UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

For the quarterly period ended November 30, 1996

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

For the transition period from _________________ to ______________

Commission File No.:  0-25592

                             PERIPHONICS CORPORATION
             (exact name of registrant as specified in its charter)

            Delaware                                    11-2699509
(State or other jurisdiction of                      (I.R.S. Employer
 incorporation or organization)                    Identification No.)

             4000 Veterans Memorial Highway, Bohemia, New York 11716
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (516) 468-9000

     Check 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(s),  and (2) has been subject to such filing  requirements
for the past 90 days. Yes [X] No [ ]

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date:  January 10, 1997.

      Class of                                              Number of
   Common Equity                                            Shares

   Common Stock,                                           13,645,288
   par value $.01



<PAGE>




                             PERIPHONICS CORPORATION
                                AND SUBSIDIARIES


                                      INDEX

                                                                   Page No.

Part I. Financial Information

 Item 1. Financial Statements

         Consolidated Balance Sheets - November 30, 1996              3
          and May 31, 1996

         Consolidated Statements of Earnings - Six Months             4
          Ended November 30, 1996 and November 30, 1995

         Consolidated Statements of Earnings - Three Months           5
          Ended November 30, 1996 and November 30, 1995

         Consolidated Statements of Cash Flows - Six Months           6
          Ended November 30, 1996 and November 30, 1995

         Notes to Consolidated Financial Statements                 7-8

 Item 2. Managements's Discussion and Analysis of Financial        9-13
         Condition and Results of Operations

Part II. Other Information                                        14-15

            Signatures                                               16



<PAGE>


                    PERIPHONICS CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)

<TABLE>
<CAPTION>

                                                                                    November 30, 1996          May 31, 1996
                                                                                       (Unaudited)               (Audited)
<S>                                                                                        <C>                      <C>   


ASSETS
CURRENT ASSETS:
  Cash and cash equivalents............................................                  $  16,479              $  18,664
  Short-term investments...............................................                      5,313                  8,603
  Accounts receivable, less allowance for doubtful accounts of
    $890 and $750 respectively . . . . . . . . . . ....................                     32,736                 23,829
  Inventories..........................................................                     12,150                 11,097
  Deferred income taxes................................................                      1,151                  1,261
  Prepaid expenses and other current assets............................                        938                    935
                                                                                         ---------              ---------
      TOTAL CURRENT ASSETS.............................................                     68,767                 64,389

PROPERTY, PLANT AND EQUIPMENT, net.....................................                     12,775                 10,426
OTHER ASSETS...........................................................                        283                    288
                                                                                         ---------              ---------
                                                                                         $  81,825              $  75,103
                                                                                         =========              =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable.....................................................                  $   6,073              $   4,247
  Accrued expenses and other current liabilities.......................                     11,292                 11,666
                                                                                         ---------              ---------
      TOTAL CURRENT LIABILITIES........................................                     17,365                 15,913
DEFERRED INCOME TAXES..................................................                        140                    409
                                                                                         ---------              ---------
                                                                                            17,505                 16,322
                                                                                         ---------              ---------
STOCKHOLDERS' EQUITY
 Preferred Stock, par value $.01 per share,  1,000,000  authorized,  none issued
 Common stock, par value $.01 per share, 30,000,000 shares authorized
   13,627,132 shares outstanding as of November 30, 1996
   13,598,164 shares outstanding as of May 31, 1996  . . . . ..........                        136                    136
   Additional Paid-in Capital..........................................                     41,955                 41,770
   Retained Earnings...................................................                     64,320                 58,781
                                                                                         ---------              ---------
                                                                                         $  81,825              $  75,103
                                                                                         =========              =========
</TABLE>

                                        3



<PAGE>


                    PERIPHONICS CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                                 Six Months Ended
                                                                                                    November 30,
                                                                                               1996             1995
                                                                                                    (Unaudited)
<S>                                                                                             <C>              <C>


System sales........................................................................        $ 40,449         $ 31,422
Service revenues....................................................................          11,493            7,669
                                                                                            --------         --------
  Total revenues....................................................................          51,942           39,091
                                                                                            --------         --------
Cost of system sales................................................................          18,929           14,595
Cost of service revenues............................................................           6,951            4,934
                                                                                            --------         --------
  Cost of revenues..................................................................          25,880           19,529
                                                                                            --------         --------
Gross profit........................................................................          26,062           19,562
                                                                                            --------         --------
Operating expenses:
  Selling, general and administrative...............................................          13,279           10,339
  Research and development..........................................................           5,035            3,466
                                                                                            --------         --------
                                                                                              18,314           13,805
                                                                                            --------         --------
Earnings from operations............................................................           7,748            5,757
                                                                                            --------         --------
Other income (expense):
  Interest and other income.........................................................             701              293
  Foreign exchange gain (loss) .....................................................             328            (132)
                                                                                            --------         --------
                                                                                               1,029              161
                                                                                            --------         --------
Earnings before provision for income taxes..........................................           8,777            5,918
Provision for income taxes..........................................................           3,423            2,426
                                                                                            --------         --------
Net earnings . . . . . . . . . . . . . .............................................        $  5,354         $  3,492
                                                                                            ========         =========
Net earnings per common and common equivalent share. . . . .........................        $   0.38         $   0.27
                                                                                            ========         ========
Weighted average number of common and common equivalent shares......................          13,951           12,764
                                                                                            ========         ========

</TABLE>


                                        4

<PAGE>



                    PERIPHONICS CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>

 
                                                                                                 Three Months Ended
                                                                                                    November 30,
                                                                                               1996              1995
                                                                                                     (Unaudited)
<S>                                                                                             <C>               <C>


System sales........................................................................        $ 22,694         $ 17,535
Service revenues....................................................................           5,989            4,012
                                                                                            --------
  Total revenues....................................................................          28,683           21,547
                                                                                            --------         --------
Cost of system sales................................................................          10,907            8,187
Cost of service revenues............................................................           3,647            2,667
                                                                                            --------         --------
  Cost of revenues..................................................................          14,554           10,854
                                                                                            --------         --------
Gross profit........................................................................          14,129           10,693
                                                                                            --------         --------
Operating expenses:
  Selling, general and administrative...............................................           7,114            5,474
  Research and development..........................................................           2,615            1,854
                                                                                            --------         --------
                                                                                               9,729            7,328
                                                                                            --------         --------
Earnings from operations............................................................           4,400            3,365
                                                                                            --------         --------
Other income (expense):
  Interest and other income.........................................................             372              102
  Foreign exchange gain (loss) .....................................................             210              (7)
                                                                                            --------         --------
                                                                                                 582               95
                                                                                            --------         --------
Earnings before provision for income taxes..........................................           4,982            3,460
Provision for income taxes..........................................................           1,943            1,418
                                                                                            --------         --------
Net earnings . . . . . . . . . . . . . .............................................        $  3,039         $  2,042
                                                                                            ========         ========
Net earnings per common and common equivalent share. . . . .........................        $   0.22         $   0.16
                                                                                            ========         ========
Weighted average number of common and common equivalent shares......................          13,956           12,838
                                                                                            ========         ========

</TABLE>


                                        5



<PAGE>


                    PERIPHONICS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                                      Six Months Ended
                                                                                                         November 30,
                                                                                                    1996           1995
                                                                                                        (Unaudited)
<S>                                                                                                  <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net earnings.........................................................................        $   5,354      $   3,492
   Adjustments to reconcile net earnings to net cash and cash equivalents
     used in operating activities:
     Depreciation and amortization......................................................            1,679          1,147
     Deferred income taxes..............................................................            (159)           (12)
     Changes in operating assets and liabilities:
        Increase in accounts receivable . . . . . ......................................          (8,907)        (1,415)
        Increase in inventories.........................................................          (1,053)        (5,249)
        (Increase) Decrease in prepaid expenses and other current assets................              (3)           288
        Decrease (Increase) in other assets.............................................               5            (86)
        Increase in accounts payable and accrued expenses and other
           current liabilities..........................................................           1,452          1,640
                                                                                                --------       --------
           Net cash and cash equivalents used in operating activities .......... . . . .          (1,632)          (195)
                                                                                                ---------      --------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property, plant and equipment.........................................          (4,028)        (1,842)
     Proceeds from sale of short-term investments.......................................           9,573            ---
     Purchases of short-term investments................................................          (6,283)           ---
                                                                                                --------       --------
           Net cash and cash equivalents used in investing activities...................            (738)        (1,842)
                                                                                                --------       --------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from stock options exercised...........................................                185            156
     Proceeds from Secondary Public Offering of Common Stock..........................               ---         14,131
                                                                                                --------       --------
           Net cash and cash equivalents provided by financing activities...............             185         14,287
                                                                                                --------       --------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS....................................          (2,185)        12,250

CASH AND CASH EQUIVALENTS, beginning of period..........................................          18,664          8,753
                                                                                                --------       --------
CASH AND CASH EQUIVALENTS, end of period................................................        $ 16,479       $ 21,003
                                                                                                ========       ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the period for:
  Interest .............................................................................             ---            ---
  Income Taxes..........................................................................        $  2,534       $  1,654


</TABLE>


                                        6


<PAGE>



                    PERIPHONICS CORPORATION AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF PRESENTATION

     In the opinion of Periphonics Corporation and subsidiaries (the "Company"),
the  accompanying   unaudited  consolidated  financial  statements  contain  all
adjustments  (consisting  only of normal  recurring  adjustments)  necessary  to
present fairly the financial position,  the results of operations,  and the cash
flows at November 30, 1996 and for all periods presented.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting  principles
have been omitted. These financial statements should be read in conjunction with
the  Consolidated  Financial  Statements and Notes included in the Company's May
31, 1996 Annual  Report on Form 10-K as filed with the  Securities  and Exchange
Commission.

     The results of operations  for the three and six months ended  November 30,
1996 and 1995 are not  necessarily  indicative of the results to be expected for
the full year.  Dollar  amounts  are  presented  in  thousands  except per share
amounts.

 2.      STOCK SPLIT AND CHANGES IN AUTHORIZED CAPITAL

     On September 20, 1996, the Board of Directors  approved a two-for-one split
of its  common  stock  effected  as a stock  dividend  on  October  31,  1996 to
shareholders  of record at the close of  business  on October  15,  1996.  After
giving  effect  to the  stock  split,  the  shares  outstanding  increased  from
approximately 6,812,566 to approximately 13,625,132.


     All  historical  share and per share  data  appearing  in the  consolidated
financial statements and notes thereto have been retroactively  adjusted for the
stock split.

     Also, on September 20, 1996, the Board of Directors determined it advisable
to amend the Company's  Certificate of  Incorporation  to increase the number of
authorized shares of Common Stock from 15,000,000  shares to 30,000,000  shares.
The proposed amendment to the Amended and Restated  Certificate of Incorporation
was submitted for shareholder  approval.  Shareholder  approval was announced on
November 8, 1996 at the 1996 Annual Meeting of Stockholders.


3.       INVENTORIES

     Inventories consist of the following:

                         November 30, 1996             May 31, 1996

    Raw materials             $ 7,723                    $ 6,218
    Work-in-process             4,427                      4,879
                              -------                    -------
                              $12,150                    $11,097
                              =======                    =======



                                        7


<PAGE>



4.       INITIAL PUBLIC OFFERING

     On March 30,  1995,  the Company  consummated  an initial  public  offering
("IPO") of 5,500,000  shares of common  stock at a price of $7.00 per share.  Of
the shares offered, 4,300,000 were sold by the Company and 1,200,000 shares were
sold by shareholders of the Company.

     In April 1995, the  underwriters  of the IPO exercised their over allotment
option to purchase an additional  825,000 shares from the selling  shareholders.
The Company did not receive any of the  proceeds  from the  exercise of the over
allotment option.

     The net  proceeds to the Company from the sale of the  4,300,000  shares of
common stock  offered was  approximately  $27.1  million  (after  deducting  the
underwriting  discount and offering  expenses  payable by the Company).  The net
proceeds to the Company were used to repay  indebtedness of $14.2 million and to
redeem  1,500,000  shares  of  its  common  stock  from  Exxon  Corporation  for
approximately  $8.8  million  (plus the payment to Exxon of  approximately  $0.2
million of  accumulated  dividends  on the Series A  Preferred  Stock  which was
converted   into  such  common   stock).   The  balance  of  the  net  proceeds,
approximately $3.9 million,  was used for general corporate purposes,  including
working capital.

4.       SECONDARY PUBLIC OFFERING

     On November 17, 1995, the Company  consummated a secondary  public offering
of  2,510,000  shares of common  stock at a price of $12.75  per  share.  Of the
shares  offered,  1,200,000  were sold by the Company and 1,310,000 were sold by
certain stockholders of the Company.

     Also in November 1995, the underwriters of the secondary offering exercised
their  over-allotment  option to purchase an additional  376,500 shares from the
selling  stockholders.  The Company did not receive any of the proceeds from the
exercise of the over-allotment option.

     The net  proceeds to the Company from the sale of the  1,200,000  shares of
Common Stock  offered was  approximately  $14.0  million  (after  deducting  the
underwriting  discount and offering  expenses  payable by the Company).  The net
proceeds to the Company are to be used for general corporate purposes, including
working capital,  facilities expansion and possible  acquisitions of businesses,
products or technologies complementary to the Company's business.


                                        8


<PAGE>


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


Results of Operations

Six Months Ended November 30, 1996 compared to Six Months Ended
November 30, 1995

     Total Revenues.  Total revenues  increased by 32.9% to $51.9 million in the
first six months of fiscal  1997 from  $39.1  million in the first six months of
fiscal 1996.  System sales  increased by 28.7% to $40.4 million in the first six
months of fiscal 1997 from $31.4 million in the first six months of fiscal 1996.
The  increase  in system  sales was  primarily  due to an increase in unit sales
volume.  Service  revenues  increased by 49.9% to $11.5 million in the first six
months of fiscal 1997 from $7.7  million in the first six months of fiscal 1996,
primarily  due to the  addition of more units to the service  base as well as an
increase in installation revenues.

     Gross Profit.  The  Company's  gross profit  increased by $6.5 million,  or
33.2%,  to $26.1  million  in the first six  months  of fiscal  1997 from  $19.6
million in the first six months of fiscal 1996.  Gross profit as a percentage of
total  revenues  increased  to 50.2% in the first six months of fiscal 1997 from
50.0% in the first  six  months of fiscal  1996.  Gross  profit on system  sales
increased by $4.7 million, or 27.9%, to $21.5 million in the first six months of
fiscal 1997 from $16.8 million in the first six months of fiscal 1996. The gross
margin on system sales decreased to 53.2% in the first six months of fiscal 1997
from 53.6% in the first six months of fiscal 1996. The Company  attributes  this
decrease primarily to the product mix during the current six month period. Gross
profit on service revenues increased by $1.8 million,  or 66.1%, to $4.5 million
in the first six months of fiscal 1997 from $2.7 million in the first six months
of fiscal 1996. Gross margin on service revenues increased to 39.5% in the first
six months of fiscal  1997 from  35.7% in the first six  months of fiscal  1996.
This  increase was  attributable  to growth in the service  base,  as well as an
increase in installation revenues.

     Selling,  General  and  Administrative   Expenses.   Selling,  General  and
Administrative  ("SG&A")  expenses  were $13.3 million and $10.3 million for the
first six months of fiscal  1997 and 1996,  respectively,  or 25.6% and 26.4% of
total revenues, respectively. The increase in the dollar amount of SG&A expenses
was primarily due to both the continued  expansion of the Company's sales effort
in  domestic  and  international  markets  and to  increases  in  SG&A  expenses
necessary to support the increased level of sales. SG&A expenses  decreased as a
percentage of total  revenues due to the Company's  ability to leverage  certain
fixed expenses over its growing revenue base.

     Research  and  Development  Expenses.   Research  and  Development  ("R&D")
expenses  were $5.0  million and $3.5 million for the first six months of fiscal
1997 and 1996, respectively,  or 9.7% and 8.9% of total revenues,  respectively.
The  increase  in the  dollar  amount of R&D  expenses  reflects  the  continued
expansion  of the  Company's  R&D staff which  increased  to 114 from 88 between
November 30, 1995 and November 30, 1996.  R&D expenses are charged to operations
as  incurred,  and no  software  development  costs have been  capitalized.  The
Company  expects the dollar amount of R&D  expenditures to continue to increase,
although such  expenses as a percentage of total  revenues will vary from period
to period.


                                        9

<PAGE>

     Other Income  (Expense).  Other income was $1.0 million and 0.2 million for
the six months ended November 30, 1996 and 1995 respectively. Interest and other
income  increased to $0.7 million in the six months ended November 30, 1996 from
$0.3  million  in the six  months  ended  November  30,  1995  primarily  due to
increased cash balances. The Company had a foreign exchange gain of $0.3 million
in the six months ended November 30, 1996 compared to a foreign exchange loss of
$0.1  million for the six months  ended  November  30,  1995.  To the extent the
Company is unable to match revenue received in foreign  currencies with expenses
paid in the same  currency,  it is  exposed  to  fluctuations  in  international
currency transactions.

     Income  Taxes.   Variations  in  the  customary  relationship  between  the
provision for income taxes and the statutory  income tax rate  primarily  result
from foreign  subsidiaries'  net operating  losses which did not produce current
tax benefits,  the utilization of research and development tax credits and state
and local income taxes. The Company's  effective income tax rates were 39.0% and
41.0% for the six months ended November 30, 1996 and 1995, respectively.

     Foreign   Operations.   The  Company's  European   subsidiary  operated  at
approximately  a $0.6 million loss during the six months ended November 30, 1996
as compared to a loss of $0.4 million  during the six months ended  November 30,
1995.  The  increase  in such losses was  attributed  to a decrease in the gross
margin and an  increase  in the dollar  amount of SG&A  expenses  to support the
expansion of the sales and marketing  effort  partially  offset by a decrease in
the exchange loss in the six months ended November 30, 1996.  Transfers from the
Company's North American operations to its European subsidiary are accounted for
at cost,  plus a  reasonable  profit.  The cost of  revenues  for the  Company's
European  subsidiary  includes  approximately  $0.2  million and $0.2 million of
intercompany  gross profit earned by the Company's North American  operations on
system sales by the European  subsidiary to third parties  during the six months
ended November 30, 1996 and 1996, respectively.


Three Months Ended November 30, 1996 compared to Three Months ended
November 30, 1995

     Total Revenues.  Total revenues  increased by 33.1% to $28.7 million in the
three  months  ended  November  30, 1996 from $21.5  million in the three months
ended November 30, 1995. System sales increased by 29.4% to $22.7 million in the
three  months  ended  November  30, 1996 from $17.5  million in the three months
ended  November 30, 1995.  The increase in system sales was  primarily due to an
increase  in unit sales  volume.  Service  revenues  increased  by 49.3% to $6.0
million in the three  months  ended  November  30, 1996 from $4.0 million in the
three months ended  November  30,  1995,  primarily  due to the addition of more
units to the service base as well as an increase in installation revenues.

     Gross Profit.  The  Company's  gross profit  increased by $3.4 million,  or
32.1%,  to $14.1 million in the three months ended  November 30, 1996 from $10.7
million  in the  three  months  ended  November  30,  1995.  Gross  profit  as a
percentage  of total  revenues  decreased  to 49.3% in the  three  months  ended
November 30, 1996 from 49.6% in the three months ended November 30, 1995.  Gross
profit on system sales increased by $2.4 million,  or 26.1%, to $11.8 million in
the three months  ended  November 30, 1996 from $9.4 million in the three months
ended November 30, 1995. The gross margin on system sales  decreased to 51.9% in
the three  months  ended  November 30, 1996 from 53.3% in the three months ended
November 30, 1995.

                                       10

<PAGE>


     The Company  attributes  this decrease  primarily to the product mix during
the current three month period.  Gross profit on service  revenues  increased by
$1.0 million,  or 74.1 % to $2.3 million in the three months ended  November 30,
1996 from $1.3 million in the three months ended November 30, 1995. Gross margin
on service  revenues  increased to 39.1% in the three months ended  November 30,
1996 from 33.5% in the three months ended  November 30, 1995.  This increase was
attributable  to higher  installation  revenues  and an  increase in the service
base.

     Selling,  General  and  Administrative   Expenses.   Selling,  General  and
Administrative  ("SG&A")  expenses  were $7.1  million and $5.5  million for the
three months ended November 30, 1996 and 1995, respectively,  or 24.8% and 25.4%
of total  revenues,  respectively.  The  increase  in the dollar  amount of SG&A
expenses was  primarily  due to both the  continued  expansion of the  Company's
sales  effort in domestic  and  international  markets and to  increases in SG&A
expenses  necessary  to support  the  increased  level of sales.  SG&A  expenses
decreased as a percentage  of total  revenues  due to the  Company's  ability to
leverage certain fixed expenses over its growing revenue base.

     Research  and  Development  Expenses.   Research  and  Development  ("R&D")
expenses were $2.6 million and $1.9 million for the three months ended  November
30,  1996  and  1995,  respectively,   or  9.1%  and  8.6%  of  total  revenues,
respectively.  The increase in the dollar  amount of R&D  expenses  reflects the
continued  expansion of the Company's  R&D staff which  increased to 114 from 88
between  November 30, 1995 and  November  30, 1996.  R&D expenses are charged to
operations as incurred, and no software development costs have been capitalized.
The  Company  expects  the dollar  amount of R&D  expenditures  to  continue  to
increase,  although such  expenses as a percentage  of total  revenues will vary
from period to period.

     Other  Income  (Expense).  Other  income was $0.6 and $0.1  million for the
three months ended November 30, 1996 and 1995  respectively.  Interest and other
income  increased to $0.4  million in the three  months ended  November 30, 1996
from $0.1 million in the three months ended  November 30, 1995  primarily due to
increased cash balances. The Company had a foreign exchange gain of $0.2 million
for the three  months  ended  November  30,  1996.  To the extent the Company is
unable to match revenue received in foreign  currencies with expense paid in the
same  currency,  it  is  exposed  to  fluctuations  on  international   currency
transactions.

     Income  Taxes.   Variations  in  the  customary  relationship  between  the
provision for income taxes and the statutory  federal  income tax rate primarily
result from foreign  subsidiaries'  net  operating  losses which did not produce
current tax benefits,  the  utilization of research and  development tax credits
and state and local income taxes. The Company's  effective income tax rates were
39.0%  and  41.0%  for the  three  months  ended  November  30,  1996 and  1995,
respectively.

                                       11

<PAGE>


Liquidity and Capital Resources

     The Company's  principal cash  requirement to date has been to fund working
capital and  capital  expenditures  in order to support the growth of  revenues.
Historically,  the Company has primarily financed this requirement  through cash
flow from operations, bank borrowings and two public offerings for the Company's
common stock in 1995,  which  resulted in an  aggregate of $41.1  million of net
proceeds to the Company. Cash flow from operations was $(1.6) million and $(0.2)
million for the six months ended  November 30, 1996 and 1995,  respectively.  At
November 30, 1996, the Company had working  capital of $51.4 million,  including
$21.8  million of cash and cash  equivalents  and  short-term  investments.  The
Company  expects its working capital needs to increase along with future revenue
growth.

     At November 30, 1996, current assets and current  liabilities  increased by
$4.4 million and $1.5 million,  respectively,  compared to May 31, 1996. Current
assets increased  principally as a result of an increase in accounts receivable.
During the  period  ended  November  30,  1996,  current  liabilities  increased
primarily due to an increase in accounts  payable due to higher operating levels
offset, in part, by a decrease in accrued expenses  resulting from the timing of
payments.

     The average days sales outstanding (calculated by dividing the net accounts
receivable  at the balance  sheet date for each period by the average  sales per
day during the  quarter  immediately  preceding  the  balance  sheet  date) were
approximately  104  days and 83 days at  November  30,  1996  and May 31,  1996,
respectively.  The Company  attributes  the increase in days' sales  outstanding
primarily to increased sales to government  agencies which generally have longer
payment cycles. To the extent the Company's sales mix continues to shift towards
government  agencies,  the  average  day's  sales  outstanding  is  expected  to
increase.

     The Company's  inventory as of May 31, 1996 and November 30, 1996 was $11.1
million and $12.1 million  respectively.  The increase in inventory from May 31,
1996 to November  30,  1996  reflects  an  investment  by the Company to support
future sales growth.

                                       12

<PAGE>


     In January 1995,  the Company  increased its line of credit to $8.0 million
with interest  charged at the prime rate plus 0.25%.  The line of credit expires
on November 30, 1997.  As of November  30, 1996,  the Company had no  borrowings
under this line of credit. The Company is presently  negotiating to increase and
restructure  the line of credit to a revolving line of credit,  with a term loan
option.

     The  Company  made  capital  expenditures  totaling  $4.0  million and $1.8
million  during the six months ended  November 30, 1996 and 1995,  respectively.
The Company  expects that its capital  expenditures  for  facilities  expansion,
possible technology licenses and acquisitions, and additional computer equipment
utilized  for  development  and  testing  of the  Company's  products,  will  be
substantially greater than its capital expenditures in the prior several years.

     The  Company  believes  that its  existing  sources of working  capital and
borrowings  available  under its revolving  line of credit will be sufficient to
fund its operations and capital Expenditures for at least 12 months.

     Foreign  Currency  Transaction  The Company  does not  currently  engage in
international  currency  hedging  transactions to mitigate its foreign  currency
exposure.  Included in the foreign  exchange gain (loss) are unrealized  foreign
exchange  gains and losses  resulting  from the  currency  remeasurement  of the
financial statements of the Company's foreign subsidiaries into U.S. dollars. To
the extent the Company is unable to match revenue received in foreign currencies
with expenses  paid in the same  currency,  it is exposed to possible  losses on
international currency transactions.

Inflation

     In the opinion of  management,  inflation has not had a material  effect on
the operations of the Company.

Recent Accounting Pronouncements

     In October 1995, the Financial  Accounting  Standards Board ("FASB") issued
Statement No. 123,  "Accounting  for  Stock-Based  Compensation,"  which must be
adopted by the Company in fiscal  1997.  The Company has chosen not to implement
the fair value based  accounting  method for  employee  stock  options,  but has
elected to  disclose,  commencing  with its fiscal 1997 Annual  Report,  the pro
forma net earnings and net earnings per share as if such method had been used to
account for stock-based compensation costs as described in Statement No. 123.

Certain Factors That May Affect Future Results

     From time to time, information provided by the Company,  statements made by
its employees or  information  included in its filings with the  Securities  and
Exchange Commission  (including this Form 10-Q) may contain statements which are
so-called   "forward-looking   statements"  and  not  historical  facts.   These
forward-looking  statements  are made pursuant to the safe harbor  provisions of
the Private  Securities  Litigation  Reform Act of 1995.  The  Company's  actual
future results may differ significantly from those stated in any forward-looking
statements.   Forward-looking   statements   involve   a  number  of  risks  and
uncertainties,  including,  but not limited to, product demand,  pricing, market
acceptance,  litigation,  risks in product and technology  development and other
risk factors detailed from time to time in the Company's Securities and Exchange
Commission  reports  including  this  Form  10-Q for the  fiscal  quarter  ended
November 30, 1996 and its Form 10-K for the fiscal year ended May 31, 1996.

                                       13


<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

         None

Item 2. Changes in Securities

     The Company declared a 2-for-1 stock split in the form of a stock dividend,
which was paid on October 31, 1996 to holders of record on October 15, 1996.

Item 3. Defaults Upon Senior Securities

         None

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

     (a) On November 8, 1996 the Company held its Annual Meeting of Stockholders
(the "Meeting").

     (b) At the Meeting,  the Stockholders of the Company elected Edward H. Blum
and Richard A. Daniels as Class II directors.

     (c) In addition to electing  directors at the Meeting,  the Stockholders of
the  Company  amended  the  Company's   Amended  and  Restated   Certificate  of
incorporation to increase the number of authorized shares from 16,000,000 shares
consisting  of  15,000,000  shares  of  common  stock  and  1,000,000  shares of
preferred stock, to 31,000,000  shares consisting of 30,000,000 shares of common
stock and 1,000,000 shares of preferred stock.

     (d) At the Meeting,  the Stockholders of the Company approved the amendment
of the  Company's  1995  Stock  Option  Plan to  increase  the  number of shares
reserved for issuance thereunder from 800,000 to 1,200,000.

     (e) The Stockholders of the Company then ratified the selection of Deloitte
& Touche LLP as the  Company's  independent  auditors for the fiscal year ending
May 31,  1997.  The  following  sets forth the  results of voting on each matter
voted upon at the meeting:

     1. Election of Directors

                                     For              Against

         Edward H. Blum           4,817,065           37,450
  
         Richard A. Daniels       4,817,065           37,450


     2.  Amendment of the Company's Amended and Restated Certificate
         of Incorporation.

                                     For              Against

                                  4,672,605           79,200


                                       14


<PAGE>



     3. Amendment of the Company's 1995 Stock Option Plan.

                                     For              Against

                                  4,539,589           175,680

     4. Ratification of Deloitte & Touche LLP as the Company's independent
        auditor's for the fiscal year ending May 31, 1997.

                                     For              Against

                                  4,831,740            4,690

Item 5.  Other Information

         None

Item 6. Exhibits and Reports on Form 8-K

         (a)  Exhibits

              3   Certificate of Amendment of Amended and Restated Certificate
                  of Incorporation of the Company

             10   1995 Stock Option Plan, As Amended

             27   Financial Data Schedule

         (b)  Reports on Form 8-K

              None



                                       15



<PAGE>

                                   SIGNATURES

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


                                          PERIPHONICS CORPORATION
                                          Registrant



                                    By:   \s\ Peter J. Cohen
                                          -------------------------------- 
                                          Peter J. Cohen
                                          Chairman of the Board, President
                                          and Chief Executive Officer
                                          (Principal Operating Officer)


                                    By:   \s\ Kevin J. O'Brien
                                          --------------------------------
                                          Kevin J. O'Brien
                                          Vice President-Finance and
                                          Administration (Principal
                                          Accounting Officer), Secretary



Dated:  January 14, 1997




                                       16