<PAGE>

SECURITIES AND EXCHANGE COMMISSION  WASHINGTON, D.C. 20549


FORM 10-Q

(Mark one)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934 for the quarter ended December 31, 2000

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

Commission file number 0-19856

XIRCOM, INC.
2300 Corporate Center Drive
Thousand Oaks, California 91320
Telephone:  (805) 376-9300

CALIFORNIA  (State of incorporation)

95-4221884  (IRS Employer Identification No.)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X]  No [_]


There were 30,087,128 shares of the Registrant's $.001 par value Common Stock
outstanding as of February 2, 2001.

                                                                  1 XIRCOM, INC.
<PAGE>

Xircom, Inc.
TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                             Page in Form 10-Q
<S>      <C>                                                 <C>
PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         Condensed Consolidated Balance Sheets                               3

         Condensed Consolidated Statements of Operations                     4

         Condensed Consolidated Statements of Cash Flows                     5

         Notes to Condensed Consolidated Financial Statements              6-9

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS                    9-16

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
         ABOUT MARKET RISK                                               16-17

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS                                                  17

ITEM 2.  CHANGES IN SECURITIES                                              17

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                                    17

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                17

ITEM 5.  OTHER ITEMS                                                        17

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                17-19

SIGNATURES                                                                  19
</TABLE>

                                                                  2 XIRCOM, INC.
<PAGE>

Xircom, Inc.
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                     (Unaudited)
                                                                                     December 31          September 30
(In thousands)                                                                              2000                  2000
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                  <C>
Current assets:
     Cash and cash equivalents                                                          $ 78,672              $113,284
     Short-term investments                                                              195,793               195,205
     Accounts receivable, net                                                             48,841                53,203
     Income tax receivable                                                                 6,029                 2,377
     Inventories                                                                          35,104                24,483
     Deferred income taxes                                                                15,109                14,674
     Other current assets                                                                 13,360                 9,045
----------------------------------------------------------------------------------------------------------------------
Total current assets                                                                     392,908               412,271

Property and equipment, net                                                               81,858                74,734
Goodwill and other acquired intangibles, net                                              48,106                50,921
Other assets                                                                               6,532                 3,623
----------------------------------------------------------------------------------------------------------------------

Total assets                                                                            $529,404              $541,549
----------------------------------------------------------------------------------------------------------------------

Current liabilities:
     Accounts payable                                                                   $ 24,852              $ 34,014
     Accrued liabilities                                                                  36,054                39,442
----------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                                 60,906                73,456

Deferred income taxes                                                                     20,723                17,134

Shareholders' equity:
     Common stock                                                                             30                    30
     Paid-in capital                                                                     403,054               404,008
     Accumulated other comprehensive loss                                                   (848)               (1,078)
     Retained earnings                                                                    45,539                47,999
----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity                                                               447,775               450,959
----------------------------------------------------------------------------------------------------------------------

Total liabilities and shareholders' equity                                              $529,404              $541,549
----------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                                                  3 XIRCOM, INC.
<PAGE>

Xircom, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
(In thousands, except per share information)
Three Months Ended December 31                                                              2000                 1999
---------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>                  <C>
Net sales                                                                               $120,094             $124,111
Cost of sales                                                                             84,765               67,038
---------------------------------------------------------------------------------------------------------------------
Gross profit                                                                              35,329               57,073

Operating expenses:
 Research and development                                                                 11,027                7,569
 Sales and marketing                                                                      21,798               24,832
 General and administrative                                                                5,931                4,392
 Amortization of goodwill and other
  acquisition-related intangibles                                                          2,815                  608
 Acquisition-related non-recurring charges                                                     -                2,865
---------------------------------------------------------------------------------------------------------------------
     Total operating expenses                                                             41,571               40,266
---------------------------------------------------------------------------------------------------------------------
Operating income (loss)                                                                   (6,242)              16,807

Other income, net                                                                          3,719                  625
---------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes                                                         (2,523)              17,432

Income tax provision (benefit)                                                               (63)               4,707
---------------------------------------------------------------------------------------------------------------------

Net income (loss)                                                                       $ (2,460)            $ 12,725
---------------------------------------------------------------------------------------------------------------------

Basic earnings (loss) per share                                                            $(.08)                $.49
Diluted earnings (loss) per share                                                          $(.08)                $.46
---------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                                                  4 XIRCOM, INC.
<PAGE>

Xircom, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
(In thousands)
Three Months Ended December 31                                                           2000                  1999
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                   <C>
Operating activities:
 Net income (loss)                                                                  $  (2,460)            $  12,725
 Adjustments to derive cash flows from operating activities:
   Depreciation and amortization                                                        8,069                 4,161
   Deferred income taxes                                                                3,154                     -
   Non-cash charges                                                                       132                 1,451
   Foreign currency exchange loss                                                          70                   940
   Changes in assets and liabilities:
     Accounts receivable                                                                4,362               (16,569)
     Inventories                                                                      (10,621)                3,101
     Other current assets                                                              (2,158)                2,559
     Accounts payable and accrued liabilities                                         (12,390)               (9,819)
     Income taxes                                                                      (3,419)                 (453)
-------------------------------------------------------------------------------------------------------------------
 Net cash used in operating activities                                                (15,261)               (1,904)
-------------------------------------------------------------------------------------------------------------------

Investing activities:
 Purchases of short-term investments                                                 (195,097)             (368,155)
 Sales of short-term investments                                                      194,509                85,950
 Purchases of property and equipment                                                  (12,433)              (10,768)
 Other                                                                                 (2,854)                 (923)
-------------------------------------------------------------------------------------------------------------------
 Net cash used in investing activities                                                (15,875)             (293,896)
-------------------------------------------------------------------------------------------------------------------

Financing activities:
 Issuance of common stock                                                               1,659               227,546
 Repurchase of common stock                                                            (5,135)                    -
 Repayment of notes payable                                                                 -                (4,988)
-------------------------------------------------------------------------------------------------------------------
 Net cash provided by (used in) financing activities                                   (3,476)              222,558
-------------------------------------------------------------------------------------------------------------------

Net decrease in cash and cash equivalents                                             (34,612)              (73,242)
Cash and cash equivalents at beginning of period                                      113,284               135,630
-------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                          $  78,672             $  62,388
-------------------------------------------------------------------------------------------------------------------

Supplemental cash flow disclosures:
 Cash paid for income taxes                                                         $      50             $   6,234
 Non-cash transactions--Common stock
  issued in lieu of indebtedness                                                    $       -             $   7,382
-------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                                                  5 XIRCOM, INC.
<PAGE>

Xircom, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared
by the Company without audit (except for the balance sheet information as of
September 30, 2000, which was derived from audited consolidated financial
statements) pursuant to Securities and Exchange Commission regulations.  In the
opinion of management, the financial statements reflect all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the consolidated financial position at December 31, 2000, and the consolidated
statements of operations and cash flows for the three-month periods ended
December 31, 2000 and 1999, in accordance with accounting principles generally
accepted in the United States. The accompanying financial statements are
condensed and do not include certain footnotes and financial presentations
normally required under accounting principles generally accepted in the United
States and, therefore, should be read in conjunction with the audited financial
statements included in the Company's annual report on Form 10-K for the fiscal
year ended September 30, 2000.  The results of operations for the three-month
period ended December 31, 2000 are not necessarily indicative of the results to
be expected for the entire fiscal year.

Cash equivalents and short-term investments

All highly liquid investments with maturities of three months or less at the
date of purchase are considered to be cash equivalents. Short-term investments
primarily consist of U.S., state and municipal government obligations, including
auction rate securities, and investment grade corporate debt securities,
including commercial paper and auction rate securities. Short-term investments,
except auction rate securities, mature between three months and one year from
the purchase date. Auction rate securities carry interest or dividend rates that
reset within every ninety days but have underlying contractual maturities of
greater than one year.  All cash equivalents and short-term investments are
classified as available for sale. Cost approximates market value for all
classifications of cash equivalents and short-term investments.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market and
consist of the following:

<TABLE>
<CAPTION>
                                        December 31       September 30
(In thousands)                                 2000               2000
----------------------------------------------------------------------
<S>                                     <C>                <C>
Finished goods                              $14,714            $ 8,813
Subassemblies                                   754                669
Work-in-process                               2,668              3,565
Component parts                              16,968             11,436
----------------------------------------------------------------------
                                            $35,104            $24,483
----------------------------------------------------------------------
</TABLE>

Revenue recognition

The Company recognizes revenue from product sales when shipped.  The Company has
contractual agreements that permit distributors and dealers to return products
or receive price protection credits under certain circumstances.  The Company
makes a provision for the estimated amount of product returns or credits that
may occur under these contracts in the period of sale, and has a policy of
reserving channel inventory held by its customers in excess of a one-month
supply.  The Company generally provides a lifetime limited warranty against
defects in the hardware component and a two-year limited warranty on the
software component of its network adapters and modem products, and makes
provisions for these costs in the period of sale.  In addition, the Company
provides telephone support to purchasers of its products as needed to assist
them in their installation or use.

Foreign currency transactions

The functional currency of most of the Company's foreign subsidiaries is the
U.S. dollar.  However, the functional currency of the Company's European trading
subsidiary is the Euro.  Translation adjustments are recorded on the balance
sheet under "Accumulated other comprehensive loss".

The Company has a program to manage its foreign currency risk.  As part of this
program, the Company enters into one-month forward contracts to hedge exposures
to foreign currency fluctuations of certain assets and liabilities denominated
in a currency other than the functional currency.  These contracts are
designated as effective hedges and, accordingly, gains and losses on these
forward contracts are recognized in the same period the offsetting gains


                                                                  6 XIRCOM, INC.
<PAGE>

Xircom, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and losses of hedged assets and liabilities are realized and recognized. Gains
and losses on forward contracts, to the extent they differ in amount from the
hedged assets and liabilities, are included in Other income, net. There were no
outstanding forward contracts as of December 31, 2000.

Earnings per share

Basic earnings per share is calculated using the weighted average common shares
outstanding for the period, and excludes dilutive securities.  Diluted earnings
per share reflects the dilution to earnings that would occur if stock options
and other dilutive securities resulted in the issuance of common stock.  The
weighted average number of shares for basic and diluted earnings per share were
as follows:

<TABLE>
<CAPTION>
(In thousands)
Three Months Ended December 31                     2000         1999
--------------------------------------------------------------------
<S>                                              <C>          <C>
Weighted average number of
 shares--basic                                   29,726       25,840

Effect of dilutive securities--
 employee stock options                               -        2,065
--------------------------------------------------------------------
Weighted average number of
 shares--diluted                                 29,726       27,905
--------------------------------------------------------------------
</TABLE>

For the three months ended December 31, 2000, common stock equivalent shares
such as employee stock options have been excluded from the computation of
diluted weighted average shares as their effect would be anti-dilutive.

Comprehensive income (loss)

During the three-month periods ended December 31, 2000 and 1999, total
comprehensive income (loss) was ($2,230,000) and $12,470,000, respectively.  The
difference between net loss and total comprehensive loss relates to the
Company's foreign currency translation adjustments.

Reclassifications

Certain reclassifications of previously reported amounts have been made to
conform to the current period's presentation.

Acquisition of Omnipoint Technologies, Inc.

On June 27, 2000, the Company purchased all of the outstanding shares of
Omnipoint Technologies, Inc. ("OTI") from VoiceStream Wireless Corporation.  OTI
is a developer and integrator of advanced wireless communication technologies
such as Global System for Mobile Communication ("GSM") and General Packet Radio
Services ("GPRS") which will provide users access to mobile internet protocol
("IP") based data.

The acquisition was accounted for using the purchase method of accounting and
accordingly, the purchase price was allocated to the tangible and intangible net
assets acquired on the basis of their respective fair values on the acquisition
date. The fair value of intangible assets was determined based upon an
independent valuation using a combination of methods, including an income
approach for the acquired in-process technologies, an avoided cost approach for
the customer base and a cost approach for the value of the workforce-in-place.

The purchase price allocation is preliminary and subject to adjustments as the
Company completes its review and evaluation of the acquired assets and assumed
liabilities.

Acquisition-related non-recurring charges

During the three-month period ended December 31, 1999 the Company incurred
approximately $2.9 million of non-recurring transaction and transition charges
related to the acquisition of Entrega Technologies, Inc.  Transaction charges
include certain fees and accounting and legal expenses.  Transition charges
include costs of severance and future operating lease payments related to
facilities that were vacated.

Shareholders' equity

On December 9, 1999, the Company sold 4.6 million shares of Common Stock
(including the exercise of the underwriters' over-allotment option) in an
underwritten public offering at a price of $51.25, and realized net proceeds of
approximately $223.3 million.

During the three months ended December 31, 2000, the Company repurchased 230,000
shares of its common stock at a total cost of $5.1 million under a repurchase
program approved by its Board of Directors in September 2000.


                                                                  7 XIRCOM, INC.
<PAGE>

Xircom, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Legal proceedings

The Company is involved in certain claims and legal proceedings, including
patent disputes that arise in the normal course of business.

On May 26, 2000, 3Com Corporation (3Com) filed a complaint in the United States
District Court for the District of Utah, alleging infringement of several 3Com
patents by products of the Company.  The complaint seeks certain injunctive
relief and compensatory damages.  The Company filed its answer and counterclaim
in response to the original complaint.  The Company denies all infringement and
all claims by 3Com for entitlement to damages or other relief.  Further
proceedings are pending.  The Company is unable to predict the outcome of these
proceedings or the time at which they may be resolved.

On September 25, 2000, Northrop Grumman Corporation filed a lawsuit in the
United States District Court, Eastern District of Texas, Beaumont Division
alleging patent infringement of a single Northrop Grumman patent against Intel
Corporation, 3Com Corporation, Xircom, Inc., D-Link Systems, Inc., and The
Linksys Group.  The Complaint seeks certain injunctive relief and compensatory
damages.  The Company has filed its Answer and Counterclaim in response to the
Complaint.  The Company denies all infringement and all claims by Northrop
Grumman for entitlement to damages or other relief.  Further proceedings are
pending.  The Company is unable to predict the outcome of these proceedings or
the time at which they may be resolved.

In the opinion of the Company, the outcome of any of these matters will not have
a material adverse effect on the Company's consolidated financial position but
could be material to its results of operations or cash flows in any one
accounting period.

Subsequent Event

On January 15, 2001, Intel Corporation and Xircom entered into a definitive
agreement under which Intel, through a wholly owned subsidiary, would acquire
all of the outstanding common stock of Xircom for $25 per share in an all-cash
tender offer valued at approximately $748 million. In addition, Intel will
assume all existing vested and unvested employee stock options. Intel's
obligations to accept shares tendered in the offer is conditioned upon the
tender of a majority of outstanding Xircom shares, measured on a fully-diluted
basis, receipt of regulatory approvals, other customary conditions, and
compliance by Xircom with certain financial and business criteria. The tender
offer will expire on March 2, 2001, but may be extended under certain
circumstances. The transaction is expected to be completed during the quarter
ending March 31, 2001. Upon completion of the transaction, Xircom will become a
wholly owned subsidiary of Intel.

Xircom shareholders are advised to read the Tender Offer Statement on Schedule
TO, which was filed by Intel and ESR Acquisition with the SEC on January 29,
2001, and the related Solicitation/ Recommendation Statement on Schedule 14d-9
which was filed by Xircom with the SEC on the same date.  The Tender Offer
Statement (including an offer to purchase, letter of transmittal and related
tender offer documents) and the Solicitation/ Recommendation Statement contain
important information, which should be read carefully.  These documents were
mailed to Xircom shareholders on January 29, 2001 and are available at no charge
at the SEC's web site, www.sec.gov.
                       -----------


                                                                  8 XIRCOM, INC.
<PAGE>

Xircom, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Segment information

The table below presents information about the Company's reportable segments for
the three-month periods ended December 31, 2000 and 1999.

<TABLE>
<CAPTION>
(In thousands)                                                Branded            OEM            Unallocated           Total
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>               <C>             <C>                  <C>
Three months ended December 31, 2000

Net sales                                                     $52,114           $67,980           $      -           $120,094
Operating income (loss)                                       $ 9,837           $12,854           $(28,933)          $ (6,242)
Other income, net                                             $     -           $     -           $  3,719           $  3,719
Income (loss) before income taxes                             $ 9,837           $12,854           $(25,214)          $ (2,523)
-----------------------------------------------------------------------------------------------------------------------------
Three months ended December 31, 1999

Net sales                                                     $93,477           $30,634           $      -           $124,111
Operating income (loss)                                       $36,861           $ 9,235           $(29,289)          $ 16,807
Other income, net                                             $     -           $     -           $    625           $    625
Income (loss) before income taxes                             $36,861           $ 9,235           $(28,664)          $ 17,432
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

This Quarterly Report contains trend analysis and other forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Actual results could differ materially from those projected in the trend
analysis and other forward-looking statements contained herein, as a result of
the risk factors set forth below and elsewhere in this report.

Overview
--------

On January 15, 2001, Intel Corporation and Xircom entered into a definitive
agreement under which Intel, through a wholly owned subsidiary, would acquire
all of the outstanding common stock of Xircom for $25 per share in an all-cash
tender offer valued at approximately $748 million. In addition, Intel will
assume all existing vested and unvested employee stock options. Intel's
obligations to accept shares tendered in the offer is conditioned upon the
tender of a majority of outstanding Xircom shares, measured on a fully-diluted
basis, receipt of regulatory approvals, other customary conditions, and
compliance by Xircom with certain financial and business criteria. The tender
offer will expire on March 2, 2001, but may be extended under certain
circumstances. Upon completion of the transaction, Xircom will become a wholly
owned subsidiary of Intel. The Company expects to incur substantial acquisition
related costs in the second quarter of fiscal 2001, including investment
banking, legal, and other transaction costs, and anticipates that the
acquisition will be completed during the quarter ending March 31, 2001.

Xircom shareholders are advised to read the Tender Offer Statement on Schedule
TO which was filed by Intel and ESR Acquisition with the SEC on January 29,
2001, and the related Solicitation/Recommendation Statement on Schedule 14d-9
which was filed by Xircom with the SEC on the same date. The Tender Offer
Statement (including an offer to purchase, letter of transmittal and related
tender offer documents) and the Solicitation/Recommendation Statement contain
important information which should be read carefully. These documents were
mailed to Xircom shareholders on January 29, 2001 and are available at no charge
at the SEC's web site, www.sec.gov.


                                                                  9 XIRCOM, INC.
<PAGE>

Xircom, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Results of Operations
---------------------

The following table sets forth the statements of operations as a percentage of
net sales:

<TABLE>
<CAPTION>
Three Months Ended December 31                             2000          1999
-----------------------------------------------------------------------------
<S>                                                      <C>           <C>
Net sales                                                100.0%        100.0%
Cost of sales                                             70.6%         54.0%
----------------------------------------------------------------------------
Gross profit                                              29.4%         46.0%
Operating expenses:
  Research and development                                 9.3%          6.1%
  Sales and marketing                                     18.1%         20.0%
  General and administrative                               4.9%          3.6%
  Amortization of goodwill and other
   acquisition-related intangibles                         2.3%          0.5%
  Acquisition-related non-recurring charges                  -           2.3%
----------------------------------------------------------------------------
                                                          34.6%         32.5%
----------------------------------------------------------------------------
Operating income (loss)                                   (5.2)%        13.5%
Other income, net                                          3.1%          0.5%
----------------------------------------------------------------------------
Income (loss) before income taxes                         (2.1)%        14.0%
Income tax provision (benefit)                            (0.1)%         3.7%
----------------------------------------------------------------------------
Net income (loss)                                         (2.0)%        10.3%
----------------------------------------------------------------------------
</TABLE>

Net sales

Net sales decreased 3% to $120.1 million in the three-month period ended
December 31, 2000 from $124.1 million in the three-month period ended December
31, 1999.  We derive net sales principally from shipments of Integrated PC Card,
PC Card and Mini-PCI card products (collectively "adapter products"). The
adapter products connect notebook PCs and other handheld devices to networks,
the Internet and online services using the following technologies:

 .   Fast Ethernet, Ethernet and Token Ring local area network ("LAN");
 .   Multifunction LAN and modem ("Combo cards"); and,
 .   Modem.

We also derive net sales from shipments of USB port expansion solution products,
which enable users to add peripheral devices to their computer via a single USB
connection, Rex MicroPDA, and the NetStation product family (our all-in-one
conference room networking device for notebook and handheld PC users).

The decrease in net sales is primarily due to an increased shipment mix of
MiniPCI cards, which have lower selling prices than PC cards. Total unit
shipments of adapter products during the three-month period ended December 31,
2000 increased 56% from the comparable prior year period, but average selling
prices declined due to increased shipment mix of MiniPCI cards and increased
competition in the market for adapter products.

Net sales by our distribution customers (the "branded" business) declined by 44%
during the three-month period ended December 31, 2000 as compared to the
corresponding prior year period.  We believe this decrease is primarily due to a
shift in fulfillment of orders through the OEM channel as opposed to the
distribution channel. Sales to our OEM customers during the three-month period
ended December 31, 2000 increased by 122% over the comparable prior year period.
We expect this trend to continue through fiscal 2001.


                                                                 10 XIRCOM, INC.
<PAGE>

Xircom, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Revenues from our products as a percentage of total revenues were as follows:

<TABLE>
<CAPTION>
Three Months Ended December 31
(percentage of total revenue)                   2000      1999
--------------------------------------------------------------
<S>                                             <C>       <C>
LAN Adapters                                     25%       31%
LAN+Modem                                        65%       56%
Modem                                             7%        8%
Port expansion system                             2%        4%
Other                                             1%        1%
--------------------------------------------------------------
</TABLE>

International sales.  Total international sales (shipments to customers located
outside the U.S.) were 47% of total net sales for the three-month period ended
December 31, 2000, compared to 53% for the comparable prior year period.  Sales
of our adapter cards grew at a faster rate in the U.S. than in the Europe and
the Asia-Pacific regions during the first quarter of fiscal 2001 from the
comparable prior year period.

Gross profit

Gross profit consists of net sales less cost of sales.  Cost of sales includes
material, labor, manufacturing overhead and other costs of sales.  Other costs
of sales include provisions for excess and obsolete inventory, warranty expense
and royalty payments to licensers of software incorporated into our products.
Gross profit margins for the quarter ended December 31, 2000 were 29.4% compared
to 46.0% for the comparable prior-year period.  The decrease in gross profit as
a percentage of net sales was primarily attributable to a greater mix of sales
to our OEM customers, which generally result in lower gross profit margins,
versus our distribution partners, and higher sales of Mini-PCI card products,
which have a significantly lower margin than other OEM products such as
integrated PC cards. We expect gross profit margins during the remainder of
fiscal 2001 to be in a similar range to what we reported in the quarter ended
December 31, 2000.

Operating expenses

We increased our research and development expenses in the three-month period
ended December 31, 2000 by 46% as compared to the prior period primarily due to
our acquisition of OTI in June 2000  which resulted in increased staffing and
expenditures for the development of wireless data solutions for wireless
networks for mobile technology customers. In addition, we continued to incur
research and development costs to support expanded branded and OEM product
offerings including our RealPort2 Integrated PC Cards, PortStation(TM) ADSL USB
modems, SpringPort(TM) Modem for Handspring Visor, Rex MicroPDA and NetStation
products. We expect total expenditures for research and development to increase
through fiscal 2001 due to our planned expenditures on product enhancements and
new product introductions.

Our sales and marketing expenses decreased by 12% in the three-month period
ended December 31, 2000 as compared to the corresponding prior-year period
primarily due to the lower sales and marketing expenditures that generally are
associated with OEM sales versus branded business sales.  During the remainder
of fiscal 2001, we expect sales and marketing expenses to decrease compared to
the corresponding prior year periods.

Our general and administrative expenses for the three-month period ended
December 31, 2000 increased by 35% as compared to the corresponding prior-year
period to support growth in our organization, including the acquisition of OTI
in our third quarter of 2000, and continued expenditures on our information
systems hardware and software. We expect general and administrative expenses to
increase during 2001 due to the effect of a full year of OTI expenses being
included in our results of operations and the expansion of information systems
hardware and software.

Amortization of goodwill and other acquisition-related intangibles

As a result of our acquisition of the Rex product line in September 1999 and OTI
in June 2000, we recorded goodwill and other acquisition-related intangible
assets of approximately $55 million, and are amortizing them over 3 to 5 years.

Acquisition-related non-recurring charges

As a result of our acquisition of Entrega in October 1999, we recorded
approximately $2.9 million of non-recurring transaction and transition charges.
Transaction charges include certain fees and


                                                                 11 XIRCOM, INC.
<PAGE>

Xircom, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

accounting and legal expenses. Transition charges include costs of severance and
future operating lease payments related to facilities we have vacated.

Other income, net

Other income, net is primarily comprised of interest and dividend income we earn
from our cash and short-term investments. This amount is offset by early payment
discounts taken by our customers, foreign currency transaction losses, and
losses on disposals of fixed assets.  The increase in Other income, net during
the period ended December 31, 2000 as compared to the prior year period was due
primarily to increased interest income resulting from a higher average balance
of cash and short-term investments, and higher interest rates, and a decrease in
foreign exchange losses. Our interest income was $4.5 million and $2.0 million
in fiscal 2001 and 2000 and our net foreign currency transaction losses were
$70,000 in fiscal 2001 and $940,000 in fiscal 2000.

Income taxes

We recognized a benefit for income taxes of $63,000 for the three months ended
December 31, 2000. The difference between our effective tax rate and the federal
statutory tax rate was primarily due to non-deductible amortization of goodwill
and intangibles associated with the OTI acquisition, partially offset by the use
of tax preferred investments.

The difference between the effective tax rates and the 35% federal statutory tax
rate for the three months ended December 31, 1999 was due primarily to benefits
from the tax holiday status of the Company's operations in Malaysia, use of tax-
preferred investments, and state income taxes.

Risk Factors
------------

We may be unable to remain competitive in the mobile information access
industry, which could reduce our profitability.

The market for notebook PC Card adapters has grown rapidly since the PCMCIA
introduced a standard form factor for PC Card LAN adapters in 1993.  Companies
in the PC, desktop LAN adapter and modem industries with greater name
recognition and greater financial resources than us, have a significant presence
in the PC Card adapter market.  As a result, we have faced increased competition
in our industry. Actions by our competitors, which continue to influence this
competitive environment, include price reductions, new product introductions,
targeted challenges to our intellectual property, promotional efforts, and
changes in the level of channel inventory.  We expect competition to remain
intense and as a result, we may lose some of our business to our competitors.
Further, we believe that the market for PC Card LAN adapters, modems and Combo
cards will continue to be price competitive, and thus we could continue to
experience lower selling prices, lower gross profit margins and reduced
profitability levels than earned from such products in the past.

If our manufacturing facility becomes unable to produce our products
efficiently, we may be forced to increase prices or suffer reduced profit
margins.

Our manufacturing facility, located in Malaysia, produces substantially all of
our PC Card adapter products.  We may be unable to achieve significant
additional efficiencies from this facility.  If we are unable to achieve
additional cost reductions through increased production or manufacturing
efficiencies we may be unable to keep pace with our competitors' cost or price
reductions to an extent necessary to maintain or increase our market share
without adversely affecting gross profit margins.  In addition, interruptions in
the supply of products could occur if we are unable to accurately forecast
demand levels, or react sufficiently rapidly to changes.  This in turn could
adversely affect future sales.  We also face risks associated with maintaining
production facilities overseas, including management of a distant and remote
manufacturing facility, currency fluctuations and potential instability in the
local country.  This is particularly of concern to us in light of past economic
and political uncertainty in Malaysia and in Asia generally.

Any changes in the mix of products we sell and in the types of customers to whom
we sell could reduce our profit margins.

Certain of our products have lower gross profit margins than others.  As a
result, changes in our product mix could result in variations in overall


                                                                 12 XIRCOM, INC.
<PAGE>

Xircom, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

gross profit margin. See "Management's Discussion and Analysis of Financial
Conditions and Results of Operations" for a discussion of the relative margins
of our different products. In addition, shipments to our OEM customers generally
result in lower average selling prices and gross profit margins than sales made
through our distribution partners. Furthermore, the increased percentage of
revenue from OEM customers during 2001 as compared to fiscal 2000 has resulted
in an increased concentration in our customer base. With this increased customer
concentration, we have increased our dependency on a more limited number of
customers at lower average selling prices and gross profit margins than sales
made through our distribution partners. These trends may continue, as we
anticipate a continuing increase in OEM revenues as a percentage of sales. PC
Card functionalities continue to migrate to different form factors such as
MiniPCI or other on board access card solutions, resulting in lower selling
prices and gross profit margins than in traditional PC Card adapters.

Our inability to compete successfully in international markets may reduce our
sales.

Our sales may be subject to government controls and other risks such as:

 .   Federal restrictions on export;
 .   Export licenses;
 .   Trade restrictions;
 .   Changes in tariff and freight rates;
 .   Currency fluctuations;
 .   Economic instability; and,
 .   Political instability.

As a result of recent and potential factors such as currency fluctuations and
economic instability impacting international markets, we could encounter
difficulties in accessing new and existing international markets or experience
increased credit risks.  Such credit risks could include insolvency of customers
or other impairments of customers' ability to repay amounts owed to us.  These
credit risks could also include insolvency of vendors or other impairments of
our vendors' ability to supply materials to us.

Foreign currency fluctuations could adversely affect our results.

We face exposure to adverse movements in foreign currency exchange rates.  These
exposures may change over time and could have a material adverse impact on our
financial results.  We do substantially all our manufacturing at our facility in
Malaysia and we operate regional sales and marketing headquarters located in
Belgium, Singapore and Japan.  As a result, a substantial portion of our
operating expenses are denominated in the Malaysian ringgit, the Euro, the
Singapore dollar and the Japanese yen. The majority of our international sales
are denominated in the Euro.  We hedge certain foreign currency fluctuations and
continue to evaluate the impact of such foreign currencies on our foreign
exchange exposure.  We only hedge foreign currency exposures associated with
certain assets and liabilities denominated in currencies other than the
functional currencies and do not hedge anticipated foreign currency cash flows.
This hedging activity is intended to offset the financial impact of foreign
currency fluctuations on certain nonfunctional currency assets and liabilities,
but this hedging activity may not be successful in fully offsetting such
financial impact.

We could incur unnecessary expenses if we are unable to accurately predict
product sales.

We generally ship products within one to four weeks after receipt of orders.
Therefore, our sales backlog is typically minimal.  Accordingly, our
expectations of future net sales are based largely on our own estimates of
future demand and not on firm customer orders.  If our net sales do not meet
expectations, profitability would be adversely affected, as we may not be able
to reduce expenses at the same pace in the near term.

Our sales could be reduced if we are unable to respond quickly to changes in
demand for our products.

Our net sales can be affected by changes in the quantity of products that our
distributor and OEM customers maintain in their inventories.  We believe that
our distribution partners carry relatively low quantities of our inventory
compared to that of our competitors.  We have taken steps to reduce the


                                                                 13 XIRCOM, INC.
<PAGE>

Xircom, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

levels of inventory maintained by our OEM customers. We believe that these
actions enable us to react more quickly to changes in market demand. However, we
may also be affected more directly and more rapidly by changes in the market,
including the impact of any slowdown or rapid increase in end user demand.
Despite our efforts to minimize channel inventory exposure, distribution
partners and OEM customers may still choose to reduce their inventories below
current levels, which could cause a reduction in our net sales.

If we are unable to develop new products in a timely manner, we risk losing our
customers.

Our success is dependent on our ability to continue to introduce new products
with advanced features, functionality and solutions that our customers demand.
We may be unable to continue to timely introduce new products that are accepted
by the market, or that sell through to end users in quantities sufficient to
make the products viable for the long-term.  Sales of our new products may
negatively impact sales of existing products.  In addition, we may have
difficulty establishing our products' presence in markets where we do not
currently have significant brand recognition.

If we are unable to successfully market wireless wide area network products, we
could experience loss of sales and decreased revenue.

Our wireless wide area network product strategy is dependent on the success of
wireless carriers in their efforts to deploy GPRS and its packet switching
capabilities in their wireless GSM networks.  We may be unable to achieve sell
through of our wireless wide area network products to end users in commercially
viable quantities if carriers fail to:

 .   Successfully complete GPRS network trials;
 .   Incorporate GPRS infrastructure into their GSM networks;
 .   Achieve satisfactory throughput speeds; or,
 .   Market GPRS capable terminals in commercial quantities.

In addition, we may be unsuccessful in our efforts to obtain formal type
approval on our future wireless products. Failure to obtain such approval in a
timely manner may prohibit our timely offerings of new wireless products.

We may be unable to manufacture our products because we are dependent on a
limited number of qualified suppliers for our components.

Because of frequent technology changes and rapid industry growth, the cost and
availability of components used to manufacture our products may fluctuate.
Because some components, including custom chipsets, are available from sole
suppliers, we risk having an inadequate supply of components due to a number of
factors, including:

 .   Supplier manufacturing constraints;
 .   Excess of demand versus supply;
 .   National political or economic changes; and,
 .   Other risks not within our control.

Although we have not experienced any significant parts shortages over the past
year, many components we use require long-lead purchase orders thereby limiting
our flexibility to change order quantities in the event of changes in demand.
Any supply source interruptions, limitations on availability, or inability to
develop alternative sources as needed could adversely affect our ability to
deliver products and, in turn, our future earnings.

Rapid technological changes and short product life cycles in our industry could
harm our business.

Rapid technological change and short product life cycles characterize the
industry in which we operate.  The industry includes competitors with greater
financial and technical resources than us, including, in particular, 3Com.
While we have historically been successful in developing or integrating leading
technology into our products, ongoing investment in research and development is
required for us to maintain our technological position.  We may need to increase
the rate of such investment depending on competitive factors, and we may not be
able to innovate as quickly as our competitors.

If networking capability is included in extension modules to PCs or in the PC
itself, it could result in a reduction in the demand for add-on networking
devices.  Our ability to retain our market share and


                                                                 14 XIRCOM, INC.
<PAGE>

Xircom, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

operating results are also dependent on continued growth in the underlying
markets for notebook computers, notebook networking products, and the notebook-
to-network connection rate.

An inability to adequately protect our proprietary technology may result in us
losing our competitive position.

We may be unable to protect our intellectual property adequately through patent,
copyright, trademark and other protection.  For example, patents issued to us
may not be upheld as valid if litigation over the patent were initiated.
Alternatively, competitors may succeed in designing around the claims of issued
patents, thereby avoiding infringement of applicable patents.  If we are unable
to protect or enforce our intellectual property adequately, it could allow
competitors to duplicate our technology or may otherwise limit any competitive
technological advantage we may have.  Because of the rapid pace of technological
change in the communications industry we believe our success is likely to depend
more upon continued innovation, technical expertise, marketing skills and
customer support and service rather than upon legal protection of our
proprietary rights.  However, we will continue to seek to secure appropriate
intellectual property rights for our innovations, and will aggressively assert
our intellectual property rights when necessary.

With the proliferation of new products and rapidly changing technology in the
mobile information access market, there has been a significant volume of patents
or similar intellectual property rights held by third parties.  Given the nature
of our products and development efforts, there are risks that third parties
could assert patent or intellectual property rights claims against us.  These
risks include the cost of licensing or designing around a given technology.  If
a claimant refuses to offer such a license on terms acceptable to us, there is a
risk of incurring substantial litigation or settlement costs regardless of the
merits of the allegations.  In the event of litigation, if we do not prevail we
may be required to pay significant damages and/or to cease sales and production
of infringing products.

We currently use software licensed from third parties in certain of our Combo,
modem-only, Token Ring, port expansion system and MicroPDA products.  Our
operating results could be adversely affected by a number of factors relating to
this third-party software, including:

 .   Failure by a licensor to accurately develop, timely introduce, promote or
    support the software;
 .   Delays in shipment of our products;
 .   Excess customer support or product return costs experienced by us due to
    errors in licensed software; or,
 .   Termination of our relationship with such licensors.

Any inability to attract and retain qualified managerial and other skilled
personnel could harm our operations.

Our continued success depends, in part, on our ability to identify, attract,
motivate and retain qualified managerial, technical and sales personnel.
Because our future success is dependent on our ability to manage effectively the
enhancement and introduction of existing and new products and the marketing of
such products, we are particularly dependant on our ability to identify,
attract, motivate and retain qualified managers, engineers and salespersons.
The loss of the services of a significant number of our engineers or sales
people or one or more of our senior officers or managers could be disruptive to
our development efforts or business relationships and could seriously harm our
business.

If we are unable to effectively integrate processes, products or businesses that
we create or acquire, we could experience disruptions to our business.

The recently acquired Wireless Technology Group ("WTG" formerly OTI) must be
integrated with our existing business structure.  If we are ineffective in
integrating WTG within our business or fail to do so with acquisitions that we
have made in the past or may make in the future, we may face disruptions to our
business activities, and our business may be seriously harmed.


                                                                 15 XIRCOM, INC.
<PAGE>

Xircom, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

If we are unable to renew our tax reinvestment allowance in Malaysia, we could
incur additional tax liability.

Since its inception, we have received tax holiday status on our manufacturing
operations in Malaysia. Under this tax holiday, the earnings of our
manufacturing subsidiary were not taxable in Malaysia.  This tax holiday expired
in October 2000.  In October 2000, we received notification that we have been
granted a reinvestment allowance for new capital investment in our manufacturing
operations in Malaysia.  We cannot be assured that we will be able to renew or
extend this allowance.

The Company is also subject to additional risk factors as identified in its
Annual Report on Form 10-K for the year ended September 30, 2000.

Liquidity and Capital Resources
-------------------------------

As of December 31, 2000 we had $78.7 million in cash and cash equivalents and
$195.8 million in short-term investments.  Our operating activities used cash of
approximately $15.3 million during the three-month period ended December 31,
2000, primarily due to net income excluding depreciation and amortization
expense and a decrease in accounts receivable being offset by a decrease in
accounts payable and other accrued liabilities and an increase in inventory.
Our accounts receivable decreased primarily due to lower revenues and timing of
collections while accounts payable and other accrued liabilities decreased
primarily due to the timing of payments for material inventory purchases. Our
inventory increased primarily due to lower than expected revenues.

We used $15.9 million of cash in investing activities during the three-month
period ended December 31, 2000, primarily for capital expenditures. Our short-
term investments consist of financial instruments, including auction rate
securities with interest rates or dividends that reset within 90 days, but with
longer-term underlying contractual maturities. Our capital expenditures were for
information systems hardware and software, purchase of land and leasehold
improvements associated with new leased facilities, and the purchase of
manufacturing equipment for use in our Penang, Malaysia facility.

Our financing activities used $3.5 million in cash during the three-month period
ended December 31, 2000.  This was primarily the result of $5.1 million to
repurchase 230,000 shares of our stock under a plan authorized by our board of
directors in September 2000.

We have an unsecured bank credit facility allowing borrowings up to $25.0
million. We also have credit facilities totaling $5.5 million, denominated in
Malaysian ringgit, with banks in Malaysia. We had no borrowings outstanding and
approximately $30.2 million in borrowings available under our credit facilities
as of December 31, 2000.

We believe that cash on hand, borrowings available under our existing facilities
or from other financing sources, and cash provided by operations will be
sufficient to support our working capital and capital expenditure requirements
for at least the next twelve months.  However, there can be no assurances that
future cash requirements to fund operations will not require us to seek
additional capital sooner than the twelve months, or that such additional
capital will be available when required on terms acceptable to us.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion about our market risk disclosures involves forward-
looking statements.  Actual results could differ materially from those projected
in the forward-looking statements.

Our portfolio of cash equivalents and short-term investments is of a short-term
nature, and we have no borrowings outstanding.  Accordingly, we are not subject
to significant market price risk related to investments.  However, our interest
income is sensitive to changes in the general level of taxable and tax-free
short-term U.S. interest rates.  Based on our investment mix and balances as of
December 31, 2000, if average short term market interest rates had been 100
basis points lower over the last twelve


                                                                 16 XIRCOM, INC.
<PAGE>

Xircom, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

months, our interest income and income before taxes would have been
approximately $2.7 million lower.

Our operating results are exposed to weak economic conditions in foreign markets
and changes in exchange rates, primarily between the U.S. dollar and the Euro,
the Malaysian ringgit, and to a lesser extent the Japanese yen.  Beginning with
fiscal 2000, the majority of our international sales are denominated in the
Euro.  When the dollar strengthens against the Euro or the yen, we experience a
decrease in the value of sales in currencies other than the functional currency.

In our European and Japanese markets, respectively, we are a net receiver of the
Euro and the yen.  As such, we benefit from a weaker U.S. dollar versus the Euro
and the Japanese yen.  Our Malaysian operations are net payers of currencies
other than the U.S. dollar.  As such, our operating results may be adversely
affected by a weaker U.S. dollar versus the Malaysian ringgit.

To mitigate the short-term effect of changes in currency exchange rates on our
foreign currency-based expenses, we purchase and hold Malaysian ringgits in
advance of the due date of our underlying obligations.  In addition, we hedge
our Euro currency exposures associated with certain assets and liabilities
denominated in currencies other than the functional currencies by utilizing
forward contracts.  This hedging program reduces, but does not eliminate, the
impact of U.S. dollar/Euro currency exchange rate movements. There were no
outstanding forward contracts as of December 31, 2000.

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None.

ITEM 2.  CHANGES IN SECURITIES

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

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

The Annual Meeting of Shareholders of the Company was held on January 19, 2001.
The following is a brief description of each matter voted upon at the meeting
and the number of affirmative votes and the number of negative votes cast with
respect to each.

(a)  The shareholders elected the following persons as directors of the Company
with votes for and against (withheld) each nominee as shown in the following
table.

<TABLE>
<CAPTION>
                                                           Votes
Nominee                                 Votes For       Withheld
-----------------------------------------------------------------
<S>                                    <C>              <C>
Michael F.G. Ashby                     24,650,803         403,458
Kenneth J. Biba                        24,650,508         403,753
Gary J. Bowen                          24,653,968         400,293
Dirk I. Gates                          24,642,953         411,308
Carl E. Russo                          24,653,882         400,379
William J. Schroeder                   24,652,518         401,743
Robert R. Stapleton                    24,643,420         410,841
Delbert W. Yocam                       24,650,568         403,693
</TABLE>

(b)  The shareholders approved the adoption of the Company's 2001 Director Stock
Option Plan. There were 19,637,303 votes in favor of, and 4,876,629 votes cast
against, the proposal. There were 540,329 abstentions.

(c)  The shareholders ratified the appointment of Ernst & Young LLP as
independent auditors for the Company for the year ending September 30, 2001.
There were 24,581,931 votes cast in favor of, and 35,690 votes cast against, the
appointment of Ernst & Young LLP as independent auditors. There were 436,640
abstentions.

ITEM 5.  OTHER ITEMS

None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     Exhibit 2.1  Agreement and Plan of Merger, dated January 15, 2001, by and
                  among Intel Corporation, ESR Acquisition Corporation and
                  Xircom, Inc. (incorporated by reference to Amendment No. 2 to
                  Intel's Schedule 13D filed on January 22, 2001).


                                                                 17 XIRCOM, INC.
<PAGE>

Xircom, Inc.
PART II. OTHER INFORMATION

    Exhibit 2.1a   Stock Option Agreement, dated January 15, 2001, by and
                   between Intel Corporation and Xircom, Inc. (incorporated by
                   reference to Amendment No. 2 to Intel's Schedule 13D filed on
                   January 22, 2001).

    Exhibit 2.1b   Tender and Voting Agreement, dated January 15, 2001, by and
                   among Intel Corporation, ESR Acquisition Corporation and Dirk
                   Gates (incorporated by reference to Exhibit (d)(3) to the
                   Schedule TO of Acquisition filed on January 29, 2001).

    Exhibit 10.38  Form of Change of Control Agreement between the Company and
                   certain executive officers (incorporated by reference to
                   Exhibit (e)(4) to the Solicitation/Recommendation Statement
                   on Schedule 14D-9 filed on January 29, 2001).

    Exhibit 10.38a Form of Amendment to the Change of Control Agreement between
                   the Company and certain executive officers (incorporated by
                   reference to Exhibit (e)(4) to the Solicitation/
                   Recommendation Statement on Schedule 14D-9 filed on January
                   29, 2001).

    Exhibit 10.39  Employment Agreement, dated January 15, 2001, between Intel
                   Corporation and Dirk Gates (incorporated by reference to
                   Exhibit (d)(5) to the Schedule TO of Acquisition filed on
                   January 29, 2001).

    Exhibit 10.40  Employment Agreement, dated January 15, 2001, between Intel
                   Corporation and Sam Bass (incorporated by reference to
                   Exhibit (d)(6) to the Schedule TO of Acquisition filed on
                   January 29, 2001).

    Exhibit 10.41  Employment Agreement, dated January 15, 2001, between Intel
                   Corporation and Steven DeGennaro (incorporated by reference
                   to Exhibit (d)(7) to the Schedule TO of Acquisition filed on
                   January 29, 2001).

    Exhibit 10.42  Employment Agreement, dated January 15, 2001, between Intel
                   Corporation and Marc Devis (incorporated by reference to
                   Exhibit (d)(8) to the Schedule TO of Acquisition filed on
                   January 29, 2001).

    Exhibit 10.43  Employment Agreement, dated January 15, 2001, between Intel
                   Corporation and Jeffery Tang (incorporated by reference to
                   Exhibit (d)(9) to the Schedule TO of Acquisition filed on
                   January 29, 2001).

    Exhibit 10.44  Employment Agreement, dated January 15, 2001, between Intel
                   Corporation and Boguslaw Piekarski (incorporated by reference
                   to Exhibit (d)(10) to the Schedule TO of Acquisition filed on
                   January 29, 2001).

    Exhibit 10.45  Employment Agreement, dated January 15, 2001, between Intel
                   Corporation and Mick Conley (incorporated by reference to
                   Exhibit (d)(11) to the Schedule TO of Acquisition filed on
                   January 29, 2001).

(b) Reports on Form 8-K

    On October 19, 2000, we filed a report on Form 8-K relating to the Company's
    financial results for the three and twelve-month periods ended


                                                                 18 XIRCOM, INC.
<PAGE>

Xircom, Inc.
PART II. OTHER INFORMATION

    September 30, 2000, as presented in a press release dated October 17, 2000.


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.


                                                                    XIRCOM, INC.
                                                          ----------------------
                                                                    (Registrant)


Date: February 9, 2001                                         /s/ Dirk I. Gates
      -----------------                                    ---------------------
                                                                   Dirk I. Gates
                                            Chairman of the Board, President and
                                                         Chief Executive Officer

Date: February 9, 2001                                   /s/ Steven F. DeGennaro
      ------------------                                 -----------------------
                                                             Steven F. DeGennaro
                                                       Senior Vice President and
                                                         Chief Financial Officer



                                                                 19 XIRCOM, INC.