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

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

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

Commission File Number 0-25699

PLX TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in its Charter)

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

390 POTRERO AVENUE
SUNNYVALE, CALIFORNIA 94086
(408) 774-9060
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)

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

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

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

The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing sale price of the Common Stock on March 15,
2000, as reported on the Nasdaq National Market, was approximately $617,148,241.
Shares of Common Stock held by each executive officer and director and by each
person who to the Company's knowledge owns 5% or more of the outstanding voting
stock have been excluded in that such persons may be deemed to be affiliates.
This determination of affiliate status is not necessarily a conclusive
determination for other purposes.

The number of shares of Common Stock outstanding at March 15, 2000 was
22,034,996.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Report on Form 10-K incorporates information by reference from
the Registrants Proxy Statement for its 2000 Annual Meeting of Stockholders--
Items 10, 11, 12 and 13.

PART I

ITEM 1: BUSINESS

OVERVIEW

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

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

- growth of the Internet,

- deployment of high-speed networking, and

- proliferation of multimedia.

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

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

- focusing on high-growth markets,

- delivering comprehensive solutions, including semiconductor devices,

- software development kits and hardware design kits,

- extending our technology advantages by incorporating new functions
and technologies,

- driving industry standards, and

- strengthening and expanding our industry relationships.

INDUSTRY BACKGROUND

Embedded systems are found in many common products and offer varying
levels of performance depending on each product's requirements. These products
range from low performance devices such as electronic toys and microwave ovens
to very complex, high-performance electronic equipment such as network routers
and switches. High-performance embedded systems offer increased data processing
capabilities and typically utilize one

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or more 32-bit or 64-bit microprocessors, fast memories and peripherals, and
sophisticated operating systems or control code.

Demand for high-performance embedded systems, which are designed to
transmit, store and process information rapidly, has dramatically increased due
to the:

- growth of the Internet,

- deployment of high-speed networking and

- proliferation of multimedia.

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

Networking and Telecommunications. Networking and telecommunications
applications include digital telephony, remote access servers, routers,
network switches and cable modem equipment. This market segment is
growing rapidly due to the rise of the Internet and the proliferation of
high bandwidth communication technologies such as Fast Ethernet, Gigabit
Ethernet, Asynchronous Transfer Mode, or ATM, cable modem, and Digital
Subscriber Line, or xDSL.

Enterprise Storage. Enterprise storage applications include disk storage
subsystems, automated tape libraries and file servers. The growing use
of multimedia applications and storage networks is driving corporate
demand for increased data storage capacity.

Imaging. Imaging applications include printers, copiers, medical
instrumentation and video and graphics equipment. The demand for better
image quality and faster performance, as well as connection of these
applications to high-speed networks, have increased their data
processing requirements.

Industrial. Industrial applications include a wide range of process
control computers and factory automation equipment. These products have
high data transfer rate requirements, are used to monitor and control
complex processes in real-time and are being increasingly attached to
networks.

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

THE I/O SUBSYSTEM

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

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

As data transfer requirements for the I/O subsystem have increased, so
has the complexity of its interface components such as processors, logic and
related software. Until a few years ago, most embedded systems used simple I/O
subsystems that contained no processors, limited logic and rudimentary software,
if any. Complex I/O subsystem components such as processors, elaborate control
logic and advanced software were costly, and therefore

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their use was confined to very high-end equipment such as mainframe computers.
Furthermore, the lack of widely accepted I/O standards impeded the use of
complex I/O subsystems in other than high-end applications. However, advances in
semiconductor technology combined with the widespread adoption of standards in
embedded systems have enabled the development of highly integrated semiconductor
devices that can better manage I/O subsystem performance at lower cost.

PENETRATION OF I/O STANDARDS IN EMBEDDED SYSTEMS

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

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

Although the PCI standard has resolved many development issues relating
to I/O hardware architectures, software remains a challenge. The lack of
standards for I/O control software and the wide use of proprietary operating
systems place a significant demand on development resources. Consequently,
embedded developers are increasingly adopting standard operating systems with
well-defined I/O structures as opposed to developing their own software
internally. Examples include Linux, Windows NT, Windows CE and standard
operating systems from companies such as Wind River and Integrated Systems. In a
related development, a consortium of industry leaders approved a new
specification, Intelligent I/O, or I(2)O, in 1997 to address software
compatibility and performance issues. I(2)O architecture enables more efficient
use of the PCI bus and can result in higher data transfer rates and thus
increased embedded system performance. Instead of designing proprietary
software, developers can use I(2)O architecture as a standard software
architecture that reduces software development time and costs. Furthermore, by
using I(2)O architecture, embedded system suppliers can more easily integrate
third party system components, thereby reducing development costs and improving
time-to-market.

NEED FOR STANDARD I/O PRODUCTS AND COMPREHENSIVE I/O SOLUTIONS

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

Instead of developing all the hardware and software technology
internally, embedded systems developers seek to focus their scarce engineering
resources on the proprietary features of their products. By using standard
semiconductor devices in the I/O subsystem instead of using custom-designed
devices they are able to implement the basic framework of the system more easily
and thereby reduce the I/O subsystem design effort, providing faster
time-to-market and lower development cost. Standard products allow the design
teams to concentrate their efforts on differentiating hardware and software
features. In addition to standard semiconductor devices, embedded

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designers can benefit from several other design elements, such as data control
software, hardware design kits and third-party development tools to complete
their development work in a timely manner. These additional elements simplify
development and improve time to market. They provide the design team with proven
hardware and software design examples and the tools to adapt these examples to
the embedded designers' needs.

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

THE PLX SOLUTION

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

Our solution consists of three related products:

- semiconductor devices,

- software development kits which assist in developing systems that
incorporate our semiconductor devices, and

- hardware design kits that allow development of a system using our
semiconductor devices and software development kits.

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

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

PLX products provide I/O connectivity solutions for PCI and I(2)O and
other industry standards. As new I/O standards evolve, we expect to support them
where appropriate. More than 500 electronic equipment manufacturers use PLX
semiconductor devices in a wide variety of embedded systems applications.
Customers currently shipping systems that incorporate our products include 3Com,
Cisco Systems, Compaq Computer, Hewlett-Packard, IBM, Intel, Lucent
Technologies, Marconi, Nortel Networks, and Siemens.

STRATEGY

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

Focus on High-Growth Markets. We focus on high-growth embedded systems
markets including networking and telecommunications, enterprise storage, imaging
and industrial. Within these markets, there are many highly differentiated
applications with different design criteria such as product function,
performance, cost, power consumption, software, size limitations and design
support. The requirements of many of these differentiated applications are
addressed by our products, and we target those applications where we believe we
can attain a leadership position.

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

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third parties. For example, our PCI 9080 I/O accelerator is supported by two
software development kits and five hardware design kits which support
microprocessors from Hitachi, IBM, IDT, Intel, and Motorola.

Extend I/O Subsystem Technology. We offer our customers highly
integrated semiconductor devices and related software that incorporate many of
the latest advances in I/O technology. Our semiconductor devices and software
are designed to enable quick adoption of new I/O technologies and enhancements
to existing I/O standards. We seek to integrate additional I/O-related functions
into our semiconductor devices to provide our customers with increasing
functionality at the same or lower costs. For example, we developed our IOP 480,
a device that integrates IBM's PowerPC core with our PCI technology. We employ a
team of engineers with considerable expertise in embedded systems architectures,
product definition, semiconductor and software design and engineering to
maintain our I/O subsystem technology advantages.

Drive I/O Subsystem Standards for Embedded Applications. We believe that
our understanding of I/O technology trends and market requirements allows us to
bring to market more quickly new products that support the latest I/O
technologies. Through our participation in key industry groups responsible for
standards such as the PCI Special Interest Group, the PCI Industrial Computer,
Infiniband Trade Association, PCI-X Manufacturers' Group and the I(2)O Special
Interest Group, we have taken an active role in defining new I/O standards.

Strengthen and Expand Industry Relationships. We work with industry
leaders in developing software development tools and marketing programs that
promote the use of each company's products. Key microprocessor partners include
Hitachi, IBM, IDT, Intel and Motorola, and key software partners include
Integrated Systems, Microsoft, Synopsys and Wind River. As a result of these
relationships, we enable embedded systems designers to choose the best products
for their particular applications while still employing our product as the core
of their I/O subsystem design.

CUSTOMERS

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

Our products are standard semiconductor devices that may be incorporated
into equipment used in several of our target markets. More than 500 electronic
equipment manufacturers incorporate our semiconductor devices in their products.

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The following table lists representative customers that purchased
directly or through distributors more than $100,000 of our products in 1999.

NETWORKING AND
TELECOMMUNICATIONS ENTERPRISE STORAGE
--------------------------- ----------------------

3Com Compaq
Artesyn Technologies DPT
Cisco Systems Emulex
Copper Mountain IBM
Digi International Network Appliance
Eicon Technology
Hewlett-Packard
IBM IMAGING
Intel ----------------------
Lucent Technologies Hewlett-Packard
Marconi Kofax Image Products
Nortel Networks Pinnacle Systems
Performance Technology Scitex
Proxim
SDL Communications
Siemens

PRODUCTS

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

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

In the third quarter of 1999, we began shipping the IOP 480, our first
I/O processor, which combines the features of our I/O accelerator devices with a
microprocessor core and memory controller that can connect to a variety of
memory types and sizes. An I/O processor is a microprocessor designed to manage
I/O tasks and move data efficiently. The I/O processor will enhance overall
system performance by maximizing data flow and off-loading more I/O tasks from
the host processor, compared with an I/O accelerator. It will integrate, in one
cost and space-saving device, many of the circuit elements required for I/O
management. By combining several functions into one semiconductor device, the
IOP 480 will enable a more compact, power-efficient design, compared with
designs that use several semiconductor devices to achieve these functions.

Software Development Kits. Our software development kits are designed to
simplify and accelerate the development of systems that incorporate our
semiconductor devices. For PCI technology we offer PCI SDK software, which
shortens the time needed to develop the software used to transfer data through a
PCI bus. It

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includes a programming interface that enables developers to execute complex
transactions with simple commands. This programming interface allows customers
to migrate their designs, with the same software interface, from our existing 32
bit I/O accelerators to our 64 bit I/O accelerators and I/O processor products.
This common interface allows customers to preserve their software investment
even as their designs evolve in complexity and as new I/O architectures are
deployed. The PCI SDK is applicable to both proprietary and standard operating
systems. Our software development kit for I(2)O Architecture simplifies the
development of software for I(2)O architecture-based technology.

Hardware Design Kits. We offer hardware design kits that support the
development of systems incorporating PLX semiconductor devices. We call our
hardware design kits "reference design kits." Designers use the hardware design
kits to evaluate our semiconductor devices and to simplify and accelerate
product development. Each hardware design kit includes a development circuit
board that designers can use to evaluate the PLX products and also design their
own system. These hardware design kits also include technical drawings,
documentation and other design assistance tools. Current hardware design kits
support IBM's PowerPC processors, Motorola's PowerQuicc processors, Intel's i960
processors, IDT's MIPs processors and Hitachi's SH processors.

To offer additional design support, we work with third party companies
that provide development tools for our customers. Although we receive no
revenues from these development tools, they promote sales of our semiconductor
devices because these tools often make it easier to develop embedded systems
incorporating our products. Examples include software development tools from
Diab Data, IBM, Integrated Systems, Microsoft, Netware, and Wind River and
software modeling tools from Synopsys.

Our principal product offerings and functions include the following:

- ---------------------------------------------------------------------------------------------
CATEGORY PRODUCT DESCRIPTION
------------------------- ---------------------------- -------------------------------------
SEMICONDUCTOR DEVICES
- ---------------------------------------------------------------------------------------------

32-bit Target I/O PCI 9030 - Enables connection of 8-,
Accelerators PCI 9052 16- and 32-bit peripherals
PCI 9050 and personal computer
adapters to PCI.
- ---------------------------------------------------------------------------------------------
32-bit Master I/O PCI 9054 - Provides the flexibility to
Accelerators PCI 9080 connect with a wide range of
PCI 9060SD processors, peripherals and
PCI 9060ES memory including Motorola
PCI 9060 PowerQuicc, Intel i960, IBM
PowerPC, Hitachi
SH, IDT MIPs and
Texas Instruments
DSPs.
- ---------------------------------------------------------------------------------------------
32-bit I/O Processors IOP 480 - Incorporates PowerPC
microprocessor and memory
controller in addition to a
32-bit master I/O
accelerator.
- ---------------------------------------------------------------------------------------------
64-bit/66 MHz I/O PCI 9610 - Provides the flexibility to
Accelerators connect with a wide range of
(Announced, in microprocessors, peripherals
development) and memory including
Motorola
PowerQuicc,
PowerQuiccII,
Intel i960, IBM
PowerPC, Hitachi
SH, IDT MIPs and
Texas Instruments
DSPs.
- ---------------------------------------------------------------------------------------------

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- ---------------------------------------------------------------------------------------------
SOFTWARE DEVELOPMENT KITS
- ---------------------------------------------------------------------------------------------

PCI Software PCI SDK - Provides tools for
accelerating design of data
transport software.

- Includes
development and
debugging
utilities, sample
firmware and
drivers.
---------------------------------------------------------------------------------------------
I(2)O Software SDK for I(2)O Architecture - Enables rapid development
of I(2)O software.
--------------------------------------------------------------------------------------------
HARDWARE DESIGN KITS
- ---------------------------------------------------------------------------------------------
Reference Design Kits Nine kits supporting a - Include evaluation boards,
range of products PCI SDK software,
documentation and schematics
to assist system development.
- ---------------------------------------------------------------------------------------------

TECHNOLOGY

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

- semiconductor design,

- software technology,

- system design, and

- industry standards.

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

Software Technology. We devote substantial engineering resources to the
development of software technology used to assist the system developer in
debugging hardware and creating data control software. The quality and
availability of these tools are key differentiating factors between PLX and
competing alternatives. We are now shipping, as part of our software development
kits, our PCI debugging tool, PLXMon 99. We continue to enhance and expand our
software development kits, which contain a set of programming interfaces that
simplify the development of software. Our software expertise provides us with
valuable insights into our customers' software development issues, which aids
the definition and development of future semiconductor devices.

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

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Industry Standards. Through our participation in the key industry groups
responsible for standards such as the PCI Special Interest Group, the I(2)O
Special Interest Group and the PCI Industrial Computer Manufacturers' Group, we
take an active role in defining new I/O standards such as PCI-X and Infiniband.
In addition, we are closely monitoring other new I/O technologies to determine
their applicability to our embedded market customer base.

COMPETITION

Competition in the various markets served by us comes from companies of
various sizes, many of which are significantly larger and have greater financial
and other resources than we do and thus can better withstand adverse economic or
market conditions than we. Our principal products compete with standard products
from companies such as Applied Micro Circuits, Galileo Technology, Tundra
Semiconductor, and V3 Semiconductor.

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

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

SALES, MARKETING AND TECHNICAL SUPPORT

Our sales and marketing strategy is to achieve design wins at leading
embedded systems companies in high-growth market segments. We market and sell
our products in the United States through a combination of direct regional sales
managers, a national distributor, and a network of independent manufacturers'
representatives. We maintain United States direct sales offices in Boston,
Chicago, Los Angeles, Raleigh, Tampa and Sunnyvale.

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

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As of December 31, 1999, we employed 38 individuals in sales and
marketing. Sales in North America represented 65%, 66% and 78% of product
revenues for 1999, 1998 and 1997, respectively. All sales to date have been
denominated in U.S. dollars.

In 1999, sales to our exclusive United States distributor, Unique
Technologies, accounted for 25% of our revenues, and sales to a European
distributor, A2M, accounted for 10% of our revenues. Revenues related to sales
through distributors are expected to continue to account for a significant
portion of our total revenues. See "Risk Factors -- A Large Portion of Our
Revenues Is Derived from Sales to Third-Party Distributors Who May Terminate
Their Relationships with Us at Any Time."

Net revenues through distributors accounted for approximately 58%, 49%
and 56% of our net revenues for 1999, 1998 and 1997, respectively. In 1999,
sales to Cisco Systems and IBM directly or through distributors accounted for
12% and 11%, respectively. In 1998, sales to IBM accounted for 13% of net
revenues. In 1997, sales to no single customer accounted for 10% or more of our
total revenues.

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

RESEARCH AND DEVELOPMENT

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

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

Our research and development expenditures totaled $7.3 million in 1999,
$6.6 million in 1998, and $4.2 million in 1997. Research and development
expenses consist primarily of salaries and related costs of employees engaged in
research, design, and development activities. In addition, expenses for outside
engineering consultants and non-recurring engineering at our independent
foundries are included in research and development expenses. As of December 31,
1999, there were 33 employees engaged in research and development. We perform
our research and development activities at our headquarters in Sunnyvale,
California. We are seeking to hire additional skilled development engineers, who
are currently in short supply. Our business could be adversely affected if we
encounter delays in hiring additional engineers. See "Certain Factors That May
Affect Future Operating Results - Failure to Hire Additional Personnel and to
Improve Our Operations Will Limit Our Growth."

Our future performance depends on a number of factors, including our
ability to identify emerging technology trends in our target markets, define and
develop competitive new products in a timely manner, enhance existing products
to differentiate them from those of competitors and bring products to market at
competitive prices. The technical innovations and product development required
for us to remain competitive are inherently complex and require long development
cycles. We typically must incur substantial research and development costs
before the technical feasibility and commercial viability of a product can be
ascertained. We must also continue to make

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significant investments in research and development in order to continually
enhance the performance and functionality of our products to keep pace with
competitive products and customer demands for improved performance. Revenues
from future products or product enhancements may not be sufficient to recover
the development costs associated with these products or enhancements. The
failure to successfully develop new products on a timely basis could have a
material adverse effect on our business. See "Certain Factors That May Affect
Future Operating Results -- Rapid Technological Change Could Make Our Products
Obsolete."

MANUFACTURING

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

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

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

INTELLECTUAL PROPERTY

Our future success and competitive position depend upon our ability to
obtain and maintain the proprietary technology used in our principal products.
Most of our current products include implementations of the PCI and I(2)O
industry standards, which are available to other companies. We currently have no
patents on any of our PCI or I(2)O products and rely instead on trade secret
protection. We have two patents on technology in our other products that expire
in September 2007 and September 2014. In the future, we plan to seek patent
protection when we feel it is necessary.

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

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

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

EMPLOYEES

As of December 31, 1999, we employed a total of 85 full-time employees,
including 33 engaged in research and development, 38 engaged in sales and
marketing, 6 engaged in manufacturing operations and 8 engaged in general
administration activities. We also from time to time employ part-time employees
and hire contractors. Our employees are not represented by any collective
bargaining agreement, and we have never experienced a work stoppage. We believe
that our employee relations are good.

EXECUTIVE OFFICERS AND DIRECTORS

Our executive officers and directors, their ages and their positions as
of December 31, 1999, are as follows:

NAME AGE POSITION
- ---- --- --------

Michael J. Salameh................. 45 President and Director
Michael Franz, Ph.D................ 51 Vice President, Engineering
Scott M. Gibson.................... 41 Vice President, Finance, Chief Financial Officer
and Secretary
Mark R. Easley..................... 44 Vice President, Marketing
Michael A. Hopwood................. 37 Vice President, Worldwide Sales
William E. Hart.................... 47 Vice President, Operations
D. James Guzy...................... 63 Chairman of the Board of Directors
Eugene Flath....................... 62 Director
Timothy Draper..................... 41 Director
Young K. Sohn...................... 43 Director
John H. Hart....................... 54 Director

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

Dr. Michael Franz has served as our Vice President of Engineering since
joining us in November 1999. From 1993 through October 1999, Dr. Franz held
various senior engineering management level positions with

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Toshiba's semiconductor company, including Director of System Level Integration
and Director of Technology Development. From 1986 to 1993, Dr. Franz was
employed with Siemens' semiconductor division, as Director of Engineering. Dr.
Franz received a B.S. in Electrical Engineering from Technical University of
Munich and an M.S. and Ph.D. in Electrical Engineering from the University of
Wisconsin.

Scott M. Gibson has served as our Vice President of Finance and Chief
Financial Officer since joining us in October 1997. Mr. Gibson was employed by
YieldUP International Corporation, a semiconductor equipment manufacturer, as
Vice President and Chief Financial Officer from September 1995 through March
1997. Mr. Gibson served as Vice President of Customer Service for Tencor
Instruments, a semiconductor equipment manufacturer, from April 1994 through
June 1995. Mr. Gibson was employed by Prometrix Corporation, a semiconductor
equipment manufacturer, as Vice President and Chief Financial Officer from April
1992 until its merger with Tencor Instruments in February 1994. Mr. Gibson
received a B.S. in Industrial Engineering from Iowa State University and an
M.B.A. from the University of Michigan Business School.

Mark R. Easley has served as our Vice President of Marketing since March
1996. From October 1993 through March 1996, he owned Mission Research
Enterprises Technical Sales, a manufacturers' representative company. From March
1986 through October 1993, Mr. Easley held various positions at Adaptec, Inc., a
semiconductor company including Director of Sales for Asia-Pacific and Japan
from July 1988 through October 1993 and Strategic Marketing Manager from March
1986 through June 1988. Mr. Easley is also a director of Sebring Systems, Inc.
Mr. Easley received a B.S. in Computer Science from Purdue University.

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

William E. Hart has served as our Vice President of Operations since
January 1996. Between July 1993 and January 1996, he served as our Operations
Manager and Controller. From January 1992 to June 1993, Mr. Hart was employed by
Euphonix Inc., a digital audio equipment company, as its production manager.
From November 1982 through December 1991, Mr. Hart was employed as a
manufacturing manager for NTX Communications, a computer company. Mr. Hart
received a B.A. from St. Mary's College and a Masters degree in Public
Administration from California State University, Hayward.

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

Eugene Flath has been a director of PLX since May 1989. Mr. Flath has
been a General Partner of Associated Venture Investors since February 1988 and a
Special General Partner of Applied Technology Investors since July 1994. Mr.
Flath also serves on the board of directors of several private companies. Mr.
Flath received a B.S. in Electrical Engineering and a B.S. in Naval Science from
the University of Wisconsin and an M.S. in Electrical Engineering from the
University of New Hampshire.

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

Young K. Sohn has been a director of PLX since April 1999. Mr. Sohn is
currently serving as CEO of Oak Technology, a semiconductor manufacturer. From
1992 until March 1999, Mr. Sohn held various executive management positions at
Quantum Corporation, a disk drive manufacturer, including President of the Hard
Disk Drive Business. Prior to joining Quantum, Mr. Sohn was employed for nine
years at Intel as a Marketing and Sales

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Executive and Director of Worldwide Channel Marketing in Intel's Reseller
Channel organization. Mr. Sohn received a B.S. in Electrical Engineering from
the University of Pennsylvania and an M.B.A. from MIT's Sloan School of
Management.

John H. Hart has been a director of PLX since April 1999. Mr. Hart has
been Senior Vice President and Chief Technical Officer of 3Com Corporation since
August 1996. From the time Mr. Hart joined 3Com in September 1990 until July
1996, he was Vice President and Chief Technical Officer. Prior to joining 3Com,
Mr. Hart worked for Vitalink Communications Corporation for seven years, where
his most recent position was Vice President of Network Products. Mr. Hart
received a B.S. in Mathematics from the University of Georgia.

BACKLOG

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

ITEM 2: PROPERTIES

We lease two adjacent facilities in Sunnyvale, California, which have
approximately 20,000 square feet and 15,000 square feet pursuant to two leases
which expire in February 2001 and November 2004, respectively. These two
facilities comprise our headquarters and include our research and development,
sales and marketing and administration departments. We believe that our current
facilities will be adequate through 2000.

ITEM 3: LEGAL PROCEEDINGS

None.

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

No matters were submitted to a vote of security holders during the three
months ended December 31, 1999.

PART II

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

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

1999 HIGH BID LOW BID
-------- -------

April 5, 1999 through the end of the Second Quarter......... $50.00 $10.75
Third Quarter............................................... 46.00 17.50
Fourth Quarter.............................................. 36.00 13.75

As of March 15, 2000, there were approximately 110 holders of record of
the Company's Common Stock. As of March 15, 2000, the last reported sales price
of our common stock was $37.25.

The Company has never paid cash dividends on its Common Stock. The
Company currently intends to retain earnings, if any, for use in its business
and does not anticipate paying any cash dividend in the foreseeable future. Any
future declaration and payment of dividends will be subject to the discretion of
the Company's Board of

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Directors, will be subject to applicable law and will depend upon the Company's
results of operations, earnings, financial condition, contractual limitations,
cash requirements, future prospects and other factors deemed relevant by the
Company's Board of Directors.

During the three months ended December 31, 1999, the Company did not
sell any equity securities that were not registered under the Securities Act of
1933, as amended.

ITEM 6: SELECTED FINANCIAL DATA

The following table includes selected consolidated financial data for
each of the five years ended December 31, 1999, which are derived from and more
fully described in the consolidated financial statements and notes included in
this report at Item 14.

YEARS ENDED DECEMBER 31,
---------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenues ............................. $40,669 $26,276 $17,534 $ 9,813 $ 9,316
Gross profit ............................. 27,831 16,605 10,558 5,287 3,805
Operating income ......................... 9,994 3,383 1,991 893 1,016
Net income ............................... 7,231 2,766 1,924 891 1,049
Diluted earnings per share ............... $ 0.33 $ 0.15 $ 0.11 $ 0.05 $ 0.06
Shares used in calculation of diluted
earnings per share ..................... 21,849 18,405 17,758 17,287 16,768

DECEMBER 31,
---------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
(IN THOUSANDS)

CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents ................ $ 8,636 $ 5,638 $ 2,701 $ 1,077 $ 1,444
Working capital .......................... 32,827 6,116 3,591 2,257 1,682
Total assets ............................. 52,055 11,766 8,013 4,053 3,149
Long-term debt ........................... -- -- -- -- --
Total Stockholders' equity ............... $46,402 $ 7,760 $ 4,889 $ 2,909 $ 1,989

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

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

OVERVIEW

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

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storage, imaging, industrial and other embedded applications as well as in
related adapter cards. We generate a small portion of our revenues from sales of
our software and development tools.

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

We rely on a combination of direct sales personnel and distributors and
manufacturers' representatives throughout the world to sell a significant
portion of our products. We pay manufacturers' representatives a commission on
sales while we sell products to distributors at a discount from the selling
price. We generally recognize revenue at the time of title passage to electronic
equipment manufacturers. Revenues from sales to distributors that are made under
agreements which allow the return of products unsold by the distributor are not
recognized until the distributor ships the product to its customer. See "Certain
Factors That May Affect Future Operating Results -- A Large Portion of Our
Revenues Is Derived From Sales to Third-Party Distributors Who May Terminate
Their Relationships with Us at Any Time."

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

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

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

RESULTS OF OPERATIONS

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

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FISCAL YEAR ENDED DECEMBER 31,
----------------------------------
1999 1998 1997
------ ------ ------

Net revenues .......................................... 100.0% 100.0% 100.0%
Cost of revenues ...................................... 31.6 36.8 39.8
------ ------ ------
Gross profit .......................................... 68.4 63.2 60.2
Expenses:
Research and development .......................... 17.8 24.9 23.7
Selling, general and administrative ............... 26.0 25.4 25.2
------ ------ ------
Total operating expenses ................... 43.8 50.3 48.9
------ ------ ------
Operating income ...................................... 24.6 12.9 11.3
Interest income and other, net ........................ 3.6 0.3 0.3
------ ------ ------
Income before income taxes and equity in net loss
of unconsolidated investee ........................ 28.2 13.2 11.6
Provision for income taxes ............................ 9.6 2.6 0.6
------ ------ ------
Income before equity in net loss of unconsolidated
investee .......................................... 18.6 10.6 11.0
Equity in net loss of unconsolidated investee ......... 0.8 -- --
------ ------ ------
Net income ............................................ 17.8% 10.6% 11.0%
====== ====== ======

COMPARISON OF YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

Net Revenues. Revenues consist of product revenues generated principally
by sales of our semiconductor devices. Revenues for 1999 were $40.7 million, an
increase of $14.4 million or 55% from 1998. Revenues for 1998 were $26.3
million, an increase of $8.8 million or 50% from $17.5 million for 1997. In each
year the increase was primarily due to higher volume shipments of PCI products.

Gross Profit. Gross profit represents net revenues less the cost of
revenues. Cost of revenues includes the cost of purchasing semiconductor devices
from our independent foundries, additional assembly and testing costs, our
operating costs associated with the procurement, storage, and shipment of
products, as well as royalty expenses paid on some of our products. Gross profit
for 1999 was $27.8 million, an increase of $11.2 million or 68% from 1998. Gross
profit for 1998 was $16.6 million, an increase of $6.0 million or 57% from $10.6
million for 1997. Gross profit as a percentage of revenues was 68.4% in 1999,
63.2% in 1998 and 60.2% in 1997. In each year, the increase in absolute dollars
was primarily due to higher revenues. Gross margin as a percentage of revenues
increased in 1999 from 1998 and in 1998 from 1997 primarily due to lower product
costs.

Research and Development Expenses. Research and development expenses
consist primarily of salaries and related costs of employees engaged in
research, design, and development activities. In addition, expenses for outside
engineering consultants and non-recurring engineering at our independent
foundries are included in research and development expenses. Research and
development expenses for 1999 were $7.3 million, an increase of $0.7 million or
11% from 1998. Research and development expenses for 1998 were $6.6 million, an
increase of $2.4 million or 58% from 1997 expenses of $4.2 million. Research and
development expenses as a percentage of revenues were 17.8% in 1999, 24.9% in
1998 and 23.7% in 1997. In each year, the increase in absolute dollars was
primarily due to the addition of personnel for the development of new product
and the enhancement of existing products, as well as payments to outside
consultants where specific resources were needed in the development process. The
decrease in research and development expenses as a percentage of revenue from
1998 to 1999 was primarily due to higher net revenues as well as lower expenses
for non-recurring engineering at our independent foundries. The increase in
research and development expenses as a percentage of revenues from 1997 to 1998
reflects an increase in the number of new semiconductor products being developed
by us as well as an increase in the number of new development tools and software
being developed. We expect that research and development expenses in absolute
dollars will likely increase in future periods.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses consist primarily of employee related expenses,
professional fees, trade show and other promotional expenses, and sales
commissions to manufacturers' representatives. Selling, general and
administrative expenses for 1999 were $10.6 million, an increase of $3.9 million
or 58.5% from 1998. Selling, general and administrative expenses for 1998

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were $6.7 million, an increase of $2.3 million or 51% from $4.4 million in 1997.
Selling, general and administrative expenses as a percentage of revenues were
26.0% in 1999, 25.4% in 1998 and 25.2% in 1997. In each year, the increase in
absolute dollars principally reflected higher personnel related costs resulting
from an increase in sales and marketing personnel as well as increased sales
commissions from higher product revenues. We expect that selling, general and
administrative expenses in absolute dollars will likely increase in future
periods.

Deferred Compensation. In connection with the grant of restricted stock
and options to our employees during 1997 and 1998, we recorded aggregate
deferred compensation of $361,000, representing the difference between the
deemed value of our common stock for accounting purposes and the restricted
stock purchase price or stock option exercise price at the date of grant. The
amount of deferred compensation is presented as a reduction of stockholders'
equity and amortized ratably over the vesting period of the applicable stock
grants. Amortization of deferred compensation recorded in 1999 and 1998 was
$91,000 and $79,000, respectively. We currently expect to record amortization of
deferred compensation related to these stock grants of approximately $20,000 per
quarter through December 31, 2001.

Interest Income and Other, Net. Interest income and other, net reflects
interest earned on average cash, cash equivalents and short-term investment
balances. Interest income and other, net increased to $1.5 million in 1999 from
$75,000 in 1998. Interest income and other, net increased in 1998 to $75,000
from $44,000 in 1997. The increase from 1998 to 1999 was primarily due to
interest earned on higher levels of short-term investments, long-term
investments, and cash balances generated by the initial public offering in April
1999. The increase from 1997 to 1998 was primarily due to interest earned on
higher levels of short-term investments and cash balances.

Provision for Income Taxes. Income tax expense as a percentage of pretax
income was 34%, 20% and 5%, for the years ended December 31, 1999, 1998 and
1997, respectively. Our effective tax rate in 1999 differs from the applicable
statutory rate primarily due to state income taxes offset by the benefit of the
research and development tax credit. Our effective tax rate in 1998 differs from
the applicable statutory rate primarily due to the benefit of research and
development tax credits and the realization of deferred tax assets. Our
effective tax rate in 1997 differs from the applicable statutory rate primarily
due to the benefit of net operating loss and research and development tax credit
carryforwards. We expect that the effective tax rate in future periods will
remain at about the same level as in 1999.

Equity in Net Loss of Unconsolidated Investee. The increase in equity in
net loss of unconsolidated investee represents losses recognized under the
equity method of accounting for the investment in Sebring Systems in the fourth
quarter of 1999.

The valuation allowance for deferred tax assets decreased by $407,000 in
1998. Decreases in the valuation allowance were based upon taxable income earned
in 1998, as well as management's expectations of future taxable income.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have financed our operations through a combination
of sales of equity securities and cash generated by operations. At December 31,
1999, we had $32.8 million in working capital including $8.6 million in cash and
cash equivalents. Our operating activities generated cash of $4.1 million, $4.0
million and $2.6 million in 1999, 1998 and 1997, respectively. Cash provided by
operating activities in 1999, 1998, and 1997 was primarily attributable to net
income adjusted for depreciation, offset by increases in accounts receivable in
1999 and 1997 and increases in inventories due to increased shipment levels.

Our investing activities used cash of $32.3 million, $1.1 million and
$1.0 million in 1999, 1998 and 1997, respectively. The 1999 investing activities
were primarily for the purchase of short-term and long-term investment
securities. Cash provided by financing activities was approximately $31.2
million in 1999, $26,000 in 1998 and $56,000 in 1997. Cash provided by financing
activities in 1999 is primarily related to our initial public offering, which
generated approximately $31 million in net proceeds from the sale of common
stock in April 1999.

As of December 31, 1999, we had no material purchase commitments
outstanding.

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

YEAR 2000

In prior years, the Company discussed the nature and progress of its
plans to become Year 2000 ready. In late 1999, the Company completed its
remediation and testing of systems. As a result of those planning and
implementation efforts, the Company experienced no significant disruptions in
mission critical information technology and non-information technology systems
and believes those systems successfully responded to the Year 2000 date change.
The Company expensed approximately $100,000 during 1999 in connection with
remediating its systems. The Company is not aware of any material problems
resulting from Year 2000 issues, either with its products, its internal systems,
or the products and services of third parties. The Company will continue to
monitor its mission critical computer applications and those of its suppliers
and vendors throughout the year 2000 to ensure that any Year 2000 matters that
may arise are addressed promptly.

CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

The statements contained in this Report on Form 10-K that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including, without limitation, statements regarding the Company's
expectations, objectives, anticipations, plans, hopes, beliefs, intentions or
strategies regarding the future. Forward-looking statements include, without
limitation, the statements regarding (a) the growing demand for standards-based
components such as the Company's semiconductor devices that connect systems
together; (b) the Company's objective to expand its advantages in data transfer
technology, under the heading "Item 1, Business - Overview"; the statements
regarding (a) the Company's objective to continue to expand its market position
as a developer and supplier of I/O connectivity solutions for high-performance
embedded systems, (b) the Company's plan to target those applications where the
Company believes it can attain a leadership position, (c) the Company's belief
that its understanding of I/O technology trends and market requirements allows
it to bring to market more quickly new products that support the latest I/O
technology, under the heading "Item 1, Business - Strategy"; the statements
regarding (a) the Company's belief with respect to the principal factors of
competition in the business, (b) the Company's belief that it competes favorably
with respect to each of those factors, under the heading "Item 1, Business -
Competition"; the statements regarding (a) the Company's belief that providing
customers with comprehensive product support is critical to remaining
competitive in the markets it serves, (b) the Company's belief that its close
contact with customer design engineers provides valuable input into existing
product enhancements and next generation product specifications, under the
heading "Item 1, Business - Sales, Marketing and Technical Support"; the
Company's belief that the transition of its products to smaller geometries will
be important for the Company to remain competitive under the heading "Item 1,
Business - Manufacturing"; the Company's belief that its current facilities will
be adequate through 2000 under the heading "Item 2, Properties"; the statement
regarding the Company's intention to retain earnings for use in its business and
not to pay any cash dividend in the foreseeable future under the heading "Item
5, Market for Registrant's Common Equity and Related Stockholder Matters"; the
Company's belief that its long-term success will depend on its ability to
introduce new products under the heading "Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations - Overview"; the
statements regarding (a) the Company's expectation that research and development
expenses, selling, general and administrative expenses in absolute dollars will
likely increase in future periods, (b) the Company's expectation to record
amortization of deferred compensation related to the stock grants of
approximately $20,000 per quarter through December 31, 2001, (c) the Company's
expectation that the effective tax rate in future periods will remain at about
the same level as in 1999, under the heading "Item 7 - Management's Discussion
and Analysis of Financial Condition and Results of Operations - Comparison of
Year Ended December 31, 1999, 1998 and 1997"; the Company's belief that its
existing resources, together with cash generated from its operations, will be
sufficient to meet its capital requirements for at least the next twelve months
under the heading "Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources"; the
statements regarding (a) the Company's belief that the

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adoption of FAS 133 will not have a significant impact on its operating results
or cash flows, (b) the Company's belief that its current recognition policy
complies with SAB 101, under the heading "Consolidated Financial Statements -
Notes to Consolidate Financial Statements - Note 1. Organization and Summary of
Significant Accounting Policies - Recent Accounting Pronouncements"; the
statement regarding the Company's expectation that the sale of its products to a
limited number of customers and resellers may continue to account for a high
percentage of revenues for the foreseeable future under the heading
"Consolidated Financial Statements - Notes to Consolidate Financial Statements -
Note 3. Concentration of Credit, Customer and Supplier Risk". All
forward-looking statements included in this document are based on information
available to the Company on the date hereof, and the Company assumes no
obligation to update any such forward-looking statements. It is important to
note that the Company's actual results could differ materially from those
included in such forward-looking statements. These cautionary statements should
be considered in the context of the factors listed listed below, as well as
those disclosed from time to time in the Company's Reports on Forms 10-Q and
8-K.

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

OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY DUE TO FACTORS WHICH ARE NOT
WITHIN OUR CONTROL

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

Other circumstances that can affect our operating results include:

- our ability to develop, introduce and market new products and
technologies on a timely basis,

- the timing of significant orders, order cancellations and
reschedulings,

- changes in our pricing policies or those of our competitors or
suppliers, including decreases in unit average selling prices of our
products,

- introduction of products and technologies by our competitors,

- shifts in our product mix toward lower margin products,

- the availability of production capacity at the fabrication
facilities that manufacture our products, and

- the availability and cost of materials to our suppliers.

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

OUR LENGTHY SALES CYCLE CAN RESULT IN UNCERTAINTY AND DELAYS WITH REGARD TO OUR
EXPECTED REVENUES

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

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development and sales and marketing efforts and the time when we generate higher
revenues, if any, from these expenditures.

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

RAPID TECHNOLOGICAL CHANGE COULD MAKE OUR PRODUCTS OBSOLETE

The semiconductor industry is characterized by rapidly changing
technology and industry standards, along with frequent new product
introductions. Consequently, our future success depends on our ability to
identify trends in our target markets and to offer new semiconductor devices, as
well as other products and services, that address the changing needs of our
target customers.

WE MUST MAKE SIGNIFICANT RESEARCH AND DEVELOPMENT EXPENDITURES PRIOR TO
GENERATING REVENUES FROM PRODUCTS

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

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

OUR INDEPENDENT MANUFACTURERS MAY NOT BE ABLE TO MEET OUR MANUFACTURING
REQUIREMENTS

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

OUR RELIANCE ON SINGLE SOURCE MANUFACTURERS OF OUR SEMICONDUCTOR DEVICES COULD
DELAY SHIPMENTS AND INCREASE OUR COSTS

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

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INTENSE COMPETITION IN THE MARKETS IN WHICH WE OPERATE MAY REDUCE THE DEMAND FOR
OR PRICES OF OUR PRODUCTS

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

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

FAILURE TO HAVE OUR PRODUCTS DESIGNED INTO THE PRODUCTS OF ELECTRONIC EQUIPMENT
MANUFACTURERS WILL RESULT IN REDUCED SALES

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

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

LOWER DEMAND FOR OUR CUSTOMERS' PRODUCTS WILL RESULT IN LOWER DEMAND FOR OUR
PRODUCTS

Demand for our products depends in large part on the development and
expansion of the high-performance embedded systems markets including networking
and telecommunications, enterprise storage, imaging and industrial applications.
The size and rate of growth of these embedded systems markets may in the future
fluctuate significantly based on numerous factors. These factors include the
adoption of alternative technologies, capital spending levels and general
economic conditions. Demand for products that incorporate high-performance
embedded systems may not grow.

DEFECTS IN OUR PRODUCTS COULD INCREASE OUR COSTS AND DELAY OUR PRODUCT SHIPMENTS

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

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

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

FAILURE TO HIRE ADDITIONAL PERSONNEL AND TO IMPROVE OUR OPERATIONS WILL LIMIT
OUR GROWTH

We have experienced rapid growth which places a significant strain on
our limited personnel and other resources. To manage our expanded operations
effectively, we will need to further improve our operational, financial and
management systems. We will also need to successfully hire, train, motivate and
manage our employees. We may not be able to manage our growth effectively, which
could have a material adverse effect on our business. Also, we are seeking to
hire additional skilled development engineers, who are currently in short
supply. Our business could be adversely affected if we encounter delays in
hiring additional engineers.

WE COULD LOSE KEY PERSONNEL DUE TO COMPETITIVE MARKET CONDITIONS AND ATTRITION

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

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

A LARGE PORTION OF OUR REVENUES IS DERIVED FROM SALES TO THIRD-PARTY
DISTRIBUTORS WHO MAY TERMINATE THEIR RELATIONSHIPS WITH US AT ANY TIME

We depend on distributors to sell a significant portion of our products.
In 1999, net revenues through distributors accounted for approximately 58% of
our net revenues. Some of our distributors also market and sell competing
products. Distributors may terminate their relationships with us at any time.
Our future performance will depend in part on our ability to attract additional
distributors that will be able to market and support our products effectively,
especially in markets in which we have not previously distributed our products.
We may lose one or more of our current distributors or may not be able to
recruit additional or replacement distributors. The loss of one or more of our
major distributors could have a material adverse effect on our business.

THE DEMAND FOR OUR PRODUCTS DEPENDS UPON OUR ABILITY TO SUPPORT EVOLVING
INDUSTRY STANDARDS

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

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THE SUCCESSFUL MARKETING AND SALES OF OUR PRODUCTS DEPEND UPON OUR THIRD PARTY
RELATIONSHIPS, WHICH ARE NOT SUPPORTED BY WRITTEN AGREEMENTS

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

OUR LIMITED ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
COULD ADVERSELY AFFECT OUR COMPETITIVE POSITION

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

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

BECAUSE WE SELL OUR PRODUCTS TO CUSTOMERS OUTSIDE OF NORTH AMERICA AND BECAUSE
OUR PRODUCTS ARE INCORPORATED WITH PRODUCTS OF OTHERS THAT ARE SOLD OUTSIDE OF
NORTH AMERICA WE FACE FOREIGN BUSINESS, POLITICAL AND ECONOMIC RISKS

Sales outside of North America accounted for 35%, 34% and 22% of our
revenues in 1999, 1998 and 1997, respectively. We anticipate that these sales
may increase in future periods and may account for an increasing portion of our
revenues. In addition, equipment manufacturers who incorporate our products into
their products, sell their products outside of North America, thereby exposing
us indirectly to foreign risks. Further, most of our semiconductor products are
manufactured outside of North America. Accordingly, we are subject to
international risks, including:

- difficulties in managing distributors,

- difficulties in staffing and managing foreign subsidiary and branch
operations,

- political and economic instability,

- foreign currency exchange fluctuations,

- difficulties in accounts receivable collections,

- potentially adverse tax consequences,

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- timing and availability of export licenses,

- changes in regulatory requirements, tariffs and other barriers,

- difficulties in obtaining governmental approvals for
telecommunications and other products, and

- the burden of complying with complex foreign laws and treaties.

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

OUR POTENTIAL FUTURE ACQUISITIONS MAY NOT BE SUCCESSFUL BECAUSE WE HAVE NOT MADE
ACQUISITIONS IN THE PAST

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

- potentially dilutive issuances of equity securities,

- large one-time write-offs,

- the incurrence of debt and contingent liabilities or amortization
expenses related to goodwill and other intangible assets,

- difficulties in the assimilation of operations, personnel,
technologies, products and the information systems of the acquired
companies,

- diversion of management's attention from other business concerns,
and

- risks of entering geographic and business markets in which we have
no or limited prior experience and potential loss of key employees
of acquired organizations.

Since we have not made any acquisitions in the past, we are not certain
that we will be able to successfully integrate any businesses, products,
technologies or personnel that may be acquired in the future. Our failure to do
so could have a material adverse effect on our business.

OUR PRINCIPAL STOCKHOLDERS HAVE SIGNIFICANT VOTING POWER AND MAY TAKE ACTIONS
THAT MAY NOT BE IN THE BEST INTERESTS OF OUR OTHER STOCKHOLDERS

Our principal stockholders beneficially owned approximately 40% of our
outstanding common stock as of December 31, 1999. Although these stockholders do
not have majority control, they currently have, and likely will continue to
have, significant influence with respect to the election of our directors and
approval or disapproval of our significant corporate actions. This influence
over our affairs might be adverse to the interests of other stockholders. In
addition, the voting power of these stockholders could have the effect of
delaying or preventing a change in control of PLX. Commencing at the first
annual meeting of stockholders following the annual meeting of stockholders when
we shall have had at least 800 stockholders, our stockholders will not be
entitled to cumulate their votes in the election of directors, and the holders
of a majority of the common stock present at a meeting of stockholders will be
able to elect all of our directors.

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THE ANTI-TAKEOVER PROVISIONS IN OUR CERTIFICATE OF INCORPORATION COULD ADVERSELY
AFFECT THE RIGHTS OF THE HOLDERS OF OUR COMMON STOCK

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

One anti-takeover provision that we have is the ability of our Board of
Directors to determine the terms of preferred stock and issue preferred stock
without the approval of the holders of the common stock. Our Certificate of
Incorporation allows the issuance of up to 5,000,000 shares of preferred stock.
Currently, there are no shares of preferred stock outstanding. However, because
the rights and preferences of any series of preferred stock may be set by the
Board of Directors in its sole discretion without approval of the holders of the
common stock, the rights and preferences of this preferred stock may be superior
to those of the common stock. Accordingly, the rights of the holders of common
stock may be adversely affected.

ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have an investment portfolio of fixed income securities, including
those classified as cash equivalents, and short and long-term investments of
approximately $32.4 million at December 31, 1999. These securities are subject
to interest rate fluctuations and will decrease in market value if interest
rates increase.

The primary objective of the Company's investment activities is to
preserve principal while at the same time maximizing yields without
significantly increasing risk. The Company invests primarily in high-quality,
short-term and long-term debt instruments. A hypothetical 100 basis point
increase in interest rates would result in less than $0.4 million decrease (less
than 1%) in the fair value of the Company's available-for-sale securities.

ITEM 8: CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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

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

PART III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item is incorporated herein by
reference to the Company's Proxy Statement for the 2000 Annual Meeting of
Stockholders.

ITEM 11: EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by
reference to the Company's Proxy Statement for the 2000 Annual Meeting of
Stockholders.

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ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item is incorporated herein by
reference to the Company's Proxy Statement for the 2000 Annual Meeting of
Stockholders.

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated herein by
reference to the Company's Proxy Statement for the 2000 Annual Meeting of
Stockholders.

PART IV

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

(a) 1. Consolidated Financial Statements

For the following financial information included herein, see Index on
page 28:

Report of Ernst & Young LLP, Independent Auditors.

Consolidated Balance Sheets as of December 31, 1999 and 1998.

Consolidated Statements of Operations for each of the three years in the
period ended December 31, 1999.

Consolidated Statements of Stockholders' Equity for each of the three
years in the period ended December 31, 1999.

Consolidated Statements of Cash Flows for each of the three years in the
period ended December 31, 1999.

Notes to Consolidated Financial Statements.

2. Financial Statement Schedule

The financial statement schedules of the Company are included in Part IV
of this report:

For the three years ended December 31, 1999 -- II Valuation and
Qualifying Accounts

3. Exhibits Index

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

(b) Reports on Form 8-K

No reports on Form 8-K were filed by the Company during the fourth
quarter ended December 31, 1999.

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

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PLX TECHNOLOGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
----

Report of Ernst & Young LLP, Independent Auditors................................. 29

Consolidated Balance Sheets as of December 31, 1999 and 1998...................... 30

Consolidated Statements of Operations for each of the three years in the
period ended December 31, 1999................................................ 31

Consolidated Statements of Stockholders' Equity for each of the three
years in the period ended December 31, 1999................................... 32

Consolidated Statements of Cash Flows for each of the three years in the
period ended December 31, 1999................................................ 33

Notes to Consolidated Financial Statements........................................ 34

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REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
PLX Technology, Inc.

We have audited the accompanying consolidated balance sheets of PLX
Technology, Inc. as of December 31, 1999 and 1998, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1999. Our audits also included the
financial statement schedule listed in the Index 14(a). These consolidated
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of PLX
Technology, Inc. as of December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999 in conformity with accounting principles generally accepted in
the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

Ernst & Young LLP

San Jose, California
January 21, 2000

29
31

PLX TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

ASSETS

YEARS ENDED DECEMBER 31,
-------------------------
1999 1998
-------- --------

Current assets:
Cash and cash equivalents ............................. $ 8,636 $ 5,638
Short-term investments ................................ 20,075 --
Accounts receivable, less allowance for doubtful
accounts of $240 in 1999 and $173 in 1998.......... 5,439 2,073

Inventories ........................................... 2,504 1,344
Deferred tax assets ................................... 1,379 735
Other current assets .................................. 447 332
-------- --------
Total current assets .................................... 38,480 10,122
Property and equipment, net ............................. 1,537 1,515
Other assets ............................................ 840 129
Long term investments ................................... 11,198 --
-------- --------
Total Assets .......................................... $ 52,055 $ 11,766
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable .................................... $ 1,825 $ 1,601
Accrued compensation and benefits ................... 1,052 724
Deferred revenues ................................... 1,001 592
Income tax payable .................................. 847 442
Accrued commissions ................................. 320 100
Other accrued expenses .............................. 608 547
-------- --------
Total current liabilities ............................... 5,653 4,006
Commitments
Convertible redeemable preferred stock:
5,000,000 authorized shares in 1998:
issued and outstanding none in 1999 and
4,579,636 in 1998.................................. -- 5

Stockholders' equity:
Preferred stock, $.001 par value:
Authorized--5,000,000 in 1999: none issued and
outstanding ..................................... -- --
Common Stock, $.001 par value authorized
30,000,000 shares: issued and outstanding
22,008,809 in 1999 and 4,626,643 shares
in 1998 ........................................... 22 5
Additional paid-in capital .......................... 36,828 5,617
Deferred compensation ............................... (192) (283)
Notes receivable for employee stock purchases ....... -- (163)
Accumulated other comprehensive loss ................ (66) --
Retained earnings ................................... 9,810 2,579
-------- --------
Total stockholders' equity .............................. 46,402 7,755
-------- --------
Total liabilities and stockholders' equity .............. $ 52,055 $ 11,766
======== ========

See accompanying notes to consolidated financial statements.

30
32

PLX TECHNOLOGY, INC.

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

YEARS ENDED DECEMBER 31,
-----------------------------------
1999 1998 1997
-------- ------- -------

Net revenues ................................................. $ 40,699 $26,276 $17,534
Cost of revenues ............................................. 12,868 9,671 6,976
-------- ------- -------
Gross margin ................................................. 27,831 16,605 10,558
Operating expenses
Research and development ................................... 7,268 6,552 4,156
Selling, general and administrative ........................ 10,569 6,670 4,411
-------- ------- -------
Total operating expenses ..................................... 17,837 13,222 8,567
-------- ------- -------
Operating income ............................................. 9,994 3,383 1,991
Interest income and other, net ............................... 1,473 75 44
-------- ------- -------
Income before provision for income taxes and equity
in net loss of unconsolidated investee ..................... 11,467 3,458 2,035
Provision for income taxes ................................... 3,896 692 111
-------- ------- -------
Income before equity in net loss of unconsolidated investee .. 7,571 2,766 1,924
Equity in net loss of unconsolidated investee ................ (340) -- --
-------- ------- -------
Net income ................................................... $ 7,231 $ 2,766 $ 1,924
======== ======= =======
Basic earnings per share (Note 2) ............................ $ 0.43 $ 0.77 $ 0.58
======== ======= =======
Shares used to compute basic per share amounts ............... 17,007 3,601 3,293
======== ======= =======
Diluted earnings per share (Note 2) .......................... $ 0.33 $ 0.15 $ 0.11
======== ======= =======
Shares used to compute diluted per share amounts ............. 21,849 18,405 17,758
======== ======= =======

See accompanying notes to consolidated financial statements.

31
33

PLX TECHNOLOGY, INC.

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

REDEEMABLE
CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL
--------------------- ------------------------ PAID IN
SHARES AMOUNT SHARES AMOUNT CAPITAL
---------- ------ ------------ ------ --------

Balance at January 1, 1997 .... 4,579,636 $ 5 3,615,916 $ 4 $ 5,056
Sale of common stock ........ -- -- 1,058,500 1 209
Unearned compensation
related to stock
options .................... -- -- -- -- 235
Net income and
comprehensive income ....... -- -- -- -- --
---------- --- ------------ ---- --------
Balance at December 31, 1997 .. 4,579,636 5 4,674,416 5 5,500
Repurchase of common
stock ...................... -- -- (47,773) -- (10)
Unearned compensation
related to stock
options .................... -- -- -- -- 127
Amortization of
unearned compensation ...... -- -- -- -- --
Payments on stockholder
notes receivable ........... -- -- -- -- --
Net income and
comprehensive income ....... -- -- -- -- --
---------- --- ------------ ---- --------
Balance at December 31, 1998 .. 4,579,636 5 4,626,643 5 5,617
Issuance of common
stock, net of issuance
costs ...................... -- -- 3,795,000 4 30,997
Conversion of
redeemable convertible
preferred stock to
common stock ............... (4,579,636) (5) 13,738,908 13 (8)
Issuance of Stock
pursuant to exercise
of stock options ........... -- -- 22,950 -- 106
Payments on stockholder
notes receivable ........... -- -- -- -- --
Repurchase of common
stock ...................... -- -- (174,692) -- (30)
Compensation related to
stock options issued
to non-employees ........... -- -- -- -- 146
Amortization of
deferred compensation ...... -- -- -- -- --
Accumulated other
comprehensive (loss) ....... -- -- -- -- --
Net income .................. -- -- -- -- --
---------- --- ------------ ---- --------
Balance at December 31, 1999 .. -- $-- 22,008,809 $ 22 $ 36,828
========== === ============ ==== ========

NOTES
RECEIVABLE
ACCUMULATED FOR RETAINED
OTHER EMPLOYEE EARNINGS TOTAL COMPREHENSIVE
COMPREHENSIVE DEFERRED STOCK (ACCUMULATED STOCKHOLDERS' INCOME
(LOSS) COMPENSATION PURCHASES DEFICIT) EQUITY (LOSS)
------------- ------------ ---------- ------------ ------------- -------------

Balance at January 1, 1997 ...... -- -- $ (45) $(2,111) 2,909 --
Sale of common stock .......... -- -- (154) -- 56 --
Unearned compensation
related to stock
options ...................... -- (235) -- -- -- --
Net income and
comprehensive income ......... -- -- -- 1,924 1,924 1,924
---- ----- ----- ------- -------- --------
Balance at December 31, 1997 .... -- (235) (199) (187) 4,889 $1,924
Repurchase of common
stock ........................ -- -- -- -- (10) --
Unearned compensation
related to stock
options ...................... -- (127) -- -- -- --
Amortization of
unearned compensation ........ -- 79 -- -- 79 --
Payments of stockholder
notes receivable ............. -- -- 36 -- 36 --
Net income and
comprehensive income ......... -- -- -- 2,766 2,766 2,766
---- ----- ----- ------- -------- --------
Balance at December 31, 1998 .... -- (283) (163) 2,579 7,760 $2,766
Issuance of common
stock, net of issuance
costs ........................ -- -- -- -- 31,001 --
Conversion of
redeemable convertible
preferred stock to
common stock ................. -- -- -- -- -- --
Issuance of Stock
pursuant to exercise
of stock options ............. -- -- -- -- 106 --
Payments on stockholder
notes receivable ............. -- -- 163 -- 163 --
Repurchase of common
stock ........................ -- -- -- -- (30) --
Compensation related to
stock options issued
to non-employees ............. -- -- -- -- 146 --
Amortization of
deferred compensation ........ -- 91 -- -- 91 --
Accumulated other
comprehensive (loss) ......... (66) -- -- -- (66) (66)
Net income .................... -- -- -- 7,231 7,231 7,231
---- ----- ----- ------- -------- --------
Balance at December 31, 1999 .... $(66) $(192) $ -- $ 9,810 $ 46,402 $ 7,297
==== ===== ===== ======= ======== ========

See accompanying notes to consolidated financial statements.

32
34

PLX TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

YEARS ENDED DECEMBER 31,
------------------------------------
1999 1998 1997
-------- ------- -------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ......................................... $ 7,231 $ 2,766 $ 1,924
Adjustments required to reconcile net income to
cash flows provided by operating activities:
Depreciation ..................................... 933 737 455
Amortization of unearned compensation ............ 91 79 --
Compensation related to stock options issued to
non-employees ................................. 146 -- --
Equity in net loss of unconsolidated investee .... 340 -- --
Changes in operating assets and liabilities:
Accounts receivable ............................ (3,366) 486 (805)
Inventories .................................... (1,160) (131) (700)
Deferred tax assets ............................ (644) (544) (191)
Other current assets ........................... (115) (281) 7
Other Assets ................................... (30) 6 (118)
Accounts payable ............................... 224 (238) 1,244
Accrued compensation and benefits .............. 328 335 275
Deferred revenues .............................. 409 300 239
Income tax payable ............................. 405 331 111
Accrued commissions ............................ 220 (78) 94
Other accrued expenses ......................... 61 232 17
-------- ------- -------
Net cash provided by operating activities .......... 5,073 4,000 2,552

CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of short-term investments ............... (20,087) -- --
Purchase of long-term investments ................ (11,252) -- --
Purchase of property and equipment ............... (955) (1,089) (984)
Investment in unconsolidated investee ............ (1,021) -- --
-------- ------- -------
Net cash used in investing activities .............. (33,315) (1,089) (984)
-------- ------- -------
CASH FLOWS PROVIDED BY (USED IN) FINANCING
ACTIVITIES:
Proceeds from sales of common stock .............. 31,107 -- 56
Repurchases of common stock ...................... (30) (10) --
Repayments of stockholder notes receivable ....... 163 36 --
-------- ------- -------
Net cash provided by financing activities .......... 31,240 26 56
Increase in cash and cash equivalents .............. 2,998 2,937 1,624
Cash and cash equivalents at beginning of year ..... 5,638 2,701 1,077
-------- ------- -------
Cash and cash equivalents at end of year ........... $ 8,636 $ 5,638 $ 2,701
======== ======= =======

SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITIES:
Common stock issued for notes receivable ......... $ -- $ -- $ 154

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes ....................... $ 3,785 $ 905 $ 190

See accompanying notes to consolidated financial statements.

33
35

PLX TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

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

BASIS OF PRESENTATION

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

CASH AND CASH EQUIVALENTS

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

The Company accounts for its investments in accordance with Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (FAS 115). Under FAS 115, management determines the
appropriate classification of debt securities at the time of purchase and
reevaluates such designation as of each balance sheet date. At December 31, 1999
and 1998, all debt securities were designated as available-for-sale.
Available-for-sale securities are carried at fair value with unrealized gains
and losses reported in a separate component of stockholders' equity. The
amortized cost of debt securities in this category is adjusted for the
amortization of premiums and the accretion of discounts to maturity. Such
amortization, as well as any interest earned on the securities, is included in
interest income and other, net. Realized gains and losses and declines in value
judged to be other-than-temporary on available-for-sale securities are included
in interest income and other, net. The cost of securities sold is based on the
specific identification method.

The Company invests its excess cash in high quality, short-term and
long-term debt and equity instruments. The following is a summary of the
Company's investments by major security type at December 31, 1999 (in
thousands):

GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------

Operating Cash $ 274 -- -- $ 274
Money market mutual funds 1,070 -- -- 1,070
Certificates of Deposit 1,499 1 -- 1,500
Commercial Paper 14,765 -- (6) 14,759
Municipal Bonds 18,865 2 (53) 18,814
Corporate Debt Securities 1,502 -- (2) 1,500
U.S. Government & agency securities 2,000 -- (8) 1,992
------- -- ---- -------
$39,975 $3 ($69) $39,909
======= == ==== =======

At December 31, 1999 the fair value of long-term debt maturities due
within three years was approximately $11.2 million.

34
36

INVENTORIES

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

DECEMBER 31,
-----------------------
1999 1998
------- -------
(IN THOUSANDS)

Work in Process........... $ 193 $ 35
Finished goods............ 2,311 1,309
------- -------
Total................. $ 2,504 $ 1,344
======= =======

PROPERTY AND EQUIPMENT

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

The recoverability of the carrying amount of property and equipment is
assessed based on estimated future undiscounted cash flows and if impairment
exists a charge to operations is measured as the excess of the carrying amount
over the fair value of the assets. Based upon this method of assessing
recoverability, no asset impairment occurred in any of the years presented.

Property and equipment are as follows:

DECEMBER 31,
-----------------------
1999 1998
------- -------
(IN THOUSANDS)

Equipment and furniture..... $ 2,471 $ 1,872
Purchased software.......... 1,521 1,165
------- -------
3,992 3,037
Accumulated depreciation.... (2,455) (1,522)
------- -------
Net property and equipment.. $ 1,537 $ 1,515
======= =======

STOCK-BASED COMPENSATION

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

REVENUE RECOGNITION

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

ADVERTISING

The Company accounts for advertising costs as expenses in the period in
which they are incurred. Advertising expenses for 1999, 1998, and 1997 were
$77,000, $70,000, and $29,000, respectively.

35
37

SOFTWARE DEVELOPMENT COSTS

In accordance with Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise
Marketed," the Company capitalizes eligible computer software costs upon
achievement of technological feasibility subject to net realizable value
considerations. The Company has defined technological feasibility as completion
of a working model. The period between the achievement of technological
feasibility and release of the Company's software products has been of short
duration. As of December 31, 1999, such costs were insignificant. Accordingly,
the Company has charged all such costs to research and development expenses in
the accompanying consolidated statements of operations.

USE OF ESTIMATES

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

ACCUMULATED OTHER COMPREHENSIVE LOSS

The Company has adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (FAS 130). FAS 130 requires that all items
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. Accumulated other
comprehensive loss on the accompanying Consolidated Balance Sheets is comprised
entirely of unrealized losses on investments.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement
of Accounting Standards No. 133, "Accounting for Derivative Instruments and
Hedging Activities" (FAS 133). FAS 133 provides a comprehensive and consistent
standard for the recognition and measurement of derivatives and hedging
activities. FAS 133, as amended by FAS 137, is effective for fiscal years
beginning after June 15, 2000 and the Company believes that the adoption of FAS
133 will not have a significant impact on the Company's operating results or
cash flows.

2. NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted
net income per share is calculated using the weighted average number of
outstanding shares of common stock plus dilutive common stock equivalents.

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

YEARS ENDED DECEMBER 31,
--------------------------------------
1999 1998 1997
-------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Net income................................... $ 7,231 $ 2,766 $ 1,924
======== ======== ========
Weighted average shares of common stock
outstanding ............................. 17,548 4,657 4,019
Less weighted average shares of common
stock subject to repurchase ............. (541) (1,056) (726)
-------- -------- --------
Shares used in computing basic net income
per share ............................... 17,007 3,601 3,293
-------- -------- --------

36
38

Net income per share -- Basic ............... $ 0.43 $ 0.77 $ 0.58
======== ======== ========
Shares used in computing basic net income
per share ............................... 17,007 3,601 3,293
Effective of dilutive securities:
Stock options............................ 763 9 --
Unvested restricted stock ............... 541 1,056 726
Redeemable convertible preferred stock .. 3,538 13,739 13,379
-------- -------- --------
Shares used in computing diluted net
income per share (denominator)........... 21,849 18,405 17,758
-------- -------- --------
Historical net income per share -- diluted .. $ 0.33 $ 0.15 $ 0.11
======== ======== ========

3. CONCENTRATIONS OF CREDIT, CUSTOMER AND SUPPLIER RISK

Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash equivalents and trade
receivables. The Company generally invests its excess money in money market
funds, commercial paper of corporations with high credit ratings, and treasury
bills. The Company has not experienced any significant losses on its cash
equivalents or short and long-term investments. The Company performs ongoing
credit evaluations of its customers and generally requires no collateral. A
relatively small number of customers and resellers account for a significant
percentage of the Company's revenues. The Company expects that the sale of its
products to a limited number of customers and resellers may continue to account
for a high percentage of revenues for the foreseeable future. The Company
analyzes the need for reserves for potential credit losses and records reserves
when necessary.

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

4. REDEEMABLE CONVERTIBLE PREFERRED STOCK

In April 1999, the Company completed its initial public offering of
3,795,000 shares of the Company's common stock at a public offering price of
$9.00 per share, which generated approximately $31 million in net proceeds to
the Company.

In connection with the Company's initial public offering, 4,579,636
outstanding shares of redeemable convertible preferred stock were converted into
13,738,908 shares of common stock.

5. COMMON STOCK

At December 31, 1999, 2,477,050 shares of the Company's common stock
were reserved for future issuance.

On May 7, 1986 the Board of Directors of the Company approved a form of
Restricted Stock Purchase Agreement to be used to sell restricted shares of the
Company's common stock (the "Restricted Stock") to its employees, officers and
consultants. There was no formal, written plan. From time to time, the Board of
Directors reserved shares of its common stock for grant under the program. At
December 31, 1999, a total of 4,227,374 shares of Restricted Stock were issued
and outstanding pursuant to the program. The shares were issued at fair market
value as determined by the Board of Directors. The repurchase price of the
restricted shares is the original sales price. The shares are subject to a
repurchase option in favor of the Company (the "Repurchase Option") that expires
over a period of four years from the date of issuance. Under the program's
standard vesting schedule, the number of shares subject to the Repurchase Option
is reduced as follows: (i) on the first anniversary of the date of issuance, the
number of shares subject to the Repurchase Option is reduced by 25%; and (ii)
each month thereafter, the number of shares subject to the Repurchase Option is
reduced by 2.083% of the total Restricted Stock issued. As consideration for the
issuance of such Restricted Stock, each of the officers has paid 20% of the
aggregate purchase price of the

37
39

Restricted Stock issued to him in cash and executed a promissory note (each, a
"Note") for the remaining 80% of the aggregate purchase price. The Notes accrued
interest at a rate of 6% per annum and became due and payable upon the
effectiveness of the Company's registration statement pursuant to which the
subject securities may be offered and sold by such officers. The notes were full
recourse. All outstanding notes were repaid during 1999. The program was
terminated upon adoption of our 1998 Incentive Stock Plan on January 15, 1998.
As of December 31, 1999 there were 977,925 shares subject to repurchase.

The Company's 1998 Stock Incentive Plan (the "1998 Plan") was approved
by the Board of Directors on January 15, 1998. The 1998 Plan provides for the
grant of both incentive and nonqualified stock options. A total of 1,500,000
shares of common stock have been reserved for issuance under the 1998 plan. The
Company's 1999 Stock Incentive Plan (the "1999 Plan") was approved by the Board
of Directors on January 25, 1999. The 1999 Plan provides for the grant of both
incentive and nonqualified stock options. A total of 1,000,000 shares of common
stock have been reserved for issuance under the 1999 Plan. The maximum term of
any stock option granted under the 1998 and 1999 Plans is ten years, except that
with respect to incentive stock options granted to a person possessing more than
10% of the combined voting power of the Company (a 10% stockholder), the term of
such stock options shall be for no more than five years. The exercise price of
incentive stock options granted under the 1998 and 1999 Plan must be at least
100% of the fair market value of the common stock on the grant date except that
the exercise price of incentive stock options granted to a 10% stockholder must
be at least 110% of such fair market value on the date of grant. The options
generally vest over a period of three to four years.

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

OPTIONS OUTSTANDING
------------------------------------------
WEIGHTED
OPTIONS AGGREGATE AGGREGATE
AVAILABLE NUMBER OF EXERCISE EXERCISE
FOR GRANT OPTIONS PRICE PRICE
--------- --------- ---------- ------

Balance at January 1, 1998 ....... -- -- $ -- $ --
Options authorized ............ 800,000 -- -- $ --
Options granted ............... (660,250) 660,250 3,246,250 $ 4.92
Options canceled .............. 15,000 (15,000) (75,000) $ 5.00
------- --------- ----------
Balance at December 31, 1998...... 154,750 645,250 $ 3,171,205 $ 4.91
Options authorized ............ 1,700,000 --
Options granted ............... (964,000) 964,000 10,966,138 $11.38

Options exercised ............. -- (22,950) (105,750) $ 4.61
Options cancelled ............. 88,542 (88,542) (691,023) $ 7.80
------- --------- ----------
Balance at December 31, 1999 ..... 979,292 1,497,758 13,340,615 $ 8.91
======= ========= ==========

The following table summarizes the information about options outstanding
at December 31, 1999:

OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------- -------------------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
RANGE OF EXERCISE NUMBER REMAINING EXERCISE NUMBER EXERCISE
PRICE OUTSTANDING CONTRACTUAL LIFE PRICE EXERCISABLE PRICE
- ------------------- ----------- ---------------- -------- ----------- --------

$3.00.............. 23,000 8.05 years $ 3.00 23,000 $ 3.00
$5.00.............. 559,258 8.37 years $ 5.00 559,258 $ 5.00
$8.00.............. 35,000 9.25 years $ 8.00 35,000 $ 8.00
$9.00.............. 645,050 9.26 years $ 9.00 645,050 $ 9.00
$15.13 - $27.44.... 235,450 9.81 years $18.65 235,450 $18.65
--------- ---------
Total.............. 1,497,758 8.99 years $ 8.91 1,497,758 $ 8.91
========= =========

38
40

As of December 31, 1999 and 1998, there were 316,310 and 60,134 stock
options vested at a weighted average exercise price of $5.34 per share and $4.94
per share.

The Company has elected to follow APB Opinion No. 25 and related
interpretations in accounting for its stock grants since the alternative fair
market value accounting provided for under FAS 123 requires use of grant
valuation models that were not developed for use in valuing stock grants. Under
APB Opinion No. 25, as the exercise price of the Company's stock grants and
options equals the deemed fair value of the underlying stock on the date of
grant, no compensation expenses are recognized.

During the years ended December 31, 1998 and 1997, the Company recorded
aggregate deferred compensation of $361,000, representing the difference between
the grant price and the deemed fair value of the Company's common stock options
granted during these periods. The amortization of deferred compensation is
charged to operations and is amortized over the vesting period of the options,
which is typically four years. For the years ended December 31, 1999, 1998, and
1997, amortization expenses was $91,000, $79,000 and none, respectively.

Pro forma information regarding net income is required by FAS 123, which
also requires that the information be determined as if the Company has accounted
for grants subsequent to December 31, 1994 under a method specified by FAS 123.
The fair value of grants of Restricted Stock in 1997 and of options granted in
1998 were estimated at the date of grant using the minimum value method. Options
granted in 1999 were estimated using the Black-Scholes valuation module. The
following weighted average assumptions were used for 1999, 1998, and 1997:

YEARS ENDED DECEMBER 31,
-----------------------------------
1999 1998 1997
---- ----- -----

Volatility................................ 0.59 -- --
Expected life of options (in years)....... 4.00 4.00 3.86
Dividend yield............................ 0.00% 0.00% 0.00%
Risk-free interest rate................... 5.26% 4.95% 6.14%

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

YEARS ENDED DECEMBER 31,
------------------------------------
1999 1998 1997
------ ------ ------
(IN THOUSANDS, EXCEPT SHARE AND
PER SHARE DATA)

Net income as reported.................... $7,231 $2,766 $1,924
Pro forma net income...................... 6,187 $2,642 $1,917
Net income per share as reported
Basic................................. $ 0.43 $ 0.77 $ 0.58
Diluted............................... $ 0.33 $ 0.15 $ 0.11
Pro forma net income per share
Basic................................. $ 0.36 $ 0.74 $ 0.58
Diluted............................... $ 0.28 $ 0.14 $ 0.11

The weighted average grant date fair value for the Restricted Stock
grants during 1997 was $0.04. The weighted average grant date fair value of
options granted during 1999 and 1998 was $5.76 and $0.86, respectively.

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For purposes of pro forma disclosures, the value of the stock grants and
stock options is deemed amortized over the grant vesting period. Because FAS 123
is applicable only to stock grants subsequent to December 31, 1994, the pro
forma effect will not be fully reflected until 2000.

6. RETIREMENT SAVINGS PLAN

The Company has a retirement savings plan, commonly known as a 401(k)
plan, that allows all full-time employees to contribute from 1% to 15% of their
pretax salary, subject to IRS limits. Beginning in 1996, the Company made a
matching contribution calculated at 50 cents on each dollar of the first 6% of
participant contributions. The Company's contributions to the 401(k) plan were
$187,000, $124,000, and $50,000 for 1999, 1998, and 1997, respectively. There
are nine investment funds in which each employee may invest contributions in
whole percentage increments.

7. INCOME TAXES

The provision for income taxes consists of the following:

YEARS ENDED DECEMBER 31,
-------------------------------------------
1999 1998 1997
------- ------- -----
(IN THOUSANDS)

Federal:
Current ................. $ 3,806 $ 1,235 $ 291
Deferred ................ (487) (544) (191)
------- ------- -----
3,319 691 100
State:
Current ................. 734 1 11
Deferred ................ (157) -- --
------- ------- -----
577 1 11
Total .............. $ 3,896 $ 692 $ 111
======= ======= =====

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

YEARS ENDED DECEMBER 31,
-------------------------------------
1999 1998 1997
------- ------- -----
(IN THOUSANDS)

Tax at the U.S. statutory rate ......... $ 4,013 $ 1,210 $ 712
State taxes ............................ 375 -- --
Benefit of net operating losses ........ -- -- (502)
Impact of temporary differences ........ -- -- 234
Research and development credits ....... (266) (226) (215)
Adjustment of the valuation allowance .. -- (337) (191)
Other .................................. (226) 45 73
------- ------- -----
$ 3,896 $ 692 $ 111
======= ======= =====

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Significant components of the Company's deferred tax assets are as
follows:

YEARS ENDED DECEMBER 31,
------------------------
1999 1998
------- -----
(IN THOUSANDS)

Deferred tax assets:
Reserves and accruals not currently deductible........... $ 991 $ 683
Other individually immaterial items...................... 388 52
------- -----
Total deferred tax assets.................................. $ 1,379 $ 735
======= =====

The valuation allowance decreased by $407,000 and $639,000 in 1998 and
1997, respectively.

8. LEASE COMMITMENTS

The Company leases its facilities under noncancelable lease agreements,
and rental expenses for all leases aggregated approximately $664,000, $641,000,
and $264,000 for the years ended December 31, 1999, 1998, and 1997,
respectively. Future minimum lease payments at December 31, 1999 are as follows:

(IN THOUSANDS)

2000.................................................................. $ 728
2001.................................................................. 448
2002.................................................................. 466
2003.................................................................. 483
2004.................................................................. 458
-------
Total minimum lease payments......................................... $ 2,583
=======

9. SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION

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

Revenues by geographic region were as follows:

YEARS ENDED DECEMBER 31,
-------------------------------------------
1999 1998 1997
------- ------- -------
(IN THOUSANDS)

Revenues:
United States ............ $26,527 $17,379 $13,630
Europe ................... 9,621 6,283 2,963
Asia ..................... 4,551 2,614 941
------- ------- -------
Total ....................... $40,699 $26,276 $17,534
======= ======= =======

For the year ended December 31, 1999, two customers accounted for 10% or
more of net revenues. Unique Technologies, our U.S distributor, and A2M, a
European distributor, accounted for 25% and 10% of net revenues, respectively.
For the year ended December 31, 1998, Unique Technologies and A2M accounted for
22% and 11% of revenues, respectively. No other customers accounted for more
than 10% of net revenues in 1998. For the year ended December 31, 1997, no
customer accounted for more than 10% of net revenues.

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10. RELATED PARTY TRANSACTIONS

The Company and a customer are related parties because the chairman of
the Company's Board of Directors also serves on the customer's Board of
Directors. For the years ended December 31, 1999, 1998, and 1997, net revenues,
which were transacted at arms' length prices, to the customer were approximately
$896,000, $330,000, and $765,000, respectively.

In June 1997, the Company purchased 892,857 shares of preferred stock of
Sebring Systems, Inc. for $100,000. The Company expensed this $100,000 in 1997
due to Sebring spending this amount on research and development. This amount is
included in research and development expenses in the 1997 consolidated statement
of operations. The chairman of the Company's Board of Directors is on the board
of Sebring Systems.

In November 1999, the Company purchased 33,048,731 shares of preferred
stock of Sebring Systems, Inc. for approximately $1.0 million. The Company
expensed approximately $340,000 in 1999 due to Sebring spending this amount on
research and development. This loss from investee is included in the 1999
consolidated statement of operations. The chairman of the Company's Board of
Directors is on the board of Sebring Systems.

11. QUARTERLY SUMMARIES

(In thousands, except per share amounts, unaudited)

Three Months Ended
--------------------------------------------------
Mar 31, Jun 30, Sep 30, Dec 31,
1999 1999 1999 1999
------ ------ ------- -------

Net sales ........................ $8,908 $9,413 $10,597 $11,781
Gross profit ..................... 5,656 6,191 7,591 8,393
Net income ....................... 1,085 1,582 2,128 2,436
Net income per diluted share ..... $ 0.06 $ 0.07 $ 0.09 $ 0.11

Three Months Ended
--------------------------------------------------
Mar 31, Jun 30, Sep 30, Dec 31,
1998 1998 1998 1998
------ ------ ------- -------

Net sales ........................ $5,413 $5,626 $ 7,385 $ 7,852
Gross profit ..................... 3,405 3,518 4,763 4,919
Net income ....................... 138 291 1,252 1,085
Net income per diluted share ..... $ 0.01 $ 0.02 $ 0.07 $ 0.06

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

(IN THOUSANDS)

ADDITIONS
BALANCE AT CHARGED TO DEDUCTIONS BALANCE AT
BEGINNING COSTS AND AMOUNTS WRITTEN END OF
OF PERIOD EXPENSES OFF/RECOVERED PERIOD

Year ended December 31, 1999
Allowance for doubtful accounts... $173 $ 70 $(3) $240

Year ended December 31, 1998
Allowance for doubtful accounts... $158 $ -- $15 $173

Year ended December 31, 1997
Allowance for doubtful accounts... $28 $137 $(7) $158

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SIGNATURES

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

March 29, 2000 PLX Technology, Inc.

by: /s/ Michael J. Salameh
----------------------------------------
Name: Michael J. Salameh
Title: President

POWER OF ATTORNEY

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

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

Name and Signature Title(s) Date
------------------ -------- ----

/s/ Michael J. Salameh
- ------------------------------------ President and Director March 29, 2000
Michael J. Salameh (Principal Executive Officer)

/s/ Scott M. Gibson
- ------------------------------------ Vice President, Chief Financial March 29, 2000
Scott M. Gibson Officer
(Principal Financial Officer)
/s/ D. James Guzy
- ------------------------------------ Director and Chairman of the March 29, 2000
D. James Guzy Board of Directors

- ------------------------------------ Director
Eugene Flath

/s/ Timothy Draper
- ------------------------------------ Director March 29, 2000
Timothy Draper

/s/ Young K. Sohn
- ------------------------------------ Director March 29, 2000
Young K. Sohn

- ------------------------------------ Director
John H. Hart

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EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

3.1* Amended and Restated Certificate of Incorporation of the
Registrant.

3.2* Registrant's Amended and Restated Bylaws.

4.1 Reference is made to Exhibit 3.1.

10.1* Form of Indemnification Agreement between PLX and each of its
Officers and Directors.

10.2*+ 1998 Stock Incentive Plan.

10.3*+ 1999 Stock Incentive Plan.

10.4* Lease Agreement dated December 20, 1995 by and between Aetna Life
Insurance Company as Landlord and PLX as Tenant.

10.5* Lease Agreement dated October 17, 1997 between The Arrillaga
Foundation and The Perry Foundation as Landlords and PLX as Tenant,
as amended.

10.6*+ Form of Restricted Stock Purchase Agreement used in connection with
the 1986 Restricted Stock Purchase Program.

10.7*+ Form of Pledge Agreement used in connection with the 1986
Restricted Stock Purchase Program.

10.8*+ Form of Promissory Note used in connection with the 1986 Restricted
Stock Purchase Program.

10.9* PLX Technology, Inc. Stock Restriction, Information Rights and
Registration Rights Agreement dated April 19, 1989.

10.10* PLX Technology, Inc. Stock Restriction, Information Rights and
Registration Rights Agreement dated July 3, 1991.

23.1 Consent of Ernst & Young LLP, Independent Auditors

27.1 Financial Data Schedule.

- --------------------
* Incorporated by reference to the same numbered exhibit previously filed with
the Company's Registration Statement on Form S-1 (Registration No.
333-71795).

+ Management contract or compensatory plan or arrangement.