   |                 |      | 163           |   |              |     |              |     |       |        |  |        |   |        | 163    |       
|                             | Repurchase of common stock                                                         |                                |        |             |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | (30    | )     
|                             | Compensation related to stock options
issued to non-employees                      |                                |        |             |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | 146    |       
|                             | Amortization of deferred compensation                                              |                                |        | 91           |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | 91     |       
|                             | Comprehensive income:                                                              |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |        |       
|                             |                                                                                    | Unrealized loss on investments |        |              |  |                 |      |               |  |              |     |               | (66 | )     |        |   |       |   |        |        | (66    | )
|                             |                                                                                    | Net income                     |        |              |  |                 |      |               |  |              |     |               |    |       |        |   | 7,231  |   |        |        | 7,231  |  
|                             |                                                                                    |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |       
|                             | Total comprehensive income                                                         |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        | 7,165  |       
|                             |                                                                                    |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |       
|Balance at December 31, 1999 |                                                                                    |                                | (192   | )            |   |                 |     |               |   |              | (66 | )             |     |       | 9,810  |   |        |   | 46,402 |       
|                             | Issuance of common stock related to
acquisition of Sebring Systems                 |                                |        |             |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | 28,868 |       
|                             | Deferred compensation on options
issued related to acquisition of
Sebring Systems  |                                |        | (12,310      | ) |                 |      |               |   |              |     |               |     |       |        |   |        |   |        | 1,124  |       
|                             | Issuance of stock pursuant to exercise
of stock options                            |                                |        |             |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | 1,532  |       
|                             | Stockholder notes receivable                                                       |                                |        |             |   |                 |      | (50           | ) |              |     |              |     |       |        |  |        |   |        | (50    | )     
|                             | Repurchase of common stock                                                         |                                |        |             |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | (28    | )     
|                             | Reversal of deferred compensation on
options associated with employee
terminations |                                |        | 4,409        |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |       |       
|                             | Deferred compensation on stock options
issued to employees                         |                                |        | (3,491       | ) |                 |      |              |   |              |     |              |     |       |        |  |        |   |        |       |       
|                             | Amortization of deferred compensation                                              |                                |        | 2,272        |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | 2,272  |       
|                             | Comprehensive loss:                                                                |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |        |       
|                             |                                                                                    | Unrealized gain on investments |        |              |  |                 |      |               |  |              |     |               | 120 |       |        |   |       |   |        |        | 120    |  
|                             |                                                                                    | Net loss                       |        |              |  |                 |      |               |  |              |     |               |    |       |        |   | (7,042 | ) |        |        | (7,042 | )
|                             |                                                                                    |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |       
|                             | Total comprehensive loss                                                           |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        | (6,922 | )     
|                             |                                                                                    |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |       
|Balance at December 31, 2000 |                                                                                    |                                | (9,312 | )            |   |                 | (50  | )             |   |              | 54  |               |     |       | 2,768  |   |        |   | 73,198 |       
|                             | Issuance of stock pursuant to exercise
of stock options                            |                                |        |             |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | 883    |       
|                             | Stockholder notes receivable interest                                              |                                |        |             |   |                 |      | (13           | ) |              |     |              |     |       |        |  |        |   |        | (13    | )     
|                             | Tax benefit from employee stock option
plans                                       |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        | 281    |       
|                             | Repurchase of common stock                                                         |                                |        |             |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | (91    | )     
|                             | Reversal of deferred compensation on
options associated with employee
terminations |                                |        | 2,474        |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |       |       
|                             | Deferred compensation on stock options
issued to consultants                       |                                |        |              |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | 17     |       
|                             | Amortization of deferred compensation                                              |                                |        | 2,906        |   |                 |      |              |   |              |     |              |     |       |        |  |        |   |        | 2,906  |       
|                             | Comprehensive loss:                                                                |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |        |       
|                             |                                                                                    | Unrealized loss on investments |        |              |  |                 |      |               |  |              |     |               | (52 | )     |        |   |       |   |        |        | (52    | )
|                             |                                                                                    | Translation adjustments        |        |              |   |                 |      |               |   |              |     |               | (39 | )     |        |   |        |   |        |        | (39    | )
|                             |                                                                                    | Net loss                       |        |              |  |                 |      |               |  |              |     |               |    |       |        |   | (6,537 | ) |        |        | (6,537 | )
|                             |                                                                                    |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |       
|                             | Total comprehensive loss                                                           |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        | (6,628 | )     
|                             |                                                                                    |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |       
|Balance at December 31, 2001 |                                                                                    | $                              | (3,929 | )            |   | $               | (63  | )             |   | $            | (37 | )             |     | $     | (3,769 | ) |        | $ | 70,553 |       
|                             |                                                                                    |                                |        |              |   |                 |      |               |   |              |     |               |     |       |        |   |        |   |        |       

See accompanying notes to consolidated financial statements.



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PLX TECHNOLOGY, INC.




CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

|                                                                                                              |                                                               |                                   |         |                          |        |      |         |         |        |   |         |         |        |  
|------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | --------------------------------- | ------- | ------------------------ | ------ | ---- | ------- | ------- | ------ | - | ------- | ------- | ------ | -
|                                                                                                              |                                                               |                                   |         | Years Ended December 31,
|                                                                                                              |                                                               |                                   |         |                         
|                                                                                                              |                                                               |                                   |         | 2001                     |        | 2000 |         | 1999   
|                                                                                                              |                                                               |                                   |         |                          |        |      |         |        
|Cash flows from operating activities:                                                                         |                                                               |                                   |         |                          |        |      |         |         |        |   |         |        
|Net income (loss)                                                                                             |                                                               | $                                 | (6,537  | )                        |        | $    | (7,042  | )       |        | $ | 7,231   |        
|Adjustments required to reconcile net income (loss) to cash
flows provided by (used in) operating activities: |                                                               |                                   |         |                          |        |      |         |         |        |   |         |        
|                                                                                                              | Depreciation                                                  |                                   |         | 2,650                    |        |      |         | 1,519   |        |   |         | 933     |       
|                                                                                                              | Amortization of deferred compensation                         |                                   |         | 2,906                    |        |      |         | 2,272   |        |   |         | 91      |       
|                                                                                                              | Compensation related to acceleration of stock options         |                                   |         |                         |        |      |         | 1,124   |        |   |         |        |       
|                                                                                                              | Compensation related to stock options issued to non-employees |                                   |         | 17                       |        |      |         |        |        |   |         | 146     |       
|                                                                                                              | Amortization of goodwill and other intangible assets          |                                   |         | 4,177                    |        |      |         | 2,537   |        |   |         |        |       
|                                                                                                              | In-process research and development                           |                                   |         |                         |        |      |         | 14,342  |        |   |         |        |       
|                                                                                                              | Equity in net loss of unconsolidated investee                 |                                   |         |                         |        |      |         |        |        |   |         | 340     |       
|                                                                                                              | Interest on notes receivable for employee stock purchases     |                                   |         | (13                      | )      |      |         |        |        |   |         |        |       
|                                                                                                              | Changes in operating assets and liabilities:                  |                                   |         |                          |        |      |         |         |        |   |         |         |       
|                                                                                                              |                                                               | Accounts receivable               |         |                          | 699    |      |         |         | 667    |   |         |         | (3,366 | )
|                                                                                                              |                                                               | Inventories                       |         |                          | (65    | )    |         |         | (2,017 | ) |         |         | (1,160 | )
|                                                                                                              |                                                               | Deferred tax assets               |         |                          | 905    |      |         |         | (2,720 | ) |         |         | (644   | )
|                                                                                                              |                                                               | Income tax receivable             |         |                          | (185   | )    |         |         |       |   |         |         |       |  
|                                                                                                              |                                                               | Other current assets              |         |                          | 787    |      |         |         | (2,284 | ) |         |         | (115   | )
|                                                                                                              |                                                               | Other assets                      |         |                          | (153   | )    |         |         | (480   | ) |         |         | (30    | )
|                                                                                                              |                                                               | Accounts payable                  |         |                          | (3,209 | )    |         |         | 2,875  |   |         |         | 224    |  
|                                                                                                              |                                                               | Accrued compensation and benefits |         |                          | (683   | )    |         |         | (3     | ) |         |         | 328    |  
|                                                                                                              |                                                               | Deferred revenues                 |         |                          | (1,149 | )    |         |         | 429    |   |         |         | 409    |  
|                                                                                                              |                                                               | Income tax payable                |         |                          | (552   | )    |         |         | (14    | ) |         |         | 405    |  
|                                                                                                              |                                                               | Deferred tax liability            |         |                          | (270   | )    |         |         | 1,100  |   |         |         |       |  
|                                                                                                              |                                                               | Accrued commissions               |         |                          | (35    | )    |         |         | 25     |   |         |         | 220    |  
|                                                                                                              |                                                               | Other accrued expenses            |         |                          | (926   | )    |         |         | 884    |   |         |         | 61     |  
|                                                                                                              |                                                               |                                   |         |                          |        |      |         |         |        |   |         |        
|Net cash provided by (used in) operating activities                                                           |                                                               |                                   | (1,636  | )                        |        |      | 13,214  |         |        |   | 5,073   |        
|Cash flows used in investing activities:                                                                      |                                                               |                                   |         |                          |        |      |         |         |        |   |         |        
|                                                                                                              | Purchase of short-term investments                            |                                   |         | (9,179                   | )      |      |         | (23,733 | )      |   |         | (20,087 | )     
|                                                                                                              | Sales of short-term investments                               |                                   |         | 14,981                   |        |      |         | 6,745   |        |   |         |        |       
|                                                                                                              | Maturities of short-term investments                          |                                   |         | 19,176                   |        |      |         | 24,070  |        |   |         |        |       
|                                                                                                              | Purchase of long-term investments                             |                                   |         | (14,133                  | )      |      |         | (8,149  | )      |   |         | (11,252 | )     
|                                                                                                              | Sales of long-term investments                                |                                   |         | 12,475                   |        |      |         |        |        |   |         |        |       
|                                                                                                              | Purchase of property and equipment                            |                                   |         | (4,952                   | )      |      |         | (30,212 | )      |   |         | (955    | )     
|                                                                                                              | Cash acquired in Sebring acquisition                          |                                   |         |                         |        |      |         | 33      |        |   |         |        |       
|                                                                                                              | Investment in unconsolidated investee                         |                                   |         |                         |        |      |         |        |        |   |         | (1,021  | )     
|                                                                                                              |                                                               |                                   |         |                          |        |      |         |         |        |   |         |        
|Net cash provided by (used in) investing activities                                                           |                                                               |                                   | 18,368  |                          |        |      | (31,246 | )       |        |   | (33,315 | )      
|                                                                                                              |                                                               |                                   |         |                          |        |      |         |         |        |   |         |        
|Cash flows provided by financing activities:                                                                  |                                                               |                                   |         |                          |        |      |         |         |        |   |         |        
|                                                                                                              | Proceeds from sales of common stock                           |                                   |         | 883                      |        |      |         | 1,532   |        |   |         | 31,107  |       
|                                                                                                              | Proceeds from issuance of promissory note                     |                                   |         |                         |        |      |         | 28,500  |        |   |         |        |       
|                                                                                                              | Decrease (increase) in restricted cash and investments        |                                   |         | 4,025                    |        |      |         | (4,025  | )      |   |         |        |       
|                                                                                                              | Repurchases of common stock                                   |                                   |         | (91                      | )      |      |         | (28     | )      |   |         | (30     | )     
|                                                                                                              | Net repayments of stockholder notes receivable                |                                   |         |                         |        |      |         | 38      |        |   |         | 163     |       
|                                                                                                              | Repayment of note payable                                     |                                   |         | (28,500                  | )      |      |         |        |        |   |         |        |       
|                                                                                                              |                                                               |                                   |         |                          |        |      |         |         |        |   |         |        
|Net cash provided by (used in) financing activities                                                           |                                                               |                                   | (23,683 | )                        |        |      | 26,017  |         |        |   | 31,240  |        
|                                                                                                              |                                                               |                                   |         |                          |        |      |         |         |        |   |         |        
|Effect of exchange rate fluctuations on cash and cash equivalents                                             |                                                               |                                   | (39     | )                        |        |      |        |         |        |   |        |        
|Increase (decrease) in cash and cash equivalents                                                              |                                                               |                                   | (6,990  | )                        |        |      | 7,985   |         |        |   | 2,998   |        
|Cash and cash equivalents at beginning of year                                                                |                                                               |                                   | 16,621  |                          |        |      | 8,636   |         |        |   | 5,638   |        
|                                                                                                              |                                                               |                                   |         |                          |        |      |         |         |        |   |         |        
|Cash and cash equivalents at end of year                                                                      |                                                               | $                                 | 9,631   |                          |        | $    | 16,621  |         |        | $ | 8,636   |        
|                                                                                                              |                                                               |                                   |         |                          |        |      |         |         |        |   |         |        
|Supplemental disclosure of cash flow information:                                                             |                                                               |                                   |         |                          |        |      |         |         |        |   |         |        
|                                                                                                              | Cash received for income taxes                                |                                   | $       | 1,876                    |        |      |         |        |        |   |         |        |       
|                                                                                                              | Cash paid for income taxes                                    |                                   | $       | 99                       |        |      | $       | 7,529   |        |   | $       | 3,785   |       
|                                                                                                              | Cash paid for interest                                        |                                   | $       | 1,363                    |        |      | $       | 186     |        |   |         |        |       

See accompanying notes to consolidated financial statements.

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PLX TECHNOLOGY, INC.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Reclassifications

Certain previously reported amounts have been reclassified to conform to
the current year presentation format with no impact on net income. All
financial information has been restated to conform to this presentation.

Description of Business

PLX Technology, Inc. (the Company) develops and markets I/O
interconnectivity solutions that speed the transfer of data in high-performance
embedded systems. The Companys principal products are high performance
semiconductor devices, as well as related software development kits and
hardware design kits. Semiconductor devices account for substantially all of
the Companys net revenues.

Basis of Presentation

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary. All intercompany transactions and balances
have been eliminated.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

The Company accounts for its investments in accordance with Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments in
Debt and Equity Securities (FAS 115). Under FAS 115, management determines
the appropriate classification of debt securities at the time of purchase and
reevaluates such designation as of each balance sheet date. At December 31,
2001 and 2000, all debt securities were designated as available-for-sale.
Available-for-sale securities are carried at fair value with unrealized gains
and losses reported in a separate component of stockholders equity. The fair
value of securities is based on quoted market prices. The amortized cost of
debt securities in this category is adjusted for the amortization of premiums
and the accretion of discounts to maturity. Such amortization, as well as any
interest earned on the securities, is included in interest income. Realized
gains and losses and declines in value judged to be other-than-temporary on
available-for-sale securities are included in interest income.
The cost of securities sold is based on the specific identification method.

The Company invests its excess cash in high quality, short-term and
long-term debt and equity instruments. The following is a summary of the
Companys investments by major security type at December 31, 2001 and December
31, 2000 (in thousands):
39Table of Contents

|                                    |  |                |        |       |  |            |    |            |  |   |    |   |  |   |        | 
|----------------------------------- |  | -------------- | ------ | ----- |  | ---------- | -- | ---------- |  | - | -- | - |  | - | ------ | 
|                                    |  |                |        |       |  | Gross      |    | Gross      |  |   |    |  
|                                    |  |                |        |       |  | Unrealized |    | Unrealized |  |   |    |  
|                                    |  | Amortized Cost |        | Gains |  | Losses     |    | Fair Value
|                                    |  |                |        |       |  |            |    |           
|2001                                |  |                |        |       |  |            |    |            |  |   |    |   |  |   |        | 
|Operating cash                      |  | $              | 2,168  |       |  | $          |   |            |  | $ |   |   |  | $ | 2,168  | 
|Money market mutual funds           |  |                | 7,462  |       |  |            |   |            |  |   |   |   |  |   | 7,462  | 
|Municipal bonds                     |  |                | 6,000  |       |  |            |   |            |  |   |   |   |  |   | 6,000  | 
|Corporate debt securities           |  |                | 2,088  |       |  |            |   |            |  |   | (1 | ) |  |   | 2,087  | 
|U.S. government & agency securities |  |                | 1,000  |       |  |            | 3  |            |  |   |   |   |  |   | 1,003  | 
|                                    |  |                |        |       |  |            |    |            |  |   |    |   |  |   |        | 
|                                    |  | $              | 18,718 |       |  | $          | 3  |            |  | $ | (1 | ) |  | $ | 18,720 | 
|                                    |  |                |        |       |  |            |    |            |  |   |    |   |  |   |        | 
|2000                                |  |                |        |       |  |            |    |            |  |   |    |   |  |   |        | 
|Operating cash                      |  | $              | 2,251  |       |  | $          |   |            |  | $ |   |   |  | $ | 2,251  | 
|Money market mutual funds           |  |                | 2,794  |       |  |            |   |            |  |   |   |   |  |   | 2,794  | 
|Certificates of deposit             |  |                | 1,000  |       |  |            |   |            |  |   |   |   |  |   | 1,000  | 
|Municipal bonds                     |  |                | 43,013 |       |  |            | 53 |            |  |   | (7 | ) |  |   | 43,059 | 
|Corporate debt securities           |  |                | 1,995  |       |  |            | 1  |            |  |   |   |   |  |   | 1,996  | 
|U.S. government & agency securities |  |                | 2,000  |       |  |            | 7  |            |  |   |   |   |  |   | 2,007  | 
|                                    |  |                |        |       |  |            |    |            |  |   |    |   |  |   |        | 
|                                    |  | $              | 53,053 |       |  | $          | 61 |            |  | $ | (7 | ) |  | $ | 53,107 | 
|                                    |  |                |        |       |  |            |    |            |  |   |    |   |  |   |        | 

At December 31, 2001, the fair value of long-term debt investments due
within one to two years was approximately $3.1 million.

Allowance for Doubtful Accounts

The Company evaluates the collectibility of accounts receivable based on
length of time the receivables are past due. It records reserves for bad debts
against amounts due to reduce the net recognized receivable to the amount it
reasonably believes will be collected.

Inventories

Inventories are valued at the lower of cost (first-in, first-out method)
or market (net realizable value). Inventories were as follows:

|                |       |   |                |       |      |   |       |       | 
|--------------- | ----- | - | -------------- | ----- | ---- | - | ----- | ----- | 
|                |       |   | December 31,  
|                |       |   |               
|                |       |   | 2001           |       | 2000
|                |       |   |                |       |     
|                |       |   | (in thousands)
|Work in Process |       | $ | 506            |       |      | $ | 646   |      
|Finished goods  |       |   | 4,080          |       |      |   | 3,875 |      
|                |       |   |                |       |      |   |       |      
|                | Total |   | $              | 4,586 |      |   | $     | 4,521 | 
|                |       |   |                |       |      |   |       |      

Inventory Write-downs

The Company evaluates the write-downs for inventory based on a combination
of factors. Based on the life of the product, sales history, obsolescence and
sales forecast, the Company records write-downs ranging from 0% to 100%.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of 39 years for buildings and three to five years for equipment,
furniture and purchased software. Leasehold improvements are amortized using
the straight-line method over the shorter of the useful lives of the assets or
the terms of the leases.

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Reviews are regularly performed to determine whether facts and
circumstances exist which indicate that the carrying amount of assets may not
be recoverable. The recoverability of the carrying amount of property and
equipment is assessed based on estimated future undiscounted cash flows and if
impairment exists a charge to operations is measured as the excess of the
carrying amount over the fair value of the assets. Based upon this method of
assessing recoverability, no asset impairment occurred in any of the years
presented.

Property and equipment are as follows:

|                           |  |                |        |      |  |   |        |  
|-------------------------- |  | -------------- | ------ | ---- |  | - | ------ | -
|                           |  | December 31,  
|                           |  |               
|                           |  | 2001           |        | 2000
|                           |  |                |        |     
|                           |  | (in thousands)
|Land                       |  | $              | 8,550  |      |  | $ | 8,550  |  
|Building                   |  |                | 19,333 |      |  |   | 19,333 |  
|Equipment and furniture    |  |                | 8,847  |      |  |   | 4,589  |  
|Purchased software         |  |                | 4,139  |      |  |   | 3,544  |  
|                           |  |                |        |      |  |   |        |  
|                           |  |                | 40,869 |      |  |   | 36,016 |  
|Accumulated depreciation   |  |                | (7,290 | )    |  |   | (4,739 | )
|                           |  |                |        |      |  |   |        |  
|Net property and equipment |  | $              | 33,579 |      |  | $ | 31,277 |  
|                           |  |                |        |      |  |   |        |  

Goodwill and Other Intangibles

Goodwill is recorded when the consideration paid for acquisitions exceeds
the fair value of identifiable net tangible and intangible assets acquired.
Goodwill and other acquisition-related intangibles are amortized on a
straight-line basis over 4 years. Goodwill and other intangibles are reviewed
for recoverability periodically or whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. The carrying amount
is compared to the undiscounted cash flows of the Company. Should the review
indicate that these intangibles are not recoverable, their carrying amount
would be reduced by the estimated shortfall of those cash flows. No impairment
has been indicated to date.

Stock-Based Compensation

The Company accounts for its stock option and stock grant plans in
accordance with Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees (APB Opinion No. 25), and has elected to follow the
disclosure-only alternative permitted by Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation (FAS 123).

Revenue Recognition

Sales to original equipment manufacturers are generally recognized at the
time of title passage. Recognition of sales to distributors, including
international distributors, is deferred until the product is resold by the
distributors to end users. Net revenues from the sale of software development
kits is insignificant for all years presented. The Company provides an
allowance for estimated returns of defective products.

Advertising

The Company accounts for advertising costs as expenses in the period in
which they are incurred. Advertising expenses for 2001, 2000, and 1999 were
$161,000, $280,000, and $77,000, respectively.

Software Development Costs

In accordance with Statement of Financial Accounting Standards No. 86,
Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise
Marketed, the Company capitalizes eligible computer software costs upon
achievement of technological feasibility subject to net realizable value
considerations. The Company has defined technological feasibility as
completion of a working model. The period between the

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achievement of technological feasibility and release of the Companys
software products has been of short duration. As of December 31, 2001, 2000,
and 1999 such costs were insignificant. Accordingly, the Company has charged
all such costs to research and development expenses in the accompanying
consolidated statements of operations.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates and such
differences may be material to the financial statements.

Comprehensive Income (Loss)

The Companys comprehensive income (loss) is comprised of net income
(loss), translation adjustments and unrealized holding gains (losses) on
marketable equity securities and investments. The accumulated other
comprehensive income (loss) within the stockholders equity section of the
balance sheet is comprised of translation adjustments and unrealized gains
(losses) from marketable equity securities and investments.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Financial
Instruments and Hedging Activities (SFAS 133), which provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities. SFAS 133, as amended, was adopted by the
Company effective January 1, 2001 and did not have an impact on the Companys
results of operations or financial position, as the Company holds no derivative
financial instruments and does not currently engage in hedging activities.

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 141, Business Combinations, and
SFAS No. 142, Goodwill and Other Intangible Assets. These standards become
effective for fiscal years beginning after December 15, 2001. SFAS No. 141
requires all business combinations to be accounted for using the purchase
method of accounting and is effective for all business combinations initiated
after June 30, 2001. Under the new rules, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be subject
to annual impairment tests in accordance with the SFAS 142. Other intangibles
will continue to be amortized over their useful lives. The Company will adopt
SFAS No. 142 beginning in the first quarter of 2002. As a result of the
discontinuance of the amortization of goodwill and indefinite lived
intangibles, excluding the impact of potential impairment charges, the
application of SFAS No. 142 is expected to result in an increase in the
Companys operating income of approximately $3.6 million per year. During the
first six months of 2002, the Company will test goodwill and indefinite lived
intangibles for impairment under the new rules, applying a fair-value-based
test. The Company does not expect to have impairment at the date of adoption
of this standard.

In October 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 144, Accounting for Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of, and addresses financial accounting and reporting for the
impairment and disposal of long-lived assets. This statement is effective for
fiscal years beginning after December 15, 2001. Adoption of this statement is
not expected to have a material impact on the Companys financial position or
results of operations.



|2. |  | Net Income (Loss) Per Share
|-- |  | ---------------------------

Basic net income (loss) per share is computed by dividing net income
(loss) by the weighted average number of common shares outstanding during the
period that are not subject to repurchase. Diluted net income (loss) per share
is calculated using the weighted average number of outstanding shares of common
stock plus dilutive common stock equivalents.

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A reconciliation of shares used in the calculation of basic and diluted
net income (loss) per share is as follows:

|                                                                   |                                        |   |                                       |   |      |   |        |   |  |   |        |       | 
|------------------------------------------------------------------ | -------------------------------------- | - | ------------------------------------- | - | ---- | - | ------ | - |  | - | ------ | ----- | 
|                                                                   |                                        |   | Years Ended December 31,             
|                                                                   |                                        |   |                                      
|                                                                   |                                        |   | 2001                                  |   | 2000 |   | 1999  
|                                                                   |                                        |   |                                       |   |      |   |       
|                                                                   |                                        |   | (in thousands, except per share data)
|Net income (loss)                                                  |                                        | $ | (6,537                                | ) |      | $ | (7,042 | ) |  | $ | 7,231  |      
|                                                                   |                                        |   |                                       |   |      |   |        |   |  |   |        |      
|Weighted average shares of common stock outstanding                |                                        |   | 23,258                                |   |      |   | 22,636 |   |  |   | 17,548 |      
|Less weighted average shares of common stock
subject to repurchase |                                        |   |                                      |   |      |   | (76    | ) |  |   | 541    |      
|                                                                   |                                        |   |                                       |   |      |   |        |   |  |   |        |      
|Shares used in computing basic net income (loss)
per share         |                                        |   | 23,258                                |   |      |   | 22,560 |   |  |   | 17,007 |      
|                                                                   |                                        |   |                                       |   |      |   |        |   |  |   |        |      
|Net income (loss) per share  basic                                |                                        | $ | (0.28                                 | ) |      | $ | (0.31  | ) |  | $ | 0.43   |      
|                                                                   |                                        |   |                                       |   |      |   |        |   |  |   |        |      
|Shares used in computing basic net income (loss)
per share         |                                        |   | 23,258                                |   |      |   | 22,560 |   |  |   | 17,007 |      
|Effect of dilutive securities:                                     |                                        |   |                                       |   |      |   |        |   |  |   |        |      
|                                                                   | Stock options                          |   |                                       |  |      |   |        |  |  |   |        | 763   | 
|                                                                   | Unvested restricted stock              |   |                                       |  |      |   |        |  |  |   |        | 541   | 
|                                                                   | Redeemable convertible preferred stock |   |                                       |  |      |   |        |  |  |   |        | 3,538 | 
|                                                                   |                                        |   |                                       |   |      |   |        |   |  |   |        |      
|Shares used in computing diluted net income (loss)
per share       |                                        |   | 23,258                                |   |      |   | 22,560 |   |  |   | 21,849 |      
|                                                                   |                                        |   |                                       |   |      |   |        |   |  |   |        |      
|Net income (loss) per share  diluted                              |                                        | $ | (0.28                                 | ) |      | $ | (0.31  | ) |  | $ | 0.33   |      
|                                                                   |                                        |   |                                       |   |      |   |        |   |  |   |        |      



|3. |  | Concentrations of Credit, Customer and Supplier Risk
|-- |  | ----------------------------------------------------

Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash equivalents, short-term
investments, long-term investments and trade receivables. The Company
generally invests its excess money in money market funds, commercial paper of
corporations with high credit ratings, municipal bonds, and treasury bills.
The Company has not experienced any significant losses on its cash equivalents
or short and long-term investments. The Company performs ongoing credit
evaluations of its customers and generally requires no collateral. At December
31, 2001, the Companys two largest receivable balances accounted for
approximately 27% and 17% of net accounts receivable. The largest receivable
balance was secured by a letter of credit. Through fiscal 2001, a relatively
small number of customers and resellers accounted for a significant percentage
of the Companys revenues. The Company analyzes the need for reserves for
potential credit losses and records reserves when necessary.

Currently, the Company relies on single source suppliers of materials for
the significant majority of its product inventory. As a result, should the
Companys current suppliers not produce and deliver inventory for the Company
to sell on a timely basis, operating results may be adversely impacted.



|4. |  | Business Combination
|-- |  | --------------------

On May 19, 2000, the Company purchased Sebring Systems, Inc., a
development stage company, that was developing the SebringRing, a Switched-PCI
interconnect solution, for an aggregate purchase price, including assumed
liabilities, of $32.3 million. The transaction was accounted for using
purchase accounting. Prior to the purchase, the Company owned approximately
16% of the outstanding shares of Sebring, which was accounted for using the
equity method of accounting.

The financial results for the year ended December 31, 2000 reflect the
acquisition from the date the transaction was closed.

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The purchase price of the Sebring Systems acquisition is summarized below:

|                                   |  |   |        | 
|---------------------------------- |  | - | ------ | 
|(in thousands)                     |  |   |        | 
|Net previous investment in Sebring |  | $ | 681    | 
|Fair value of common stock issued  |  |   | 24,196 | 
|Fair value of options assumed      |  |   | 4,672  | 
|Assumed liabilities                |  |   | 2,242  | 
|Acquisition costs                  |  |   | 525    | 
|                                   |  |   |        | 
|Total consideration                |  | $ | 32,316 | 
|                                   |  |   |        | 

The Company issued an aggregate of 960,931 shares of its common stock
valued at $24.2 million. The stock options were valued using the Black-Scholes
valuation model. Additionally, the Company incurred $0.5 million in
professional fees, including legal, valuation and accounting fees related to
the acquisition, which were capitalized as part of the purchase price of the
transaction.

The allocation of the Companys purchase price to the tangible and
identifiable intangible assets acquired and liabilities assumed is summarized
below.

The allocation was based on an independent appraisal and estimate of fair
value.

|                                      |                    |         |        |        |       | 
|------------------------------------- | ------------------ | ------- | ------ | ------ | ----- | 
|(in thousands)                        |                    |         |        |       
|Net tangible assets                   |                    | $       | 1,165  |       
|In-process technology                 |                    |         | 14,342 |       
|Goodwill and other intangible assets: |                    |         |        |       
|                                      | Goodwill           |         |        | 13,339 |      
|                                      | Acquired employees |         |        | 983    |      
|                                      | Tradename          |         |        | 355    |      
|                                      |                    | Patents |        |        | 2,132 | 
|                                      |                    |         |        |       
|                                      |                    |         | 16,809 |       
|                                      |                    |         |        |       
|Net assets acquired                   |                    | $       | 32,316 |       
|                                      |                    |         |        |       

The net tangible assets acquired were comprised primarily of property and
equipment and accrued liabilities. The acquired in-process technology was
written-off in the second quarter of fiscal 2000. The estimated weighted
average useful life of the intangible assets for patents, tradenames, and the
residual goodwill, created as a result of the acquisition of Sebring Systems is
approximately four years.

Additionally, PLX recorded $12.3 million in deferred compensation on
options granted to employees below fair market value related to the acquisition
of Sebring. Deferred compensation is being amortized over the vesting period
of three years.

The $14.3 million allocation of the purchase price to the acquired
in-process technology was determined by identifying research projects in areas
for which technological feasibility had not been established and no alternative
future uses existed. PLX acquired technology consisting of silicon switch
fabric interconnect solutions. The value was determined by estimating the
expected cash flows from the project once commercially viable, discounting the
net cash flows to their present value, and then applying a percentage of
completion to the calculated value as defined below.

The net cash flows from the identified project utilized were based on
estimates of revenues, cost of sales, research and development costs, selling,
general and administrative costs, royalty costs and income taxes from the

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project. These estimates were based on assumptions mentioned below. The
research and development costs excluded costs to bring the acquired in-process
project to technological feasibility.

The estimated revenues were based on management projections of the
acquired in-process project. The business projections were compared with and
found to be in line with industry analysts forecasts of growth in
substantially all of the relevant markets. Estimated total revenues from the
acquired in-process technology product were assumed to peak in fiscal 2003 and
decline in fiscal 2004 as other new products were expected to become available.
These projections were based on estimates of market size and growth, expected
trends in technology, and the nature and expected timing of new product
introductions, by the Company and its competitors.

Discounting the net cash flows back to their present value was based on
the cost of capital for well-managed venture capital funds which typically have
similar risks and returns on investments. The cost of capital used in
discounting the net cash flows from acquired in-process technology was 25%.

The Company estimated, as of the acquisition date, the project was 85%
complete. The percentage of completion was determined using costs incurred by
Sebring prior to the acquisition date compared to the remaining research and
development to be completed to bring the project to technological feasibility.
As of December 31, 2001, the project was completed. The product was taped out
successfully and is currently being sampled.

Unaudited Pro Forma Financial Results

The unaudited pro forma financial information combines the historical
statements of operations of PLX Technology, Inc. and Sebring Systems, Inc. for
the years ended December 31, 2000 and 1999 and gives effect to the transaction,
including the amortization of goodwill and other intangible assets and the
recognition of deferred compensation, as if they occurred at the beginning of
each period presented. The amount of the aggregate purchase price allocated to
purchased in-process research and development has been excluded from the pro
forma information, as it is a non-recurring item.

The unaudited pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the operating results that would have
occurred if the transactions had been consummated at the dates indicated, nor
is it necessarily indicative of future operating results of the combined
companies and should not be construed as representative of these amounts for
any future periods.

|                                                          |  |                                          |        |      |  |   |        |  
|--------------------------------------------------------- |  | ---------------------------------------- | ------ | ---- |  | - | ------ | -
|                                                          |  | Year Ended December 31,                 
|                                                          |  |                                         
|                                                          |  | 2000                                     |        | 1999
|                                                          |  |                                          |        |     
|                                                          |  | (Unaudited)                             
|                                                          |  | (in thousands, except per share amounts)
|Net revenues                                              |  | $                                        | 65,351 |      |  | $ | 41,074 |  
|Net income (loss)                                         |  | $                                        | 1,848  |      |  | $ | (4,745 | )
|Net income (loss) per share  basic and diluted           |  | $                                        | 0.08   |      |  | $ | (0.26  | )
|Number of shares used in per share calculations  basic   |  |                                          | 22,560 |      |  |   | 17,968 |  
|Number of shares used in per share calculations  diluted |  |                                          | 23,550 |      |  |   | 17,968 |  



|5. |  | Employee Stock Plans
|-- |  | --------------------

At December 31, 2001, 4,764,094 shares of the Companys common stock were
reserved for future issuance.

The Companys 1998 Stock Incentive Plan (the 1998 Plan) was approved by
the Board of Directors on January 15, 1998. The 1998 Plan provides for the
grant of both incentive and nonqualified stock options. A total of 1,500,000
shares of common stock have been reserved for issuance under the 1998 Plan.
The Companys 1999 Stock Incentive Plan (the 1999 Plan) was approved by the
Board of Directors on January 25, 1999. The 1999 Plan provides for the grant
of both incentive and nonqualified stock options. A total of 2,500,000 shares
of common stock have been reserved for issuance under the 1999 Plan. The
maximum term of any stock option granted under the 1998 and 1999 Plans is ten
years, except that with respect to incentive stock options granted to a person

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possessing more than 10% of the combined voting power of the Company (a
10% stockholder), the term of such stock options shall be for no more than five
years. The exercise price of incentive stock options granted under the 1998
and 1999 Plan must be at least 100% of the fair market value of the common
stock on the grant date except that the exercise price of incentive stock
options granted to a 10% stockholder must be at least 110% of such fair market
value on the date of grant. The options generally vest over a period of three
to four years.

Activity under the 1998 and 1999 Plans is summarized as follows:

|                             |                    |  |           |            |           |  |                                                 |           |                  |   |            |             |          |   |       |       | 
|---------------------------- | ------------------ |  | --------- | ---------- | --------- |  | ----------------------------------------------- | --------- | ---------------- | - | ---------- | ----------- | -------- | - | ----- | ----- | 
|                             |                    |  |           |            |           |  | Options Outstanding                            
|                             |                    |  |           |            |           |  |                                                
|                             |                    |  | Options   |            |           |  |                                                 |           |                  |   |            |             | Weighted
|                             |                    |  | Available |            | Number of |  | Aggregate                                       |           | Average Exercise
|                             |                    |  | for Grant |            | Options   |  | Exercise Price                                  |           | Price           
|                             |                    |  |           |            |           |  |                                                 |           |                 
|                             |                    |  |           |            |           |  | (in thousands, except share and per share data)
|Balance at January 1, 1999   |                    |  | 154,750   |            |           |  | 645,250                                         |           |                  | $ | 3,171,205  |             |          | $ | 4.91  |      
|                             | Options authorized |  |           | 1,700,000  |           |  |                                                 |          |                  |   |            |             |          |   |       |       | 
|                             | Options granted    |  |           | (964,000   | )         |  |                                                 | 964,000   |                  |   |            | 10,966,138  |          |   |       | 11.38 | 
|                             | Options exercised  |  |           |           |           |  |                                                 | (22,950   | )                |   |            | (105,750    | )        |   |       | 4.61  | 
|                             | Options canceled   |  |           | 88,542     |           |  |                                                 | (88,542   | )                |   |            | (691,023    | )        |   |       | 7.80  | 
|                             |                    |  |           |            |           |  |                                                 |           |                  |   |            |             |          |   |       |      
|Balance at December 31, 1999 |                    |  | 979,292   |            |           |  | 1,497,758                                       |           |                  |   | 13,340,615 |             |          |   | 8.91  |      
|                             | Options authorized |  |           | 1,500,000  |           |  |                                                 |          |                  |   |            |             |          |   |       |       | 
|                             | Options granted    |  |           | (1,735,113 | )         |  |                                                 | 2,159,774 |                  |   |            | 39,165,122  |          |   |       | 18.13 | 
|                             | Options assumed    |  |           |           |           |  |                                                 | 204,989   |                  |   |            | 625,374     |          |   |       | 3.05  | 
|                             | Options exercised  |  |           |           |           |  |                                                 | (267,393  | )                |   |            | (1,532,701  | )        |   |       | 5.73  | 
|                             | Options canceled   |  |           | 505,053    |           |  |                                                 | (698,801  | )                |   |            | (10,375,251 | )        |   |       | 14.85 | 
|                             |                    |  |           |            |           |  |                                                 |           |                  |   |            |             |          |   |       |      
|Balance at December 31, 2000 |                    |  | 1,249,232 |            |           |  | 2,896,327                                       |           |                  |   | 41,223,159 |             |          |   | 14.23 |      
|                             | Options authorized |  |           | 900,000    |           |  |                                                 |          |                  |   |            |             |          |   |       |       | 
|                             | Options granted    |  |           | (1,114,000 | )         |  |                                                 | 1,114,000 |                  |   |            | 8,941,348   |          |   |       | 8.03  | 
|                             | Options exercised  |  |           |           |           |  |                                                 | (192,400  | )                |   |            | (883,183    | )        |   |       | 4.59  | 
|                             | Options canceled   |  |           | 638,679    |           |  |                                                 | (727,744  | )                |   |            | (10,285,923 | )        |   |       | 14.13 | 
|                             |                    |  |           |            |           |  |                                                 |           |                  |   |            |             |          |   |       |      
|Balance at December 31, 2001 |                    |  | 1,673,911 |            |           |  | 3,090,183                                       |           |                  | $ | 38,995,401 |             |          | $ | 12.62 |      
|                             |                    |  |           |            |           |  |                                                 |           |                  |   |            |             |          |   |       |      

Options assumed of 204,989 represent options related to the May 2000
acquisition of Sebring Systems. Options assumed from Sebring Systems are no
longer available for grant once canceled.

The following table summarizes the information about options outstanding
at December 31, 2001:

|                |  |                     |           |                     |  |                  |  |             |       |                |  |  |           |          |  |   |       |  |  | 
|--------------- |  | ------------------- | --------- | ------------------- |  | ---------------- |  | ----------- | ----- | -------------- |  |  | --------- | -------- |  | - | ----- |  |  | 
|                |  | Options Outstanding |           | Options Exercisable
|                |  |                     |           |                    
|                |  |                     |           |                     |  | Weighted Average |  | Weighted    |       |                |  |  |           | Weighted
|Range of        |  | Number              |           | Remaining           |  | Average          |  | Number      |       | Average       
|Exercise Price  |  | Outstanding         |           | Contractual Life    |  | Exercise Price   |  | Exercisable |       | Exercise Price
|                |  |                     |           |                     |  |                  |  |             |       |               
|$1.84 - $5.00   |  |                     | 569,376   |                     |  | 6.96 years       |  | $           | 4.14  |                |  |  | 569,376   |          |  | $ | 4.14  | 
|$5.19 - $7.95   |  |                     | 910,117   |                     |  | 9.17 years       |  |             | 7.53  |                |  |  | 896,117   |          |  |   | 7.55  | 
|$8.00 - $9.35   |  |                     | 453,291   |                     |  | 7.42 years       |  |             | 8.94  |                |  |  | 444,291   |          |  |   | 8.93  | 
|$13.00 - $21.06 |  |                     | 623,214   |                     |  | 8.31 years       |  |             | 19.16 |                |  |  | 611,214   |          |  |   | 19.28 | 
|$23.00 - $40.00 |  |                     | 534,185   |                     |  | 8.48 years       |  |             | 25.83 |                |  |  | 534,185   |          |  |   | 25.83 | 
|                |  |                     |           |                     |  |                  |  |             |       |                |  |  |           |          |  |   |       |  |  | 
|Total           |  |                     | 3,090,183 |                     |  | 8.21 years       |  | $           | 12.62 |                |  |  | 3,055,183 |          |  | $ | 12.66 | 
|                |  |                     |           |                     |  |                  |  |             |       |                |  |  |           |          |  |   |       |  |  | 

As of December 31, 2001, 2000, and 1999, there were 1,580,937, 992,469,
and 316,310 stock options vested at weighted average exercise prices of $9.82
per share, $7.58 per share, and $5.34 per share, respectively.

The Company has elected to follow APB Opinion No. 25 and related
interpretations in accounting for its stock grants since the alternative fair
market value accounting provided for under FAS 123 requires use of grant

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valuation models that were not developed for use in valuing stock grants.
Under APB Opinion No. 25, as the exercise price of the Companys stock grants
and options equals the deemed fair value of the underlying stock on the date of
grant, no compensation expenses are recognized.

During the year ended December 31, 2000, the Company recorded aggregate
deferred compensation of $15.8 million, representing the difference between the
grant price and the deemed fair value of the Companys common stock options
granted during this period. The Company recorded no deferred compensation in
2001 and 1999. The amortization of deferred compensation is charged to
operations and is amortized on a straight-line basis over the vesting period of
the options, which is typically three years. For the years ended December 31,
2001, 2000, and 1999, amortization expense was $2,906,000, $2,272,000, and
$91,000, respectively.

Pro forma information regarding net income (loss) is required by FAS 123,
which also requires that the information be determined as if the Company had
accounted for grants subsequent to December 31, 1994 under a method specified
by FAS 123. Options granted were estimated using the Black-Scholes valuation
model. The following weighted average assumptions were used for 2001, 2000,
and 1999:

|                                    |  |                          |      |      |  |      |      |   |  |  |      |  
|----------------------------------- |  | ------------------------ | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                    |  | Years Ended December 31,
|                                    |  |                         
|                                    |  | 2001                     |      | 2000 |  | 1999
|                                    |  |                          |      |      |  |     
|Volatility                          |  |                          | 1.00 |      |  |      | 0.84 |   |  |  | 0.59 |  
|Expected life of options (in years) |  |                          | 4.00 |      |  |      | 4.00 |   |  |  | 4.00 |  
|Dividend yield                      |  |                          | 0.00 | %    |  |      | 0.00 | % |  |  | 0.00 | %
|Risk-free interest rate             |  |                          | 4.66 | %    |  |      | 6.29 | % |  |  | 5.26 | %

The weighted average grant date fair value of options granted during 2001,
2000, and 1999 was $8.03, $21.90, and $5.76, respectively.

If compensation cost for the Companys stock-based compensation plans had
been determined based on the fair value at the grant dates for awards under
those plans consistent with the method of FAS 123, then the Companys net
income (loss) per share would have been adjusted to the pro forma amounts
indicated below:

|                                        |         |   |                                       |       |      |   |         |       |   |   |       |      | 
|--------------------------------------- | ------- | - | ------------------------------------- | ----- | ---- | - | ------- | ----- | - | - | ----- | ---- | 
|                                        |         |   | Years Ended December 31,             
|                                        |         |   |                                      
|                                        |         |   | 2001                                  |       | 2000 |   | 1999   
|                                        |         |   |                                       |       |      |   |        
|                                        |         |   | (in thousands, except per share data)
|Net income (loss) as reported           |         | $ | (6,537                                | )     |      | $ | (7,042  | )     |   | $ | 7,231 |     
|Pro forma net income (loss)             |         | $ | (12,807                               | )     |      | $ | (12,257 | )     |   | $ | 6,187 |     
|Net
income (loss) per share as reported |        
|                                        | Basic   |   | $                                     | (0.28 | )    |   | $       | (0.31 | ) |   | $     | 0.43 | 
|                                        | Diluted |   | $                                     | (0.28 | )    |   | $       | (0.31 | ) |   | $     | 0.33 | 
|Pro
forma net income (loss) per share   |        
|                                        | Basic   |   | $                                     | (0.55 | )    |   | $       | (0.54 | ) |   | $     | 0.36 | 
|                                        | Diluted |   | $                                     | (0.55 | )    |   | $       | (0.54 | ) |   | $     | 0.28 | 



|6. |  | Stock Repurchase
|-- |  | ----------------

In January 2001, the Board of Directors of the Company approved a stock
repurchase program whereby up to 2,000,000 shares of the Companys common stock
may be purchased in the open market or in privately negotiated transactions.
As of December 31, 2001, 10,000 shares had been repurchased under the terms of
this program.

47



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|7. |  | Retirement Savings Plan
|-- |  | -----------------------

The Company has a retirement savings plan, commonly known as a 401(k)
plan, that allows all full-time employees to contribute from 1% to 15% of their
pretax salary, subject to IRS limits. Beginning in 1996, the Company made a
matching contribution calculated at 50 cents on each dollar of the first 6% of
participant contributions. The Companys contributions to the 401(k) plan were
$299,000, $255,000, and $187,000 for 2001, 2000, and 1999, respectively.



|8. |  | Income Taxes
|-- |  | ------------

The provision (benefit) for income taxes consists of the following:

|         |          |       |        |                          |        |      |       |                |       |  |       |       |       | 
|-------- | -------- | ----- | ------ | ------------------------ | ------ | ---- | ----- | -------------- | ----- |  | ----- | ----- | ----- | 
|         |          |       |        | Years Ended December 31,
|         |          |       |        |                         
|         |          |       |        | 2001                     |        | 2000 |       | 1999          
|         |          |       |        |                          |        |      |       |               
|         |          |       |        |                          |        |      |       | (in thousands) |       |  |       |      
|Federal: |          |       |        |                          |        |      |       |                |       |  |       |      
|         | Current  |       | $      | (2,382                   | )      |      | $     | 6,650          |       |  | $     | 3,806 |      
|         | Deferred |       |        | 600                      |        |      |       | (1,461         | )     |  |       | (487  | )    
|         |          |       |        |                          |        |      |       |                |       |  |       |      
|         |          |       | (1,782 | )                        |        |      | 5,189 |                |       |  | 3,319 |      
|State:   |          |       |        |                          |        |      |       |                |       |  |       |      
|         | Current  |       |        | (119                     | )      |      |       | 870            |       |  |       | 734   |      
|         | Deferred |       |        | 35                       |        |      |       | (159           | )     |  |       | (157  | )    
|         |          |       |        |                          |        |      |       |                |       |  |       |      
|         |          |       | (84    | )                        |        |      | 711   |                |       |  | 577   |      
|         |          |       |        |                          |        |      |       |                |       |  |       |      
|         |          | Total |        | $                        | (1,866 | )    |       | $              | 5,900 |  |       | $     | 3,896 | 
|         |          |       |        |                          |        |      |       |                |       |  |       |      

The provision (benefit) for income taxes differs from the amount of income
taxes determined by applying the U.S. statutory federal income tax rate as
follows:

|                                                                        |  |                          |        |      |  |      |       |   |  |   |       |  
|----------------------------------------------------------------------- |  | ------------------------ | ------ | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                                                        |  | Years Ended December 31,
|                                                                        |  |                         
|                                                                        |  | 2001                     |        | 2000 |  | 1999
|                                                                        |  |                          |        |      |  |     
|                                                                        |  | (in thousands)          
|Tax (benefit) at the U.S. statutory rate                                |  | $                        | (2,941 | )    |  | $    | (400  | ) |  | $ | 4,013 |  
|State taxes (net of federal benefit)                                    |  |                          | (55    | )    |  |      | 462   |   |  |   | 375   |  
|Tax exempt interest income                                              |  |                          | (87    | )    |  |      | (157  | ) |  |   |      |  
|Non-deductible in-process R&D write off                                 |  |                          |       |      |  |      | 5,020 |   |  |   |      |  
|Non-deductible amortization of deferred
compensation                    |  |                          | 1,017  |      |  |      |      |   |  |   |      |  
|Non-deductible amortization of goodwill and
purchased intangible assets |  |                          | 1,158  |      |  |      | 808   |   |  |   |      |  
|Research and development credit                                         |  |                          |       |      |  |      | (305  | ) |  |   | (266  | )
|Tax benefits from prior years                                           |  |                          | (975   | )    |  |      |      |   |  |   |      |  
|Other individually immaterial items                                     |  |                          | 17     |      |  |      | 472   |   |  |   | (226  | )
|                                                                        |  |                          |        |      |  |      |       |   |  |   |       |  
|                                                                        |  | $                        | (1,866 | )    |  | $    | 5,900 |   |  | $ | 3,896 |  
|                                                                        |  |                          |        |      |  |      |       |   |  |   |       |  

48



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The Company increased its benefit in fiscal 2001 by $975,000 or $0.04 per
share due to the recognition of tax benefits from prior years. This change in
estimated taxes was reflected in the federal tax return for 2000 filed in
September 2001.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Companys deferred tax assets and liabilities are as follows:

|                          |                                               |  |                          |       |      |  |   |        |  
|------------------------- | --------------------------------------------- |  | ------------------------ | ----- | ---- |  | - | ------ | -
|                          |                                               |  | Years Ended December 31,
|                          |                                               |  |                         
|                          |                                               |  | 2001                     |       | 2000
|                          |                                               |  |                          |       |     
|                          |                                               |  | (in thousands)          
|Deferred tax assets:      |                                               |  |                          |       |      |  |   |       
|                          | Accrued expenses and reserves                 |  | $                        | 1,422 |      |  | $ | 2,052  |  
|                          | Net operating loss carryforwards              |  |                          | 1,100 |      |  |   | 1,100  |  
|                          | Research and development credit carryforwards |  |                          | 600   |      |  |   |       |  
|                          | Costs capitalized for tax purposes            |  |                          | 537   |      |  |   |       |  
|                          | Other                                         |  |                          | 135   |      |  |   | 947    |  
|                          |                                               |  |                          |       |      |  |   |       
|                          | Gross deferred tax assets                     |  |                          | 3,794 |      |  |   | 4,099  |  
|                          | Valuation allowance                           |  |                          | (600  | )    |  |   |       |  
|                          |                                               |  |                          |       |      |  |   |       
|                          | Net deferred tax assets                       |  |                          | 3,194 |      |  |   | 4,099  |  
|Deferred tax liabilities: |                                               |  |                          |       |      |  |   |       
|                          | Acquisition related intangibles               |  |                          | (830  | )    |  |   | (1,100 | )
|                          |                                               |  |                          |       |      |  |   |       
|                          | Total net deferred tax assets                 |  | $                        | 2,364 |      |  | $ | 2,999  |  
|                          |                                               |  |                          |       |      |  |   |       

At December 31, 2001, the Company had net operating loss carryforwards for
federal and state purposes of approximately $3,150,000, which will expire
beginning in 2012, if not utilized and federal research and development tax
credits of approximately $600,000, which will expire in the year 2021. For
financial reporting purposes at December 31, 2001, a valuation allowance of
$600,000 has been recognized to offset the deferred tax assets relating to the
federal research and development tax credits that may be subject to limitations
on their utilization.

Utilization of the net operating loss carryforwards may be subject to a
substantial annual limitation due to the ownership change limitations provided
by the Internal Revenue Code of 1986, as amended, and similar state provisions.
The annual limitation may result in the expiration of net operating loss
carryforwards before utilization.



|9. |  | Commitments
|-- |  | -----------

The Company leases certain of its facilities and equipment under
noncancelable operating lease agreements and subleases space under one
operating lease that expires in 2002. Future minimum lease payments at
December 31, 2001 are as follows:

|                                |  |                |       |  
|------------------------------- |  | -------------- | ----- | -
|                                |  | (in thousands)
|2002                            |  | $              | 560   |  
|2003                            |  |                | 522   |  
|2004                            |  |                | 496   |  
|2005                            |  |                | 56    |  
|2006                            |  |                | 19    |  
|Total minimum lease payments    |  |                | 1,653 |  
|                                |  |                |       |  
|Sublease income                 |  |                | (498  | )
|                                |  |                |       |  
|Net operating lease commitments |  | $              | 1,155 |  
|                                |  |                |       |  

49



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Rental expense for all leases aggregated approximately $477,000, $767,000,
and $664,000 for the years ended December 31, 2001, 2000, and 1999,
respectively.



|11. |  | Segments of an Enterprise and Related Information
|--- |  | -------------------------------------------------

The Company has one operating segment, the sale of semiconductor devices.
The President has been identified as the Chief Operating Decision Maker (CODM)
because he has final authority over resource allocation decisions and
performance assessment. The CODM does not receive discrete financial
information about individual components of the Companys business.

Revenues by geographic region based on customer location were as follows:

|          |                           |   |                          |        |      |   |        |        |  |   |        |        | 
|--------- | ------------------------- | - | ------------------------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|          |                           |   | Years Ended December 31,
|          |                           |   |                         
|          |                           |   | 2001                     |        | 2000 |   | 1999  
|          |                           |   |                          |        |      |   |       
|          |                           |   | (in thousands)          
|Revenues: |                           |   |                          |        |      |   |        |        |  |   |        |       
|          | North America             |   | $                        | 24,864 |      |   | $      | 39,658 |  |   | $      | 26,527 | 
|          | France                    |   |                          | 6,373  |      |   |        | 7,232  |  |   |        | 3,945  | 
|          | Europe  excluding France |   |                          | 5,092  |      |   |        | 9,858  |  |   |        | 5,676  | 
|          | Asia                      |   |                          | 7,799  |      |   |        | 8,603  |  |   |        | 4,551  | 
|          |                           |   |                          |        |      |   |        |        |  |   |        |       
|Total     |                           | $ | 44,128                   |        |      | $ | 65,351 |        |  | $ | 40,699 |       
|          |                           |   |                          |        |      |   |        |        |  |   |        |       

Sales to the following distributors accounted for 10% or more of net
revenues:

|                    |  |      |    |      |  |      |    |   |  |  |    |  
|------------------- |  | ---- | -- | ---- |  | ---- | -- | - |  |  | -- | -
|                    |  | 2001 |    | 2000 |  | 1999
|                    |  |      |    |      |  |     
|A2M                 |  |      | 14 | %    |  |      | 11 | % |  |  | 10 | %
|Unique Technologies |  |      | 11 | %    |  |      | 25 | % |  |  | 25 | %

The Company terminated its relationship with Unique Technologies, its U.S.
distributor, in March 2001.

Sales to the following end customers, either directly or through the
Companys distributors, accounted for 10% or more of net revenues:

|          |  |      |    |      |  |      |    |   |  |  |    |  
|--------- |  | ---- | -- | ---- |  | ---- | -- | - |  |  | -- | -
|          |  | 2001 |    | 2000 |  | 1999
|          |  |      |    |      |  |     
|Prediwave |  |      | 18 | %    |  |      |   |   |  |  |   |  
|IBM       |  |      | 14 | %    |  |      | 11 | % |  |  | 11 | %
|Cisco     |  |      | 11 | %    |  |      | 17 | % |  |  | 12 | %



|11. |  | Debt Repayment
|--- |  | --------------

On October 25, 2000, the Company signed a promissory note to borrow $28.5
million in connection with its purchase of a facility. The loan was
collaterized by cash, short-term and long-term investments of approximately
$33.1 million, which were classified as restricted cash at December 31, 2000.
The interest rate on the loan was the LIBOR rate plus 0.45% (7.14% at December
31, 2000). In August 2001, the Company repaid all amounts owed under the loan,
an aggregate amount of $28.5 million. The Company liquidated short-term and
long-term securities in order to repay the loan.



|12. |  | Related Party Transactions
|--- |  | --------------------------

The Company and a customer are related parties because the chairman of the
Companys Board of Directors also serves on the customers Board of Directors.
For the years ended December 31, 2001, 2000, and

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1999, net revenues from sales to this customer, which were transacted at
arms length prices, were approximately $746,000, $994,000, and $896,000,
respectively.



|13. |  | Quarterly Summaries
|--- |  | -------------------

(In thousands, except per share amounts, unaudited)

|                                    |  |                    |        |              |  |              |        |              |  |   |        |   |  |   |        |  
|----------------------------------- |  | ------------------ | ------ | ------------ |  | ------------ | ------ | ------------ |  | - | ------ | - |  | - | ------ | -
|                                    |  | Three Months Ended
|                                    |  |                   
|                                    |  | Mar 31, 2001       |        | Jun 30, 2001 |  | Sep 30, 2001 |        | Dec 31, 2001
|                                    |  |                    |        |              |  |              |        |             
|Net revenues                        |  | $                  | 12,429 |              |  | $            | 9,463  |              |  | $ | 10,513 |   |  | $ | 11,723 |  
|Gross profit                        |  |                    | 8,365  |              |  |              | 5,071  |              |  |   | 6,846  |   |  |   | 8,239  |  
|Net income (loss)                   |  |                    | (1,467 | )            |  |              | (3,381 | )            |  |   | (1,132 | ) |  |   | (557   | )
|Net income (loss) per basic share   |  | $                  | (0.06  | )            |  | $            | (0.15  | )            |  | $ | (0.05  | ) |  | $ | (0.02  | )
|Net income (loss) per diluted
share |  | $                  | (0.06  | )            |  | $            | (0.15  | )            |  | $ | (0.05  | ) |  | $ | (0.02  | )

|                                    |  |                    |        |              |  |              |         |              |  |   |        |  |  |   |        | 
|----------------------------------- |  | ------------------ | ------ | ------------ |  | ------------ | ------- | ------------ |  | - | ------ |  |  | - | ------ | 
|                                    |  | Three Months ended
|                                    |  |                   
|                                    |  | Mar 31, 2000       |        | Jun 30, 2000 |  | Sep 30, 2000 |         | Dec 31, 2000
|                                    |  |                    |        |              |  |              |         |             
|Net revenues                        |  | $                  | 14,542 |              |  | $            | 16,090  |              |  | $ | 18,409 |  |  | $ | 16,310 | 
|Gross profit                        |  |                    | 10,122 |              |  |              | 11,538  |              |  |   | 13,163 |  |  |   | 11,160 | 
|Net income (loss)                   |  |                    | 3,375  |              |  |              | (12,732 | )            |  |   | 1,980  |  |  |   | 335    | 
|Net income (loss) per basic share   |  | $                  | 0.16   |              |  | $            | (0.57   | )            |  | $ | 0.09   |  |  | $ | 0.01   | 
|Net income (loss) per diluted
share |  | $                  | 0.15   |              |  | $            | (0.57   | )            |  | $ | 0.08   |  |  | $ | 0.01   | 

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS(IN THOUSANDS)

|                                                             |  |            |     |            |  |               |     |            |  |   |      |   |  |   |     | 
|------------------------------------------------------------ |  | ---------- | --- | ---------- |  | ------------- | --- | ---------- |  | - | ---- | - |  | - | --- | 
|                                                             |  |            |     |            |  | ADDITIONS     |     | DEDUCTIONS |  |   |      |  
|                                                             |  | BALANCE AT |     | CHARGED TO |  | AMOUNTS       |     | BALANCE   
|                                                             |  | BEGINNING  |     | COSTS AND  |  | RECOVERED     |     | AT END OF 
|                                                             |  | OF PERIOD  |     | EXPENSES   |  | (WRITTEN OFF) |     | PERIOD    
|                                                             |  |            |     |            |  |               |     |           
|Year
ended December 31, 2001
Allowance for doubtful accounts |  | $          | 318 |            |  | $             | 49  |            |  | $ | (165 | ) |  | $ | 202 | 
|Year ended December 31, 2000
Allowance for doubtful accounts |  | $          | 240 |            |  | $             | 150 |            |  | $ | (72  | ) |  | $ | 318 | 
|Year ended December 31, 1999
Allowance for doubtful accounts |  | $          | 173 |            |  | $             | 70  |            |  | $ | (3   | ) |  | $ | 240 | 

51



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SIGNATURES

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

|               |                                           |                       
|-------------- | ----------------------------------------- | ----------------------
|March 13, 2002 | PLX Technology, Inc.                     
|              
|               | by:                                       | /s/ Michael J. Salameh
|               |                                          
|               | Name: Michael J. Salameh
Title: President

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael J. Salameh and Rafael Torres,
and each of them, his attorneys-in-fact, each with the power of substitution,
for him in any and all capacities, to sign any amendments to this Report on
Form 10-K and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.

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

|                                           |  |                                                                                      |  |               
|------------------------------------------ |  | ------------------------------------------------------------------------------------ |  | --------------
|Name and Signature                         |  | Title(s)                                                                             |  | Date          
|                                           |  |                                                                                      |  |               
|                                          
|/s/ Michael J. Salameh

Michael J. Salameh |  | President and Director
(Principal Executive Officer)                                 |  | March 13, 2002
|                                          
|/s/ Rafael Torres
Rafael Torres            |  | Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer) |  | March 13, 2002
|                                          
|/s/ D. James Guzy
D. James Guzy            |  | Director and Chairman of the Board of Directors                                      |  | March 13, 2002
|                                          
|Eugene Flath                               |  | Director                                                                             |  | March 13, 2002
|                                          
|/s/ Timothy Draper
Timothy Draper          |  | Director                                                                             |  | March 13, 2002
|                                          
|/s/ Young K. Sohn
Young K. Sohn            |  | Director                                                                             |  | March 13, 2002
|                                          
|John H. Hart                               |  | Director                                                                             |  | March 13, 2002

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EXHIBIT INDEX

|             |  |                                                                                                                                                       |  |  |  | 
|------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit      |  |                                                                                                                                                       |  |  |  | 
|Number       |  | Description                                                                                                                                           |  |  |  | 
|             |  |                                                                                                                                                       |  |  |  | 
|2.1 (2)      |  | Agreement and Plan of Merger dated April 19, 2000 by and among PLX
Technology, Inc., OKW Technology Acquisition Corporation and
Sebring Systems, Inc.
|            
|3.1 (1)      |  | Amended and Restated Certificate of Incorporation of the Registrant.                                                                                 
|            
|3.2 (1)      |  | Registrants Amended and Restated Bylaws.                                                                                                            
|            
|4.1          |  | Reference is made to Exhibit 3.1.                                                                                                                    
|            
|10.1 (1)     |  | Form of Indemnification Agreement between PLX and each of its
Officers and Directors.                                                                
|            
|10.2 (1) (4) |  | 1998 Stock Incentive Plan.                                                                                                                           
|            
|10.3 (1) (4) |  | 1999 Stock Incentive Plan.                                                                                                                           
|            
|10.4 (1)     |  | Lease Agreement dated October 17, 1997 between The Arrillaga
Foundation and The Perry Foundation as Landlords and PLX as Tenant,
as amended.         
|            
|10.5 (3)     |  | PLX Technology, Inc. Stock Restriction, Information Rights and
Registration Rights Agreement dated April 19, 1989.                                   
|            
|10.6 (5)     |  | PLX Technology, Inc. Stock Restriction, Information Rights and
Registration Rights Agreement dated July 3, 1991.                                     
|            
|10.7 (6)     |  | Loan Agreement dated October 25, 2000 between Wells Capital
Management and PLX.                                                                      
|            
|21.1         |  | Subsidiaries of the Company.                                                                                                                         
|            
|23.1         |  | Consent of Ernst & Young LLP, Independent Auditors.                                                                                                  



---

|(1) |  | Incorporated by reference to the same numbered exhibit previously filed with the Companys Registration
Statement on Form S-1 (Registration No. 333-71795).
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Incorporated by reference to Exhibit 2.1 to Form 8-K as filed on June 2, 2000.                                                                             
|   
|   
|   
|   
|(3) |  | Incorporated by reference to Exhibit 10.9 to the Companys Registration Statement on Form S-1 (Registration
No. 333-71795).                                
|   
|   
|   
|   
|(4) |  | Management contract or compensatory plan or arrangement.                                                                                                   
|   
|   
|   
|   
|(5) |  | Incorporated by reference to Exhibit 10.10 to the Companys Registration Statement on Form S-1 (Registration
No. 333-71795).                               
|   
|   
|   
|   
|(6) |  | Incorporated by reference to Exhibit 10.11 to the Companys quarterly report on Form 10-Q for the quarter
ended September 30, 2000.