<PAGE>

<TABLE>
<CAPTION>
                                                                                          Exhibit 13.1

            FINANCIAL HIGHLIGHTS


(Dollar and share amounts in thousands, except per share amounts)

                                                                                   Fiscal Year Ended June 30,
                                                                                   --------------------------
                                                                        1999                  1998               Change
                                                                 -------------------   ------------------   ----------------
<S>                                                              <C>                   <C>                  <C>
For the year:
     Net revenues                                                         $59,797              $49,198              21.5%
     Operating income                                                       9,162                7,055              29.9%
     Net income                                                             6,772                5,164              31.1%

Earnings per share:
     Basic                                                                $  0.72              $  0.73             (1.4)%
     Diluted                                                                 0.66                 0.55              20.0%

At year-end:
     Cash and short-term investments                                       $25,725              $25,831             (0.4)%
     Total assets                                                           55,925               47,401              18.0%
     Shareholders' equity                                                   46,380               38,611              20.1%
     Book value per share                                                     4.51                 4.10              10.0%

Shares used in computing earnings per share:
     Basic                                                                   9,395                7,083              32.6%
     Diluted                                                                10,279                9,412               9.2%
</TABLE>
<PAGE>

                            SELECTED FINANCIAL DATA

The following selected financial data of the Company is qualified by reference
to and should be read in conjunction with the Financial Statements, including
the Notes thereto, and Management's Discussion and Analysis of Financial
Condition and Results of Operations included elsewhere herein. The Statement of
Income Data for each of the years in the four-year period ended June 30, 1999
and the Balance Sheet Data as of June 30, 1997, 1998 and 1999 are derived from,
and are qualified by reference to, the Financial Statements which are
incorporated by reference from the Company's 1999 Annual Report to Shareholders.
The Statement of Income Data for the year ended June 30, 1995 and the Balance
Sheet Data as of June 30, 1995 and 1996 are derived from audited financial
statements not included herein.

<TABLE>
<CAPTION>
                                                              Fiscal Year Ended June 30,
                                                     ---------------------------------------------------
                                                        1999      1998      1997       1996      1995
                                                      -------   -------   -------   --------   -------
                                                             (in thousands, except per share data)
<S>                                                     <C>       <C>       <C>       <C>        <C>
Statement of Income Data:

Net revenues                                            $59,797   $49,198   $33,166   $41,174    $22,732
Cost of revenues                                         35,484    29,285    20,986    22,797     12,873
                                                     ---------------------------------------------------
     Gross profit                                        24,313    19,913    12,180    18,377      9,859
Operating expenses:
     Research and development                             5,976     5,065     4,187     4,414      2,942
     Selling, general and administrative                  9,175     7,793     5,989     6,471      4,038
                                                     ---------------------------------------------------
          Total operating expenses                       15,151    12,858    10,176    10,885      6,980
                                                     ---------------------------------------------------
Income from operations                                    9,162     7,055     2,004     7,492      2,879
Other income (expense), net                               1,098       738       351       (50)       144
                                                     ---------------------------------------------------
Income before income taxes                               10,260     7,793     2,355     7,442      3,023
Provision for income taxes                                3,488     2,629       777     2,732        982
                                                     ===================================================
Net income                                              $ 6,772   $ 5,164   $ 1,578   $ 4,710    $ 2,041
                                                     ===================================================
Basic earnings per share                                  $0.72     $0.73     $0.73     $2.19      $0.97
                                                     ===================================================
Diluted earnings per share                                $0.66     $0.55     $0.22     $0.63      $0.28
                                                     ===================================================
Shares used in computing basic earnings per share (1)     9,395     7,083     2,165     2,149      2,096
                                                     ===================================================
Shares used in computing diluted earnings per share (1)   10,279    9,412     7,316     7,493      7,199
                                                     ===================================================

                                                                         As of June 30,
                                                     ---------------------------------------------------
                                                         1999      1998      1997      1996       1995
                                                       -------   -------   -------   -------    -------
                                                                         (in thousands)

Balance Sheet Data:

Working capital                                         $37,642   $32,751   $12,984   $12,145    $ 7,999
Total assets                                             55,925    47,401    23,581    19,820     14,483
Long-term obligations                                       ---       ---       ---       ---        ---
Shareholders' equity                                     46,380    38,611    16,795    15,095     10,352
</TABLE>

(1)  See Note 1 of Notes to Financial Statements for an explanation of the
     method used to determine the number of shares used in computing basic and
     diluted earnings per share.

                                       2
<PAGE>

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

This Annual Report to Shareholders includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act.  All statements other than statements of historical fact are "forward-
looking statements" for purposes of these provisions, including any statements
regarding: projections of earnings, revenues, expenses or other financial items;
the plans and objectives of management for future operations; the adequacy of
allowances for returns, price protection and similar items; proposed new
products or services; the adequacy of cash generated from operations and cash
balances; the Company's exposure to interest rate risk; costs, liabilities,
exposure, and plans related to the Year 2000 problem; the Company's ability to
mitigate  risks associated with the Year 2000 problem;  future economic
conditions or performance; and assumptions underlying any of the foregoing.  In
some cases, forward-looking statements can be identified by the use of
terminology such as "may," "will," "expects," "plans," "anticipates,"
"estimates," "potential," or "continue," or the negative thereof or other
comparable terminology.  Although the Company believes that the expectations
reflected in the forward-looking statements contained herein are reasonable,
there can be no assurance that such expectations or any of the forward-looking
statements will prove to be correct, and actual results could differ materially
from those projected or assumed in the forward-looking statements.  The
Company's future financial condition and results of operations, as well as any
forward-looking statements, are subject to risks and uncertainties, including
but not limited to the factors set forth in the Company's Form 10-K under the
heading "Factors That May Affect Future Results" and elsewhere in this report.
All forward-looking statements and reasons why results may differ included in
this Annual Report are made as of the date hereof, and the Company assumes no
obligation to update any such forward-looking statement or reason why actual
results may differ.

OVERVIEW

Pericom Semiconductor Corporation (the "Company") was incorporated in June 1990.
The Company completed its first profitable fiscal year on June 30, 1993 and has
been profitable in each of its last twenty-six quarters.  The Company designs,
manufactures and markets high performance digital, analog and mixed-signal
integrated circuits used for the transfer, routing, and timing of digital and
analog signals within and between computer, networking, datacom and telecom
systems. The Company's first volume sales occurred in fiscal 1993 and consisted
exclusively of 5-volt 8-bit interface logic circuits. The Company expanded its
product offering by introducing 3.3-volt 16-bit logic circuits and 8-bit digital
switches in fiscal 1994; clock generators, 3.3-volt clock synthesizers and
buffers, and high-speed interface products for the networking industry in fiscal
1995; 32-bit logic, 16-bit digital switches and Pentium, 56K modem and laser
printer clock synthesizers in fiscal 1996; an analog switch family, mixed-
voltage logic, a family of clock generators and a FastEthernet transceiver in
fiscal 1997; a family of low voltage ALVCH logic, clock devices for Pentiun and
Pentium II mobile computers, a complete solution for the PC100 memory module
standard and a 3.3-volt bus switch family offering the fastest bus switches on
the market in fiscal 1998; and in fiscal 1999 three families of 2.5-volt zero-
delay clock drivers for the networking and telecommunications markets, a family
of application specific bus switches to support PCI "hot plugging" and GTL bus
termination, integrated clock generators to support the latest Pentium III and
Celeron Intel processors and a complete interface solution for the PC133 memory
module standard.

As is typical in the semiconductor industry, the Company expects selling prices
for its products to decline over the life of each product. The Company's ability
to increase net revenues is highly dependent upon its ability to increase unit
sales volumes of existing products and to introduce and sell new products in
quantities sufficient to compensate for the anticipated declines in selling
prices of existing products. The Company seeks to increase unit sales volume
through increased wafer fabrication capacity allocations from its existing
foundries, qualification of new foundries, increased number of die per wafer
through die size reductions and improved yields of good die through the
implementation of advanced process technologies, but there can be no assurance
that the Company will be successful in these efforts. In fiscal 1997 and 1998,
approximately 90% of the wafers for the Company's semiconductor products were
manufactured by Chartered.  In fiscal 1999, 85% of the wafers were manufactured
by Chartered. The Company qualified AMS as a wafer supplier in fiscal 1991, NJRC
in fiscal 1995, TSMC in fiscal 1997 and LG in 1998.

Declining selling prices will adversely affect gross margins unless the Company
is able to offset such declines with the sale of new higher margin products or
achieve commensurate reductions in unit costs. The Company seeks to improve its
overall gross margin through the development and introduction of selected new
products that the Company believes will ultimately achieve higher gross margins.
A higher gross margin for a new product is typically not achieved until

                                       3
<PAGE>

some period after the initial introduction of the product -- after start-up
expenses for that product have been incurred and once volume production begins.
In general, costs are higher at the introduction of a new product due to the use
of a more generalized design schematic, lower economies of scale in the assembly
phase and lower die yield. The Company's ability to decrease unit cost depends
on its ability to shrink the die sizes of its products, improve yields, obtain
favorable subcontractor pricing, and make in-house test and assembly operations
more productive and efficient. There can be no assurance that these efforts,
even if successful, will be sufficient to offset declining selling prices.

Revenue from product sales is recognized upon shipment. Estimated costs for
exchanges, returns, price protection and other concessions are accrued in the
period that sales are recognized. Although the Company believes that, to date,
it has provided adequate allowances for exchanges, returns, price protection and
other concessions, and, to date, actual amounts incurred have not differed
materially from the allowances, there can be no assurance that actual amounts
incurred will not exceed the Company's allowances, particularly in connection
with the introduction of new products, enhancements to existing products or
price reductions.


RESULTS OF OPERATIONS

The following table sets forth certain statement of income data as a percentage
of net revenues for the periods indicated.

<TABLE>
<CAPTION>
                                                                                        Fiscal Year Ended
                                                                                            June 30,
                                                                          1999                  1998                1997
                                                                   -------------------   ------------------   ----------------

<S>                                                                <C>                   <C>                  <C>
Net revenues                                                             100.0%               100.0%             100.0%
Cost of revenues                                                          59.3                 59.5               63.3
                                                                -------------------------------------------------------------
     Gross Margin                                                         40.7                 40.5               36.7
Operating expenses:
     Research and development                                             10.0                 10.3               12.6
     Selling, general and administrative                                  15.3                 15.9               18.1
                                                                -------------------------------------------------------------
          Total operating expenses                                        25.3                 26.2               30.7
                                                                -------------------------------------------------------------
Income from operations                                                    15.4                 14.3                6.0
Other income, net                                                          1.8                  1.5                1.1
                                                                -------------------------------------------------------------
Income before income taxes                                                17.2                 15.8                7.1
Provision for income taxes                                                 5.9                  5.3                2.3
                                                                -------------------------------------------------------------
Net income                                                                11.3%                10.5%               4.8%
                                                                =============================================================
</TABLE>


COMPARISON OF FISCAL 1999, 1998 AND 1997

NET REVENUES.  Net revenues increased 22% from $49.2 million in fiscal 1998 to
$59.8 million in fiscal 1999.  The increase in net revenues was attributable to
increased sales volume in the Company's SiliconSwitch and SiliconClock product
lines, partially offset by a decrease in the sales volume of the
SiliconInterface product line and a decline in the weighted average selling
price for all products.  Net revenues increased 48% from $33.2 million in fiscal
1997 to $49.2 million in fiscal 1998. This increase in net revenues was
attributable to increased sales volume in all of the Company's product families,
and in particular the Company's SiliconSwitch product line.

GROSS PROFIT.  Gross profit increased 22% from $19.9 million in fiscal 1998 to
$24.3 million in fiscal 1999.  Gross margin rose slightly to 40.7% in fiscal
1999 versus 40.5% in fiscal 1998. This increase is due to the introduction of
higher gross margin new products and ongoing reductions in wafer, assembly and
test costs  although these improvements were offset to some extent by decreases
in average selling prices in the Company's various product lines. Gross profit
increased 63% from $12.2 million in fiscal 1997 to $19.9 million in fiscal 1998.
Gross margin increased from 36.7% in fiscal 1997 to 40.5% in fiscal 1998. This
increase in gross margin resulted from cost reductions in excess of decreases in
the average selling prices in the Company's various product lines and the
introduction of new products

                                       4
<PAGE>

at higher gross margins. Cost reductions were achieved in each of the Company's
product lines through reduced wafer costs, lower per unit assembly and test
costs, and increased die per wafer resulting from reduced design geometries.

RESEARCH AND DEVELOPMENT. Research and development expenses increased 18.0% from
$5.1 million in fiscal 1998 to $6.0 million in fiscal 1999 but decreased
slightly as a percentage of net revenues from 10.3% to 10.0%. Research and
development expenses increased 21.0% from $4.2 million in fiscal 1997 to $5.1
million in fiscal 1998 but decreased as a percentage of net revenues from 12.6%
in fiscal 1997 to 10.3% in fiscal 1998. The increase in absolute dollars in
research and development spending in each year was attributable to development
costs for new products in each of the Company's product lines and expansion of
the Company's engineering staff as the Company continued its commitment to new
product development.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses consist primarily of personnel and related overhead costs for sales,
marketing, finance, human resources and general management. Such costs include
advertising, sales materials, sales commissions, and other marketing and
promotional expenses. Selling, general and administrative expenses increased
17.7% from $7.8 million in fiscal 1998 to $9.2 million in fiscal 1999 but
decreased as a percentage of net revenue from 15.9% to 15.3%.  The increase in
expense in absolute dollars was attributable to increased staffing levels,
particularly in sales and marketing and the addition of a sales office in Japan.
Selling, general and administrative expenses increased 30.1% from $6.0 million
in fiscal 1997 to $7.8 million in fiscal 1998, but decreased as a percentage of
net revenues from 18.1% in fiscal 1997 to 15.9% in fiscal 1998. The increase in
expense was attributable to increased staffing levels, particularly in sales and
marketing, as well as increased commission expense due to higher sales levels.

OTHER INCOME, NET. Other income, net includes interest income and expense and
the Company's allocated portion of net losses of Pericom Technology, Inc.
("PTI"), a British Virgin Islands corporation based in Shanghai, People's
Republic of China.  PTI was formed by Pericom and certain Pericom shareholders
in 1994 to develop and market semiconductors in China and certain other Asian
countries. See Note 4 of Notes to Financial Statements.  Other income, net
increased from income of $738,000 in fiscal 1998 to $1,098,000 in fiscal 1999.
Interest income increased from $1.1 million in fiscal 1998 to $1.4 million in
fiscal 1999 as a result of the Company's investment of the net proceeds from its
initial public offering. The proceeds were invested for the full fiscal year in
1999 versus approximately 8 months in fiscal 1998. The Company's share of the
net losses of PTI declined from $345,000 in fiscal 1998 to $288,000 in fiscal
1999. Other income, net increased from income of $351,000 in fiscal 1997 to
$738,000 in fiscal 1998.  Interest income increased from $431,000 in fiscal 1997
to $1,083,000 in fiscal 1998 as a result of the Company's investment of the net
proceeds from its initial public offering. The increased interest income in
fiscal 1998 was partially offset by an increase of $265,000 in the Company's
share of the net losses of PTI.

PROVISION FOR INCOME TAXES. The provision for income taxes was $3,488,000,
$2,629,000 and $777,000 in fiscal 1999, 1998 and 1997, respectively. In each of
these fiscal years, the provision for income taxes differed from the federal
statutory rate primarily due to state income taxes and the utilization of
research and development tax credits.

LIQUIDITY AND CAPITAL RESOURCES

Prior to the Company's initial public offering in October 1997, the Company used
proceeds from the private sale of equity securities, bank borrowings and
internal cash flow to support its operations, acquire capital equipment and
finance inventory and accounts receivable growth.  Operating activities provided
approximately $3.8 million in cash in fiscal 1999, $3.5 million in fiscal 1998,
and $2.9 million in fiscal 1997.

Net cash used for investing activities was $5.3 million, $20.9 million and $2.0
million in fiscal 1999, 1998 and 1997, respectively.  The Company made capital
expenditures of approximately $3.0 million, $2.9 million and $2.0 million in
fiscal 1999, 1998 and 1997, respectively.  The Company expects to spend
approximately $4.0 million in fiscal 2000 to acquire capital equipment,
primarily for research and development and testing, and for leasehold
improvements associated with facilities expansion.  The Company used proceeds
from its initial public offering to purchase short-term investments of $17.1
million in fiscal 1998.

As of June 30, 1999, the Company's principal source of liquidity included cash,
cash equivalents and short-term investments of approximately $25.7 million. The
Company believes that cash generated from operations and existing

                                       5
<PAGE>

cash balances will be sufficient to fund necessary purchases of capital
equipment and to provide working capital at least through the next 12 months.
However, there can be no assurance that future events will not require the
Company to seek additional capital sooner or, if so required, that adequate
capital will be available at all or on terms acceptable to the Company.

MARKET RISK DISCLOSURE

At June 30, 1999, the Company's investment portfolio consisted of fixed income
securities, excluding those classified as cash equivalents, of $17.4 million
(see Note 1 of Notes to Financial Statements).  These securities are subject to
interest rate risk and will decline in value if market interest rates increase.
For example, if market interest rates were to increase immediately and uniformly
by 10% from levels as of June 30, 1999, the decline in the fair value of the
portfolio would not have a material effect on the Company's results of
operations over the next fiscal year. Due to the short duration and conservative
nature of these instruments, the Company does not believe that it has a material
exposure to interest rate risk.

YEAR 2000 READINESS DISCLOSURE

The Company is aware of the issues associated with the programming code in
existing computer systems as Year 2000 approaches. The Year 2000 problem is
pervasive and complex, as virtually every computer operation will be affected by
the rollover of the two digit year value to 00. The issue is whether computer
systems will properly recognize date sensitive information when the year changes
to 2000. Systems that do not properly recognize such information could generate
erroneous data or cause a system to fail. The Company has been working to
identify and assess the risks associated with its information systems, products,
operations and infrastructure, suppliers and customers that are not Year 2000
compliant, and to develop, implement and test remediation and contingency plans
to mitigate these risks. The Company is replacing or upgrading systems,
equipment and facilities that are known to be Year 2000 non-compliant. For the
Year 2000 non-compliance issues identified to date, management believes the cost
of upgrade or remediation has been less than $100,000 and expects total costs
incurred to not exceed this amount. If implementation of replacement systems is
delayed, or if significant new non-compliance issues are identified, the
Company's financial condition, results of operations, or cash flows could be
materially adversely affected.

INFORMATION SYSTEMS. The Company began the installation of an enterprise wide
EDP system that was required to meet Pericom's business needs in late fiscal
1997.  The enterprise wide system purchased by the Company includes many
important functional improvements necessary for Pericom to be a competitive
semiconductor manufacturing company and is Year 2000 compliant.  The Company has
not allocated a portion of the total project cost to the Year 2000 issue.  The
Company believes that the incremental cost associated with Year 2000 compliance
is not material, as this feature is included in the enterprise wide system
purchased by the Company to satisfy business needs.  The Company believes that
substantially all of its systems, including the new enterprise wide system, are
Year 2000 compliant.

PRODUCTS. The Company currently believes that it has no significant exposure to
contingencies directly related to the Year 2000 issue for products it has sold
or will sell in the future.

OPERATIONS AND INFRASTRUCTURE. Machinery and equipment and other items used in
the operations and facilities of the Company have been inventoried and are
currently being assessed for Year 2000 compliance.  The assessment to date has
not uncovered any material issues.

SUPPLIERS. The Company has contacted its critical suppliers to determine whether
their operations, products and services are Year 2000 compliant. Where
practicable, the Company will attempt to mitigate its risks with respect to the
failure of suppliers to be Year 2000 compliant. In the event that suppliers are
not Year 2000 compliant, the Company will seek alternative sources of suppliers.
However, such failures remain a possibility and could have a material impact on
the Company's financial condition, results of operations, or cash flows.

CUSTOMERS. The Company is actively responding to all customer requests for
compliance, surveys and other general information related to its Year 2000
programs.

                                       6
<PAGE>

GENERAL.  The Company does not currently expect its costs associated with the
Year 2000 problem to be material, and expects to be able to fund these costs
through operating cash flows. However, the risks associated with the Year 2000
problem can be difficult to identify and to address, and could result in
material adverse consequences to the Company. Even if the Company, in a timely
manner, completes all of its assessments, identifies and tests remediation plans
believed to be adequate, and develops contingency plans believed to be adequate,
some problems may not be identified or corrected in time to prevent material
adverse consequences to the Company.

As the Year 2000 project continues, the Company may discover additional Year
2000 problems, may not be able to develop, implement, and test remediation or
contingency plans in a timely manner, or may find that the costs of these
activities exceed current expectations and become material. In many cases, the
Company is relying on assurances from suppliers and customers that new and
upgraded information systems and other products will be Year 2000 compliant. The
Company has and plans to test certain third-party products, but cannot be sure
that its tests will be adequate or that, if problems are identified, they will
be addressed by the supplier in a timely and satisfactory way.

Because the Company uses a variety of information systems and has additional
systems embedded in its operations and infrastructure,  the Company cannot be
sure that all of its systems will work together in a Year 2000-compliant
fashion. Furthermore, the Company cannot be sure that it will not suffer
interruptions, either because of its own Year 2000 problems or those of its
customers or suppliers whose Year 2000 problems may make it difficult or
impossible for them to fulfill their commitments to the Company.

The Company believes that substantially all of its systems, including the new
enterprise wide system, are Year 2000 compliant and therefore has no contingency
plans. Under the worst case scenario, if the Company is wrong in its beliefs
about the Year 2000 readiness of its systems, it could have an adverse effect on
the Company's financial condition, results of operations, or cash flows.
Further, the Company could be materially and adversely impacted by widespread
economic or financial market disruption, or by Year 2000 computer system
failures at third parties with which it has relationships.

                                       7
<PAGE>

                         INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
Pericom Semiconductor Corporation:

We have audited the accompanying balance sheets of Pericom Semiconductor
Corporation as of June 30, 1999 and 1998, and the related statements of income,
shareholders' equity and comprehensive income, and of cash flows for each of the
three years in the period ended June 30, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Pericom Semiconductor Corporation at June
30, 1999 and 1998, and the results of its operations and its cash flows for each
of the three years in the period ended June 30, 1999, in conformity with
generally accepted accounting principles.


DELOITTE & TOUCHE LLP

San Jose, California
July 23, 1999

                                       8
<PAGE>

                       PERICOM SEMICONDUCTOR CORPORATION

                                BALANCE SHEETS

                       (In thousands, except share data)

<TABLE>
<CAPTION>


                                                                    ----------------------
                                                                           June 30,
                                                                    ----------------------
                                                                       1999        1998
                                                                    ----------   ---------
<S>                                                                 <C>          <C>
ASSETS
Current assets:
      Cash and equivalents                                           $ 8,328      $ 8,773
        Short-term investments                                        17,397       17,058
      Accounts receivable:
            Trade (net of allowances of $2,570 and $1,559)             9,719        5,437
                Other                                                    346          193
      Inventories                                                      9,835        8,917
      Prepaid expenses and other current assets                          582          153
      Deferred income taxes                                              356          510
                                                                 -------------------------
                  Total current assets                                46,563       41,041
Property and equipment--net                                            6,509        5,121
Investment in and advances to joint venture                            2,611        1,046
Other assets                                                             242          193
                                                                 -------------------------
                        Total                                        $55,925      $47,401
                                                                 =========================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
      Accounts payable                                               $ 7,295      $ 6,117
      Accrued liabilities                                              1,604        1,855
      Income taxes payable                                                22          318
                                                                 -------------------------
                  Total current liabilities                            8,921        8,290
Commitments and contingencies (Notes 8 and 9)
Deferred income taxes                                                    624          500
Shareholders' equity:
        Preferred stock, 5,000,000 shares authorized; none
         issued and                                                      ---          ---
               outstanding
      Common stock, 30,000,000 shares authorized;
            shares outstanding: 1999, 9,519,241; 1998, 9,286,399      25,600       24,570
        Accumulated other comprehensive loss                            (33)         ---
      Retained earnings                                               20,813       14,041
                                                                 -------------------------
                  Total shareholders' equity                           46,380       38,611
                                                                 -------------------------
                  Total                                               $55,925      $47,401
                                                                 =========================
</TABLE>


                              See notes to financial statements.

                                       9
<PAGE>

                       PERICOM SEMICONDUCTOR CORPORATION

                             STATEMENTS OF INCOME

                   (In thousands, except per share amounts)

<TABLE>
<CAPTION>


                                                                Years Ended June 30,
                                                     -------------------------------------------
                                                        1999           1998            1997
                                                     -----------   ------------   --------------

<S>                                                  <C>           <C>            <C>
Net revenues                                          $59,797         $49,198          $33,166
Cost of revenues                                       35,484          29,285           20,986
                                                  ---------------------------------------------
  Gross profit                                         24,313          19,913           12,180
Operating expenses:
  Research and development                              5,976           5,065            4,187
  Selling, general and administrative                   9,175           7,793            5,989
     Total                                             15,151          12,858           10,176
                                                  ---------------------------------------------
Income from operations                                  9,162           7,055            2,004
Equity in net loss of joint venture                      (288)           (345)             (80)
Interest income                                         1,386           1,083              431
                                                  ---------------------------------------------
Income before income taxes                             10,260           7,793            2,355
Provision  for income taxes                             3,488           2,629              777
                                                  ---------------------------------------------
Net income                                            $ 6,772         $ 5,164          $ 1,578
                                                  =============================================
Basic earnings per share                                $0.72           $0.73            $0.73
                                                  =============================================
Diluted earnings per share                              $0.66           $0.55            $0.22
                                                  =============================================
Shares used in computing basic earnings per share       9,395           7,083            2,165
                                                  =============================================
Shares used in computing diluted earnings per          10,279           9,412            7,316
 share                                            =============================================

</TABLE>

                      See notes to financial statements.

                                       10
<PAGE>

                       PERICOM SEMICONDUCTOR CORPORATION

          STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME

                                (In thousands)

<TABLE>
<CAPTION>
                                                                          Accumulated
                                                                             Other            Total
                       Preferred Stock       Common Stock    Retained   Comprehensive    Shareholders'    Comprehensive
                       ----------------     -------------
                      Shares     Amount    Shares   Amount    Earnings       Income           Equity           Income
                      -------   --------   ------   -------   --------   --------------   --------------   --------------
<S>                   <C>       <C>        <C>      <C>       <C>        <C>              <C>              <C>
BALANCES, June 30,
 1996                  9,225    $ 7,717     2,165   $    79    $ 7,299             ---          $15,095

Net income and
 comprehensive           ---        ---       ---       ---      1,578             ---            1,578           $1,578
 income
                                                                                                          =================
Exercise of
 employee stock          ---        ---       181       122        ---             ---              122
 options
                    -----------------------------------------------------------------------------------------------------
BALANCES, June 30,
 1997                  9,225      7,717     2,346       201      8,877             ---           16,795

Net income and
 comprehensive           ---        ---       ---       ---      5,164             ---            5,164           $5,164
 income
                                                                                                           =================
Initial public
 offering of
 common stock, net       ---        ---     2,000    16,000        ---             ---           16,000
 of      issuance
 costs of $740


Conversion of
 preferred stock      (9,225)    (7,717)    4,612     7,717        ---             ---              ---
 to common stock

Issuance of common
 stock under             ---        ---       328       495        ---             ---              495
 employee stock
 plans

Tax benefit
 resulting from          ---        ---       ---       157        ---             ---              157
 stock option
 transactions
                    -----------------------------------------------------------------------------------------------------
BALANCES, June 30,
 1998                    ---        ---     9,286    24,570     14,041             ---           38,611

Net income               ---        ---       ---       ---      6,772             ---            6,772           $6,772
Unrealized
 Gain/(loss) on          ---        ---       ---       ---        ---             (33)             (33)             (33)
 investments
                                                                                                          -----------------
Comprehensive            ---        ---       ---       ---        ---             ---              ---           $6,739
 Income
                                                                                                          =================
Issuance of common
 stock under             ---        ---       233       737        ---             ---              737
 employee stock
 plans

Tax benefit
 resulting from          ---        ---       ---       293        ---             ---              293
 stock option
 transactions
                   ------------------------------------------------------------------------------------------------------
BALANCES, June 30,
 1999                    ---        ---     9,519   $25,600    $20,813            $(33)         $46,380
                   =====================================================================================================
</TABLE>


                    See notes to financial statements.

                                       11
<PAGE>


                       PERICOM SEMICONDUCTOR CORPORATION

                           STATEMENTS OF CASH FLOWS

                                (In thousands)

<TABLE>
<CAPTION>
                                                                                 Years Ended June 30,
                                                                       -----------------------------------------
                                                                           1999           1998          1997
                                                                       ------------   ------------   -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                    <C>            <C>            <C>
Net income                                                              $  6,772       $  5,164       $ 1,578
Adjustments to reconcile net income to net cash provided by
 (used for) operating activities:
  Depreciation and amortization                                            1,601          1,144           966
        Loss on disposal of assets                                           ---             10           ---
  Equity in net loss of joint venture                                        288            345            80
  Deferred income taxes                                                      278            141           130
  Changes in assets and liabilities:
     Accounts receivable                                                  (4,435)        (2,284)       (1,423)
     Inventories                                                            (918)        (2,735)         (713)
     Prepaid expenses and other current assets                              (429)            (4)          (67)
     Accounts payable                                                      1,178          1,133         1,701
     Accrued liabilities                                                    (252)           652          (107)
     Income taxes payable                                                     (3)            64           706
                                                                    -------------------------------------------
        Net cash provided by operating activities                          4,080          3,630         2,851
                                                                    -------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                                     (2,988)        (2,857)       (2,001)
        Purchase of short-term investments                               (13,054)       (25,203)          ---
        Maturities of short-term investments                              12,682          8,145
  (Increase) decrease in other assets                                        (49)          (260)           56
        Advances to joint venture                                         (1,853)          (747)          (25)
  Proceeds from sale of property and equipment                               ---              4             7
                                                                    -------------------------------------------
        Net cash used for investing activities                            (5,262)       (20,918)       (1,963)
                                                                    -------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Sale of common stock                                                       737         16,495           122
                                                                    -------------------------------------------
NET INCREASE (DECREASE) IN CASH AND
 EQUIVALENTS                                                                (445)          (793)        1,010
CASH AND EQUIVALENTS:
  Beginning of period                                                      8,773          9,566         8,556
                                                                    -------------------------------------------
  End of period                                                         $  8,328       $  8,773       $ 9,566
                                                                    ===========================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION:
 Cash paid during the period for:
  Income taxes                                                          $  3,210       $  2,381       $    50
                                                                    ===========================================
SUPPLEMENTAL NONCASH FINANCING ACTIVITIES:
    Tax benefit from stock option transactions                          $    293       $    157           ---
                                                                    ===========================================
</TABLE>



                      See notes to financial statements.

                                       12
<PAGE>

                       PERICOM SEMICONDUCTOR CORPORATION

                         NOTES TO FINANCIAL STATEMENTS

                FISCAL YEARS ENDED JUNE 30, 1999, 1998 AND 1997


1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Pericom Semiconductor Corporation (the "Company") was incorporated in June 1990.
The Company designs, manufactures and markets high performance digital, analog
and mixed-signal integrated circuits used for the transfer, routing, and timing
of digital and analog signals within and between computer, networking, datacom
and telecom systems.

FINANCIAL STATEMENT ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses during the reporting period.  Actual results
could differ from those estimates.

CASH EQUIVALENTS -- The Company considers all highly liquid debt instruments
purchased with a remaining maturity of three months or less to be cash
equivalents. The recorded carrying amounts of the Company's cash and cash
equivalents approximate their fair market value.

SHORT-TERM INVESTMENTS -- The Company's policy is to invest in short-term
instruments with investment grade credit ratings.  Generally, such investments
have contractual maturities of up to three years.  The Company classifies its
short-term investments as "available-for-sale" securities and the cost of
securities sold is based on the specific identification method.  As of June 30,
1999 there were no significant differences between the fair market value and the
underlying cost of such investments.  At June 30, 1999 short-term investments
consisted of the following:

<TABLE>
<CAPTION>
                                                            Gross                  Gross
                                      Amortized           Unrealized             Unrealized              Market
                                         Cost               Gains                  Losses                Value
                                   ----------------   ------------------   ----------------------   ----------------

<S>                                <C>                <C>                  <C>                      <C>
Corporate bonds and notes             $ 4,139,000             ---                   (33)              $ 4,106,000
U.S. government securities              5,992,000             ---                    (1)                5,991,000
Certificates of deposit                 7,299,000               1                   ---                 7,300,000
                                ------------------------------------------------------------------------------------
                                      $17,430,000               1                   (34)              $17,397,000
                                ====================================================================================
</TABLE>

INVENTORIES are stated at the lower of cost (first-in, first-out) or market.

PROPERTY AND EQUIPMENT are stated at cost. Depreciation and amortization are
computed using the straight-line method over estimated useful lives of three to
five years.

INVESTMENT IN JOINT VENTURE is accounted for using the equity method (see Note
4).

LONG-LIVED ASSETS -- The Company evaluates long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The Company's policy is to review the
recoverability of all intangible assets based upon undiscounted cash flows on an
annual basis at a minimum, and in addition, whenever events or changes indicate
that the carrying amount of an asset may not be recoverable.

INCOME TAXES --The Company accounts for income taxes under SFAS No. 109,
"Accounting for Income Taxes," which requires an asset and liability approach to
recording deferred taxes.

                                       13
<PAGE>

STOCK-BASED COMPENSATION -- The Company accounts for stock-based awards to
employees using the intrinsic value method in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."

REVENUE RECOGNITION -- Revenue from product sales is recognized upon shipment.
Estimated costs for sales returns, price protection, stock rotation and other
allowances are accrued in the period that sales are recognized. Domestic
distributors are permitted a return allowance of 10% of their net purchases
every six months. Revenue from design services, included in net revenues, is
recognized on the completion of project milestones set forth in the related
agreements.

FISCAL PERIOD -- The Company's fiscal years in the accompanying financial
statements have been shown as ending on June 30. Fiscal years 1997, 1998 ended
on June 28, 1997 and June 27, 1998, respectively, and each included 52 weeks.
Fiscal year 1999 ended on July 3, 1999 and included 53 weeks.

CONCENTRATION OF CREDIT RISK AND CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES ---
The Company sells its products primarily to large organizations and generally
does not require its customers to provide collateral or other security to
support accounts receivable. The Company maintains allowances for estimated bad
debt losses.

The Company participates in a dynamic high technology industry and believes that
changes in any of the following areas could have a material adverse effect on
the Company's future financial position or results of operations: advances and
trends in new technologies; competitive pressures in the form of new products or
price reductions on current products; changes in product mix; changes in the
overall demand for products and services offered by the Company; changes in
customer relationships; litigation or claims against the Company based on
intellectual property, patent, product, regulatory or other factors; risks
associated with changes in domestic and international economic and/or political
conditions or regulations; availability of necessary components; and the
Company's ability to attract and retain employees necessary to support its
growth.

COMPREHENSIVE INCOME -- In fiscal year 1999, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income", which requires an enterprise to report, by major components and as a
single total, the change in net assets during the period from nonowner sources.
Comprehensive income  for the years ended June 30, 1999, 1998 and 1997 have been
disclosed within the statement of shareholders' equity and comprehensive income.

RECENTLY ISSUED ACCOUNTING STANDARDS -- In June 1998, SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities", was issued which defines
derivatives, requires all derivatives be carried at fair value, and provides for
hedging accounting when certain conditions are met.  This statement is effective
for all fiscal quarters of fiscal years beginning after June 15, 2000.  Although
the Company has not fully assessed the implications of this new statement, the
Company does not believe adoption of this statement will have a material impact
on the Company's financial statements.

RECLASSIFICATIONS --  Certain items in the 1998 and 1997 financial statements
have been reclassified to conform with the 1999 presentation.  Such
reclassifications had no impact on net income or sharesholders' equity.

EARNINGS PER SHARE -- Basic earnings per share is based upon the weighted
average number of common shares outstanding.  Diluted earnings per share
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.

                                       14
<PAGE>

Basic and diluted earnings per share for each of the three years in the period
ended June 30, 1999 are as follows:

<TABLE>
<CAPTION>
                                                                                        Years Ended June 30,
                                                                        ------------------------------------------------
                                                                                1999            1998            1997
                                                                                ----            -----           ----
<S>                                                                         <C>             <C>             <C>
Net income                                                                      $6,772          $5,164          $1,578
                                                                         ================================================
Computation of common shares outstanding - basic
 earnings per share:
          Weighted average common stock                                          9,395           7,083           2,165
                                                                         ================================================
Basic earnings per share                                                        $ 0.72          $ 0.73          $ 0.73
                                                                         ================================================
</TABLE>

<TABLE>
<CAPTION>

Computation of common shares outstanding  diluted earnings per
 share:
<S>                                                                         <C>              <C>              <C>
          Weighted average common stock                                          9,395           7,083            2,165
          Weighted average preferred shares                                       ---            1,572            4,612
          Dilutive options using the treasury stock method                         884             757              539
                                                                         ---------------------------------------------------
Shares used in computing diluted earnings per share                             10,279           9,412            7,316
                                                                         ===================================================
Diluted earnings per share                                                     $  0.66          $ 0.55           $ 0.22
                                                                         ===================================================
</TABLE>

Options to purchase 571,553 and 224,000 shares of Common Stock at prices ranging
from $2.40 to $3.80 and $8.13 to $9.63 were outstanding as of June 30, 1997 and
1998, respectively, but not included in the computation of diluted net income
per share because the options' exercise prices were greater that the average
market price of the common shares as of such dates and therefore, would be anti-
dilutive under the treasury stock method.  There were no anti-dilutive options
at June 30, 1999.

2. INVENTORIES

Inventories consist of (in thousands):
<TABLE>
<CAPTION>
                                                                 As of June 30,
                                                       -------------------------------
                                                              1999            1998
                                                          -------------   ------------
<S>                                                       <C>             <C>
Finished goods                                                $2,620          $1,752
Work-in-process                                                5,972           5,671
Raw materials                                                  1,243           1,494
                                                       -------------------------------
                                                              $9,835          $8,917
                                                       ===============================
</TABLE>

                                       15
<PAGE>

3. PROPERTY AND EQUIPMENT

Property and equipment consist of (in thousands):
<TABLE>
<CAPTION>
                                                                                            As of June 30,
                                                                                ----------------------------------
                                                                                        1999             1998
                                                                                   --------------   ---------------

<S>                                                                                <C>              <C>
Machinery and equipment                                                                $ 5,705           $ 4,336
Computer equipment and software                                                          3,631             2,101
Furniture and fixtures                                                                     413               332
Leasehold improvements                                                                     332               137
Construction-in-progress                                                                 1,383             1,881
                                                                                ----------------------------------
Total                                                                                   11,464             8,787
Accumulated depreciation and amortization                                              (4,955)           (3,666)
                                                                                ----------------------------------
Property and equipment - net                                                           $ 6,509           $ 5,121
                                                                                ==================================
</TABLE>

Construction-in-progress is primarily implementation costs of an enterprise-wide
EDP system that is not fully in use, leasehold improvements in process, and
machinery and equipment that has not been accepted.

4. INVESTMENT IN JOINT VENTURE

In fiscal 1994, the Company purchased 1,500,000 shares of Series A Convertible
Preferred Stock issued by Pericom Technology, Inc. ("PTI") for $750,000 (an
18.4% equity investment). Such preferred stock is convertible at the option of
the Company into 1,500,000 shares of PTI common stock, does not bear dividends,
has a liquidation preference up to the purchase price and votes based on the
number of common shares into which it is convertible. PTI was incorporated in
1994 and in 1995 established a design center and sales office to pursue
opportunities and participate in joint ventures in China. The investment in PTI
is accounted for using the equity method due to the Company's significant
influence over its operations. In addition, several of the directors of the
Company are also directors of PTI, and certain shareholders of the Company are
also shareholders of PTI. During the years ended June 30, 1997, 1998 and 1999,
the Company sold $39,000, $61,000 and $65,000, respectively, in services to PTI.
During the years ended June 30, 1998 and 1999 the Company purchased $61,000 and
$72,000 in services from PTI, respectively.  At June 30, 1997, 1998 and 1999,
$99,000, $846,000 and $2,611,000, respectively, was owed to the Company by PTI
for reimbursement of certain administrative expenses incurred by the Company on
behalf of PTI and for advances made to PTI by the Company.  Advances from the
Company to PTI are guaranteed by the individual shareholders of PTI.  Condensed
financial information of the joint venture at June 30, 1999 is as follows (in
thousands):

<TABLE>
<S>                                                                           <C>
Total assets                                                                         $ 2,065
Total liabilities                                                                      2,815
Total equity                                                                            (750)

Revenue                                                                              $   531
Cost of revenues                                                                         229
                                                                           ------------------
Gross profit                                                                             302

Expenses                                                                               1,741
                                                                           ------------------
Operating Loss                                                                        (1,439)
Interest and other income/(expense)                                                      (77)
                                                                           ------------------

Net loss                                                                             $(1,516)
                                                                           ==================
</TABLE>


                                       16
<PAGE>

5. ACCRUED LIABILITIES

Accrued liabilities consist of (in thousands):
<TABLE>
<CAPTION>
                                                                                      As of June 30,
                                                                            -------------------------------
                                                                                   1999           1998
                                                                               ------------   -------------

<S>                                                                            <C>            <C>
Accrued compensation                                                               $  908          $1,059
External sales representative commissions                                             572             636
Other accrued expenses                                                                124             160
                                                                            -------------------------------
                                                                                   $1,604          $1,855
                                                                            ===============================
</TABLE>


6. SHAREHOLDERS' EQUITY

In October 1997, the Company completed an initial public offering of 2,000,000
shares of its common stock (selling shareholders sold an additional 500,000
shares in the offering) at a price of $9.00 per share.  Concurrent with the
offering, 9,225,000 shares of convertible preferred stock were converted, at a
2-for-1 ratio, into 4,612,000 shares of common stock.

PREFERRED STOCK

The number of shares of preferred stock authorized to be issued is 5,000,000.
The Board of Directors is authorized to issue the preferred stock from time to
time in one or more series and to fix the rights, privileges and restrictions of
the shares of such series.  As of June 30, 1999, no shares of preferred stock
were outstanding.

STOCK OPTION PLANS

Under the Company's 1990 Stock Option Plan and 1995 Stock Option Plans,
incentive and nonqualified stock options to purchase up to 3,480,029 shares of
common stock have been reserved at June 30, 1999 for issuance to employees,
officers, directors, independent contractors and consultants of the Company.

The options may be granted at not less than the fair value, as determined by the
Board of Directors, and not less than 85% of the fair value on grant date for
incentive stock options and nonqualified stock options, respectively. Options
vest over periods of up to 48 months as determined by the Board. Options granted
under the Plans expire 10 years from grant date.

                                       17
<PAGE>

Activity in the Company's option plans is summarized below:

<TABLE>
<CAPTION>
                                                                                                     Weighted
                                                                                                     Average
                                                                                                     Exercise
                                                                                      Shares          Price
                                                                                  --------------   ------------
<S>                                                                            <C>              <C>
Balance June 30, 1996 (698,956 exercisable at a weighted average
 price of $0.84)                                                                   1,204,969            1.56

     Granted (weighted average fair value
        of $0.94 per share)                                                          488,825            2.48
     Exercised                                                                      (180,700)           0.64
     Canceled                                                                       (316,479)           3.08
                                                                            --------------------------------
Balance June 30, 1997 (698,308 exercisable at a weighted average                   1,196,615            1.70
 price of $1.14)

     Granted (weighted average fair value
        of $2.59 per share)                                                          835,539            6.34
     Exercised                                                                      (299,314)           0.97
     Canceled                                                                       (138,516)           3.33
                                                                            --------------------------------
Balance June 30, 1998 (639,000 exercisable at a weighted average                   1,594,324            4.13
 price of $2.05)
     Granted (weighted average fair value
        of $4.23 per share)                                                        1,292,675            6.21
     Exercised                                                                      (137,904)           2.06
     Canceled                                                                       (826,250)           7.14
                                                                            --------------------------------
Balance, June 30, 1999                                                             1,922,845           $4.40
                                                                            ================================
</TABLE>

At June 30, 1999, 658,908 shares were available for future issuance under the
option plans.

In fiscal 1997, the Company canceled options to purchase 160,700 shares of
common stock with an exercise price of $3.80 per share and issued replacement
options with an exercise price of $2.40 per share.

In fiscal 1999, the Company canceled options to purchase 638,975 shares of
common stock with exercise prices ranging from $5.25 to $9.63 per share and
issued replacement options with an exercise price of $4.80 per share.

Additional information regarding options outstanding as of June 30, 1999 is as
follows:

<TABLE>
<CAPTION>
                                     Options Outstanding                   Options Exercisable
                                   -----------------------                 -------------------
                                     Weighted
                                     Average      Weighted                      Weighted
     Range of                       Remaining     Average                        Average
     Exercise          Number      Contractual    Exercise     Number           Exercise
      Prices         Outstanding   Life (Years)    Price     Exercisable          Price
------------------   -----------   ------------   --------   -----------   -------------------
 <S>                  <C>           <C>            <C>        <C>           <C>
  $0.20 - 1.44          294,597          5.14       $0.96       294,597             $0.96
  $2.40 - 4.00          398,142          7.39        2.97       276,024              2.94
  $4.40 - 4.69          197,250          8.09        4.41        99,324              4.40
      $4.80             610,656          8.72        4.80       165,022              4.80
  $4.88 - 6.75          209,700          9.06        6.25        43,657              6.37
  $7.06 - $12.44        212,500          9.74        8.89         6,293              8.78
----------------------------------------------------------------------------------------------
  $0.20 - 12.44       1,922,845          7.98       $4.40       884,917             $3.00
==============================================================================================
</TABLE>

                                       18
<PAGE>

1997 EMPLOYEE STOCK PURCHASE PLAN

In 1997, the Company approved the 1997 Employee Stock Purchase Plan (the "Stock
Purchase Plan"), which allows eligible employees of the Company to purchase
shares of Common Stock through payroll deductions.  A total of 300,000 shares of
the Company's Common Stock has been reserved for issuance under the Stock
Purchase Plan.  The Stock Purchase Plan permits eligible employees to purchase
Common Stock at a discount through payroll deductions, during 24-month purchase
periods, except that the first purchase period will be 27 months.  Each purchase
period will be divided into eight consecutive three-month accrual periods,
except that the first accrual period will be six months.  The price at which
stock is purchased under the Stock Purchase Plan is equal to 85% of the fair
market value of the Common Stock on the first day of the purchase period or the
last day of the accrual period, whichever is lower.  The initial purchase period
commenced upon the effective date of the Company's initial public offering of
Common Stock in October 1997 and will end on January 30, 2000.  The maximum
number of shares of Common Stock that any employee may purchase under the Stock
Purchase Plan during any accrual period is 500 shares.  During fiscal year 1998
and 1999, respectively, the Company issued 28,829 and 94,938 shares of common
stock under the Stock Purchase Plan at a  weighted average price of $7.11 and
$4.78 per share, respectively.  The weighted average fair value of the fiscal
1998 and 1999 awards was $2.99 and $2.30 per share, respectively.

ADDITIONAL STOCK PLAN INFORMATION

As discussed in Note 1, the Company continues to account for its stock-based
awards using the intrinsic value method in accordance with Accounting Principles
Board No. 25, "Accounting for Stock Issued to Employees," and its related
interpretations. Accordingly, no compensation expense has been recognized in the
financial statements for employee stock arrangements.

SFAS No. 123, "Accounting for Stock-Based Compensation," (SFAS 123), requires
the disclosure of pro forma net income as if the Company had adopted the fair
value method as of the beginning of fiscal 1996. Under SFAS 123, the fair value
of stock-based awards to employees is calculated through the use of option
pricing models, even though such models were developed to estimate the fair
value of freely tradable, fully transferable options without vesting
restrictions, which significantly differ from the terms of the Company's stock
option awards. These models also require subjective assumptions, including
expected time to exercise, which greatly affect the calculated values. The
Company's calculations were made using the Black-Scholes option pricing model
with the following weighted average assumptions for the Company's stock option
grants:

<TABLE>
<CAPTION>
                                                                 1999                    1998                   1997
                                                         ---------------------   --------------------   ---------------------
<S>                                                      <C>                      <C>                    <C>
Expected life                                                   5 years                5 years                 5 years
Risk-free interest rate                                          5.25%                   5.5%                    6.3%
Volatility                                                         83%                    75%                    ---
Dividend yield                                                   0.00%                  0.00%                   0.00%
</TABLE>

The following weighted average assumptions are included in the estimated grant
date fair value calculations for rights to purchase stock under the Stock
Purchase Plan:

<TABLE>
<CAPTION>
                                                                 1999                    1998
                                                         ---------------------   --------------------
<S>                                                       <C>                     <C>
Expected life                                                  3 months               3-6 months
Risk-free interest rate                                       4.3-4.7%                   5.5%
Volatility                                                     66%-88%                    76%
Dividend yield                                                   0.00%                  0.00%
</TABLE>

                                       19
<PAGE>

PRO FORMA NET INCOME AND EARNINGS PER SHARE

Had the Company amortized to expense the computed fair values of the 1999, 1998
and 1997 awards under the 1990 Stock Option Plan, 1995 Stock Option Plan and
Employee Stock Purchase Plan, the Company's pro forma net income and earnings
per share for the three fiscal years in the period ended June 30, 1999 would
have been as follows:

<TABLE>
<CAPTION>
                                                                   1999           1998           1997
                                                                ----------     ----------     ----------
<S>                                                             <C>          <C>          <C>
Pro forma net income                                            $5,734,000     $4,863,000     $1,398,000
Pro forma earnings per share:
    Basic earnings per share                                    $     0.61     $     0.69     $     0.65
    Diluted earnings per share                                  $     0.56     $     0.52     $     0.19
</TABLE>

However, the impact of outstanding nonvested stock options granted prior to
fiscal 1996 has been excluded from the pro forma calculation; accordingly, the
1997 and 1998 pro forma adjustments are not indicative of future period pro
forma adjustments, when the calculation will apply to all applicable stock
options.

7. INCOME TAXES

The provision for income taxes consists of (in thousands):

<TABLE>
<CAPTION>
                                                                                      Fiscal Year Ended June 30,
                                                                              -------------------------------------------
                                                                      1999                   1998                   1997
                                                              --------------------   --------------------   --------------------
<S>                                                           <C>                    <C>                    <C>
Federal:
   Current                                                            $2,774                $2,256                  $ 652
   Deferred                                                              235                   174                    104
                                                           --------------------------------------------------------------------
                                                                       3,009                 2,430                    756
State:
   Current                                                               143                    75                    (5)
   Deferred                                                               43                   (33)                    26
                                                           --------------------------------------------------------------------
                                                                         186                    42                     21
Charge is lieu of taxes attributable to employee
 stock plans                                                             293                   157                    ---

                                                           --------------------------------------------------------------------
Provision for income taxes                                             $3,488                $2,629                  $ 777
                                                           ====================================================================
</TABLE>
A reconciliation between the Company's effective tax rate and the U.S. statutory
rate is as follows:

<TABLE>
<CAPTION>
                                                                                            Fiscal Year Ended June 30,
                                                                                        -----------------------------------
                                                                                1999                1998               1997
                                                                         ------------------   -----------------   ---------------
<S>                                                                      <C>                  <C>                 <C>
Tax at federal statutory rate                                                   35.0%               35.0%             35.0%
State income taxes, net of federal benefit                                       1.5                 2.7              (0.3)
Research and development tax credits                                            (2.7)               (2.9)             (7.1)
Other                                                                             .2                (1.1)              5.4
                                                                       ---------------------------------------------------------
Provision for income taxes                                                      34.0 %               33.7%             33.0%
                                                                      ==========================================================
</TABLE>

                                       20
<PAGE>

The components of the net deferred tax assets (liabilities) were as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                                                         As of June 30,
                                                                                               -----------------------------------
                                                                                                     1999               1998
                                                                                               -----------------   ---------------
<S>                                                                                           <C>                 <C>
Deferred tax assets:
  Accruals and reserves recognized in different periods                                               $ 356             $ 410
  Other                                                                                                  96               113
                                                                                                        452               523
                                                                                              -------------------------------------
Deferred tax liabilities:
  Tax basis depreciation                                                                               (172)             (259)
  Capitalized research and development costs                                                           (404)             (207)
  Other                                                                                                (144)              (47)
                                                                                               -----------------------------------
                                                                                                       (720)             (513)
                                                                                               -----------------------------------
Net deferred tax assets (liabilities)                                                                 $(268)            $  10
                                                                                              =====================================
</TABLE>

8. LEASES

The Company leases certain facilities under operating leases through July 2004,
with two options to extend for an additional three years each upon termination
of the original, and extended, lease term. The future minimum operating lease
commitments at June 30, 1999 are as follows (in thousands):


<TABLE>
<CAPTION>
          Fiscal Year:
<S>                                                                                <C>
          2000                                                                                     $  632
          2001                                                                                        700
          2002                                                                                        900
          2003                                                                                        928
          2004                                                                                        957
          2005                                                                                         81
                                                                                        ------------------
                                                                                                   $4,198
                                                                                        ==================
</TABLE>

Rent expense for operating leases for the years ended June 30, 1999, 1998 and
1997 was $623,000, $481,000 and $366,000, respectively.

9. CONTINGENCIES

The semiconductor industry is characterized by frequent claims and related
litigation regarding patent and other intellectual property rights. The Company
settled the only outstanding claim of this nature in fiscal 1999 without
material adverse effect on the Company's financial position or results of
operations.

10. INDUSTRY AND SEGMENT INFORMATION

In fiscal year 1999, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", which establishes annual and
interim reporting standards for an enterprise's business segments and related
disclosures about its products, services, geographical areas and major
customers.  The Company operates in one reportable segment.

                                       21
<PAGE>

11. MAJOR CUSTOMERS AND GEOGRAPHIC OPERATING INFORMATION

In fiscal 1999 one customer represented 14% of net revenues, and three customers
each represented 11% of trade accounts receivable at June 30, 1999. In fiscal
1998, one customer accounted for 11% of net revenues and three customers
represented 12%, 11%, and 10% of trade accounts receivable, respectively, at
June 30, 1998. In fiscal 1997, two customers accounted for 17% and 14% of net
revenues, respectively, and two customers represented 12% and 11% of trade
accounts receivable, respectively, at June 30, 1997.

<TABLE>
<CAPTION>

                                                                  Fiscal Year Ended June 30,
                                                                  ---------------------------

                                                           1999                1998               1997
                                                     -----------------   ----------------   -----------------
<S>                                             <C>                 <C>                <C>
Net sales to geographic regions:
     United States                                        $31,094            $27,059             $20,895
     Europe                                                 4,784              4,920               3,648
     Asia                                                  23,919             17,219               8,623
                                             -----------------------------------------------------------

Total Net Sales                                           $59,797            $49,198             $33,166
                                             ===========================================================
</TABLE>

12. EMPLOYEE BENEFIT PLAN

The Company has a 401(k) tax-deferred savings plan under which eligible
employees may elect to have a portion of their salary deferred and contributed
to the plan. Employer matching contributions are determined by the Board of
Directors and are discretionary. There were no employer matching contributions
in fiscal 1999, 1998 or 1997.

                                       22
<PAGE>

                           QUARTERLY FINANCIAL DATA

(Amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>

                                                                     Three Months Ended
                                                                     ------------------

                                       June 30   Mar 31    Dec 31    Sep 30    June 30   Mar 31    Dec 31    Sep 30
                                        1999      1999      1998      1998      1998      1998      1997      1997
                                       -------   -------   -------   -------   -------   -------   -------   -------
<S>                                    <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Net revenues                           $15,987   $14,754   $14,510   $14,546   $13,314   $12,512   $11,974   $11,398
Cost of revenues                         9,298     8,585     8,634     8,967     7,888     7,418     7,140     6,839
                                    --------------------------------------------------------------------------------
     Gross profit                        6,689     6,169     5,876     5,579     5,426     5,094     4,834     4,559
Operating expenses:
     Research and development            1,601     1,565     1,455     1,355     1,327     1,300     1,269     1,169
     Selling, general and
      administrative                     2,561     2,227     2,292     2,095     1,841     2,005     1,991     1,956
                                    --------------------------------------------------------------------------------
          Total operating expenses       4,162     3,792     3,747     3,450     3,168     3,305     3,260     3,125
                                    --------------------------------------------------------------------------------
Income from operations                   2,527     2,377     2,129     2,129     2,258     1,789     1,574     1,434
Other income (expense), net                264       270       298       266       162       260       223        93
                                    --------------------------------------------------------------------------------
Income before income taxes               2,791     2,647     2,427     2,395     2,420     2,049     1,797     1,527
Provision for income taxes                 949       900       825       814       856       676       593       504
                                    --------------------------------------------------------------------------------
Net income                             $ 1,842   $ 1,747   $ 1,602   $ 1,581   $ 1,564   $ 1,373   $ 1,204   $ 1,023
                                    ================================================================================
Basic earnings per share               $  0.19   $  0.19   $  0.17   $  0.17   $  0.17   $  0.15   $  0.17   $  0.33
                                    ================================================================================
Diluted earnings per share             $  0.18   $  0.17   $  0.16   $  0.16   $  0.16   $  0.14   $  0.13   $  0.12
                                    ================================================================================
Shares used in computing basic
 earnings per share                      9,500     9,414     9,355     9,311     9,204     9,083     6,926     3,122
                                    ================================================================================
Share used in computing diluted
 earnings per share                     10,439    10,516    10,193     9,967    10,040    10,007     9,390     8,210
                                    ================================================================================
</TABLE>

COMMON STOCK PRICE RANGE

The Common Stock of the Company began trading publicly on the Nasdaq National
Market on October 31, 1997 under the symbol PSEM.  Prior to that date, there was
no public market for the Common Stock.  The Company has not paid cash dividends
and has no present plans to do so.  It is the policy of the Company to reinvest
earnings of the Company to finance expansion of the Company's operations, and
the Company does not expect to pay dividends in the foreseeable future.  The
following table sets forth for the periods indicated the high and low sale
prices of the Common Stock on the Nasdaq National Market.  As of June 30, 1999
there were over 2,000 holders of record of the Company's Common Stock.

<TABLE>
<CAPTION>
                                                                            High                    Low
                                                                            ----                    ---
Fiscal year ended June 30, 1998:
<S>                                                                         <C>                     <C>
          Second Quarter (from October 31, 1997)                            $10.38                  $6.13

          Third Quarter                                                      10.50                   6.00

          Fourth Quarter                                                     10.25                   5.88

Fiscal year ended June 30, 1999:

          First Quarter                                                       8.75                   4.32

          Second Quarter                                                     11.81                   4.19

          Third Quarter                                                      14.13                   6.88

          Fourth Quarter                                                     11.63                   6.13
</TABLE>

                                       23
<PAGE>

                                            CORPORATION INFORMATION

<TABLE>
<CAPTION>

<S>                                        <C>                                     <C>
BOARD OF DIRECTORS                           Alex Chi-Ming Hui                      Chief Executive Officer, President and Chairman
                                                                                    of the Board of Directors

                                             Chi-Hung (John) Hui, Ph.D. (1)         Vice President, Technology and Director
                                             Hau L. Lee, Ph.D. (1)                  Director
                                             Millard (Mel) Phelps (1)               Director
                                             Tay Thiam Song (2)                     Director
                                             Jeffery Young (2)                      Director

EXECUTIVE OFFICERS                           Patrick B Brennan                      Vice President, Finance and Administration
                                             Tat C. Choi, Ph.D.                     Vice President, Design Engineering
                                             Mark Downing                           Vice President, Marketing
                                             John K. Stahl                          Vice President, Sales
                                             Daniel W. Wark                         Vice President, Operations
</TABLE>

(1)  Member of Audit Committee.
(2)  Member of Compensation Committee.


LEGAL MATTERS       Questions regarding legal matters should be directed
                    to: Patrick B. Brennan, Vice President, Finance and
                    Administration


LEGAL COUNSEL       Morrison & Foerster LLP
                    755 Page Mill Road
                    Palo Alto, California   94304-1018
                    (650) 813-5600

INDEPENDENT         Deloitte & Touche LLP
ACCOUNTANTS         60 South Market Street, Suite 800
                    San Jose, California    95113-2303
                    (408) 998-4000

CORPORATE           2380 Bering Drive           Tel:   (408) 435-0800
OFFICE              San Jose, California 95131  Fax    (408) 435-1100
                                                Website Address:www.pericom.com

REGISTRAR AND       BankBoston, N.A.
TRANSFER AGENT      c/o BostonEquiserve, L.P.
                    P.O. Box 8040
                    Boston, Massachusetts  02266-8040
                    http://www.EquiServe.com
                    (781) 575-2000

ANNUAL MEETING      The annual meeting of shareholders for Pericom Semiconductor
                    Corporation will be on Tuesday, December 14, 1999, at 3:00
                    P.M., local time at the Company's premises, 2380 Bering
                    Drive, San Jose, California 95131.

COMMON STOCK        Pericom Semiconductor Corporation's Common Stock is traded
                    on the NASDAQ National Market under the symbol "PSEM".

FORM 10-K           A copy of the Corporation's Annual Report on Form 10-K, as
                    filed with the Securities and Exchange Commission, will be
                    made available without charge to all shareholders upon
                    written request to the Company. Direct requests to the
                    attention of the Chief Financial Officer at the corporate
                    office listed above.

                                       24