UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the quarterly period ended September 30, 1995

Commission file Number 0-17795

CIRRUS LOGIC, INC.
(Exact name of registrant as specified in its charter.)

CALIFORNIA 77-0024818
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

3100 West Warren Avenue, Fremont, CA 94538
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:
(510) 623-8300

Indicate by check mark whether the registrant(1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

YES [X] NO [ ]

The number of shares of the registrant's common stock, no par value, was
63,140,364 as of September 30, 1995.

Part 1. Financial Information
Item 1. Financial Statements
CIRRUS LOGIC, INC.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)

Quarter Ended Two Quarters Ended
Sept. 30, Oct. 1, Sept. 30, Oct. 1,
1995 1994 1995 1994
--------- --------- --------- ---------

Net sales $317,820 $202,211 $618,089 $387,208

Costs and expenses:
Cost of sales 176,494 113,715 354,183 210,342
Research and development 54,540 37,212 108,490 75,242
Selling, general and administrative 38,365 29,222 76,429 58,136
Non-recurring costs - 3,856 - 3,856
Merger costs - 2,418 - 2,418
--------- --------- --------- ---------
Total costs and expenses 269,399 186,423 539,102 349,994

Income from operations 48,421 15,788 78,987 37,214
Interest and other income (expense), net (193) 2,257 2,433 3,681
--------- --------- --------- ---------
Income before provision for income taxes 48,228 18,045 81,420 40,895
Provision for income taxes 15,191 5,607 25,646 12,882
--------- --------- --------- ---------
Net income $33,037 $12,438 $55,774 $28,013
========= ========= ========= =========

Net income per common and common equivalent share $0.47 $0.20 $0.80 $0.44
========= ========= ========= =========

Weighted average common and common
equivalent shares outstanding 70,997 63,206 69,386 63,473
========= ========= ========= =========

<FN>
See Notes to the Unaudited Consolidated Condensed Financial Statements.

CIRRUS LOGIC, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)

Sept. 30, April 1,
1995 1995
(Unaudited)
--------- ---------

ASSETS
Current assets:
Cash and cash equivalents $118,092 $106,882
Short-term investments 44,654 80,144
Accounts receivable, net 207,091 161,333
Inventories 151,142 103,642
Other current assets 83,671 27,931
--------- ---------
Total current assets 604,650 479,932
Property and equipment, net 145,871 100,244
Joint venture manufacturing agreement, net 48,569 49,935
Investment in joint venture 13,800 13,800
Deposits and other assets 35,603 29,623
--------- ---------
$848,493 $673,534
========= =========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities $235,375 $162,002
Accrued salaries and benefits 28,714 32,508
Obligations under equipment loans and
capital leases, current portion 14,967 11,481
Income taxes payable 17,507 22,322
--------- ---------
Total current liabilities 296,563 228,313

Obligations under equipment loans and
capital leases, non-current 40,671 26,205

Commitments and contingencies

Shareholders' equity:
Capital stock 320,210 283,741
Retained earnings 191,049 135,275
--------- ---------
Total shareholders' equity 511,259 419,016
--------- ---------
$848,493 $673,534
========= =========
<FN>
See Notes to the Unaudited Consolidated Condensed Financial Statements.

CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)

Two Quarters Ended
Sept. 30, Oct. 1,
1995 1994
--------- ---------

Cash flows from operations:
Net income $55,774 $28,013
Adjustments to reconcile net income to net
cash flows from operations:
Depreciation and amortization 27,627 16,894
Net change in operating assets and liabilities (69,542) (18,063)
--------- ---------
Net cash flows provided by operations 13,859 26,844
--------- ---------
Cash flows from investing activities:
Purchase of short-term investments (112,568) (186,853)
Proceeds from sale of short-term investments 148,058 105,832
Additions to property and equipment (64,521) (18,739)
Increase in deposits and other assets (12,924) (12,173)
--------- ---------
Net cash flows used by investing activities (41,955) (111,933)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock 21,948 5,603
Short-term borrowing 41,000 -
Borrowings on equipment loans 23,615 3,510
Principal payments on capital leases and loans (6,257) (5,579)
Repayment of short-term borrowing (41,000) -
--------- ---------
Net cash flows provided by financing activities 39,306 3,534
--------- ---------
Increase (decrease) in cash and cash equivalents 11,210 (81,555)
Cash and cash equivalents - beginning of period 106,882 193,825
--------- ---------
Cash and cash equivalents - end of period $118,092 $112,270
========= =========

Supplemental disclosure of cash flow information:
Interest paid $1,586 $1,151
Income taxes paid $15,769 $8,646
Tax benefit of stock option exercises $14,692 $ -
Equipment purchased under capitalized leases $594 $6,849
<FN>
See Notes to the Unaudited Consolidated Condensed Financial Statements.

CIRRUS LOGIC, INC.

NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. Basis of Presentation

The Consolidated Condensed Financial Statements have been prepared
by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations. In the opinion of the Company, the financial
statements reflect all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the
financial position, operating results and cash flows for those
periods presented. These consolidated condensed financial
statements should be read in conjunction with the consolidated
financial statements, and notes thereto for the year ended
April 1, 1995, included in the Company's 1995 Annual Report on
Form 10-K. The results of operations for the interim periods
presented are not necessarily indicative of the results that may
be expected for the entire year.

2. Cash Equivalents and Investments

At September 30, 1995, the Company's cash equivalents and short-term
investments consisted primarily of U.S. Government Treasury and
agency securities, commercial paper, auction preferred stock,
municipal bonds and certificates of deposit. Cash equivalents
and short-term investments held at September 30, 1995 approximate fair
market value.

3. Inventories

Inventories are comprised of the following:

Sept. 30, April 2,
1995 1995
--------- ---------
(In thousands)
Work-in-process $ 119,030 $ 84,920
Finished goods 32,112 18,722
--------- ---------
Total $ 151,142 $ 103,642
========= =========

4. Income Taxes

The Company provides for income taxes during interim reporting
periods based upon an estimate of the annual effective tax rate.
Such estimate reflects an effective tax rate lower than the
federal statutory rate primarily because of certain foreign
operations taxed at lower rates.

5. Net Income Per Common and Common Equivalent Share

Net income per common and common equivalent share is based on the
weighted average common shares outstanding and dilutive common
equivalent shares (using the treasury stock or modified treasury
stock method, whichever applies). Common equivalent shares
include stock options and warrants. Dual presentation of primary
and fully diluted earnings per share is not shown on the face of
the income statement because the differences are insignificant.

6. Contingencies

During September 1995, Crystal Semiconductor Corporation, a wholly
owned subsidiary of the Company, settled a suit alleging
infringement of a patent. The settlement did not have a material
adverse effect on the Company's consolidated financial position,
results of operations, or cash flows.

On May 7, 1993, the Company was served with two shareholder class
action lawsuits filed in the United States District Court for the
Northern District of California. The lawsuits, which name the
Company and several of its officers and directors as defendants,
allege violations of the federal securities laws in connection
with the announcement by Cirrus Logic of its financial results for
the quarter ended March 31, 1993. The complaints do not specify
the amounts of damages sought. The Company believes that the
allegations of the complaints are without merit, and the Company
intends to vigorously defend itself. The Company believes that
the ultimate resolution of this matter will not have a material
adverse effect on its financial position, results of operations,
or cash flows.

On November 7 and 8, 1995 three shareholder class action lawsuits
were filed in the United States District Court for the Northern
District of California against the Company and several of its
officers and directors. The lawsuits allege violations of the
federal securities laws in connection with the announcement by
Cirrus Logic on November 7, 1995 that a major customer
discontinued orders for the Company's 32-bit products. The
complaints do not specify the amounts of damages sought. The
Company believes that the allegations of the complaints are
without merit, and the Company intends to vigorously defend
itself. The Company believes that the ultimate resolution of this
matter will not have a material adverse effect on its financial
position, results of operations, or cash flows.

7. Proposed Public Offerings

On October 23, 1995, the Company announced that it intended to
conduct a registered public offering of Common Stock and
convertible notes. In light of market conditions, the Company is
reconsidering its financing alternatives and may decide to revise
or cancel its plans for the offering announced on October 23,
1995.

8. Joint Venture Agreements and Manufacturing Contract

During September 1994, the Company and IBM completed a series of
agreements pertaining to joint manufacturing. In January 1995,
under the terms of the agreements, a new joint venture (MiCRUS)
began manufacturing semiconductor wafers for each parent company.

In January 1995, MiCRUS leased approximately $145 million of
wafer fabrication and infrastructure equipment pursuant to a lease
guaranteed jointly and severally by the Company and IBM. As part
of the initial agreement, Cirrus Logic committed to pay $36
million as a cash contribution. In addition, Cirrus Logic and IBM
each committed to provide MiCRUS with approximately $100 million
of additional capital equipment, primarily through lease
financing, of which the final $30 million will be provided by the
Company in the fourth quarter of fiscal 1996.

In March 1995, IBM and the Company agreed to a $120 million
expansion of MiCRUS, of which Cirrus Logic committed to provide
$60 million in financing. The Company expects to use equipment
leases to fulfill its financing commitment. This expansion is
expected to be in full production in fiscal 1997.

In addition, in October 1995, the Company committed to provide a
further $198 million to fund a second expansion of MiCRUS and to
support the migration to 0.35 micron process technology. Of this
amount the Company expects to spend $33 million in cash for
facilities and to provide equipment lease guarantees for the
balance. IBM may elect to provide up to half of the $198 million
of the Company's commitment in order to obtain up to half of the
additional wafer capacity from the MiCRUS expansion.

In October 1995, the Company also concluded agreements with AT&T
to form a joint venture to build additional wafer production
capacity in an existing facility in Orlando, Florida owned by
AT&T. The agreements with AT&T obligate the Company to provide
$420 million in financing. The Company expects to finance $280
million of this amount through leasing equipment and subleasing it
to the joint venture, or by guaranteeing leases entered into by
the joint venture. Of the $140 million balance, the Company will
contribute $35 million in installments over a three-year period
and pay $105 million in installments over a four-year period. The
payment of $105 million will be charged to the Company's cost of
sales over the life of the venture based upon the ratio of current
units of production to current and anticipated future units of
production.

The Company expects to enter into a volume purchase agreement with
TSMC under which the Company expects to make advance payments to
TSMC of approximately $118 million, one-half in calendar 1997 and
one-half in calendar 1998.

The Company also has concluded an agreement with UMC which
requires the Company to make a total $90 million equity investment
during fiscal 1996 and 1997.

The Company estimates that its total financial obligations for the
IBM, AT&T, UMC and TSMC transactions (excluding future wafer
purchases) may total $225 million in the remainder of fiscal 1996,
$600 million in fiscal 1997 and $200 million in the following
three years. The Company intends to obtain the necessary capital
through a combination of equity and/or debt financing, equipment
lease financing, lease guarantees and cash generated from
operations. In addition, the Company estimates that capital
expenditures for its own facilities, testing and other equipment
may total $500 to $600 million through fiscal 2000. The Company
expects to finance seventy to eighty percent of these capital
expenditures through lease financing. There can be no assurance
that financing will be available or, if available, will be on
satisfactory terms.

Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations

This information should be read along with the unaudited
consolidated condensed financial statements and the notes thereto
included in Item 1 of this Quarterly Report and the audited
consolidated financial statements and notes thereto and
Management's Discussion and Analysis of Financial Condition and
Results of Operations for the fiscal year ended April 1, 1995,
contained in the Annual Report to Shareholders. On June 1, 1995,
the Board of Directors approved a two-for-one split of the
Company's Common Stock. Shareholders of record as of June 19,
1995 received certificates reflecting the additional shares.
These certificates were distributed on July 17, 1995. All
references to the number of shares of Common Stock, warrants and
options to purchase shares of Common Stock, weighted average
common and common equivalent shares outstanding, and share prices
have been restated to reflect the two-for-one split.

Overview

Historically, the majority of the wafers used by the Company have
been merchant wafers manufactured by outside suppliers. The
Company believes that it is currently the world's largest
purchaser of merchant wafers. In recent periods, the merchant
wafer market has been unable to meet market demand. This has
increased the cost of merchant wafers, negatively affecting the
Company's gross margins and, at times, preventing the Company from
purchasing enough wafers to meet the demand for its products.

In response to these conditions and its rapid growth, the Company
has embarked upon a strategy to increase its sources of wafer
supplies by taking additional ownership interests in wafer
manufacturing operations. The Company has formed joint ventures,
one with IBM and one with AT&T, to own and operate wafer fabs.
The Company is also entering into agreements to increase its
committed supply of merchant wafers from foundries located in
Asia, and the Company intends to continue to seek additional
committed wafer supplies through similar or other arrangements.

The Company's continued investment in manufacturing capacity will
require the Company to make substantial expenditures over the next
several years. In connection with the Company's agreements to
increase its committed wafer supplies through the MiCRUS joint
venture, the joint venture with AT&T, an investment in a new
company being formed by United Microelectronics Corporation (UMC),
an expected volume purchase agreement with Taiwan Semiconductor
Manufacturing Co., Ltd. (TSMC), and its internal capital expansion
program, the Company expects that it must make capital
contributions or cash investments totalling up to $570 million,
and must obtain or guarantee up to $1,055 million in capital
equipment lease financing through fiscal 2000. In addition,
significant additional expenditures and financing guarantees by
the Company will be required if it makes arrangements with other
companies to increase its wafer supply.

Results of Operations

The following table discloses the percentages that income
statement items are to net sales and the percentage change in the
dollar amounts for the same items compared to the similar period
in the prior fiscal year.

Percentage of Net Sales Percentage of Net Sales
Quarter Ended Two Quarters Ended
------------------- -------------------
Sept. 30, Oct. 1, Percent Sept. 30, Oct. 1, Percent
1995 1994 change 1995 1994 change
--------- --------- --------- --------- --------- ---------

Net sales 100% 100% 57% 100% 100% 60%

Gross margin 44% 44% 60% 43% 46% 49%
Research and development 17% 18% 47% 18% 19% 44%
Selling, general and administrative 12% 14% 31% 12% 15% 31%
Non-recurring costs - 2% -100% - 1% -100%
Merger costs - 1% -100% - 1% -100%
Income from operations 15% 8% 207% 13% 10% 112%
Income before income taxes 15% 9% 167% 13% 11% 99%
Income taxes 5% 3% 171% 4% 3% 99%

Net income 10% 6% 166% 9% 7% 99%

Net Sales

Net sales for the second quarter of fiscal 1996 were $317.8
million, an increase of 57% from the $202.2 million reported for
the second quarter of fiscal 1995. Net sales for the first two
quarters of fiscal 1996 were $618.1 million, an increase of 60%
over the $387.2 million reported for the same period of fiscal
1995. This increase was largely due to an increase in sales of
graphics, audio, mass storage and wireless communications
products. Graphics and mass storage product revenue grew because
of an increase in unit sales to the desktop personal computer
market segment. Audio product sales grew because of an increase
in sales of 16-bit audio codec products. Wireless communications
product sales grew because of an increase in sales of and wireless
communications chips and Cellular Digital Packet Data (CDPD) base
stations.

For the second and first two quarters of fiscal 1996, export sales
(including sales to U.S.-based customers with manufacturing plants
overseas) were 58% and 59%, respectively, of total sales compared
to 54%, for the corresponding periods in fiscal 1995.

The Company's sales are currently denominated primarily in U.S.
dollars. The Company may purchase hedging instruments to reduce
short-term foreign currency related to trade receivables
denominated in foreign currencies.

No customer accounted for 10% or more of sales during either the
second or first two quarters of fiscal 1996 or fiscal 1995.

Gross Margin

The gross margin was 44% in the second quarter of fiscal 1996,
compared to 44% for the second quarter of fiscal 1995. The gross
margin was 43% in the first two quarters of fiscal 1996, compared
to 46% for the same period of fiscal 1995. Although the gross
margin percentage was comparable in the second quarter of fiscal
1996 and 1995, the factors influencing the percentage were
diverse. In fiscal 1996, the gross margin percentage increased as
a result of lower manufacturing costs for wafers produced by
MiCRUS. In fiscal 1995, the gross margin declined because of
start-up expenses related to the production ramp of CDPD base
station equipment, and charges to fully reserve audio component
inventories for a certain multimedia customer. The decline in the
gross margin percentage for the first two quarters of fiscal 1996
compared to fiscal 1995 was mostly the result of higher wafer
costs caused by an increase in wafer prices for merchant wafers,
an insufficient supply of 0.6 micron wafers which made necessary
the use of less cost effective 0.8 micron wafers to meet expanded
unit shipments, expediting expenses related to premiums paid to
suppliers to increase production of the Company's products, lower
yields on new products ramping into production, and lower selling
prices on certain graphics and audio parts. The decline in gross
margin for the period was partially offset by lower manufacturing
costs for wafers produced by MiCRUS in the second quarter.

Research and Development

Research and development expenditures increased $17.3 million over
the second quarter of fiscal 1995 to $54.5 million in the second
quarter of fiscal 1996. The expenditures in the second quarter
and the first two quarters of fiscal 1996 were approximately 17%
and 18%, respectively, of net sales compared to 18% and 19%,
respectively, in the comparable periods of fiscal 1995. Expenses
increased in absolute amounts as the Company continues to invest
in new product development. The Company intends to continue
making substantial investments in research and development and
expects these expenditures will continue to increase in absolute
amounts.

Selling, General and Administrative Expenses

Selling, general and administrative expenses represented
approximately 12% of net sales in the second quarter and the first
two quarters of fiscal 1996, compared to 14% and 15%,
respectively, in the corresponding periods in fiscal 1995. The
absolute spending increase in fiscal 1996 reflects increased
direct expenses for the expanding sales force, increased marketing
expenses for promotions and advertising, and increased
administrative and legal expenses. The Company expects these
expenses to increase in absolute terms during the remainder of
fiscal 1996.

Income Taxes

The Company's effective tax rate was 31.5% for the second quarter
and first two quarters of fiscal 1996, as against 31.1% and 31.5%
for the comparable periods in fiscal 1995. The 31.5% annual
effective tax rate is less than the U.S. federal statutory rate
primarily because certain foreign earnings are taxed at lower
rates.

Liquidity and Capital Resources

During the first two quarters of fiscal 1996, the Company
generated approximately $13.9 million of cash and cash equivalents
in its operating activities, compared to approximately $26.8
million during the first two quarters of fiscal 1995. The
decrease was primarily caused by the net change in operating
assets and liabilities, offset somewhat by increased income from
operations and an increase in the non-cash effect of depreciation
and amortization.

During the first two quarters of fiscal 1996, $42.0 million in
cash was used in investing activities compared to $111.9 million
used in investing activities during the same period last fiscal
year. Short-term investments were the principal investing
activities generating or using cash along with additions to
property and equipment.

During the first two quarters of fiscal 1996, $39.3 million in
cash was provided by financing activities compared to $3.5 million
during the same period last fiscal year. Borrowings on equipment
loans and proceeds from the issuance of Common Stock were the
principal financing activities generating cash. The Company has a
bank line of credit for up to a maximum of $65 million available
through December 1995, at the bank's prime rate. As of September
30, 1995, there were no outstanding extensions of credit under
this facility other than a stand-by letter of credit in the amount
of $10 million.

Cash, cash equivalents and short-term investments decreased $24.3
million from $187 million at April 1, 1995, to $162.7 million at
September 30, 1995. During the same period accounts receivable
and inventories increased $45.8 million and $47.5 million,
respectively, and accounts payable, accrued salaries and benefits,
income taxes payable and other accrued liabilities increased $64.8
million. The Company believes accounts receivable and inventories
will increase. The increases in accounts receivable, inventory,
accounts payable and accrued liabilities are associated with the
growth in the Company's operations.

In January 1995, MiCRUS leased approximately $145 million of wafer
fabrication and infrastructure equipment pursuant to a lease
guaranteed jointly and severally by the Company and IBM. As part
of the initial agreement, Cirrus Logic committed to pay $36
million as a cash contribution. In addition, Cirrus Logic and IBM
each committed to provide MiCRUS with approximately $100 million
of additional capital equipment, primarily through lease
financing, of which the final $30 million will be provided by the
Company in the fourth quarter of fiscal 1996.

The Company also has concluded an agreement with UMC which
requires the Company to make a total $90 million equity investment
during fiscal 1996 and 1997.

The Company's future capital requirements include financing the
growth of working capital items such as accounts receivable and
inventory and the purchase of manufacturing and test equipment. In
addition, the Company is continuing to pursue other potential
transactions to satisfy its future production requirements,
including equity investments in, loans to or joint ventures with
wafer manufacturing companies and acquisition or construction of
wafer fabrication facilities. The Company has acquired technology
companies in the past and may do so in the future. Such potential
transactions may require substantial capital resources, which may
require the Company to seek additional debt or equity financing.

Future Operating Results

Quarterly Fluctuations

On November 7, 1995, the Company announced that a major customer
of the Company reduced its orders for certain graphics and audio
chips, as a result of the customer's forecasted demand and the
current inventories of Cirrus Logic products held by that customer
and its subcontractors. The Company expects this will reduce the
rate of revenue growth for the current quarter ending December 30,
1995, and that the operating profits for the quarter ending
December 30, 1995 are likely to decrease by 10 to 15 percent as
compared with the prior quarter ended September 30, 1995.

The Company's quarterly revenues and operating results have varied
significantly in the past and are likely to vary substantially
from quarter to quarter in the future. The Company's quarterly
operating results are affected by a wide variety of factors, many
of which are outside of the Company's control, including but not
limited to, the Company's ability to introduce new products and
technologies on a timely basis, changes in product mix or
fluctuations in manufacturing costs which affect the Company's
gross margins, market acceptance of the Company's and customers'
products, sales timing, the level of orders which are received and
can be shipped in a quarter, the cyclical nature of both the
semiconductor industry and the markets addressed by the Company's
products, product obsolescence, price erosion, and competitive
factors. The Company's future operating results also will depend
in part on economic conditions in the United States and the
worldwide markets that the Company serves. Any unfavorable
changes in the above or other factors could adversely affect the
Company's operating results.

The Company must order wafers and build inventory well in advance
of product shipments. Because the Company's markets are volatile
and subject to rapid technology and price changes, there is a risk
that the Company will forecast incorrectly and produce excess or
insufficient inventories of particular products. This inventory
risk is heightened because many of the Company's customers place
orders with short lead times and because sales to these customers
have increased as a percentage of total sales. To the extent the
Company produces excess or insufficient inventories of particular
products, the Company's revenues and earnings could be adversely
affected. Customer lead times for certain display graphics and
audio products, which had lengthened in the fourth quarter of
fiscal 1995 and the first quarter of fiscal 1996 have now
shortened to levels previously experienced by the Company.
Accordingly, in the third quarter of fiscal 1996, a significant
portion of the Company's revenues from desktop graphics is
dependent on sales to customers who place orders with short lead
times for delivery in this quarter.

The Company's products are in various stages of their product life
cycles. The Company's success is highly dependent upon its
ability to develop complex new products, to introduce them to the
marketplace ahead of the competition, and to have them selected
for design into products of leading systems manufacturers. These
factors have become increasingly important to the Company's
results of operations because the rate of change in the markets
served by the Company continues to accelerate. Since product life
cycles are continually becoming shorter, revenues may be affected
quickly if new product introductions are delayed or if the
Company's products are not designed into the Company's customers'
successive generation of products. Of particular importance is
the timely completion and introduction of key graphics and audio
products currently in various stages of development. Any delay in
the introduction of such products could have a material adverse
effect on the Company's results of operations during the second
half of fiscal 1996 and fiscal 1997. The Company's gross margins
also will depend on the Company's success at introducing new
products quickly and effectively because the gross margins of
semiconductor products decline as competitive products are
introduced. Also, the Company must deliver product to customers
according to customer schedules. If delays occur, then revenues
and gross margins for current and follow-on products may be
affected as customers may shift to competitors to meet their
requirements. There can be no assurance that the Company will
continue to compete successfully because of these factors.

As is common in the semiconductor industry, the Company frequently
ships more product in the third month of each quarter than in
either of the first two months of the quarter, and shipments in
the third month are higher at the end of that month. This pattern
is likely to continue. The concentration of sales in the last
month of the quarter may cause the Company's quarterly results of
operations to be more difficult to predict. Moreover, a
disruption in the Company's production or shipping near the end of
a quarter could materially reduce the Company's revenues for that
quarter.

Issues Relating to Manufacturing and Manufacturing Investment

Most of the Company's wafers are currently manufactured to the
Company's specifications by outside merchant wafer suppliers.
Although the Company has increased its future wafer supplies from
manufacturing joint ventures, the Company expects to continue to
purchase a majority of its wafers from, and to be reliant upon,
outside merchant wafer suppliers for at least the next two years.
The Company also uses other outside vendors to package the wafer
die into integrated circuits (ICs). The Company's reliance on
these outside suppliers involves several risks, including the
absence of adequate guaranteed capacity, the possible
unavailability of or delays in obtaining access to certain process
technologies, and reduced control over delivery schedules,
manufacturing yields and costs. The Company may be particularly
sensitive to these risks because its merchant wafer suppliers are
currently producing at or near their full scheduled capacity. In
addition, the Company's flexibility to move production of any
particular product from one wafer manufacturing facility to
another can be limited in that such a move can require significant
re-engineering, which can lead to a delay of several quarters in
accessing available capacity. This in turn can result in periods
of time in which production is constrained even though capacity is
available at one or more wafer manufacturing facilities. The
Company's results of operations could be adversely affected if new
suppliers are not qualified in time to meet production
requirements or if particular suppliers are unable to provide a
sufficient and timely supply of product, whether because of
capacity constraints, unexpected disruptions at the plants, or
other reasons, or if the Company is forced to purchase wafers from
higher cost suppliers or to pay expediting charges to obtain
additional supply, or if the Company's test facilities are
disrupted for an extended period of time. Certain of the
Company's products are manufactured using 0.6 micron CMOS process
technology. Industry demand for this process technology is
strong. The Company believes that there will continue to be a
shortage of manufacturing capacity to produce wafers using this
process, at least through the remainder of fiscal 1996. In
addition, the Company believes there is a shortage of assembly
capacity for packaging wafer die. Since the Company does not have
guaranteed manufacturing commitments from most vendors, there is a
risk that these vendors could suddenly decide not to supply wafers
or package die. Because of this supply shortage, there is an
increased risk that certain products will not be readily available
for sale according to customer schedules and a risk that the
Company's costs will increase. Net sales and gross margin could be
adversely affected by the supply shortage, which could be
exacerbated if vendors encounter delivery problems. Net sales and
gross margin also could be adversely affected if the Company
receives orders for large volumes of products to be shipped within
short periods and if the Company's product testing capacity is not
adequate to process such volumes. The Company's results of
operations also could be adversely affected if the Company's
suppliers are subject to injunctions arising from alleged
violations of third party intellectual property rights. The
enforcement of such an injunction could impede a supplier's
ability to provide wafers or packaging services to the Company.

The Company's sales have been constrained by its inability to
obtain sufficient sources of wafer supply to meet customer demand.
To expand its wafer supplies, the Company has entered into and
continues to consider various transactions, including joint
venture agreements to own and operate wafer fabrication
facilities, increased use of "take or pay" contracts that commit
the Company to purchase specified quantities of wafers over
extended periods, and equity investments in, loans to or other
credit supports for wafer manufacturing companies in exchange for
guaranteed production.

The Company has entered into manufacturing joint venture
agreements with IBM and AT&T and expects to enter into a new long-
term volume purchase agreement with TSMC. The Company is
increasing its committed wafer production through these and other
joint ventures and take or pay contracts in order to address the
expectation that its wafer needs will continue to grow. If, as is
possible, the forecasted demand does not materialize, then the
Company's committed wafer production could exceed its needs. In
such event, if the joint ventures and other suppliers are not able
to sell their wafer output to other customers, then the Company
will have to bear higher costs in the form of unutilized overhead
in the case of the joint ventures or monetary penalties in the
case of the take or pay contracts. The Company expects to
continue purchasing a substantial number of merchant wafers,
although the number of suppliers it uses may diminish. The
decrease in the number of suppliers used by the Company could
adversely affect the Company's ability to obtain wafers from third
party suppliers in the event the Company faces unanticipated
shortfalls in supply.

If the MiCRUS and AT&T joint ventures are able to produce wafers
at or below prices generally prevalent in the market, the Company
will benefit. If, however, either of these ventures, or any other
joint venture into which the Company enters, is not able to
produce wafers at competitive prices, the Company's results of
operations will be materially adversely affected. The process of
beginning production at and increasing volume with the joint
ventures inevitably involves risks, and there can be no assurance
that the manufacturing costs of such ventures will be competitive.
Additional risks include the timely development of products,
unexpected disruptions to the manufacturing process, the
difficulty of maintaining quality and consistency, particularly at
the smaller submicron levels, dependence on equipment suppliers
and technological obsolescence.

As a participant in manufacturing joint ventures and as an
investor in the company being formed by UMC, the Company also will
share in the risks encountered by wafer manufacturers generally,
including being subject to a variety of foreign, federal, state
and local governmental regulations related to the discharge and
disposal of toxic, volatile or otherwise hazardous materials used
in the manufacturing process. Any failure by the Company to
control the use of, or to restrict adequately the discharge of,
hazardous materials by the joint ventures under present or future
regulations could subject it to substantial liability or could
cause the manufacturing operations to be suspended. In addition,
the Company could be held financially responsible for remedial
measures if any of the joint venture manufacturing facilities were
found to be contaminated whether or not the Company or the joint
venture was responsible for such contamination.

The Company will not be in direct control of the joint ventures or
of the wafer manufacturing companies in which it invests. The
Company is dependent on its joint venture partners for the
operation of the new manufacturing facilities, including the
hiring of qualified management. In addition, the manufacturing
processes and policies undertaken by each manufacturing joint
venture may not be optimized to meet the Company's specific needs
and products. If the joint ventures are unable to manage the
operations effectively, their ability to implement state-of-the-
art manufacturing processes, to produce wafers at competitive
costs, and to produce sufficient output could be adversely
affected. Also, the Company's joint venture partners may enter
into contractual or licensing agreements with third parties, or
may be subject to injunctions arising from alleged violations of
third party intellectual property rights, which could restrict the
joint venture from producing certain of the Company's products or
from producing with certain processes. Consequently, the
Company's results of operations could be adversely affected.

The increase in the Company's wafer supply arrangements could
strain the Company's management and engineering resources. This
strain on resources could be exacerbated by the geographic
distances between the Company's and the various wafer production
facilities. There can be no assurance that the Company will be
able to hire additional management, engineering and other
personnel as needed, to manage its expansion programs effectively
and to implement new production capacity in a timely manner and
within budget.

The Company believes other manufacturers are also expanding or
planning to expand their fabrication capacity over the next
several years. There can be no assurance that the industry's
expansion of wafer production will not lead to overcapacity. If
this were to occur, the market price for wafers sold by third
party foundries could decline, and the wafers produced by the
Company's joint ventures could become more costly relative to
prevailing market prices.

In connection with the financing of its expansion, the Company may
borrow money. Such indebtedness could cause the Company's
principal and interest obligations to increase substantially.
Moreover, as a consequence of existing and planned wafer supply
related transactions, the Company's obligations under guarantees,
investment commitments and take or pay arrangements also will
increase substantially. The degree to which the Company will be
leveraged could adversely affect the Company's ability to obtain
additional financing for working capital, acquisitions or other
purposes and could make it more vulnerable to industry downturns
and competitive pressures. The Company's ability to meet its debt
service and other obligations will be dependent upon the Company's
future performance, which will be subject to financial, business
and other factors affecting the operations of the Company, many of
which are beyond its control.

The Company's results of operations are subject to increasing
manufacturing risks as the Company continues to upgrade wafer
production using complex, smaller geometry processes. As the
Company increases its source of wafer supply through joint
ventures, equity investments and other arrangements, it expects it
will decrease its flexibility to reduce the amount of wafers it is
committed to purchase and that its fixed manufacturing costs as a
percentage of overall costs of sales may increase. As a result,
the operating results of the Company will be more sensitive to
fluctuations in revenues and to the cyclical nature of the
semiconductor industry.

Dependence on PC Market

Sales of most of the Company's products depend largely on sales of
personal computers (PCs). The Company believes that a slowdown in
sales in the PC market would adversely affect the Company's sales
and earnings. The growth in the PC market and the growth in the
market share enjoyed by the Company's PC OEM customers was
exceptionally strong during fiscal 1995 and the first two quarters
of fiscal 1996. However, the PC market could decline or
experience slower growth either because of slackening consumer
demand, because PC manufacturers are constrained by shortages of
required parts, or otherwise, or the Company's PC OEM customers
could experience lower sales or slower growth. This could lead to
an inventory correction by the PC and peripheral device
manufacturers, which could result in a decline in the Company's
revenues or rate of revenue growth and a decline in net income.
As a component supplier to PC OEMs and to peripheral device
manufacturers, the Company is likely to experience a greater
magnitude of fluctuations in demand than the Company's customers
themselves experience. A downturn in the PC market could also
affect the financial health of a number of the Company's
customers, which could affect the Company's ability to collect
outstanding accounts receivable from these customers.

Sales of the Company's products may become increasingly dependent
on key customers, including Intel, who supply motherboards to PC
manufacturers, and on PC manufacturers associated with the
consumer marketplace. A number of PC OEMs buy products directly
from the Company and also buy motherboards from Intel or other
suppliers who in turn buy products from the Company. This
increases the risk that a significant portion of the Company's
sales may depend directly or indirectly on the sales to a
particular PC OEM. Since the Company cannot track sales by the
motherboard manufacturers, this also increases the likelihood that
the Company may not be fully informed of its indirect dependence
on any particular PC OEM.

Increasing dominance of the PC motherboard or PC market by any one
customer increases the risks that the Company could experience
intensified pressure on product pricing and unexpected changes in
customer orders. Moreover, the Company's production schedules are
based not only on customer orders, but also on forecasted demand.
These issues may contribute to increasing volatility in the
Company's PC-related products, and thus may increase the risk of
rapid changes in revenues, margins, and earnings. Furthermore,
the intense price competition in the PC industry is expected to
continue to put pressure on the price of all PC components. Other
IC makers, including Intel, have expressed their interest in
integrating some multimedia or communications functions into their
microprocessor products. Successful integration of these
functions could reduce the Company's opportunities for IC sales in
these areas.

Issues Relating to Graphics Products

Two-dimensional ("2D") graphics accelerators have replaced
graphics controllers as the mainstream PC graphics product. The
market is now changing to require accelerated CD-ROM video
playback along with accelerated graphics and, eventually, 3D
acceleration capability. The Company is striving to bring
products to market for these needs, but there is no assurance that
it will succeed in doing so in a timely manner. If the market for
these products does not develop or is delayed, or if these
products are not brought to the market in a timely manner or do
not address the market needs or cost or performance requirements,
then net sales would be adversely affected. Currently, the
Company continues to experience intense competition in the sale of
graphics products. If competitors are successful in supplanting
the Company's products, the Company's market share may not be
sustainable and net sales, gross margin, and earnings would be
adversely affected.

The Company has a large share of the market for desktop graphics
controllers and graphics accelerators. The Company believes that
it is unlikely to increase its market share further, and that
future growth in revenues from desktop graphics products is likely
only if the size of the market continues to increase or if
competitors fail or are delayed in introducing new products.
Several competitors have recently introduced products and adopted
pricing strategies that have increased competition in the desktop
graphics market and put additional pressure on prices and gross
margins. These factors may adversely affect revenues and gross
margins for graphics accelerator products.

The Company has preliminary design wins for certain graphics
products scheduled to begin shipping in the fourth quarter of
fiscal 1996. Although the Company has conducted extensive
simulation of the product designs, the Company and its customers
have not completed testing and evaluation of the products. If the
first units were to perform poorly in the evaluation, key
customers could decide not to use these products in their own
designs rather than to risk delaying their own product
introductions. In such event, revenues from the sale of graphics
products in the fourth quarter of fiscal 1996 and in the following
quarters could be materially adversely affected.

Issues Relating to Audio Products

Most of the Company's revenues in the multimedia audio market
derive from the sales of 16-bit audio codecs and integrated 16-bit
codec plus controller solutions for the consumer PC market. The
consumer PC market is more volatile than other segments of the PC
market. The Company currently maintains a substantial market
share in multimedia PCs. Further increases in revenues from these
products are likely to depend on growth of the PC market,
continuing adoption of multimedia audio in consumer and business
PCs and selection of the Company's multimedia products by add-in
card manufacturers and PC OEM's. If competitors succeeded in
supplanting the Company's multimedia audio products at any of
these customers, the Company's market share could decline suddenly
and materially.

Due to the heavy concentration of multimedia PCs in the consumer
market, to be successful, an audio product must be compatible with
the new and existing software games that dominate consumer
multimedia PC usage. These games typically require 16-bit audio,
a SoundBlaster compatible audio controller and FM synthesis
emulation. Due to the price sensitive nature of the consumer PC
market, the market is moving from multi-chip solutions to
solutions that provide the codec, controller and synthesis
integrated into a single IC. If the Company is unable to provide
or is late to market with these highly integrated solutions, or if
its solutions are not compatible with new and existing software,
the Company could lose market share.

Revenues from the sale of audio products in the second half of
fiscal 1996 and in fiscal 1997 are likely to be significantly
affected by the success of a recently announced fully-integrated,
single-chip audio IC. The product has not yet passed customer
qualification and acceptance. If the product is not qualified and
accepted by customers in time for volume shipments in the second
half of fiscal 1996, revenues and gross margins from the sale of
audio products could be significantly impaired.

Issues Relating to Mass Storage Market

The disk drive market has historically been characterized by a
relatively small number of disk drive manufacturers and by periods
of rapid growth followed by periods of oversupply and contraction.
As a result, suppliers to the disk drive industry experience large
and sudden fluctuations in product demand. Furthermore, the price
competitive nature of the disk drive industry continues to put
pressure on the price of all disk drive components.

The Company's mass storage revenues are derived primarily from
sales of disk drive controllers and more recently, from read
channel chips and CD-ROM drive controllers. Future mass storage
revenues will be heavily dependent on the acceptance and
qualification of new generations of controllers and read channel
chips by the Company's customers.

Recently the disk drive industry has become more consolidated.
Such consolidation, which is continuing, reduces the number of
customers for the Company's mass storage products and may increase
the desire of customers to source their components internally.

Revenues from the sale of mass storage products could be affected
in various ways if the proposed merger between Seagate and Conner
Peripherals is concluded. In the short term, a combined
Seagate/Conner entity could elect to eliminate overlapping disk
drive product offerings. Such a development could sharply reduce
or increase its demand for the Company's ICs depending on whether
the discontinued disk drive products do or do not use the
Company's ICs. Such a development also would increase the risk
that the Company builds excess inventory of ICs for the disk
drives that are suddenly discontinued or builds insufficient
inventory and is unable to meet demand for ICs for the disk drives
that are retained. In the long term, the greater size of the
combined entity may increase its ability to rely on internal
sourcing of components, which could reduce demand for the
Company's products.

Revenues from the sale of mass storage products also could be
affected by the recent introduction of Windows 95, which has
created some uncertainty in the market place regarding the timing
of demand for disk drive storage capacity by end users. If disk
drive manufacturers incorrectly forecast consumer demand, they may
make sudden and dramatic changes in disk drive product mix, which
increases the risk that the Company will produce excess or
insufficient inventories of various products.

Issues Relating to Wireless and other Communication Products

Sales of the Company's Cellular Digital Packet Data ("CDPD")
products commenced during the quarter ended October 1, 1994. Since
that time the Company's subsidiary, PCSI, has sold over 3,500 base
stations to customers building CDPD communications infrastructure
in anticipation of a developing market for CDPD wireless data
services. Future CDPD revenues will depend primarily on the sale
of subscriber units, modules and components. If the CDPD market
does not develop, or the Company's CDPD products are not
competitive with those being introduced by other suppliers, then
future revenues and earnings would be adversely affected.

Sales of digital cordless phone products, which were developed by
PCSI for the Japanese Personal Handyphone System ("PHS") market,
will depend upon the establishment of infrastructure and services
which are beyond PCSI's control. If PCSI is unsuccessful or
delayed in developing next generation chip sets for the PHS
market, future chip set sales could decline rapidly. All sales
are being conducted through the Company's Japanese marketing
partners which limits the Company's gross margins for its PHS
products.

The Company's development of new technology in the wireless
communications business faces major challenges and risks which
could adversely affect the Company's results of operations.
Continued investment in research and development in technology for
which a market does not emerge could adversely affect the
Company's net sales, gross margin and earnings. Moreover,
investment in technology which proves incompatible with market
standards could impede the Company's ability to participate in
such markets. In addition, the timing and direction of the future
market development in this area could depend heavily on the
decisions of government regulators, which are subject to
significant delays and are outside of the Company's control. The
Company's competitors in wireless markets include some of the
world's largest, most successful and most technologically advanced
companies and there is no assurance that the Company will be able
to compete successfully.

The Company currently derives significant revenues from the sale
of fax/data/modem ICs, predominantly for the v.32bis standard. The
fax/data/modem market is transitioning to the higher performance
v.34 standard. If the Company is not successful in its efforts to
develop a v.34 product for sampling before the end of the fourth
fiscal quarter of 1996, revenues and gross margins for the sale of
fax/data/modem ICs in subsequent quarters could be significantly
impaired.

Intellectual Property Matters

The greater integration of functions and complexity of operation
of the Company's products also increase the risk that latent
defects or subtle faults could be discovered by customers or end
users after volumes of product have been shipped. If such defects
were significant, the Company could incur material recall and
replacement costs for product warranty.

The semiconductor industry is characterized by frequent litigation
regarding patent and other intellectual property rights. The
Company and certain of its customers from time to time have been
notified that they may be infringing certain patents and other
intellectual property rights of others. In addition, customers
have been named in suits alleging infringement of patents by
customer products. Certain components of these products have been
purchased from the Company and may be subject to indemnification
provisions made by the Company to the customers. The Company has
not been named in any such suits. Although licenses are generally
offered in situations where the Company or its customers are named
in suits alleging infringement of patents or other intellectual
property rights, there can be no assurance that litigation will
not be commenced in the future regarding patents, mask works,
copyrights, trademarks, trade secrets, or indemnification
liability, or that any licenses or other rights can be obtained on
acceptable terms. Because successive generations of the Company's
products tend to offer an increasing number of functions, there is
a likelihood that more of these claims will occur as the products
become more highly integrated. The Company cannot accurately
predict the eventual outcome of any suit or other alleged
infringement of intellectual property. An unfavorable outcome
occurring in any such suit, could have an adverse effect on the
Company's future operations and/or liquidity. Furthermore,
efforts of defending the Company against future lawsuits, if any,
could divert a significant portion of the Company's financial and
management resources.

Foreign Operations and Markets

Because many of the Company's subcontractors and several of the
Company's key customers, which customers collectively account for
a significant percentage of the Company's revenues, are located in
Japan and other Asian countries, the Company's business is subject
to risks associated with many factors beyond its control.
International operations and sales may be subject to political and
economic risks, including political instability, currency
controls, exchange rate fluctuations, and changes in import/export
regulations, tariff and freight rates. Although the Company buys
hedging instruments to reduce its exposure to currency exchange
rate fluctuations, the Company's competitive position can be
affected by the exchange rate of the U.S. dollar against other
currencies, particularly the Japanese yen. In addition, various
forms of protectionist trade legislation have been proposed in the
United States and certain other countries. Any resulting changes
in current tariff structures or other trade and monetary policies
could adversely affect the Company's international operations.
There can be no assurance that the political and economic risks to
which the Company is subject will not result in customers of the
Company defaulting on payments due to the Company or in the
reduction of potential purchases of the Company's products.

Competition

The Company's business is intensely competitive and is
characterized by price erosion and rapid technological change.
Competition typically occurs at the design stage, where the
customer evaluates alternative design approaches that require
integrated circuits. Because of shortened product life cycles and
even shorter design-in cycles, the Company's competitors have
increasingly frequent opportunities to achieve design wins in next
generation systems. In the event that competitors succeed in
supplanting the Company's products, the Company's market share may
not be sustainable and net sales, gross margin, and earnings would
be adversely affected. Competitors include major domestic and
international companies, many of which have substantially greater
financial and other resources than the Company with which to
pursue engineering, manufacturing, marketing and distribution of
their products. Emerging companies are also increasing their
participation in the market, as well as customers who develop
their own integrated circuit products. Competitors include
manufacturers of standard semiconductors, application specific
integrated circuits and fully customized integrated circuits,
including both chip and board-level products. The ability of the
Company to compete successfully in the rapidly evolving area of
high-performance integrated circuit technology depends
significantly on factors both within and outside of its control,
including but not limited to, success in designing, manufacturing
and marketing new products, wafer supply, protection of Company
products by effective utilization of intellectual property laws,
product quality, reliability, ease of use, price, diversity of
product line, efficiency of production, the pace at which
customers incorporate the Company's integrated circuits into their
products, success of the customers' products and general economic
conditions. Also the Company's future success depends, in part,
upon the continued service of its key engineering, marketing,
sales, manufacturing, support and executive personnel, and on its
ability to continue to attract, retain and motivate qualified
personnel. The competition for such employees is intense, and the
loss of the services of one or more of these key personnel could
adversely affect the Company. Because of this and other factors,
past results may not be a useful predictor of future results.

Part II. Other Information

Item 1. Legal Proceedings

During September 1995, Crystal settled a suit alleging
infringement of a patent. The settlement did not have a material
adverse effect on the Company's consolidated financial position,
results of operations, or cash flows.

Item 6. Exhibits and Reports on Form 8-K

a. Exhibits

Exhibit 3.1 Articles of Incorporation of Registrant, as amended

* Exhibit 10.25 General Partnership Agreement dated as of October 23,
1995 between the Company and AT&T.

* Exhibit 10.26 Joint Venture Formation Agreement dated as of October
23, 1995 between the Company and AT&T.

* Exhibit 10.27 Foundry Venture Agreement dated as of September 29,
1995 between the Company and United
Microelectronics Corporation ("UMC").

* Exhibit 10.28 Written Assurances Re Foundry Venture Agreement dated
as of September 29, 1995 between the Company
and UMC.

* Exhibit 10.29 Foundry Capacity Agreement dated as of September 29,
1995 between the Company and UMC.

Exhibit 11 Statement re: Computation of Earnings per share

Exhibit 27 Financial Data Schedule

* Portions have been filed separately with the Commission in reliance on
Rule 24b-2 and the Registrant's request for confidential treatment.

b. Reports on Form 8-K
None.

CIRRUS LOGIC, INC.
SIGNATURES

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

CIRRUS LOGIC, INC.
(Registrant)

November 13, 1995 /s/ Sam S. Srinivasan
Date Sam S. Srinivasan
Senior Vice President, Finance and
Administration, Chief Financial Officer,
Treasurer and Secretary
(Principal Financial and Accounting Officer)

November 13, 1995 /s/ Michael L. Hackworth
Date Michael L. Hackworth
President, Chief Executive Officer
and Director (Principal Executive Officer)