CIRRUS LOGIC INC, 10-K, 1995-06-30

CIRRUS LOGIC INC
10-K, 1995-06-30
COMPUTER PERIPHERAL EQUIPMENT, NEC

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

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 (Fee Required) for the fiscal year ended April 1, 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

Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
(Title of Class)

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 [ ]

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. [X]

Aggregate market value of the registrant's Common Stock held by non-
affiliates of the registrant as of June 2, 1995 was approximately
$1,090,750,000 based upon the closing price reported for such date on the
Nasdaq National Market. For purposes of this disclosure, shares of Common
Stock held by persons who hold more than 5% of the outstanding shares of
Common Stock and shares held by officers and directors of the Registrant have
been excluded because such persons may be deemed to be affiliates. This
determination is not necessarily conclusive.

The number of shares of the registrant's common stock, no par value, was
61,549,966 as of June 2, 1995. (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 will receive certificates reflecting the
additional shares. These certificates will be 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.)

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Registrant's 1995 Annual Meeting
of Shareholders to be held August 1, 1995 are incorporated by reference into
Part III of this Form 10-K.

<PAGE>

PART I

ITEM 1. BUSINESS

Cirrus Logic, Inc., ("Cirrus Logic" or the "Company") was
incorporated in California on February 3, 1984, as the successor
to a research corporation which had been incorporated in Utah in
1981. The Company commenced operations in November 1984.

In October 1991, April 1992, February 1993, and August 1994,
the Company merged with Crystal Semiconductor Corporation
(Crystal), Acumos Incorporated (Acumos), Pacific Communication
Sciences, Inc. (PCSI), and PicoPower Technology, Inc. (PicoPower),
respectively. These mergers were tax free reorganizations and
were accounted for as poolings of interests. All of the
consolidated financial information reflects the combined
operations of the companies.

Cirrus Logic, Inc. (the "Company") operates principally in a
single industry segment. The Company is a leading manufacturer of
advanced integrated circuits for the desktop and portable
computing, telecommunications, and consumer electronics markets.
The Company applies its system-level expertise in analog and
digital design to innovate highly integrated, software-rich
solutions. Cirrus Logic offers a broad portfolio of products
including highly integrated chips, software, evaluation boards,
manufacturing kits, subsystem modules and telecommunications
system equipment. The Company performs its own wafer and product
testing, engineering support and quality and reliability
assurance, and uses subcontractors to manufacture wafers and
assemble products. The Company also manufactures Cellular Digital
Packet Data (CDPD) base station equipment for sale to cellular
telephone companies. This equipment enables the wireless
communications technologies necessary to develop the markets for
advanced integrated circuits.

Multimedia

The Company offers a broad range of multimedia products,
comprising primarily graphics, video, and audio integrated
circuits and software. These products bring T.V. quality video
and CD-quality audio to multimedia applications for PCs,
workstations, Videoconferencing systems and consumer electronics.

The Company's customers in the multimedia market are
predominantly PC Original Equipment Manufacturers (OEMs), as well
as some of the leading add-in board makers. As of fiscal 1995
year end these major OEM customers included Acer, Apple, AST,
Compaq, Hewlett-Packard, Intel, IBM, NEC, and Packard Bell, and
board makers included Aztech, Diamond Multimedia, and STB.

PC Graphics

The Company offers a broad range of products for desktop
display. The majority of the Company's revenues from desktop
graphics are from sales of its mid-range 32-bit and higher-end
64-bit DRAM accelerator architectures for mainstream PCs. These
products are implemented in several pin-compatible families which
offer a range of price / performance solutions for and graphics
board makers. The Company has begun adding video-related features
to the graphics capabilities of new products in each of these
families.

The Company is also among the leading suppliers of VGA
controllers for portable computers. Today, the Company's families
of LCD graphics controllers offer a broad range of price /
performance options, from 32-bit accelerator architectures with
high-resolution graphics and video features for high-end
multimedia color portable PCs, to low-cost small form-factor VGA
controllers for sub-notebook PCs. The Company has developed
proprietary techniques for achieving high-quality color and
monochrome shading on LCD panels, for simultaneous display on LCDs
and CRT monitors, and for low-voltage and mixed-voltage design for
power-sensitive applications.

Video

In the past, the Company marketed video products under the
Pixel Semiconductor brand name. During fiscal year 1995 this
brand name was de-emphasized, and these products are now marketed
under the Cirrus Logic corporate brand name.

The Company's video processors can re-size full motion video
to fit into display windows of various sizes and allow for
multiple video streams simultaneously. These products have been
adopted for several videoconferencing system designs. The
Company's MediaDAC controllers digitally mix video and graphics
for display on a PC monitor. One of the products in this line has
been developed with the cooperation of Compaq.

The Company also markets a single-chip T.V. Decoder, which
can take video input formatted for the major U.S. and
international standards, and decode it into signals used by the
Company's video and graphics controller chips. Along with this
product, the company has developed board-level visual display
subsystem modules that provide for live video input, viewing, and
capture by the PC user.

Increasingly, functions of the video chips are being
integrated into the Company's desktop and portable graphics
products.

Audio

The Company, through its Crystal Semiconductor subsidiary,
uses proprietary delta sigma technology to provide high quality
mixed signal audio functions supporting multiple PC multimedia
audio standards.

The Company believes that it is the leading supplier of
16-bit stereo audio codecs for the PC market. These products
provide the interface between the digital domain of the PC, and
the analog domain of microphones and stereo speakers.
Additionally, the Company provides wavetable sound/music synthesis
chips for the PC audio market. These digital signal processor
(DSP) -based devices offer sound-generation and audio effects
capabilities which were previously found only in
professional-quality keyboards and electronic pianos.

The Company also offers audio products for use in consumer
electronics such as digital audio tape (DAT) and digital compact
cassettes (DCC) as well as in broadcast and automotive audio
system applications.

Mass Storage

The Company supplies chips that perform the key electronics
functions contained in advanced disk drives. Since pioneering the
embedded disk drive controller in 1986, the Company has helped
facilitate the development of higher capacity 3.5-inch disk drives
for desktop computers and workstations. The Company has also
provided solutions for the 2.5-inch and 1.8-inch form factor
drives for portable computers. The Company continues to be a
leading supplier of controllers to the disk drive market. In
fiscal 1995, the Company continued on its strategy of expanding
its opportunity in the disk electronics market by offering
solutions in the areas of read channel and motion control
electronics.

The Company offers a broad family of controller products for
the AT, PCMCIA and Small Computer Systems Interface (SCSI)
interface standards. To achieve the high recording densities
required by smaller disk drives, the Company has pioneered a
number of controller innovations, including advanced Reed-Solomon
error correction codes and headerless format support. The Company
continues to offer further innovation in these areas.

In fiscal 1995 the Company, in partnership with Sony
Corporation (CD-ROM Division) commenced volume shipment of a CD-
ROM controller for the emerging ATAPI interface standard. This
device is being used on Sony 2X and 4X CD-ROM ATAPI drives. The
Company is continuing its investment in this area and has
announced higher performance next generation products.

The Company began volume shipments of its read channel
products in fiscal 1995, and was the first merchant supplier to
provide data detection technology known as partial-response,
maximum likelihood (PRML) for the 3.5-inch and smaller form factor
drives. Based on the Company's CMOS mixed signal technology, and
its proprietary SofTarget (TM) approach to PRML, these devices
substantially increase the amount of data that can be stored on a
disk platter using existing industry standard head and media
technology. Current customers for these products include Conner
Peripherals, Hewlett-Packard, Seagate, Toshiba and Integral.

The Company has also developed servo/motion controller
technology that allows integration of all the functions required
to position a read/write head. This will reduce the number of
components required to implement servo control while increasing
the storage capacity of the drive by allowing denser positioning
of tracks. Parts of this technology are already being used to
provide higher integration solutions to our customers. Unlike the
read channel or controller products, servo/motion controller
products require the disk drive manufacturer to make a substantial
investment in new architecture and software, which is likely to
delay revenue generation from this technology.

The Company's mass storage customers include most of the major
disk drive manufacturers.

Communications

The Company offers both wireless and wireline communications
products.

Wireless Communications Products

In wireless communications, the Company has emerged as the
technology leader for Cellular Digital Packet Data (CDPD), which
allows "packets" of digital data to be transmitted inexpensively
over existing Advanced Mobile Phone Service (AMPS) analog cellular
networks. PCSI was the original contractor selected by the CDPD
consortium to develop specifications and design the prototype
system for the CDPD concept. The Company has sold CDPD base
stations to cellular carriers, including McCaw, and AT&T Wireless
Systems. The Company has also begun shipments of subscriber units
for portable computers, including complete modules for IBM's
ThinkPad 750 notebook computer as well as the Company's "Ubiquity
2000," for use with any IBM compatible notebook computer. These
subscriber units provide CDPD packet data capability plus circuit-
switched analog-cellular voice and data communications allowing
the unit to be used in areas where CDPD has not been deployed.
Growth of the CDPD business depends on various factors, many of
which are outside the Company's control. There can be no
assurance as to the size or the timing of the development of the
CDPD market.

In digital cordless phones, the Company was selected by DDI,
a leading Japanese telecommunications firm, and Kyocera to develop
a complete chip set for use by Japanese manufacturers of Personal
Handyphone Service (PHS) handsets and base stations. During
fiscal year 1995, PCSI began shipping chip sets in volume to serve
this emerging market. This chip set includes CMOS, BiCMOS,
Bipolar and GaAs circuits, operates at 2.7 volts, and transmits
and receives 1.9 gigahertz signals. Sales of digital cordless
phone products will depend upon the establishment of
infrastructure and services which are beyond PCSI's control.
Sales and distribution of the chipsets in Japan will be conducted
through PCSI's Japanese partner, Kyocera.

PCSI also has developed chip sets for the U.S. IS54 digital
cellular phones.

Wireline Communications Products

For wireline communications, the Company introduced the
industry's first two-chip intelligent fax/data/voice modem in
1992. More recently, the Company introduced a three-chip, high-
performance version with enhanced error correction and data
compression. The high level of integration makes these products
ideal for small form factor PCMCIA cards.

The Company also provides serial and parallel I/O devices
that allow multi-channel, multi-protocol communications. These
devices are used in terminal servers, communications servers,
single board computers, laser printers and workstations.
Customers include Compaq, Motorola, Xylogics and Xyplex.

Crystal is a leading supplier of monolithic T-1 line
interface transceivers for telecommunications equipment and CMOS
ethernet local area network line interface circuits.

PCSI supplies the Clarity series of wide area network system
products. The Clarity products compress multiple channels of fax,
data and voice over one high speed line and enable corporate users
to reduce communication costs between distant geographical
locations.

System Controllers and Host Adapters

During fiscal year 1995 the Company merged with PicoPower
Technology, Inc. PicoPower operations have been integrated into
the Company, while the PicoPower brand name has been retained for
the Company's line of system controller chips. These products are
used, along with microprocessors and memory components from other
IC vendors, to construct the system and internal bus functions of
the PC. The Company's PicoPower products use proprietary power
management techniques to help PC OEMs reduce the overall power
consumption of their systems. The primary customers have been
OEMs designing high-performance battery-operated portable PCs.

The Company also offers two lines of host-adapter products
for the PC market. The Company believes it is the leading
supplier of host adapters for the PC-Card (formerly called PCMCIA)
standard. These products are used to provide plug-in slots into
which users can install credit-card sized modules to add extra
function to their PC. The PC-Card standard has been adopted by
major PC OEMs as the expansion standard of choice for notebook and
subnotebook PCs, PDAs, and other portable computing and
communications devices.

The Company's IDE host adapter chips are used to control the
interface to advanced storage devices in the PC market, such as
hard disk drives and CD-ROM drives. The primary customers for
these products are PC OEMs.

Data Acquisition

Through its Crystal subsidiary, the Company has established a
broad line of analog-to-digital converters consisting of general-
purpose and low-frequency measurement devices. These circuits use
a combination of self-calibrating digital correction and delta
sigma architectures to improve accuracy and eliminate expensive
discrete analog components. The product family includes more than
twenty products used in industrial automation, instrumentation,
medical, military and geophysical applications. The technology
developed for the Company's data acquisition products is the
foundation of the mixed signal technology used throughout the
Company.

New Product Activities

The Company has begun shipping column-driver chips for active
matrix LCD (liquid crystal display) panels. These advanced
mixed-signal devices are used by panel manufacturers to provide
greater color depth, lower power consumption, and smaller
form-factors in their high-end portable computer displays.

The Company has begun shipping solid-state memory storage
controllers. These chips provide the interface for flash-memory
components from other IC vendors, allowing the PC to treat
solid-state memory modules as if they were conventional hard-disk
drives, either through the IDE interface or through a PC-Card
slot. The company has also developed a complete PC-Card solution
using its solid-state memory storage controller chips.

The Company is engaged in developing new products for PDAs
(Personal Digital Assistants) and ultra-portable computing and
communications devices. The Company is working with Apple
Computer, and has provided prototype chips for the next generation
of Apple's Newton PDA. To support its strategy for ultra-
portables and embedded control applications, the Company has
obtained under license RISC (reduced instruction set computing)
microprocessor technology for use in its products. The ultimate
results of the Company's efforts in the PDA and ultra-portables
arena will be dependent on many factors, including the success of
the Company's technological development efforts and its customers'
ability to stimulate demand for this product class. There can be
no assurance the Company will develop significant revenues in this
market.

Sales, Marketing and Technical Support

The Company maintains a major account team and a direct
domestic and international sales force for its PC-related
products. The major account team services the top PC and disk
drive manufacturers. The domestic sales force includes a network
of regional direct sales offices located in Northern and Southern
California and in Colorado, Florida, Illinois, Massachusetts, New
Jersey, Oregon, Pennsylvania, and Texas. International sales
offices and organizations are located in Singapore, Japan, Taiwan,
Korea, Hong Kong, the United Kingdom, Germany, France, Italy and
Barbados. The Company supplements its direct sales force with
sales representative organizations and distributors. Technical
support staff are located at the sales offices and also at the
Company's facilities in Fremont, California; Broomfield, Colorado;
San Diego, California; Austin and Plano, Texas; and Raleigh, North
Carolina.

The Company's subsidiaries, Crystal and PCSI, maintain
separate, smaller sales forces for products sold to the industrial
market and communications systems markets, respectively.

In fiscal year 1995, no customer represented 10% or more of
net sales. IBM accounted for approximately 10% of net sales in
fiscal 1994. Conner Peripherals and Seagate each accounted for
more than 10% of net sales in fiscal years 1993. No other
customer represented 10% or more of net sales during these
periods. The Company is continuing its efforts to expand its
customer base. However, the loss of a significant customer or a
significant reduction in such a customer's orders would have an
adverse effect on the Company's sales.

Export sales information is incorporated by reference from the
section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in Part II hereof.

Backlog

Sales are made primarily pursuant to standard short-term
purchase orders for delivery of standard products. The quantity
actually purchased by the customer, as well as the shipment
schedules, are frequently revised to reflect changes in the
customer's needs. Accordingly, the Company believes that its
backlog at any given time is not a meaningful indicator of future
revenues.

Research and Development

The Company believes that it must continually introduce new
products to take advantage of market opportunities and maintain
its competitive position. Research and development efforts
concentrate on the design and development of new products for each
market and on the continued enhancement of the Company's design
automation system. Expenditures for research and development in
fiscal 1995, 1994 and 1993 were approximately $165.6 million,
$126.6 million and $73.4 million, respectively. The Company
expects that its research and development spending will continue
to increase for the foreseeable future. At April 1, 1995, the
Company had 1,075 employees engaged in research and development
activities. The Company's future success is highly dependent upon
its ability to develop complex new products, to transfer new
products to production in a timely fashion, to introduce them to
the marketplace ahead of the competition and to have them selected
for design into products of leading systems manufacturers.

Manufacturing

Most of the Company's wafers currently are manufactured to
the Company's specifications by ten outside wafer suppliers
utilizing a total of fourteen foundries. The Company's products
are not dependent on a single semiconductor foundry or process
because its design system has the flexibility to generate tooling
for a variety of manufacturing environments. Products can be
transferred from one qualified foundry or process to another for
cost, capacity or performance reasons without experiencing
significant manufacturing delays. This allows the Company to
convert to new process technologies as they become available. The
majority of the Company's products are manufactured using 0.8- and
0.6-micron CMOS process technologies, although some products use
Bipolar, BiCMOS and GaAs processes.

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 called
MiCRUS began manufacturing semiconductor wafers for each parent
company using IBM's submicron wafer processing technology. MiCRUS
leased an existing 175,000 square-foot IBM facility located at the
Hudson Valley Research Park in East Fishkill, New York. Focusing
initially on manufacturing CMOS wafers with line widths in the 0.6
to 0.5 micron range, the joint venture plans to be in volume
production of both IBM and Cirrus Logic products by end of fiscal
year 1996. These superfine tolerances will enable high-
performance chips to match the higher clock speeds of the new
generation microprocessors. IBM and Cirrus Logic own 52% and 48%
of MiCRUS, respectively. By becoming an owner in the MiCRUS plant
the Company can produce high density wafers at lower cost with
direct control over delivery schedules. The term of the joint
venture, initially set for eight years, may be extended by mutual
accord. The Company has a commitment to purchase 50% of the
output of the facility over the life of the joint venture.
Activities of the joint venture are focused on the manufacture of
semiconductor wafers, and do not encompass direct product
licensing or product exchanges between the Company and IBM.
MiCRUS is now ramping steadily to high-volume production, a goal
that is expected to be reached by the end of fiscal year 1996.
The Company has agreed with IBM to increase production capacity by
an additional 30 percent.

In order to maintain high quality and production yields, the
Company employs its own staff of production, engineering and
planning personnel. Before initiating production at any wafer
supplier, the staff characterizes and qualifies the supplier's
production process to determine that the supplier's quality
standards are sufficient to produce high-quality wafers in volume.
This process takes from six to nine months. The Company then
monitors wafer production and tests all finished wafers in the
Company's own test facilities.

The Company contracts with eleven assembly vendors to package
the wafer die into finished products. The Company qualifies and
monitors assembly vendors using procedures similar in scope to
those used for wafer procurement. Assembly vendors provide fixed-
cost-per-unit pricing, as is common in the semiconductor industry.
The Company tests finished product and performs quality and
reliability testing in the Company's own facility.

The Company is working with its wafer suppliers to obtain
additional production so that the Company can meet customer demand
and shorten delivery schedules. The Company is also working to
qualify new foundries to provide additional manufacturing capacity
which the Company believes will be required to enable it to meet
customer future requirements. If there are significant delays in
obtaining additional production from current foundries or in
obtaining production from new foundries, the Company could be
forced to delay shipments of its products, which would adversely
affect its operating results.

The Company's reliance on third party wafer 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 wafer suppliers are currently producing at or near their full
scheduled capacity. 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 foundries or to pay expediting charges to
obtain additional supply.

Most of the Company's contracts with its suppliers do not
provide for the suppliers to supply, or for the Company to
purchase, substantial minimum wafer quantities. Instead,
production schedules are mutually agreed based upon forecasts for
the next six to twelve months. However, during September 1993,
the Company entered into a 3-year volume purchase agreement with
one wafer supplier. Under the terms of the agreement, the Company
must purchase certain minimum quantities of wafers. If the
Company does not purchase these minimum quantities, it would be
required to pay a reduced amount for any shortfall not sold by the
supplier to other customers. The Company estimates that under the
remaining term of the agreement, which expires in March 1997, it
is obliged to purchase approximately $70.0 million of product.

The Company has previously engaged in, and is continuing to
pursue, discussion with respect to a variety of potential
transactions to satisfy its future production requirements. The
Company's long-term strategic objective is to better service its
wafer production by reducing its dependence on outside wafer
suppliers. Among the transactions the Company has considered in
the past and expects to evaluate in the future are increased use
of "take or pay contracts" that commit the Company to purchase
specified quantities of wafers over long periods, equity
investments in or loans to wafer manufacturing companies in
exchange for guaranteed production, joint ventures to own and
operate wafer manufacturing facilities and acquisition or
construction of wafer fabrication facilities. The Company
believes that it will ultimately enter into one or more of these
arrangements.

In addition to the IC product manufacturing conducted by the
Company, the Company's PCSI subsidiary also performs final
assembly and testing of its systems products, including its
Clarity wide area network products and CDPD base station and
subscriber units.

Competition

Markets for the Company's products are highly competitive and
the Company expects that competition will increase. The Company
competes with other semiconductor suppliers who offer standard
semiconductors, application specific integrated circuits and fully
customized integrated circuits, including both chip and board-
level products. A few customers also develop integrated circuits
that compete with the Company's products. The Company's
competitive strategy has been to provide lower cost versions of
existing products and new, more advanced products for customers'
new designs.

While no single company competes with the Company in all of
the Company's product lines, the Company faces significant
competition in each of its product lines. The Company expects to
face additional competition from new entrants in each of its
markets, which may include both large domestic and international
semiconductor manufacturers and smaller, emerging companies.

The principal competitive factors in the Company's markets
include quality of hardware/software design and end-market systems
expertise; product benefits that are characterized by performance,
features, quality and compatibility with standards; access to
advanced process and packaging technologies at competitive prices;
and sales and technical support. The Company believes its
competitive strengths include its core technologies, proprietary
design automation system, knowledge of systems requirements within
its target markets, and ability to provide complete solutions that
enhances the customer's design cycles.

Competition typically occurs at the design stage, where the
customer evaluates alternative design approaches that require
integrated circuits. Because its products have not been available
from second sources, the Company generally does not face direct
competition in selling its products to a customer once its
integrated circuits have been designed into that customer's
system. Nevertheless, 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.

Technology, Patents, Licenses and Trademarks

In addition to its design system technology, the Company has
built a substantial expertise and intellectual property portfolio
in the areas of analog to digital and digital to analog
conversion, graphics, multimedia, mass storage and communications
through internal R&D and a program of strategic acquisitions.

In its early years, the Company's primary core technology was
its Storage Logic Array (S/LA) design automation system, developed
by the Company's founder, Dr. Suhas Patil, and licensed from MIT.
To maintain rapid product development cycles, the Company has
continued to enhance its design system with both internal
developments and the integration of commercially available tools.
The Company now has a comprehensive system that supports a variety
of design methodologies and environments. This has been
instrumental in the Company's ability to merge designs from its
various units, including newly acquired subsidiaries, and to
integrate all products into its manufacturing system.

In January 1990, the Company acquired Data Systems
Technology, Inc., a Colorado based technology company with
expertise in magnetic recording, data encoding and error detection
and correction schemes. This site now serves as the Company's
research and development center for its advanced mass storage read
channel and servo controller products.

In June 1991, the Company acquired Pixel Semiconductor of
Plano, Texas to provide technology for real-time full-motion video
data management. Pixel's technology is fundamental to the
Company's products for PC-based video and video conferencing.

In October 1991, the Company merged with Crystal
Semiconductor of Austin, Texas, a leader in analog and mixed
signal (analog plus digital) technology. Crystal's base
technologies include audio, delta sigma analog/digital conversion,
data and clock recovery and a number of patented design techniques
collectively called SmartAnalog. Crystal's primary product lines
include data acquisition, telecommunication and digital audio
products for PC, automotive, and consumer applications. Crystal's
technology has been fundamental in developing the Company's
fax/data/voice modem and mass storage read/write channel
products.

In December 1991, the Company acquired R. Scott Associates,
Inc. (RSA), a North Carolina company with communication protocol
software technology. RSA's technology has been incorporated into
the Company's fax/data/voice modem and wireless communications
products. RSA has since acquired Data Pumps International, Inc.,
a Florida company specializing in digital signal processing
algorithms for telecommunications.

In April 1992, the Company merged with Acumos Incorporated, a
California company developing technology and products for highly
integrated graphics controllers for desktop PCs.

In February 1993, the Company merged with Pacific
Communication Sciences, Inc. (PCSI) of San Diego, California.
PCSI brings to the Company an extensive technology and system
expertise in RF and digital wireless communications. PCSI
products and technology serve the CDPD and digital cellular
markets in the U.S. and the digital cordless markets in the U.S.
and Japan.

In August 1994, the Company merged with PicoPower Technology,
Inc, (PicoPower), which specializes in system power management and
advanced core logic for personal computers. PicoPower's system
controller chips implement proprietary power-saving technologies -
such as heat control, passive and active power management, and
battery life extension - that address power consumption at the
system level without compromising system performance.

To protect its products, the Company relies heavily on trade
secrets, patents, copyrights, mask work and trademark laws. The
Company applies for patents and copyrights arising from its R&D
and intends to continue this practice in the future to protect its
products and technologies. As of April 1, 1995, the Company held
90 registered U.S. patents and had applications pending for an
additional 220 U.S. patents. The Company has also licensed a
variety of technologies from outside parties to complement its
own.

Employees

As of April 1, 1995, the Company had 2,331 full-time equivalent
employees, of whom 1,075 were engaged in research and product
development, 472 in sales, marketing and technical support, 554 in
manufacturing and 230 in finance and administration. The
Company's future success will depend, in part, on its ability to
continue to attract, retain and motivate highly qualified
technical, marketing, engineering and management personnel. None
of the Company's employees are represented by any collective
bargaining agreements and the Company has never experienced a work
stoppage. The Company believes that its employee relations are
good.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following sets forth certain information with regard to
executive officers of Cirrus Logic, Inc. (ages are as of April 30,
1995):

Michael L. Hackworth (age 54), a founder of the Company, has
served as President, Chief Executive Officer and a director since
January 1985.

Suhas S. Patil (age 50), a founder of the Company, has served as
Chairman of the Board and director since Cirrus Logic was founded.
He served as Vice President, Research and Development until March
1990 when he became Executive Vice President, Products and
Technology.

George N. Alexy (age 46) joined the Company in 1987 as Vice
President, Marketing. In May 1993, he was promoted to Senior Vice
President, Marketing. Previously, he was employed by Intel
Corporation, most recently as Product Marketing Manager, High
Performance Microprocessors.

Douglas J. Bartek (age 45) joined the Company in 1992 as Vice
President and General Manager, User Interface Division, as a
result of the merger with Acumos Incorporated (Acumos), where he
was President and Chief Executive Officer. He was promoted to
Senior Vice President and General Manager, User Interface Division
in May 1993 and in September 1993 his title was changed to
President, User Interface Products. Prior to Acumos, he was a
Senior Vice President and a General Manager at VLSI Technology,
Inc.

William H. Bennett (age 50) joined the Company in 1989 as Vice
President, Human Resources. From 1987 to 1989, he was employed by
System Industries, Inc., as Vice President, Human Resources.

Michael L. Canning (age 54) joined the Company in 1985 as Vice
President, Manufacturing and from 1990 to 1993 he was Executive
Vice President, Operations. He is currently President, Mass
Storage Products. Previously, he was employed by Teledyne
Semiconductor as President and General Manager.

William D. Caparelli (age 51) joined the Company in 1988 as Vice
President, Worldwide Sales. In May 1993 he was promoted to Senior
Vice President, Worldwide Sales. From 1985 to 1988, he served as
Vice President, North American Sales, of VLSI Technology, Inc.

James H. Clardy (age 60) is President of Crystal Semiconductor
Corporation (Crystal) which merged with the Company in October
1991. In July 1993, he was appointed a corporate officer of the
Company. Previously, he was Vice President of Sector Operations
with Harris Semiconductor.

David L. Lyon (age 46) has been a director of the Company since
1993 and President of Pacific Communication Sciences, Inc. (PCSI)
since March 1987. PCSI merged with Cirrus Logic, Inc. in February
1993. In May 1994, he was appointed a corporate officer of the
Company. Previously, he was a Vice President of M/A-Com
Telecommunications Company.

Kenyon Mei (age 49) joined the Company in 1985 as Vice President,
Engineering. In May 1993, he was promoted to Senior Vice
President, Engineering and General Manager, Personal Systems
Business Unit.

H. Ravindra (age 46), a founder of the Company, served as
Director, Research and Development from 1984 to April 1990 when
he was promoted to Vice President, Research and Development. In
September 1994, he was appointed an officer of the Company.

Sena C. Reddy (age 46) joined the Company in 1985 as Fab
Operations Manager. In 1990, he was promoted to Vice President,
Manufacturing and in 1993, he was promoted to Senior Vice
President, Manufacturing.

Sam S. Srinivasan (age 50) joined the Company in 1988 as Vice
President, Finance, Chief Financial Officer, Treasurer and
Secretary. In May 1993, he was promoted to Senior Vice President,
Finance and Administration, Chief Financial Officer, Treasurer and
Secretary.

ITEM 2. PROPERTIES

The Company's principal facilities, located in Fremont,
California, consist of approximately 390,000 square feet of office
space leased pursuant to an agreement which expires in 2006 and
2007 with a renewal option. This space is used for manufacturing,
product development, sales, marketing and administration. An
additional 90,000 square feet is planned for occupancy at the
Fremont site in the first quarter of fiscal 1996 under similar
lease terms. The Company has an option to expand at the Fremont
site.

The Company's Austin, Texas facilities consist of
approximately 162,000 square feet. The leases expire in July 1997
with two three-year options that could extend the term to July
2003. Additionally, the Company has signed a lease for 88,000
square feet for occupancy during the third quarter of fiscal year
1996. This lease will expire in 2005. The Company's San Diego,
California facilities consist of approximately 153,000 square feet
of office space leased pursuant to leases that expire in 2006.

The Company also has facilities located in Broomfield,
Colorado; Nashua, New Hampshire; Raleigh, North Carolina; King of
Prussia, Pennslyvania; Fort Worth and Plano, Texas and Seattle,
Washington. The Company also leases sales and sales support
offices in the United States in California, Colorado, Florida,
Illinois, Massachusetts, Oregon, Pennsylvania and Texas and
internationally in Korea, Singapore, Japan, Hong Kong, Taiwan, the
United Kingdom, Germany, France and Barbados. The Company plans
to add additional manufacturing and sales offices to support its
growth.

ITEM 3. LEGAL PROCEEDINGS

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.

Crystal has been named in a suit alleging infringement of a
patent and claiming damages of $4.8 million before trebling.
Crystal has filed a counterclaim alleging infringement of three of
its patents. A jury trial is scheduled to begin in August 1995,
unless a settlement is reached by the two parties. While the
Company cannot accurately predict the eventual outcome of the
suit, management believes that the likelihood of an outcome
resulting in a material adverse effect on the Company's
consolidated financial position, results of operations, or cash
flows is remote.

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

None.

PART II

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

The Company's Common Stock is traded on the Nasdaq National Market
under the symbol "CRUS." The following table shows for the
periods indicated the high and low closing prices for the Common
Stock.

High Low
Fiscal year ended March 31, 1993
First quarter $10.07 $ 8.25
Second quarter 15.00 8.44
Third quarter 18.13 13.63
Fourth quarter 19.75 12.00
Fiscal year ended April 2, 1994
First quarter 12.50 7.25
Second quarter 17.07 8.07
Third quarter 18.50 15.38
Fourth quarter 22.19 16.50
Fiscal year ended April 1, 1995
First quarter 19.07 14.00
Second quarter 17.35 12.69
Third quarter 15.57 10.63
Fourth quarter 19.13 11.50

At April 1, 1995, there were approximately 1,370 holders of record
of the Company's Common Stock.

The Company has not paid cash dividends on its Common Stock and
presently intends to continue a policy of retaining any earnings
for reinvestment in its business.

<TABLE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

(Amounts in thousands, except per share amounts and employees)
<CAPTION>
Fiscal years ended
------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating summary:
Net sales $889,022 $557,299 $356,478 $217,574 $177,515

Costs and expenses:
Cost of sales 512,509 298,582 193,759 110,599 85,452
Research and development 165,622 126,632 73,447 41,833 31,470
Selling, general and administrative 126,666 91,887 54,924 39,459 32,983
Non-recurring costs 3,856 - - - -
Merger costs 2,418 - 3,400 2,455 -

Operating income 77,951 40,198 30,948 23,228 27,610
Foreign currency transaction gains 4,999 - - - -
Gain on sale of equity investment - 13,682 - - -
Interest income (expense), net 6,688 2,084 1,597 1,858 2,582
Income before income taxes and cumulative
effect of accounting change 89,638 55,964 32,545 25,086 30,192
Provision for income taxes 28,236 18,146 12,321 8,801 10,822
Income before cumulative effect of accounting
change 61,402 37,818 20,224 16,285 19,370
Cumulative effect of change in method of
accounting for income taxes - 7,550 - - -
Net income $61,402 $45,368 $20,224 $16,285 $19,370
Income per common and common equivalent share
before cumulative effect of accounting change $0.96 $0.67 $0.39 $0.33 $0.44
Cumulative effect of accounting change per
common and common equivalent share - 0.13 - - -
Net income per common and common equivalent share $0.96 $0.80 $0.39 $0.33 $0.44

Weighted average common and common equivalent
shares outstanding 63,680 56,402 52,424 49,180 44,420

Financial position at year end:
Total assets $673,534 $517,931 $258,292 $172,070 $129,878
Working capital 251,619 273,527 98,500 76,291 70,431
Capital lease obligations, excluding current 9,602 7,753 5,282 5,478 1,724
Long-term debt, excluding current 16,603 11,392 12,812 8,082 10,395
Total liabilities 254,518 173,616 114,876 63,142 48,068
Shareholders' equity 419,016 344,315 143,416 108,928 81,810

Current Ratio 2.10 2.77 2.02 2.54 2.96
Employees 2,331 1,854 1,369 981 761
<FN>
The number of weighted average common and common equivalent shares outstanding has been
restated for all periods to reflect the two-for-one split of the Company's Common Stock
approved by the Board of Directors on June 1, 1995.

In October 1991, April 1992, February 1993, and August 1994, the Company
merged with Crystal Semiconductor Corporation, Acumos Incorporated, Pacific
Communication Sciences, Inc., and PicoPower Technology, Inc., respectively.
All of the consolidated financial information reflects the combined operations
of the companies.

</TABLE>

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

ANNUAL RESULTS OF OPERATIONS

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 will receive certificates reflecting the
additional shares. These certificates will be 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.

During the first quarter of fiscal 1994, the Company changed
its reporting period from a 12 month year ending March 31 to a
fiscal year of 52 or 53 weeks ending on the Saturday closest to
March 31. Accordingly, fiscal years 1995 and 1994 ended on April
1, 1995 and April 2, 1994, respectively.

In August 1994, Cirrus Logic merged with PicoPower
Technology, Inc. (PicoPower) of San Jose, California. Cirrus
Logic issued 2,609,238 shares of Common Stock in exchange for all
of the outstanding preferred and common stock of PicoPower in a
transaction accounted for as a pooling of interests and structured
as a tax-free reorganization. In addition, Cirrus Logic agreed to
assume all outstanding options and a warrant to purchase stock of
PicoPower, which represented the right to purchase 793,766 shares
of Cirrus Logic Common Stock. In April 1992 and February 1993,
the Company merged with Acumos Incorporated (Acumos) and Pacific
Communication Sciences, Inc. (PCSI), respectively. These mergers
were tax free reorganizations and were accounted for as poolings
of interests. All financial information includes the combined
operations of the companies.

Net Sales

Net sales for fiscal 1995 were $889.0 million, an increase of
60% over the $557.3 million for fiscal 1994 and 149% over the
$356.5 million for fiscal 1993.

The net sales increase in fiscal 1995 compared to 1994 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 primarily
because of Cellular Digital Packet Data (CDPD) base station
installations, beginning in the second quarter of fiscal 1995.

The net sales increase in fiscal 1994 compared to 1993 was
largely due to an increase in sales of graphics, audio and data
acquisition products partially offset by a decline in sales of
mass storage products. Graphics product revenue grew because of
an increase in unit sales to the desktop personal computer market
segment. Audio product sales grew as a result of increased unit
sales of 16-bit audio products. Mass storage revenues declined
for several reasons, including an inventory correction in the disk
drive industry, decrease in market share, and reductions in unit
shipments by disk drive customers of the Company.

Export sales, principally in Asia, including sales to
overseas operations of domestic corporations, were approximately
$497 million in fiscal 1995 compared to approximately $323 million
in fiscal 1994 and approximately $200 million in fiscal 1993. The
Company's sales are currently denominated in U.S. dollars and
Japanese yen. The Company may purchase hedging instruments to
reduce short-term foreign currency exposure related to certain
cash and trade receivables denominated in the Japanese yen.

In fiscal year 1995, no customer accounted for 10% or more of
net sales. Sales to International Business Machines Corporation
(IBM) were approximately 10% of net sales in fiscal year 1994. In
fiscal year 1993, sales to Conner Peripherals, Inc. (Conner) and
Seagate Technology, Inc. (Seagate) were approximately 20% and 10%
of net sales, respectively.

Gross Margin

The gross margin percentage was 42.4% in fiscal year 1995,
compared to 46.4% and 45.7% in fiscal years 1994 and 1993,
respectively.

During fiscal year 1995, the gross margin percentage declined
from a high of 47.8% in the first fiscal quarter to a low of 39.1%
in the fourth fiscal quarter. During fiscal year 1994, the gross
margin percentage increased from a low of 38.0% in the first
fiscal quarter to 48.5% in the fourth fiscal quarter. The decline
in the gross margin percentage for fiscal year 1995 compared to
fiscal year 1994 was mostly the result of expediting expenses
related to premiums paid to suppliers to increase production of
the Company's products, higher wafer costs caused by the increased
use of more expensive suppliers, low yield on several new products
ramping into production, and lower selling prices on certain
graphics and audio parts. Exacerbating the gross margin decline
was the 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. The decrease in the gross margin
percentage for fiscal year 1995 compared to fiscal year 1994 was
tempered by a $10 million charge to cost of sales in the first
quarter of fiscal year 1994 as a result of decreased demand for
certain of the Company's low-end mass storage products. One-time
royalty revenue of approximately $3 million was included in net
sales in the first quarter of fiscal year 1995. But, offsetting
this royalty revenue was an increased inventory reserve as a
result of decreased forecasted demand for certain of the Company's
16-bit audio codecs. Because of continuing cost and price
pressures, the Company does not expect an improvement in gross
margins unless significant expansion of 0.6 micron CMOS wafer
capacity, at anticipated costs, comes on-line in mid-year calendar
1995. There is no assurance this will occur.

For fiscal year 1994 compared to fiscal year 1993, sales of
newer products and cost reductions improved gross margin.
However, some of the Company's more mature products experienced
price declines offsetting a portion of these improvements. In the
first quarter of fiscal year 1994, a significant customer of the
Company decreased its forecasted demand for certain of the
Company's low-end mass storage products. Because of this decrease
in demand and rapidly changing and uncertain disk drive market
conditions, the Company increased inventory reserves late in the
first quarter of fiscal year 1994. During the fourth quarter of
fiscal year 1994, a customer of the Company decreased its
forecasted demand for certain of the Company's 16-bit audio
codecs. Because of the decrease in demand and uncertainties in
the customer's financial condition, the Company increased
inventory reserves during the fourth quarter of fiscal year 1994.
In fiscal year 1993, manufacturing costs (including expediting
charges) were higher, as the Company responded to meet strong
market demand with relatively short lead time. During the fourth
quarter of fiscal year 1993, the gross margin further declined
because of reduced forecasted demand for mass storage products,
which resulted in additional inventory reserves.

Research and Development Expenses

Research and development expenses expressed as a percentage
of net sales were 18.6%, 22.7% and 20.6% in fiscal years 1995,
1994 and 1993, respectively. Expenses increased in absolute
dollars in all of the fiscal years, as the Company continues to
invest in new product development. During fiscal years 1994 and
1993, research and development expenses increased at a greater
rate than net sales. Therefore, the amount as a percentage of net
sales declined in fiscal year 1995. 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 14.2%, 16.5% and 15.4% in fiscal years 1995, 1994
and 1993, respectively. In fiscal year 1994, expenses increased
at a rate greater than sales. Therefore, the amount as a
percentage of net sales declined in fiscal year 1995. The
absolute spending increase in fiscal years 1995 and 1994 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 fiscal year 1996.

Non-recurring and Merger Costs

In the second quarter of fiscal year 1995, non-recurring and
merger costs were approximately $6.3 million. Non-recurring costs
of $3.9 million were primarily associated with the acquisition of
technology and marketing rights and the remaining minority
interest in a subsidiary, and the formation of the new joint
venture (MiCRUS) with IBM. Merger costs of approximately $2.4
million for the August 1994 combination of Cirrus Logic and
PicoPower included one-time costs for charges related to the
combination of the two companies, financial advisory services, and
legal and accounting fees.

During fiscal 1993, the Company incurred certain one-time
costs of approximately $3.4 million in connection with the Acumos
and PCSI mergers. These costs consisted principally of financial
advisory services, charges related to the combination of the
companies, and legal and accounting fees.

Interest Income

Interest income and other, net in fiscal year 1995 was $9.1
million compared to $4.3 million in fiscal 1994 and $3.2 million
in fiscal 1993. The increases in fiscal 1995 over fiscal 1994 and
fiscal 1994 over fiscal 1993 were primarily because of increased
cash equivalents and short-term investments principally resulting
from the stock offering in February 1994.

Foreign Currency Transaction Gains

During the fourth quarter of fiscal 1995, the Company
recorded foreign currency transaction gains of approximately $5.0
million. These gains occurred because of a decline in the U.S.
dollar against the Japanese yen and the impact of this decline on
certain yen denominated assets. Transaction gains and losses were
not material in fiscal years 1994 and 1993.

Gain on Sale of Investment

During fiscal years 1991 and 1992, the Company invested
approximately $1.7 million in Media Vision Technology, Inc. (Media
Vision) stock. The investment was accounted for by the cost
method and represented an approximate six percent interest in
Media Vision. In April 1993, the Company sold approximately 16%
of its original investment in Media Vision in an underwritten
public offering. In October 1993, the Company sold approximately
60% of its original investment in Media Vision in the open market.
In connection with the sales, the Company recorded gains of $2.5
million and $11.2 million in the first and third quarters of
fiscal year 1994, respectively.

Income Taxes

The provision for income taxes was 31.5% in fiscal 1995
compared to 32.4% and 37.9% in fiscal years 1994 and 1993,
respectively. The fiscal year 1995 rate declined from the fiscal
year 1994 rate primarily because of a decrease in state income
taxes due to benefits from investment tax credits. The 31.5%
effective tax rate is less than the U.S. statutory rate primarily
because of the research and development tax credit and certain
foreign earnings taxed at lower rates. The fiscal 1994 rate
declined from the fiscal 1993 rate primarily because of PCSI pre-
acquisition losses in fiscal 1993 which reduced reported earnings
but resulted in no fiscal 1993 tax reduction. The fiscal 1994
effective tax rate is comprised of a 33.3% annual effective tax
rate and a $500,000 non-recurring benefit in the quarter ended
October 2, 1993. This benefit is caused by increased deferred tax
assets and a larger prior year research and development tax credit
as a result of federal tax legislation in August 1993.

Cumulative Effect of Change in Accounting for Income Taxes

Effective April 1, 1993, the Company changed its method of
accounting for income taxes to the liability method required by
Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes." As permitted by SFAS No. 109,
prior period's financial statements have not been restated. The
change had no material effect on income before provision for
income taxes for the fiscal year ended April 2, 1994. However,
the cumulative effect as of March 31, 1993 of adopting SFAS No.
109 increased net income by approximately $7.6 million, ($0.13 per
share for fiscal 1994 or $0.14 per share for the first quarter of
fiscal 1994).

The Company has considered available evidence supporting the
realizability of net deferred tax assets including carrybacks,
future reversal of temporary differences, and future taxable
income exclusive of temporary differences in the carryforward
period of loss and credit carryforwards. Based on these factors
and the Company's recent earnings history, the Company has
determined that it is more likely than not that the deferred tax
assets will be realized. The realizability of the deferred tax
asset will be evaluated on a quarterly basis.

LIQUIDITY AND CAPITAL RESOURCES

During fiscal year 1995, the Company generated $65.1 million
of cash and cash equivalents from its operating activities as
compared to $49.9 million during fiscal year 1994 and $28.2
million in fiscal year 1993. The fiscal year 1995 increase over
fiscal year 1994 and the fiscal year 1994 increase over fiscal
year 1993 were primarily because of increases in income from
operations and the non-cash effect of depreciation and
amortization, offset somewhat by the net change in operating
assets and liabilities.

As of April 1, 1995, the Company's principal sources of
liquidity included $187.0 million of cash and cash equivalents and
short-term investments. The Company also has a bank line of
credit of up to $25.0 million at the bank's prime rate. This line
expires in December 1995 and is subject to certain covenants,
including the maintenance of certain financial ratios, minimum
tangible net worth and profitable operations, as well as a
prohibition against the payment of cash dividends without prior
bank approval. The Company was in compliance with all covenants
as of April 1, 1995, and there were no outstanding borrowings.

Cash, cash equivalents and short-term investments decreased
$55.9 million from $242.9 million at April 2, 1994, to $187.0
million at April 1, 1995. During the same period accounts
receivable and inventories increased $76.4 million and $24.8
million, respectively, and accounts payable, accrued salaries and
benefits, income taxes payable and other accrued liabilities
increased $73.4 million. The Company believes accounts receivable
and inventories will increase in fiscal year 1996.

Cash expenditures for property and equipment and equipment
purchased under capital leases totaled $54.2 million in fiscal
year 1995 compared to $41.8 million in fiscal year 1994 and $34.1
million in fiscal year 1993. The expenditures in all years
consisted primarily of equipment used in product design and
testing. The Company intends to continue to invest in capital
equipment to support continued growth.

In January 1995, MiCRUS leased approximately $145 million of
wafer fabrication and infrastructure equipment pursuant to a lease
with a third party and guaranteed jointly and severally by the
Company and IBM. In addition, IBM and Cirrus Logic each expect to
provide MiCRUS with approximately $160 million of additional
capital equipment for the expansion of operations. The Company
expects to use lease financing to fund this expansion. Also, the
State of New York has offered to provide Cirrus Logic with up to
$40 million in long-term loans to fund a portion of the expansion
in addition to low cost power and certain tax abatements for new
investment in the State.

In December 1994, Cirrus Logic paid $63.8 million for the
joint venture investment and the manufacturing agreement. The
manufacturing agreement payment of $50 million will be charged to
the cost of production over the life of the venture based upon the
ratio of current units of production to current and anticipated
future units of production. The joint venture is accounted for on
the equity method and the results to date have not been material.

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
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

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. 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.

The 2D graphics accelerators have replaced graphics
controllers as the mainstream PC graphics product. The market is
now changing to include 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 could be adversely
affected.

During fiscal 1994, the Company captured 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.

Most of the Company's revenues in the multimedia audio market
derive from sales of 16-bit audio codecs for PCs. However, the
market for these products is currently highly concentrated. Most
purchases of the Company's audio codecs are made by a small number
of add-in card manufacturers that produce after-market sound cards
for PCs. To date, sales of multimedia audio products have been
primarily in the consumer market, which is a smaller and more
volatile segment of the PC market. Future increases in revenues
from these products are likely to depend on the continuing growth
in the use of audio products in consumer and business applications
in the PC industry and selection of the Company's audio products
by more add-in card manufacturers and PC OEMs. If a competitor
succeeded in supplanting the Company's products at any of these
customers, the Company's market share could decline suddenly and
materially.

In the past, the Company's mass storage revenues have been
derived almost exclusively from disk drive controllers. Several
major disk drive customers source or are planning to source some
or all of their disk controller requirements internally. The
Company has recently expanded its line of disk drive products to
include read/write and motion controller chips. Future mass
storage revenues will be heavily dependent on the acceptance and
qualification of new controller chips as well as the read/write
and motion controller chips by the Company's customers. Volume
shipments of motion controller chips are not expected to occur in
the short term because the Company's customers must make a
substantial investment in new software development before they can
use this product.

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.

Sales of the Company's CDPD products commenced during the
quarter ended October 1, 1994, but the growth of the business
remains dependent on various factors, many of which are outside
the Company's control. The Company's subsidiary, PCSI, is
investing heavily in research and development and is now
manufacturing and selling CDPD base stations to carriers to
provide the communication infrastructure in anticipation of a
developing market for the use of CDPD technology. If the CDPD
market does not develop, then future net sales, gross margin, and
earnings would be adversely affected.

Sales of digital cordless phone products, which were
developed by PCSI for the Japanese market, will depend upon the
establishment of infrastructure and services which are beyond
PCSI's control. All sales will be conducted through the Company's
Japanese marketing partners, which will limit the Company's gross
margins for its digital cordless products.

As is common in the computer 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, if
sufficient turns business does not materialize or a disruption in
the Company's production or shipping occurs near the end of a
quarter, the Company's revenues for that quarter could be
materially reduced.

The Company must order wafers and build inventory well in
advance of product shipments. There is a risk that the Company
will forecast incorrectly and produce excess or insufficient
inventories of particular products because the Company's markets
are volatile and subject to rapid technology and price changes.
This inventory risk is heightened because certain 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.

Most of the Company's wafers currently are manufactured to
the Company's specifications by outside suppliers. The Company
uses other outside vendors to package the wafer die into
integrated circuits, and the Company tests most of its
semiconductor products at its Fremont, California and Austin,
Texas facilities. The Company's reliance on third party 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 wafer suppliers are currently producing at or near their full
scheduled capacity. 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 foundries or to pay expediting charges to
obtain additional supply, or if the Company's test facilities were
disrupted for an extended period of time. Certain of the
Company's products are manufactured using 0.8 and 0.6-micron CMOS
process technologies. Industry demand for these process
technologies is strong and, continuing through fiscal year 1996,
the Company believes that there is a shortage of manufacturing
capacity to produce wafers using these processes. 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 wafer cost will increase. Net sales and gross margin
could be adversely affected by the supply shortage, which could be
exacerbated if vendors encounter delivery problems. 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 to the Company.

The Company is contractually committed to purchase one-half
of the wafers produced by MiCRUS. If MiCRUS is able to produce
wafers at or below prices generally prevalent in the market, the
Company will benefit. If, however, MiCRUS is not able to produce
wafers at competitive prices, the Company's results of operations
will be correspondingly affected. MiCRUS will not begin delivery
of wafers until fiscal 1996. The ramp-up of such a large
operation inevitably involves risks, and there can be no assurance
that MiCRUS' manufacturing costs will be competitive.

As a party to the MiCRUS joint venture, the Company also will
share in the risks encountered by wafer manufacturers generally,
including timely development of products using the manufacturing
technology, unexpected disruptions to the manufacturing process,
the difficulty of maintaining quality and consistency,
particularly at the smaller submicron levels, dependence on
equipment suppliers, high capital costs, environmental hazards and
regulation, and technological obsolescence.

In order to obtain an adequate supply of wafers, the Company
has considered and will continue to consider various possible
transactions, including the increased use of "take or pay"
contracts that commit the Company to purchase specified quantities
of wafers over extended periods, equity investments in or loans to
wafer manufacturing companies in exchange for guaranteed
production, the formation of joint ventures to own and operate
wafer manufacturing facilities and the acquisition or construction
of wafer fabrication facilities.

During September 1993, the Company entered into a 3-year
volume purchase agreement with a wafer vendor. Under the terms of
the agreement, the Company must purchase certain minimum
quantities of wafers. If the Company does not purchase these
minimum quantities, it may be required to pay a reduced amount for
any shortfall not sold by the vendor to other customers.

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. 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.
Further, 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 such situations, 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.

While the Company cannot accurately predict the eventual
outcome of the suit or other alleged infringement matters
mentioned above, management believes that the likelihood of an
outcome resulting in a material adverse effect on the Company's
consolidated financial position, results of operations, or cash
flows is remote. Should an unfavorable outcome occur, it could
have an adverse effect on the Company's future operations and/or
liquidity. Also, efforts of defending the Company against future
lawsuits, if any, would use cash and management resources.

Sales of the Company's products depend largely on sales of
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 was exceptionally strong during fiscal
year 1995. This growth has created a strong demand for the
Company's products. However, should the PC market decline or
experience slower growth, then a decline in the order rate for the
Company's products could occur during a period of inventory
correction by the PC and peripheral device manufacturers. This
could result in a decline in revenue or a slower rate of revenue
growth during the inventory correction period. The Company could
likewise experience a concomitant decrease in gross margin and
operating profit. A downturn in the PC market could also affect
the financial health of some of the Company's customers, which
could affect the Company's ability to collect outstanding accounts
receivable from these customers. Furthermore, the intense price
competition in the PC industry is expected to continue to put
pressure on the price of all PC components.

Because most of the Company's subcontractors are located in
Japan and other Asian countries, the Company's business is subject
to risks associated with many factors beyond its control, such as
fluctuation in foreign currency rates, instability of foreign
economies and governments, and changes in U.S. and foreign laws
and policies affecting trade and investment. Although the Company
buys limited amounts of 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 yen.

The semiconductor and communication technologies industries
are intensely competitive and are characterized by price erosion
and rapid technological change. Competitors consist of 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. 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, 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 will depend, in
part, on its ability to continue to retain, attract and motivate
highly qualified personnel. Because of this and other factors,
past results may not be a useful predictor of future results.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(Thousands, except per share amounts)
<CAPTION>
Fiscal years ended
-----------------------------
April 1, April 2, March 31,
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Net sales $889,022 $557,299 $356,478

Operating costs and expenses:
Cost of sales 512,509 298,582 193,759
Research and development 165,622 126,632 73,447
Selling, general and administrative 126,666 91,887 54,924
Non-recurring costs 3,856 - -
Merger costs 2,418 - 3,400
--------- --------- ---------
Total operating costs and expenses 811,071 517,101 325,530
--------- --------- ---------
Operating income 77,951 40,198 30,948
Foreign currency transaction gains 4,999 - -
Gain on sale of equity investment - 13,682 -
Interest income and other, net 9,129 4,280 3,207
Interest expense (2,441) (2,196) (1,610)
--------- --------- ---------
Income before income taxes and cumulative effect
of acccounting change 89,638 55,964 32,545
Provision for income taxes 28,236 18,146 12,321
--------- --------- ---------
Income before cumulative effect of accounting change 61,402 37,818 20,224
Cumulative effect as of March 31, 1993, of change
in method of accounting for income taxes - 7,550 -
--------- --------- ---------
Net income $61,402 $45,368 $20,224
========= ========= =========
Income per common and common equivalent share
before cumulative effect of accounting change $0.96 $0.67 $0.39
Cumulative effect of accounting change per
common and common equivalent share - 0.13 -
--------- --------- ---------
Net income per common and common equivalent share $0.96 $0.80 $0.39
========= ========= =========
Weighted average common and common equivalent
shares outstanding 63,680 56,402 52,424
========= ========= =========
<FN>
See accompanying notes.
</TABLE>

<TABLE>
CONSOLIDATED BALANCE SHEETS
(Thousands)
<CAPTION>
April 1, April 2,
1995 1994
---------- ----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $106,882 $193,825
Short-term investments 80,144 49,083
Accounts receivable, less allowance for doubtful
accounts of $9,439 in 1995 and $8,237 in 1994 161,333 84,885
Inventories 103,642 78,805
Other current assets 27,931 21,400
---------- ----------
Total current assets 479,932 427,998
---------- ----------
Property and equipment, at cost:
Machinery and equipment 148,753 102,106
Furniture and fixtures 12,825 9,177
Leasehold improvements 11,757 7,889
---------- ----------
173,335 119,172
Less accumulated depreciation and amortization (73,091) (48,748)
---------- ----------
Property and equipment, net 100,244 70,424
Joint venture manufacturing agreement,
net of accumulated amortization of $65 49,935 -
Investment in joint venture 13,800 -
Deposits and other assets 29,623 19,509
---------- ----------
$673,534 $517,931
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity
<S> <C> <C>
Current liabilities:
Accounts payable $140,445 $88,951
Accrued salaries and benefits 32,508 24,157
Current maturities of long-term debt and
capital lease obligations 11,481 11,007
Income taxes payable 22,322 16,892
Other accrued liabilities 21,557 13,464
---------- ----------
Total current liabilities 228,313 154,471
---------- ----------

Capital lease obligations 9,602 7,753
Long-term debt 16,603 11,392

Commitments and contingencies

Shareholders' equity:
Convertible preferred stock, no par value; 5,000
shares authorized, none issued - -
Common stock, no par value, 140,000 shares
authorized, 60,594 shares issued and
outstanding in 1995 and 59,222 in 1994 283,741 270,442
Retained earnings 135,275 73,873
---------- ----------
Total shareholders' equity 419,016 344,315
---------- ----------
$673,534 $517,931
========== ==========
<FN>
See accompanying notes.
</TABLE>

<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
<CAPTION>
Fiscal Years Ended
--------------------------------
April 1, April 2, March 31,
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $61,402 $45,368 $20,224
Acumos Incorporated net income for the
quarter ended March 31, 1992 - - 110
Pacific Communication Sciences, Inc. net loss
for the quarter ended March 31, 1992 - - (627)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 34,329 26,315 14,437
Compensation related to the issuance of
certain employee stock options 3,109 641 745
Gain on sale of equity investment - (13,682) -
Cumulative effect of accounting change - (7,550) -
Changes in operating assets and liabilities:
Accounts receivable (76,448) (20,163) (27,114)
Inventories (24,837) (28,850) (24,728)
Other current assets (3,650) (6,751) (1,504)
Accounts payable 51,494 25,531 33,832
Accrued salaries and benefits 8,351 11,401 8,007
Income taxes payable 3,262 10,058 4,989
Other accrued liabilities 8,093 7,535 (133)
---------- ---------- ----------
Net cash provided by operating activities 65,105 49,853 28,238
---------- ---------- ----------
Cash flows from investing activities:
Purchase of short-term investments available for sale (193,901) (211,367) (200,527)
Proceeds from sale of short-term investments available for sale 187,900 200,332 194,657
Purchase of short-term investments held to maturity (158,748) - -
Proceeds from short-term investments held to maturity 133,688 - -
Purchase of long-term investments - - (35,138)
Proceeds from sale of long-term investments - - 45,188
Proceeds from sale of equity investment - 14,753 -
Joint venture manufacturing agreement (50,000) - -
Investment in joint venture (13,800) - -
Additions to property and equipment (47,313) (35,677) (26,711)
Increase in deposits and other assets (19,429) (7,725) (7,151)
---------- ---------- ----------
Net cash used by investing activities (161,603) (39,684) (29,682)
---------- ---------- ----------
Cash flows from financing activities:
Borrowings on long-term debt 13,292 6,673 15,625
Payments on long-term debt (8,688) (6,726) (9,647)
Payments on capital lease obligations (3,919) (3,330) (5,810)
Borrowings on short-term debt - 10,000 -
Payments on short-term debt - (10,000) -
Issuance of common stock in public offering, net of issuance costs - 136,025 -
Issuance of common stock, net of issuance costs and
repurchases 8,870 15,428 11,176
Collections on shareholder notes receivable - - 293
---------- ---------- ----------
Net cash provided by financing activities 9,555 148,070 11,637
---------- ---------- ----------
Net (decrease) increase in cash and cash equivalents (86,943) 158,239 10,193
Cash and cash equivalents at beginning of year 193,825 35,586 25,393
---------- ---------- ----------
Cash and cash equivalents at end of year $106,882 $193,825 $35,586
========== ========== ==========
Non-cash investing and financing activities:
Equipment purchased under capital leases $6,849 $6,158 $7,438
Tax benefit of stock option exercises 1,320 3,437 2,067
Cash payments for:
Interest 2,464 2,181 1,543
Income taxes 24,974 12,750 9,358
<FN>
See accompanying notes.
</TABLE>

<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Years Ended April 1, 1995
(Thousands)
<CAPTION>
Notes
Common Stock Receivable
------------------- Retained from
Shares Amount Earnings Shareholders Total
--------- --------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, March 31, 1992 46,468 $100,423 $8,798 ($293) $108,928
Issuance of stock under stock plans
and other, net of repurchases 2,238 6,703 --- --- 6,703
Issuance of stock by PCSI 336 3,443 --- --- 3,443
Issuance of stock by PicoPower 924 1,530 --- --- 1,530
Compensation related to the
issuance of certain employee options --- 745 --- --- 745
Collection of shareholders receivable --- --- --- 293 293
Net income --- --- 20,224 --- 20,224
Acumos net income for the
quarter ended March 31, 1992 --- --- 110 --- 110
PCSI net loss from operations for the
quarter ended March 31, 1992 --- --- (627) --- (627)
Tax benefit of stock option exercises --- 2,067 --- --- 2,067
--------- --------- ---------- ------------ -------------
Balance, March 31, 1993 49,966 114,911 28,505 --- 143,416
Issuance of stock in public
offering (net of issuance costs of $7,362) 6,940 136,025 --- --- 136,025
Issuance of stock by PicoPower 506 5,028 --- --- 5,028
Issuance of stock under stock plans
and other, net of repurchases 1,810 10,400 --- --- 10,400
Compensation related to the
issuance of certain employee options --- 641 --- --- 641
Net income --- --- 45,368 --- 45,368
Tax benefit of stock option exercises --- 3,437 --- --- 3,437
--------- --------- ---------- ------------ -------------
Balance, April 2, 1994 59,222 270,442 73,873 --- 344,315
Issuance of stock under stock plans ---
and other, net of repurchases 1,372 8,870 --- --- 8,870
Compensation related to the ---
issuance of certain employee options --- 3,109 --- --- 3,109
Net income --- --- 61,402 --- 61,402
Tax benefit of stock option exercises --- 1,320 --- --- 1,320
--------- --------- ---------- ------------ -------------
Balance, April 1, 1995 60,594 $283,741 $135,275 --- $419,016
========= ========= ========== ============ =============

<FN>
See accompanying notes.
</TABLE>

CIRRUS LOGIC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business and Major Customer Information

In fiscal 1995, no customer accounted for 10% or more of net
sales. In fiscal 1994, one customer comprised 10% of net sales.
In fiscal 1993, two other customers comprised 21% and 10% of net
sales. No other customer represented 10% or more of the Company's
net sales during these periods.

Export sales, principally in Asia, including sales to
overseas operations of domestic corporations, represented 56%, 58%
and 56% of net revenues in fiscal 1995, 1994 and 1993,
respectively. There are no restrictions on the transfer of funds
in international markets.

Basis of Presentation

The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. Significant
intercompany accounts and transactions have been eliminated.
Accounts denominated in foreign currencies have been remeasured in
accordance with Statement of Financial Accounting Standards (SFAS)
No. 52, "Foreign Currency Translation," using the U.S. dollar as
the functional currency. Translation adjustments relating to
Cirrus Logic K.K., whose functional currency is the Japanese yen,
have not been material.

During the first quarter of fiscal 1994, the Company changed
its reporting period from a 12 month year ending March 31 to a
fiscal year of 52 or 53 weeks ending on the Saturday closest to
March 31.

In April 1992 and February 1993, the Company merged with
Acumos Incorporated (Acumos) and Pacific Communication Sciences,
Inc. (PCSI), respectively. These mergers were tax free
reorganizations and were accounted for as poolings of interests.
All of the consolidated financial information includes the
operations of Acumos and PCSI.

In August 1994, Cirrus Logic merged with PicoPower
Technology, Inc. (PicoPower) of San Jose, California. Cirrus
Logic issued 2,609,238 shares of Common Stock in exchange for all
of the outstanding preferred and common stock of PicoPower in a
transaction accounted for as a pooling of interests. In addition,
Cirrus Logic agreed to assume all outstanding options and a
warrant to purchase stock of PicoPower, which represented the
right to purchase 793,766 shares of Cirrus Logic Common Stock.
All financial information has been restated to reflect the
combined operations of the companies. The table below shows the
composition of combined net sales, net income and net income per
common and common equivalent share for the pre-merger periods
indicated (in thousands, except per share amounts).

Quarter Fiscal Years Ended
Ended --------------------
July 2, April 2, March 31,
---------- --------- ---------
(Unaudited)
Net sales:
Cirrus Logic $ 175,961 $ 544,077 $ 354,770
PicoPower 9,036 13,222 1,708
---------- --------- ---------
$ 184,997 $ 557,299 $ 356,478
========== ========= =========
Net income:
Cirrus Logic $ 15,009 $ 44,632 $ 20,593
PicoPower 566 736 (369)
---------- --------- ---------
$ 15,575 $ 45,368 $ 20,224
========== ========= =========
Net income per common and
common equivalent share $ 0.24 $ 0.80 $ 0.39
========== ========= =========

Weighted average common and common
equivalent shares outstanding:

Cirrus Logic 60,414 53,456 50,894
PicoPower 3,326 2,946 1,530
---------- --------- ---------
63,740 56,402 52,424
========== ========= =========

Cash Equivalents and Investments

Cash equivalents consist primarily of over-night deposits,
commercial paper, U.S. Government Treasury instruments, and money
market funds with original maturities of three months or less at
date of purchase. Short-term investments have maturities greater
than three months but less than one year and consist of U.S.
Government Treasury instruments, money market preferred stock,
auction preferred stock, municipal bonds, certificates of deposit
and commercial paper.

Securities Held-to-Maturity and Available-for-Sale

Effective April 3, 1994, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," which creates
certain classification categories for such investments, based on
the nature of the securities and the intent and investment goals
of the Company. In accordance with SFAS No. 115, prior period
financial statements have not been restated to reflect the change
in accounting principle. The cumulative effect as of April 2,
1994 of adopting SFAS No. 115 was immaterial.

Under SFAS No. 115, management determines the appropriate
classification of certain debt and equity securities at the time
of purchase as either held-to-maturity, trading or available-for-
sale and reevaluates such designation as of each balance sheet
date.

Held-to-maturity securities are stated at cost, adjusted for
amortization of premiums and accretion of discounts to maturity.
Such amortization, as well as any interest on the securities, is
included in interest income and other, net. Held-to-maturity
securities include only those securities the Company has the
positive intent and ability to hold to maturity.

Securities not classified as held-to-maturity are classified
as available-for-sale. Available-for-sale securities are carried
at fair value, with unrealized gains and losses, net of tax,
reported as a separate component of shareholders' equity.
Realized gains and losses, declines in value judged to be other
than temporary, and interest on available-for-sale securities are
included in interest income and other, net.

Foreign Exchange Contracts

The Company may enter into foreign currency exchange or
option contracts to hedge certain of its foreign currency
exposures. Market value gains and losses on the forward contracts
are recorded as offsets to the foreign exchange gains or losses on
the hedged foreign currency transactions. During fiscal years
1995, 1994 and 1993, foreign currency contracts, when used, were
used, to hedge inventory purchases.

During fiscal 1995, the Company recorded $4,999,000 of
transaction gains pertaining to the remeasurement of certain
unhedged balance sheet accounts denominated in Japanese yen.
Transactions gains and losses were immaterial in fiscal years 1994
and 1993. In April 1995, the Company purchased a foreign currency
option contract to hedge certain balance sheet accounts
denominated in yen. The option is for approximately 3.5 billion
yen and expires in June 1995.

Inventories

Inventories are stated at the lower of standard cost, which
approximates actual cost on a first-in, first-out basis, or market
and are comprised of the following (in thousands):

April 1, April 2,
1995 1994
--------- --------
Work-in-process $ 84,920 $ 62,833
Finished goods 18,722 15,972
--------- --------
$ 103,642 $ 78,805
========= ========

Property and Equipment

Property and equipment is recorded at cost. Depreciation and
amortization is provided on a straight-line basis over estimated
useful lives ranging from three to five years, or over the life of
the lease for equipment under capitalized leases, if shorter.
Leasehold improvements are amortized over the term of the lease or
their estimated useful life, whichever is shorter.

Concentration of Credit Risk

Financial instruments which potentially subject the Company
to concentrations of credit risk consist primarily of cash
equivalents, short-term investments and trade accounts receivable.
By policy, the Company places its investments only with high
credit quality financial institutions and, other than U.S.
Government Treasury instruments, limits the amounts invested in
any one institution or in any type of instrument. Almost all of
the Company's trade accounts receivable are derived from sales to
manufacturers of computer systems and subsystems. The Company
performs ongoing credit evaluations of its customers' financial
condition and limits its exposure to accounting losses by limiting
the amount of credit extended whenever deemed necessary and
generally does not require collateral.

Revenue Recognition

Revenue from product sales direct to customers is recognized
upon shipment. Certain of the Company's sales are made to
distributors under agreements allowing certain rights of return
and price protection on products unsold by distributors.
Accordingly, the Company defers revenue and gross profit on such
sales until the product is sold by the distributors.

Non-recurring and Merger Costs

In the quarter ended October 1, 1994, non-recurring and
merger costs were approximately $6.3 million. Non-recurring costs
of $3.9 million were primarily associated with the acquisition of
certain technology and marketing rights and the remaining minority
interest in a subsidiary, and the formation of the MiCRUS joint
venture with International Business Machines Corporation (IBM).
Merger costs of approximately $2.4 million for the August 1994,
combination of Cirrus Logic and PicoPower included one-time costs
for charges related to the combination of the two companies,
financial advisory services, and legal and accounting fees.

Income Taxes

During fiscal 1994, the Company implemented SFAS No. 109,
"Accounting for Income Taxes," effective as of the beginning of
the year. Prior periods were accounted for under SFAS No. 96 and
have not been restated. The cumulative effect of this accounting
change, a result of recognizing tax benefits which had been
unrecognized prior to April 1, 1993, increased net income for
fiscal 1994 by $7,550,000, or $0.13 per share. There was no
effect on income before income taxes from the adoption of SFAS
No. 109.

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, as required). Common equivalent shares include
dilutive stock options and warrants. Dual presentation of primary
and fully diluted income per share is not shown on the face of the
income statement because the differences are insignificant.

2. FINANCIAL INSTRUMENTS

Fair Values of Financial Instruments

The following methods and assumptions were used by the
Company in estimating its fair value disclosures for financial
instruments:

Cash and cash equivalents: The carrying amount reported in
the balance sheet for cash and cash equivalents approximates
its fair value.

Investment securities and other non-current marketable
equity securities: The fair values for marketable debt and
equity securities are based on quoted market prices.

Commercial and standby letters of credit: The fair values of
commercial and standby letters of credit are based on quoted
market prices.

Foreign currency exchange contracts: The fair values of the
Company's foreign currency exchange forward contracts are
estimated based on quoted market prices of comparable
contracts, adjusted through interpolation where necessary for
maturity differences.

Long-term debt: The fair value of long-term debt is
estimated based on current interest rates available to the
Company for debt instruments with similar terms and remaining
maturities.

The carrying amounts and fair values of the Company's
financial instruments at April 1, 1995 are as follows (in
thousands):

Carrying Amount Fair Value
--------------- ----------

Cash and cash equivalents $ 106,882 $ 106,882
Investment securities:
U.S. Government Treasury
instruments 43,328 43,334
U.S. Government Agency
instrument 1,000 996
Municipal auction preferred stock 5,000 5,000
Auction preferred stock 18,000 18,000
Commercial paper 1,969 1,969
Certificates of deposit 1,997 1,997
Municipal bonds 8,850 8,781
Long-term debt 23,856 23,856

The carrying amounts and fair values of the Company's
financial instruments at April 2, 1994 are as follows (in
thousands):

Carrying Amount Fair Value
--------------- ----------

Cash and cash equivalents $ 187,875 $ 187,875
Investment securities:
U.S. Government Treasury
instruments 32,083 32,132
Auction preferred stock 17,000 17,000
Other non-current marketable equity 1,089 2,182
Foreign currency exchange forward
contracts -- 2,711
Long-term debt 19,252 19,690

Investments

The following is a summary of available-for-sales and held-
to-maturity securities at April 1, 1995 (in thousands):

Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
-------- ------ ------ --------
Available-for-Sale:
Municipal auction
preferred stock $ 5,000 $ - $ - $ 5,000
Auction preferred stock 18,000 - - 18,000
-------- ------ ------ --------
Total $ 23,000 $ - $ - $ 23,000
======== ====== ====== ========

Held-to-Maturity:
U.S. Government
Treasury instruments $ 47,273 $ 16 $ 4 $ 47,285
U.S. Government
Agency instruments 1,000 - 4 996
Commercial paper 10,874 42 - 10,916
Certificates of deposit 1,997 - - 1,997
Municipal bonds 8,850 - 69 8,781
-------- ------ ------ --------
Total $ 69,994 $ 58 $ 77 $ 69,975
======== ====== ====== ========

There have been no gross realized gains or losses on
available-for-sale securities to date. The available-for-sale
securities do not have contracted maturity dates. Held-to-
maturity securities have contracted maturities of less than one
year at April 1, 1995.

The following is a reconciliation of the investment
categories to the balance sheet classification at April 1, 1995
(in thousands):

Cash and Cash Short-term
Equivalents Investment Total
----------- ----------- ---------
Cash $ 94,032 $ - $ 94,032
Available-for-sale
securities - 23,000 23,000
Held-to-maturity
securities 12,850 57,144 69,994
----------- ----------- ---------
$ 106,882 $ 80,144 $ 187,026
=========== =========== =========

3. JOINT VENTURE AND RELATED MANUFACTURING AGREEMENT

In January 1995, MiCRUS leased approximately $145 million of
wafer fabrication and infrastructure equipment pursuant to an
operating lease with a third party and guaranteed jointly and
severally by the Company and IBM. In addition, IBM and Cirrus
Logic each expect to provide MiCRUS with approximately $160
million of additional capital equipment for the expansion of
operations. The Company expects to use lease financing to fund
this expansion. Also, the State of New York has offered to
provide Cirrus Logic with up to $40 million in long-term loans to
fund a portion of the expansion in addition to low cost power and
certain tax abatements for new investment in the State.

4. INVESTMENTS

During fiscal years 1991 and 1992, the Company invested
approximately $1,660,000 in Media Vision, Inc. (Media Vision)
Preferred Stock. The investment was accounted for by the cost
method and represented an approximate six percent interest in
Media Vision. In fiscal 1994, the Company sold approximately 76%
of its original investment in Media Vision in an initial public
offering in April 1993 and in October 1993 in the open market.
The Company realized a gain of $13,682,000 on these sales in
fiscal year 1994.

5. OBLIGATIONS UNDER CAPITAL LEASES

The Company has capital lease agreements for machinery and
equipment as follows (in thousands):

April 1, April 2,
1995 1994
--------- ---------

Capitalized cost $ 18,798 $ 16,231
Accumulated amortization (8,482) (6,658)
--------- ---------
$ 10,316 $ 9,573
========= =========

Amortization expense on assets capitalized under capital
lease obligations is included in depreciation and amortization.
The lease agreements are secured by the leased property.

Future minimum lease payments under capital leases for the
following fiscal years, together with the present value of the net
minimum lease payments as of April 1, 1995, are (in thousands):

1996 $ 4,904
1997 4,466
1998 3,431
1999 2,172
2000 629
---------
Total minimum lease payments 15,602
Less amount representing interest (1,772)
---------
Present value of net minimum lease payments 13,830
Less current maturities (4,228)
---------
Capital lease obligations $ 9,602
=========

6. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

April 1, April 2,
1995 1994
--------- ---------

Installment notes with interest
rates ranging from 6.35% to 12.6% $ 23,356 $ 18,252
Installment purchase contract with
officer of subsidiary 500 1,000
Less current maturities (7,253) (7,860)
--------- ---------
Long-term debt $ 16,603 $ 11,392
========= =========

Principal payments for the following fiscal years are (in
thousands):

1996 $ 7,253
1997 5,563
1998 5,644
1999 2,997
2000 2,399
--------
$ 23,856
========

At April 1, 1995, installment notes are secured by machinery
and equipment with a net book value of $18,940,000 ($11,430,000 at
April 2, 1994).

7. BANK ARRANGEMENTS

The Company has a commitment for a bank line of credit up to
a maximum of $25,000,000, at the bank's prime rate (9.00% at April
1, 1995). There were no outstanding borrowings under this
arrangement at April 1, 1995, and the amount available, net of
outstanding letters of credit, was approximately $5,599,000. The
line expires in December 1995. Terms of the above arrangement
require compliance with certain covenants including the
maintenance of certain financial ratios, minimum tangible net
worth and profitable operations on a quarterly basis as well as a
prohibition against the payment of cash dividends without prior
bank approval. The Company was in compliance with all covenants
at April 1, 1995.

The Company has outstanding letters of credit with banks
which are denominated in Japanese yen and U.S. dollars totaling
approximately $14,691,000 at April 1, 1995. Such letters of
credit secure inventory purchases.

In addition, the Company has a separate standby letter of
credit of $10,000,000 with a wafer vendor to secure inventory
purchases under a wafer supply agreement (see note 8).

8. COMMITMENTS

Facilities and Equipment Under Operating Lease Agreements

The Company leases its facilities and certain equipment under
operating lease agreements, some of which have renewal options.
Certain of these arrangements provide for lease payment
increases based upon future fair market rates. The aggregate
minimum future rental commitments under all operating leases for
the following fiscal years are (in thousands):

1996 $ 9,322
1997 7,985
1998 7,269
1999 7,060
2000 7,005
Thereafter 42,675
--------
Total minimum lease payments $ 81,316
========

Total rent expense was approximately $10,242,000, $6,264,000
and $4,404,000 for fiscal years 1995, 1994 and 1993, respectively.

Wafer Supply Agreement

During September 1993, the Company entered into a 3-year
volume purchase agreement with a wafer vendor. Under the terms of
the agreement, the Company must purchase certain minimum
quantities of wafers. The Company estimates that under the
remaining term of the agreement, which expires in March 1997, it
is obliged to purchase approximately $70.0 million of product. If
the Company does not purchase the minimum quantities, it may be
required to pay a reduced amount for any shortfall not sold by the
vendor to other customers. During fiscal year 1995, the Company
purchased $17.4 million of product under this supply agreement.

9. EMPLOYEE BENEFIT PLANS

The Company and its subsidiaries have adopted 401(k) Profit
Sharing Plans ("the Plans") covering substantially all of their
qualifying domestic employees. Under the Plans, employees may
elect to reduce their current compensation by up to 15%, subject
to annual limitations, and have the amount of such reduction
contributed to the Plans. The Plans permit, but do not require,
additional discretionary contributions by the Company on behalf of
all participants. During fiscal years 1995 and 1994, the Company
and its subsidiaries matched employee contributions up to various
maximums per plan for a total of approximately $1,849,000 and
$1,290,000, respectively (none in fiscal 1993). The Company
intends to continue the contributions in fiscal 1996.

10. SHAREHOLDERS' EQUITY

Warrant

The Company has an outstanding warrant to purchase 60,000
shares of Common Stock at $12.00 per share. The warrant expires
in June 1995.

Employee Stock Purchase Plan

In March 1989, the Company adopted the 1989 Employee Stock
Purchase Plan. As of April 1, 1995, 422,090 shares of Common
Stock are reserved for future issuance. During fiscal 1995, 1994
and 1993, 461,252, 409,234 and 259,098 shares, respectively, were
issued under the Employee Stock Purchase Plan.

The Board of Directors recommended for shareholder approval
an additional 800,000 shares of Common Stock for issuance under
the Employee Stock Purchase Plan.

Stock Option Plans

The Company has various stock option plans (the "Option
Plans") under which officers, key employees, non-employee
directors and consultants may be granted qualified and non-
qualified options to purchase shares of the Company's authorized
but unissued Common Stock. The price of the options is at not
less than 85% of the fair market value of the stock on date of
grant. Options are generally exercisable immediately but are
subject to repurchase if exercised prior to vesting and currently
expire no later than ten years from date of grant.

Under other option plans, the Company also has issued non-
qualified stock options to purchase a total of 631,156 shares at
prices ranging from $0.06 to $6.50 per share, subject to a vesting
schedule of three and one-half or four years and 23,000 shares as
stock grants to employees at no cost which vest over five years.
A restricted stock purchase agreement for 10,000 shares which
vests over two years has been issued to a consultant. The Company
recognizes as compensation expense the excess of the fair market
value at the date of grant over the exercise price of such options
and grants. The compensation expense is amortized ratably over
the vesting period of the options.

The Board of Directors recommended for shareholder approval
an additional 1,880,000 shares of Common Stock for issuance under
the Option Plans.

Additional information relative to stock option activity is
as follows (in thousands):
Outstanding Options
Options --------------------
Available for Number of Aggregate
Grant Shares Price
----------- ------- ----------
Balance, March 31, 1992 1,238 6,572 $ 23,610
Shares authorized for issuance 2,560 - -
Options granted (3,520) 3,520 36,285
Options exercised - (2,088) (3,647)
Options cancelled 106 (150) (879)
----------- ------- ----------
Balance, March 31, 1993 384 7,854 55,369
Shares authorized for issuance 4,170 - -
Options granted (4,200) 4,200 47,075
Options exercised - (1,360) (7,355)
Options cancelled 292 (322) (3,125)
----------- ------- ----------
Balance, April 2, 1994 646 10,372 91,964
Shares authorized for issuance 4,796 - -
Options granted (4,228) 4,228 57,574
Options exercised - (898) (3,337)
Options cancelled 272 (314) (4,407)
----------- ------- ----------
Balance, April 1, 1995 1,486 13,388 $ 141,794
=========== ======= ==========

As of April 1, 1995, approximately 14,874,000 shares of
Common Stock were reserved for issuance under the Option Plans.

11. INCOME TAXES

Income before income taxes and cumulative effect of
accounting change consists of (in thousands):

1995 1994 1993
--------- --------- ---------

United States $ 57,541 $ 40,196 $ 23,962
Foreign 32,097 15,768 8,583
--------- --------- ---------
Total $ 89,638 $ 55,964 $ 32,545
========= ========= =========

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

1995 1994 1993
---------- ---------- ----------
Federal
Current $ 27,829 $ 20,245 $ 11,817
Prepaid (2,180) (5,910) (2,074)
---------- ---------- ----------
25,649 14,335 9,743

State
Current 2,936 4,911 2,453
Prepaid (1,308) (1,820) --
---------- ---------- ----------
1,628 3,091 2,453

Foreign
Current 959 720 125
---------- ---------- ----------
Total $ 28,236 $ 18,146 $ 12,321
========== ========== ==========

The provision for income taxes differs from the amount
computed by applying the statutory federal rate to pretax income
as follows:

1995 1994 1993
------- ------- -------
U.S. federal statutory income tax
rate 35.0% 35.0% 34.0%
Provision for state income taxes,
net of federal benefit 1.4% 3.6% 6.0%
Utilization of federal net operating
loss carryforwards -- -- (3.7%)
Foreign earnings taxed at lower rates (3.0%) (3.4%) (7.9%)
Pre-merger subsidiary losses -- -- 7.1%
Non-deductible merger costs 0.7% -- 1.8%
Research and development credits
(flow-through method) (4.6%) (4.7%) (0.8%)
Other 2.0% 1.9% 1.4%
------- ------- -------
Provision for income taxes 31.5% 32.4% 37.9%
======= ======= =======

The Company does not provide U.S. federal income taxes on the
unremitted earnings of foreign subsidiaries which it intends to
permanently reinvest in the operations of such subsidiaries. The
total unremitted earnings for which no U.S. federal tax has been
provided as of April 1, 1995, is approximately $27 million.

Under SFAS No. 109, deferred income tax assets and
liabilities reflect the net tax effects of tax carryforwards and
temporary differences between the carrying amounts of assets and
liabilities for financial reporting and the amounts used for
income tax purposes.

Significant components of the Company's deferred tax assets
and liabilities are (in thousands):

April 1, April 2,
1995 1994
-------- --------
Deferred tax assets:
Inventory valuation $ 9,443 $ 8,253
Accrued expenses and allowances 13,853 8,490
Net operating loss carryforwards 3,051 4,643
Research and development credit
carryforwards 2,190 2,190
Other 2,077 873
-------- --------
Total deferred tax assets 30,614 24,449
-------- --------
Deferred tax liabilities:
Depreciation 5,057 2,973
Other 920 327
-------- --------
Total deferred tax liabilities 5,977 3,300
-------- --------
Total net deferred tax assets $ 24,637 $ 21,149
======== ========

During fiscal 1993, deferred or prepaid income taxes were
provided in accordance with SFAS No. 96 for significant temporary
differences. The prepaid tax expense for fiscal 1993 included
$1,967,000 for accrued expenses and allowances not currently
deductible and $107,000 of other items.

As a result of the 1993 PCSI merger, the Company has net
operating loss carryforwards for federal tax purposes of
approximately $8.5 million, expiring from 2002 through 2008.
These net operating loss carryforwards are available to offset
future consolidated taxable income only to the extent contributed
by PCSI and are subject to an annual limitation of approximately
$2.6 million because of the "change in ownership" rules under
Section 382 of the Internal Revenue Code.

12. LEGAL MATTERS

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. Further, customers
have been named in suits alleging infringement of patents by the
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 such situations, 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.

<PAGE>

REPORT OF ERNST & YOUNG LLP
Independent auditors
The Board of Directors and Shareholders, Cirrus Logic, Inc.

We have audited the accompanying consolidated balance sheets of Cirrus
Logic, Inc. as of April 1, 1995 and April 2, 1994, and the related
consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended April 1, 1995. Our audits
also included the financial statement schedule listed in the Index at Item
14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Cirrus Logic,
Inc. at April 1, 1995 and April 2, 1994, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
April 1, 1995, in conformity with generally accepted accounting principles.
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.

As discussed in Note 1 to the consolidated financial statements, in fiscal 1994
the Company changed its method of accounting for income taxes.

/s/Ernst & Young LLP

San Jose, California
April 25, 1995

<PAGE>

<TABLE>
CONSOLIDATED SUPPLEMENTARY FINANCIAL DATA
(Amounts in thousands except per share amounts)
(Unaudited)
<CAPTION>
Fiscal years by quarter
----------------------------------------------------------------------------
1995 1994
------------------------------------ ------------------------------------
4th 3rd 2nd 1st 4th 3rd 2nd 1st *
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating summary:
Net sales $273,215 $228,599 $202,211 $184,997 $175,369 $154,068 $127,402 $100,460
Cost of sales 166,509 135,658 113,715 96,627 90,377 79,264 66,665 62,276
Non-recurring costs - - 3,856 - - - - -
Merger costs - - 2,418 - - - - -
Operating income (loss) 21,012 19,725 15,788 21,426 21,358 18,266 8,387 (7,813)
Gain on sale of equity investment - - - - - 11,226 - 2,456
Income (loss) before income taxes 27,601 21,142 18,045 22,850 22,279 30,048 9,119 (5,482)
Income (loss) before effect of accounting change 18,907 14,482 12,438 15,575 14,816 20,029 6,622 (3,649)
Cumulative effect of change in method
of accounting for income taxes - - - - - - - 7,550
Net income $18,907 $14,482 $12,438 $15,575 $14,816 $20,029 $6,622 $3,901

Income (loss) per common and common equivalent share
before cumulative effect of accounting change $0.29 $0.23 $0.20 $0.24 $0.24 $0.35 $0.12 ($0.07)

Cumulative effect of accounting change per common and
common equivalent share - - - - - - - $0.14

Net income per common and common equivalent share $0.29 $0.23 $0.20 $0.24 $0.24 $0.35 $0.12 $0.07

Weighted average common and common equivalent shares
outstanding 64,472 63,300 63,206 63,740 61,456 56,740 54,600 52,810
<FN>
The number of weighted average common and common equivalent shares outstanding has been restated for all periods to reflect
the two-for-one split of the Company's Common Stock approved by the Board of Directors on June 1, 1995.

In October 1991, April 1992, February 1993, and August 1994, the Company merged with Crystal Semiconductor Corporation,
Acumos Incorporated, Pacific Communication Sciences, Inc., and PicoPower Technology, Inc., respectively. All of
the consolidated financial information reflects the combined operations of the companies.

* A significant customer of the Company decreased its forecasted demand for certain of the Company's low-end mass
storage products. Because of this decrease in demand and rapidly changing and uncertain disk drive market conditions,
the Company charged $10 million to cost of sales late in the first quarter of fiscal year 1994.

</TABLE>

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

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a) Executive Officers - See the section entitled "Executive
Officers of the Registrant" in Part I, Item 1 hereof.

(b) Directors - The information required by this Item is
incorporated by reference to the section entitled "Election
of Directors" in the Registrant's Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference
to the sections entitled "Executive Compensation" and various
stock benefit plan proposals in the Registrant's Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The information required by this Item is incorporated by reference
to the sections entitled "Share Ownership of Directors, Executive
Officers and Certain Beneficial Owners" of the Registrant's Proxy
Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference
to the section entitled "Executive Compensation" in the
Registrant's Proxy Statement.

PART IV

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

(a) The following documents are filed as part of this Report:

1. Financial Statements

The following consolidated financial statements of the Registrant
and Report of Ernst & Young LLP, Independent Auditors are included
herewith:

(i) Consolidated Balance Sheets as of April 1, 1995 and
April 2, 1994.

(ii) Consolidated Statements of Income for the years ended
April 1, 1995, April 2, 1994 and March 31, 1993.

(iii) Consolidated Statements of Shareholders' Equity for the
years ended April 1, 1995, April 2, 1994 and
March 31, 1993.

(iv) Consolidated Statements of Cash Flows for the years ended
April 1, 1995, April 2, 1994 and March 31, 1993.

(v) Notes to Consolidated Financial Statements.

(vi) Report of Ernst & Young LLP, Independent Auditors.

2. Financial Statement Schedules

The following consolidated financial statement schedule is filed
as part of this report and should be read in conjunction with the
consolidated financial statements:

Schedule

II Valuation and Qualifying Accounts

All other schedules have been omitted since the required
information is not present or not present in amounts sufficient to
require submission of the schedule or because the information
required is included in the consolidated financial statements or
notes thereto.

CIRRUS LOGIC INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Balance Charged to Balance
at Beginning Costs and at Close
Item of Period Expenses Deductions (1) of Period
- ----------------------- ------------- ----------- ------------ ------------
(Amounts in thousands)

1993
Allowance for doubtful
accounts $2,682 $2,433 ($488) $4,627

1994
Allowance for doubtful
accounts $4,627 $3,688 ($78) $8,237

1995
Allowance for doubtful
accounts $8,237 $4,631 ($3,429) $9,439

(1) Uncollectible accounts written off, net of recoveries

3. Exhibits

The following exhibits are filed as part of or incorporated by
reference into this Report:

3.1 (1) Restated Articles of Incorporation of Registrant, as
amended.

3.2 (1) Form of Restated Articles of Incorporation of
Registrant.

3.3 (1) By-laws of Registrant, as amended.

4.0 (1) Article III of Restated Articles of Incorporation of
Registrant (See Exhibits 3.1 and 3.2).

10.1 Amended 1987 Stock Option Plan.

10.2 Amended 1989 Employee Stock Purchase Plan.

10.3 (1) Description of Executive Bonus Plan.

10.4 (1) Fourth Amendment to Preferred Shares Purchase
Agreements, Founders Registration Rights Agreements, and
Warrant Agreements and Consent between the Registrant
and certain shareholders of the Registrant dated May 15,
1987, as amended April 28, 1989.

10.5 (1) Form of Indemnification Agreement.

10.6 (1) License Agreement between Registrant and Massachusetts
Institute of Technology dated December 16, 1987.

10.7 (1) Lease between Prudential Insurance Company of America
and Registrant dated June 1, 1986.

10.8 (1) Lease between McCandless Technology Park, Milpitas, and
Registrant dated March 31, 1989.

10.9 (1) Agreement for Foreign Exchange Contract Facility between
Bank of America National Trust and Savings Association
and Registrant, dated April 24, 1989.

10.10 (2) 1990 Directors Stock Option Plan and forms of Stock
Option Agreement.

10.11 (2) Lease between Renco Investment Company and Registrant
dated December 29, 1989.

10.12 (3) Loan agreement between First Interstate Bank of
California and Silicon Valley Bank and Registrant, dated
September 29, 1990.

10.13 (2) Loan agreement between Orix USA Corporation and the
Registrant dated April 23, 1990.

10.14 (2) Loan agreement between USX Credit Corporation and
Registrant dated December 28, 1989.

10.15 (3) Loan agreement between Household Bank and Registrant
dated September 24, 1990.

10.16 (3) Loan agreement between Bank of America and Registrant
dated March 29, 1991.

10.17 (4) Equipment lease agreement between AT&T Systems Leasing
Corporation and Registrant dated December 2, 1991.

10.18 (4) Lease between Renco Investment Company and Registrant
dated May 21, 1992.

10.19 (5) Loan agreement between Deutsche Credit Corporation and
Registrant dated March 30, 1993.

10.20 (5) Lease between Renco Investment Company and Registrant
dated February 28, 1993.

10.21 (6) Lease between Renco Investment Company and Registrant
dated May 4, 1994.

10.22 (7) Participation Agreement dated as of September 1, 1994
among Registrant, International Business Machines
Corporation, Cirel Inc. and MiCRUS Holdings Inc.

10.23 (7) Partnership Agreement dated as of September 30, 1994
between Cirel Inc. and MiCRUS Holdings Inc.

10.24 Amended and Restated Credit Agreement between Registrant
and Bank of America dated January 31, 1995.

11.1 Statement re: Computation of Per Share Earnings.

21.1 Proxy Statement to the 1995 Annual Meeting of
Shareholders.

22.1 Subsidiaries of Registrant.

23.1 Consent of Ernst & Young LLP, Independent Auditors.

27 Article 5 Fin. Data Schedule for 4th Qtr 10-K

(1) Incorporated by reference to Registration Statement
No. 33-28583.

(2) Incorporated by reference to Registrant's Report on Form 10-K
for the fiscal year ended March 31, 1990.

(3) Incorporated by reference to Registrant's Report on Form 10-K
for the fiscal year ended March 31, 1991.

(4) Incorporated by reference to Registrant's Report on Form 10-K
for the fiscal year ended March 31, 1992.

(5) Incorporated by reference to Registrant's Report on Form 10-K
for the fiscal year ended March 31, 1993.

(6) Incorporated by reference to Registrant's Report on Form 10-K
for the fiscal year ended April 1, 1994.

(7) Incorporated by reference to Registrant's Report on Form 10-Q
for the quarterly period ended October 1, 1994.

(b) Reports on Form 8-K

None.

SIGNATURES

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

CIRRUS LOGIC, INC.
By: /s/ Sam Srinivasan
Sam S. Srinivasan
Senior Vice President, Finance and Administration, Chief
Financial Officer, Principal Accounting Officer, Treasurer
and Secretary.

KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Sam S.
Srinivasan, his attorney-in-fact, 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
other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorney-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 Registrant and in the capacities and on the dates
indicated:

/s/ Michael L. Hackworth /s/ C. Gordon Bell
Michael L. Hackworth C. Gordon Bell
President, Chief Executive Director, June 29, 1995
Officer and Director
June 29, 1995

/s/ Suhas S. Patil /s/ D. James Guzy
Suhas S. Patil D. James Guzy
Chairman of the Board, Director, June 29, 1995
Executive Vice President,
Products and Technology
and Director
June 29, 1995

/s/ David L. Lyon /s/ C. Woodrow Rea, Jr.
President of PCSI (a subsidiary C. Woodrow Rea, Jr.
of Cirrus Logic, Inc.) and Director, June 29, 1995
Director
June 29, 1995

/s/ Suhas S. Patil /s/ Walden C. Rhines
Suhas S. Patil Walden C. Rhines
Chairman of the Board, Director, June 29, 1995
Executive Vice President,
Products and Technology
and Director
June 29, 1995
/s/ Robert H. Smith
Robert H. Smith
Director, June 29, 1995

/s/ Sam S. Srinivasan
Sam S. Srinivasan
Senior Vice President,
Finance and Administration,
Chief Financial Officer,
Principal Accounting Officer,
Treasurer and Secretary
June 29, 1995

[ARTICLE] 5
[MULTIPLIER] 1,000
<TABLE>

EXHIBIT 11.1
CIRRUS LOGIC, INC.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Primary:

Weighted average common shares outstanding 59,708 51,838 48,632

Dilutive common stock equivalents:
Common stock options, using treasury stock
method 3,964 4,558 3,782
Common stock warrants, using treasury
stock method 8 6 10
--------- --------- ---------
Common and common equivalent shares used in
the calculation of net income per share 63,680 56,402 52,424
========= ========= =========

Net income $61,402 $45,368 $20,224
========= ========= =========

Net income per share $0.96 $0.80 $0.39
========= ========= =========

---------------------------------------

Fully diluted:

Weighted average common shares outstanding 59,708 51,838 48,632

Dilutive common stock equivalents:
Common stock options, using treasury stock
method 4,096 4,978 3,982
Common stock warrants, using treasury
stock method 8 8 12
--------- --------- ---------
Common and common equivalent shares used in
the calculation of net income per share 63,812 56,824 52,626
========= ========= =========

Net income $61,402 $45,368 $20,224
========= ========= =========

Net income per share $0.96 $0.80 $0.38
========= ========= =========
</TABLE>

[ARTICLE] 5
[MULTIPLIER] 1,000

EXHIBIT 22.1
CIRRUS LOGIC INC.

SUBSIDIARIES OF REGISTRANT

Cirrus Logic, GmBh. (Germany)
Cirrus Logic, K.K. (Japan)
Cirrus Logic (U.K.) Limited (United Kingdom)
Cirrus Logic International SARL (France)
Cirrus Logic International Ltd. (Bermuda)
Cirrus Logic Korea Co., LTD. (Korea)
Pixel Semiconductor, Inc. (Delaware)
Crystal Semiconductor Corporation (Delaware)
Acumos Incorporated (California)
Pacific Communications Sciences, Inc. (Delaware)
PicoPower Technology, Inc.

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration
Statements (Forms S-8 No. 33-37409, 33-31697, 33-43914, 33-47453,
33-53990, 33-60464, 33-71862, and 33-83148 pertaining to one or
more of the following: the Cirrus Logic, Inc. 1987 Stock Option
Plan; the Cirrus Logic, Inc. 1989 Employee Stock Purchase Plan;
the Cirrus Logic, Inc. 1990 Directors' Stock Option Plan; the
Cirrus Logic, Inc. 1991 Non-qualified Stock Option Plan; the DST
Stock Option Plan; the Crystal Semiconductor Corporation 1987
Incentive Stock Option Plan; the Acumos, Inc. 1989 Stock Option
Plan; the Pacific Communication Sciences, Inc. 1987 Stock Option
Plan; and the PicoPower Technology Inc. 1992 Stock Option Plan of
our report dated April 25, 1995, with respect to the consolidated
financial statements and schedule of Cirrus Logic, Inc.

/s/Ernst & Young LLP

San Jose, California
June 29, 1995

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<FISCAL-YEAR-END> Apr-01-1995
<PERIOD-START> Apr-03-1994
<PERIOD-END> Apr-01-1995
<PERIOD-TYPE> 12-MOS
<CASH> 106,882
<SECURITIES> 80,144
<RECEIVABLES> 170,772
<ALLOWANCES> (9,439)
<INVENTORY> 103,642
<CURRENT-ASSETS> 479,932
<PP&E> 173,335
<DEPRECIATION> (73,091)
<TOTAL-ASSETS> 673,534
<CURRENT-LIABILITIES> 228,313
<BONDS> 0
0
0
<COMMON> 283,741
<OTHER-SE> 135,275
<TOTAL-LIABILITY-AND-EQUITY> 673,534
<SALES> 889,022
<TOTAL-REVENUES> 889,022
<CGS> 512,509
<TOTAL-COSTS> 512,509
<OTHER-EXPENSES> 298,562
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2,441)
<INCOME-PRETAX> 89,638
<INCOME-TAX> 28,236
<INCOME-CONTINUING> 61,402
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,402
<EPS-PRIMARY> $0.96
<EPS-DILUTED> $0.96

</TABLE>

[ARTICLE] 5
[MULTIPLIER] 1

AMENDED AND RESTATED CREDIT AGREEMENT

between

CIRRUS LOGIC, INC.

and

BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION

January 31, 1995

TABLE OF CONTENTS

Page

ARTICLE I
Definitions and Financial Requirements . . . . . . . . 1

1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Financial Requirements. . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE II
The Credit . . . . . . . . . . . . . . . 7

2.01 Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.02 Reference Rate, Fixed Rate, Offshore Rate, and
Offshore Currency Advances. . . . . . . . . . . . . . . . . . . 8
(a) Requests for Advances . . . . . . . . . . . . . . . . . . . 8
(b) Reference Rate Advances . . . . . . . . . . . . . . . . . . 9
(c) Fixed Rate Advances . . . . . . . . . . . . . . . . . . . . 9
(d) Offshore Rate Advances. . . . . . . . . . . . . . . . . . . 9
(e) Offshore Currency Advances. . . . . . . . . . . . . . . . . 10
(f) Prepayment of the Advances. . . . . . . . . . . . . . . . . 10
2.03 Local Currency Advances . . . . . . . . . . . . . . . . . . . . . 11
2.04 The Letter of Credit Facility . . . . . . . . . . . . . . . . . . 11
(a) Terms of Letters of Credit. . . . . . . . . . . . . . . . . 11
(b) Requests for Letters of Credit. . . . . . . . . . . . . . . 11
(c) Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.05 Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.06 Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE III
Disbursements, Payments, and Calculations . . . . . . . 13

3.01 Lending Branches. . . . . . . . . . . . . . . . . . . . . . . . . 13
3.02 Loan Account. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.03 Immediately Available Funds . . . . . . . . . . . . . . . . . . . 13
3.04 Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.05 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.06 Failure to Borrow . . . . . . . . . . . . . . . . . . . . . . . . 14
3.07 Default Interest. . . . . . . . . . . . . . . . . . . . . . . . . 14
3.08 Calculation of Interest and Fees. . . . . . . . . . . . . . . . . 15

ARTICLE IV
Taxes, Costs, Capital Adequacy, Etc.. . . . . . . . . 15

4.01 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.02 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.03 Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . . . . 16
4.04 Breaking Deposits . . . . . . . . . . . . . . . . . . . . . . . . 16
4.05 Availability. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.06 Statement of the Bank . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE V
Conditions to the Availability of Credit. . . . . . . . 17

5.01 Conditions to the First Extension of Credit . . . . . . . . . . . 17
(a) Opinion of Borrowers' Counsel . . . . . . . . . . . . . . . 17
(b) Borrowers' Corporate Resolutions. . . . . . . . . . . . . . 18
(c) Incumbency Certificates . . . . . . . . . . . . . . . . . . 18
(d) Borrowers' Compliance Certificate . . . . . . . . . . . . . 18
(e) Approvals and Consents. . . . . . . . . . . . . . . . . . . 18
(f) Cirrus International Agreement and Guaranty . . . . . . . . 18
(g) Other Evidence and Documents. . . . . . . . . . . . . . . . 18
5.02 Conditions Precedent to Each Extension of Credit. . . . . . . . . 18
(a) Borrowing Certificate . . . . . . . . . . . . . . . . . . . 19
(b) Application for the Issuance or Amendment of a
Letter of Credit. . . . . . . . . . . . . . . . . . . . . . 19
(c) Other Evidence and Documents. . . . . . . . . . . . . . . . 19
5.03 Conditions Precedent to Extensions of Credit to Borrowing
Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Credit Documentation. . . . . . . . . . . . . . . . . . . . 19
(b) Guaranties, Etc.. . . . . . . . . . . . . . . . . . . . . . 19
(c) Compliance with Conditions Precedent. . . . . . . . . . . . 20
(d) Other Evidence. . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE VI
Representations and Warranties . . . . . . . . . . 20

6.01 Organization of Borrower. . . . . . . . . . . . . . . . . . . . . 20
6.02 Organization of Subsidiaries. . . . . . . . . . . . . . . . . . . 20
6.03 Authorization of Agreement. . . . . . . . . . . . . . . . . . . . 20
6.04 Government Approvals. . . . . . . . . . . . . . . . . . . . . . . 20
6.05 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . 21
6.06 Enforceability of Agreement . . . . . . . . . . . . . . . . . . . 21
6.07 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . 21
6.08 Title to Property . . . . . . . . . . . . . . . . . . . . . . . . 21
6.09 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . 21
6.10 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 22
6.12 Regulation U. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.13 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.14 Financial Information . . . . . . . . . . . . . . . . . . . . . . 22
6.15 Renewal of Representations and Warranties . . . . . . . . . . . . 23
6.16 Permits, Franchises.. . . . . . . . . . . . . . . . . . . . . . . 23
6.17 Income Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . 23
6.18 ERISA Plan Compliance.. . . . . . . . . . . . . . . . . . . . . . 23
6.19 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.20 No Material Adverse Change. . . . . . . . . . . . . . . . . . . . 24

ARTICLE VII
Affirmative Covenants . . . . . . . . . . . . 24

7.01 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.02 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.03 Quick Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.04 Tangible Net Worth. . . . . . . . . . . . . . . . . . . . . . . . 24
7.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.06 Financial Statements, Reports, Etc. . . . . . . . . . . . . . . . 25
7.07 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.08 Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.09 Payment of Obligations. . . . . . . . . . . . . . . . . . . . . . 26
7.10 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . 26
7.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.12 Books and Records, Inspection Rights. . . . . . . . . . . . . . . 27
7.13 Company Liquid Assets.. . . . . . . . . . . . . . . . . . . . . . 27

ARTICLE VIII
Negative Covenants . . . . . . . . . . . . . 27

8.01 Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.02 Profitability . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.03 Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 27
8.04 Other Security Interests. . . . . . . . . . . . . . . . . . . . . 28
8.05 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.06 Liquidation, Merger, etc. . . . . . . . . . . . . . . . . . . . . 30
8.07 Sale of Property for Fair Consideration . . . . . . . . . . . . . 30
8.08 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.09 Change in Business. . . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE IX
Events of Default . . . . . . . . . . . . . 30

9.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Nonpayment. . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Misrepresentation . . . . . . . . . . . . . . . . . . . . . 30
(c) Failure of Security Interest. . . . . . . . . . . . . . . . 31
(d) Involuntary Liens . . . . . . . . . . . . . . . . . . . . . 31
(e) Judgments . . . . . . . . . . . . . . . . . . . . . . . . . 31
(f) Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . . . 31
(g) Involuntary Bankruptcy. . . . . . . . . . . . . . . . . . . 31
(h) Condemnation. . . . . . . . . . . . . . . . . . . . . . . . 31
(i) Regulatory Authority. . . . . . . . . . . . . . . . . . . . 32
(j) Approvals, Consents etc.. . . . . . . . . . . . . . . . . . 32
(k) Cross Default . . . . . . . . . . . . . . . . . . . . . . . 32
(l) Breach of Certain Covenants . . . . . . . . . . . . . . . . 32
(m) Breach of Other Agreements. . . . . . . . . . . . . . . . . 32
(n) Breach of Other Obligations . . . . . . . . . . . . . . . . 32
(o) ERISA Termination . . . . . . . . . . . . . . . . . . . . . 32
(p) IBM Joint Venture Guaranty. . . . . . . . . . . . . . . . . 33
(q) Material Adverse Change . . . . . . . . . . . . . . . . . . 33
9.02 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.03 Rights Not Exclusive. . . . . . . . . . . . . . . . . . . . . . . 34

ARTICLE X
Miscellaneous . . . . . . . . . . . . . . 34

10.01 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.02 Application of Amounts Received. . . . . . . . . . . . . . . . . 34
10.03 Cash Collateral for Letters of Credit. . . . . . . . . . . . . . 35
10.04 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 35
10.05 Participations; Novations. . . . . . . . . . . . . . . . . . . . 35
10.06 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.07 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 36
10.08 Waivers; Writing Required. . . . . . . . . . . . . . . . . . . . 36
10.09 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.10 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . 37
10.11 Indemnification for Hazardous Substances . . . . . . . . . . . . 37
10.12 Indemnification for Judgment Currency. . . . . . . . . . . . . . 37
10.13 English Language . . . . . . . . . . . . . . . . . . . . . . . . 38
10.14 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . 38
10.15 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.16 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.17 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.18 Nature of Liabilities. . . . . . . . . . . . . . . . . . . . . . 38
10.19 Obligations of Foreign Subsidiaries. . . . . . . . . . . . . . . 38

SCHEDULES

Schedule 6.10 Litigation and Other Proceedings
Schedule 6.13 List of Subsidiaries

EXHIBITS

Exhibit A Form of Borrowing Certificate
Exhibit B Form of Compliance Certificate
Exhibit C Form of Guaranty
Exhibit D Form of Cirrus International Agreement

AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDED AND RESTATED CREDIT AGREEMENT is entered into
as of January 31, 1995, between CIRRUS LOGIC, INC., a California
corporation (the "Company"), and BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, a national banking association (the
"Bank"), with respect to the following:

Recitals.

A. The Company and the Bank have entered into a Credit
Agreement dated as of November 9, 1992, as amended by a First
Amendment to Credit Agreement dated as of April 15, 1993, a
Second Amendment to Credit Agreement dated as of June 8, 1993, a
Third Amendment to Credit Agreement dated as of August 9, 1993, a
Fourth Amendment to Credit Agreement dated as of October 1, 1993,
a Fifth Amendment to Credit Agreement dated as of August 30,
1994, a Sixth Amendment to Credit Agreement dated as of August
31, 1994, a Seventh Amendment to Credit Agreement dated as of
October 17, 1994 and an Eighth Amendment to Credit Agreement
dated as of November 30, 1994 (as so amended, the "Original
Credit Agreement"), pursuant to which the Bank has agreed, on the
terms and conditions contained therein, to extend credit to the
Company, to Cirrus Logic International, Ltd., a Bermuda
corporation ("Cirrus International"; the Company and Cirrus
International are collectively referred to herein as the
"Borrowers"), and to certain other Subsidiaries (each such other
Subsidiary is referred to herein as a "Borrowing Entity").

B. The parties hereto desire to amend and restate in its
entirety the Original Credit Agreement upon the terms and
conditions set forth in this Agreement.

Accordingly, the Company and the Bank agree as follows:

ARTICLE I

Definitions and Financial Requirements.

1.01 Definitions. In addition to the terms defined
elsewhere in this Agreement, the following terms have the
meanings indicated for purposes of this Agreement:

"Advance" means a borrowing under Section 2.01, 2.02,
or 2.03, whether such borrowing is made by a Borrower or a
Borrowing Entity.

"Affiliate" means any Person (other than a Subsidiary)
that, directly or indirectly, controls, is controlled by, or is
under common control with, the Company.

"Agreement" means this Credit Agreement, as amended,
modified, or supplemented from time to time.

"Availability Period" means the period commencing on
the date of this Agreement and ending on December 31, 1995.

"Banking Day" means a day other than a Saturday,
Sunday, or other day on which commercial banks in San Francisco,
California, or New York, New York, are authorized or required by
law to close.

"Borrowing Certificate" means a certificate in the form
of Exhibit A.

"Borrowing Entity" has the meaning specified in Section
2.01(c).

"Borrowing Entity L/C Obligations" means the undrawn
amount of all outstanding letters of credit issued for the
account of Borrowing Entities, the amount of all unreimbursed
drawings under letters of credit issued for the account of
Borrowing Entities, the amount of all outstanding drafts accepted
under letters of credit issued for the account of Borrowing
Entities, and the amount of all unreimbursed payments of drafts
accepted under letters of credit issued for the account of
Borrowing Entities.

"Cirrus International Agreement" has the meaning
specified in Section 5.01(f).

"Closing Date" means the date of this Agreement.

"Code" has the meaning specified in Section 6.18.

"Commitment Amount" means $25,000,000.

"Compliance Certificate" means the certificate in the
form of Exhibit B.

"Consolidated Tangible Net Worth" means, on a
consolidated basis for the Company and its Subsidiaries, the
gross book value of the assets of the Company and its
Subsidiaries (exclusive of goodwill, patents, trademarks, trade
names, organization expense, treasury stock, unamortized debt
discount and expense, deferred charges and other like
intangibles) less (a) reserves applicable thereto and (b) all
liabilities (including accrued and deferred income taxes and
subordinated liabilities).

"Credit Document" means this Agreement, the Cirrus
International Agreement, the International Guaranty, any Letter
of Credit, any Letter of Credit Application, any guaranty of the
obligations of any Borrower or any Borrowing Entity under this
Agreement or under any instrument, document, or agreement
executed in connection herewith, or any other document,
instrument, or agreement executed by any Borrower or any
Borrowing Entity or other Person in connection with this
Agreement, the Credit Facilities, and the other transactions
contemplated by this Agreement.

"Credit Facilities" means the facilities for Advances,
the Letters of Credit, and the other credit extensions to the
Borrowers and the Borrowing Entities provided for in this
Agreement and any instrument and agreement required under this
agreement.

"Default" means any event or condition which, with
notice or the passage of time, would become an Event of Default.

"Dollars" and "$" mean United States dollars.

"Equivalent Amount" means the equivalent in Dollars of
a Local Currency or an Offshore Currency, calculated at the spot
rate for the purchase of such Local Currency or Offshore Currency
with Dollars quoted by Bank's Grand Cayman Branch, Grand Cayman,
British West Indies, at approximately 10:00 a.m. San Francisco,
California, time two Banking Days prior to the relevant date.

"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.

"Event of Default" means any event listed in Article
IX.

"Fixed Rate" means, for a Fixed Rate Advance, the rate
of interest quoted by the Bank and accepted by the appropriate
Borrower as being applicable to such Fixed Rate Advance.

"Fixed Rate Advance" means an Advance made pursuant to
and in accordance with the provisions of Section 2.02(c).

"Fixed Rate Interest Period" means, for a Fixed Rate
Advance, the period commencing on the date of such Fixed Rate
Advance and ending not more than six months thereafter, as
requested by a Borrower in accordance with the provisions of
Section 2.02, but in any case not later than the last day of the
Availability Period.

"International Guaranty" has the meaning specified in
Section 2.06.

"Interest Period" means a Fixed Rate Interest Period,
an Offshore Rate Interest Period, or an Offshore Currency Period,
as appropriate.

"Lending Branch" means the branches or offices of Bank
at 530 Lytton Avenue, Palo Alto, California, or such other of its
branches or offices as the Bank may from time to time designate.

"Letter of Credit" means a commercial or standby letter
of credit issued under the Letter of Credit Facility.

"Letter of Credit Application" means the Bank's
standard form application and agreement for the issuance or
amendment of commercial or standby letters of credit as such
forms are from time to time in effect.

"Letter of Credit Facility" means the facility for
letters of credit described in Section 2.04.

"Letter of Credit Obligations" means the sum of (a) the
undrawn amount of all outstanding Letters of Credit, (b) the
amount of all unreimbursed drawings under Letters of Credit,
(c) the amount of all outstanding drafts accepted under Letters
of Credit, and (d) the amount of all unreimbursed payments of
drafts accepted under Letters of Credit.

"Local Currency" means a lawful currency other than
United States dollars which is available at a branch of the Bank
located in a country other than the United States and is the
legal tender of that country where such branch is located.

"Local Currency Advance" means an Advance in a Local
Currency made pursuant to and in accordance with the provisions
of Section 2.03.

"Material Adverse Effect" means (i) a material adverse
change in, or a material adverse effect upon, any of (a) the
operations, business, properties, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries taken
as a whole; (b) the ability of the Company to perform under any
Credit Document; or (c) the legality, validity, binding effect,
or enforceability of any Credit Document; or (ii) a material
adverse change in, or a material adverse effect upon, any of (a)
the operations, business, properties, condition (financial or
otherwise) or prospects of Cirrus International; (b) the ability
of Cirrus International to perform under any Credit Document; or
(c) the legality, validity, binding effect, or enforceability of
any Credit Document.

"Offshore Currency" means any lawful currency which is
freely transferable and convertible into Dollars.

"Offshore Currency Advance" means an Advance in an
Offshore Currency made pursuant to and in accordance with the
provisions of Section 2.02(e).

"Offshore Currency Interest Period" means, for each
Offshore Currency Advance, the period commencing on the date such
Advance is disbursed and ending one, two, three, or six months
thereafter, as requested by a Borrower under Section 2.02, but
not later than the last day of the Availability Period; provided,
however, that the last day of such Offshore Currency Interest
Period shall be determined in accordance with the practices of
the offshore currency inter-bank market as from time to time in
effect.

"Offshore Currency Rate" means, for an Offshore
Currency Advance and the related Offshore Currency Interest
Period, the rate of interest quoted by the Bank and accepted by
the appropriate Borrower as being applicable to such Offshore
Currency Advance and Offshore Currency Interest Period.

"Offshore Rate" means, for each Offshore Rate Interest
Period, the rate of interest (rounded upward to the next 1/16th
of 1%) determined pursuant to the following formula:

Offshore Rate = Offered Rate
1.00 - Eurodollar Reserve Percentage

Where:
"Offered Rate" means the rate of interest at
which deposits in the applicable currency in the
approximate amount of the Offshore Rate Advance to be
made and having a maturity comparable to such Offshore
Rate Interest Period would be offered by the Bank's
Grand Cayman Branch, Grand Cayman, British West Indies
(or such other office as may be designated for such
purpose by the Bank), to major banks in the offshore
interbank market upon request of such banks at
approximately 8:00 a.m. San Francisco time two Business
Days prior to the first day of such Offshore Rate
Interest Period.

"Eurodollar Reserve Percentage" means, for
any Offshore Rate Interest Period, the maximum reserve
percentage (expressed as a decimal, rounded upward to
the next 1/100th of 1%) in effect on the first day of
such Offshore Rate Interest Period (whether or not
applicable to the Bank) under regulations issued from
time to time by the FRB for determining the maximum
reserve requirement (including any emergency,
supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities") having a
term comparable to such Offshore Rate Interest Period.
"Offshore Rate Advance" means an Advance made pursuant
to and in accordance with the provisions of Section 2.02(d).

"Offshore Rate Interest Period" means, for each
Offshore Rate Advance, the period commencing on the date the
Offshore Rate Advance begins to bear interest at a rate based on
the Offshore Rate and ending one, two, three, or six months
thereafter, as requested by a Borrower under Section 2.02;
provided, however, that the last day of each Offshore Rate
Interest Period shall be determined in accordance with the
practices of the applicable offshore interbank markets as from
time to time in effect, and provided further that no such
interest period shall extend beyond the last day of the
Availability Period.

"Participant" has the meaning specified in Section
10.5.

"Person" means any individual, association, joint
venture, partnership, joint stock company, corporation, trust,
business trust, government, governmental authority, regulatory
authority, or other entity.

"Plan" means any employee pension benefit plan
maintained or contributed to by the Company, any Subsidiary of
the Company, any Affiliate of the Company, or by any trade or
business (whether or not incorporated) under common control (as
defined in Section 4001(b) of ERISA) with the Company, any
Subsidiary, or any Affiliate and insured by the Pension Benefit
Guaranty Corporation under Title IV of ERISA.

"Reference Rate" means the rate of interest publicly
announced from time to time by the Bank in San Francisco,
California, as its Reference Rate. The Reference Rate is a rate
set by the Bank based upon various factors including the Bank's
costs and desired return, general economic conditions, and other
factors, and is used as a reference point for pricing some
loans. The Bank may price loans at, above or below the
Reference Rate. Any change in the Reference Rate shall take
effect on the day specified in the public announcement of such
change.

"Reference Rate Advance" means an Advance made pursuant
to and in accordance with the provisions of Section 2.02(b).

"Subsidiary" means any corporation, association, or
other business entity of which the Company owns, directly or
indirectly, more than 50% of the voting securities thereof or
which the Company otherwise controls.

"Swap Contract" means any agreement (including any
master agreement and any agreement, whether or not in writing,
relating to any single transaction) that is an interest rate
swap agreement, basis swap, forward rate agreement, commodity
swap, commodity option, equity or equity index swap or option,
bond option, interest rate option, forward foreign exchange
agreement, rate cap, collar or floor agreement, currency swap
agreement, cross-currency rate swap agreement, swaption,
currency option or any other, similar agreement (including any
option to enter into any of the foregoing).

1.02 Financial Requirements. Unless otherwise specified in
this Agreement, all accounting terms used in this Agreement
shall be interpreted, all financial information required under
this Agreement shall be prepared, and all financial computations
required under this Agreement shall be made, in accordance with
generally accepted accounting principles consistently applied.

ARTICLE II

The Credit.

2.01 Commitment.

(a) (1) From and after the Closing Date, all advances
made, letters of credit issued, and other credit extended under
the Original Credit Agreement shall be subject to the terms of
this Agreement, the letter of credit applications relating to
such letters of credit, and the instruments and agreements
entered into between the Bank and the Borrowing Entities
relating to outstanding credit extended to such Borrowing
Entities. All such advances, undrawn amounts of letters of
credit, reimbursement obligations relating to letters of credit,
and other credit shall be included in computing credit
availability and the credit outstanding under this Agreement.

(2) All guaranties issued by the Company with
respect to credit extended by the Bank to its Subsidiaries shall
remain in full force and effect.

(b) From time to time during the Availability Period,
and subject to the provisions of this Agreement, (x) the Bank
will extend credit to the Borrowers consisting of Advances and
Letters of Credit and, (y) upon request of the Company, and if
agreed to by the Bank in its sole discretion, the Bank will make
credit extensions, consisting of advances and letters of credit,
to Borrowing Entities under the terms and conditions for each
such credit extension.

(c) From time to time during the Availability Period,
the Company may request, in writing, that the Bank extend
credit, in the form of Advances or letters of credit, in a
specified amount to such of the Subsidiaries of the Company
(other than Cirrus International) as the Company may name in
such request. Nothing in this Agreement shall be deemed a
commitment by the Bank to grant any such request. If the Bank
agrees to extend the requested credit to a Subsidiary, such
Subsidiary shall be referred to as a "Borrowing Entity"
hereunder. The credit granted to a Borrowing Entity may, as
requested by the Borrowing Entity, be denominated in Dollars or
in the Equivalent Amount in a Local Currency or an Offshore
Currency of such requested amount.

(d) The total amount of (i) the Letter of Credit
Obligations and Borrowing Entity L/C Obligations, (ii) Advances,
and (iii) credit extensions to Borrowing Entities, shall not
exceed at any time the Commitment Amount; provided, that such
total amount may exceed the Commitment Amount by an amount not
in excess of $100,000 if such excess is solely due to a change
in applicable rates of exchange between Dollars and Offshore
Currencies or Local Currencies, as the case may be. In
determining compliance with this Section 2.01(d), Advances,
Letter of Credit Obligations, and credit extensions to Borrowing
Entities denominated in Local Currencies or Offshore Currencies
shall be converted to their Equivalent Amounts in Dollars as of
the date the Bank decided to grant the credit extension.

(e) Subject of the provisions of this Agreement, the
Advances are available to the Borrowers and the Borrowing
Entities on a revolving basis, and during the Availability
Period, Advances which have been repaid or prepaid may be
reborrowed.

2.02 Reference Rate, Fixed Rate, Offshore Rate, and
Offshore Currency Advances.

(a) Requests for Advances. Each Reference Rate
Advance shall be made upon the irrevocable written or telephone
request of a Borrower received by the Bank not later than 10:00
a.m. San Francisco time on the date of such Reference Rate
Advance, and each Fixed Rate Advance, Offshore Rate Advance, and
Offshore Currency Advance shall be made upon the irrevocable
written telephone request of a Borrower received by the Bank not
later than 10:00 a.m. on the Banking Day prior to the date such
Fixed Rate Advance, Offshore Rate Advance, or Offshore Currency
Advance is to be made, specifying:

(i) the date such Advance is to be made, which
shall be a Banking Day;

(ii) the amount of such Advance;

(iii) whether such Advance is to be a Reference
Rate Advance, a Fixed Rate Advance, an Offshore Rate Advance, or
an Offshore Currency Advance; and

(iv) if the Advance is to be a Fixed Rate
Advance, an Offshore Rate Advance, or an Offshore Currency
Advance, the Interest Period for such Advance.

Each written request for a Reference Rate Advance, a Fixed Rate
Advance, an Offshore Rate Advance, or an Offshore Currency
Advance and each confirmation of a telephone request for such an
Advance shall be in the form of a Borrowing Certificate executed
by a Borrower.

(b) Reference Rate Advances. The outstanding
principal balance of each Reference Rate Advance shall bear
interest until principal is due (computed daily on the basis of
a 360 day year and actual days elapsed), at a rate per annum
equal to the Reference Rate. Each Borrower shall pay interest
on each Reference Rate Advance to such Borrower on the last day
of each month, commencing on the first such day after the date
of such Advance, and upon payment in full of the principal of
such Advance. Each Borrower shall pay the entire outstanding
principal amount of each Reference Rate Advance to such Borrower
on the last day of the Availability Period.

(c) Fixed Rate Advances. Each Fixed Rate Interest
Period shall be a period not longer than six months, and shall
end not later than the last day of the Availability Period.
Each Fixed Rate Advance shall be in an amount not less than
$250,000 and shall be in an amount such that the number of days
in the Fixed Rate Interest Period for such Advance times the
Dollar amount of such Advance is not less than 15,000,000
Dollar-days. The outstanding principal balance of each Fixed
Rate Advance shall bear interest until principal is due
(computed daily on the basis of a 360 day year and actual days
elapsed) at a rate per annum equal to the Fixed Rate for such
Fixed Rate Advance. Interest on each Fixed Rate Advance shall
be due and payable on the last day of each month and on the last
day of the related Fixed Rate Interest Period. The entire
outstanding principal amount of each Fixed Rate Advance shall be
due and payable on the last day of the Fixed Rate Interest
Period for such Fixed Rate Advance.

(d) Offshore Rate Advances. Each Offshore Rate
Interest Period shall be a period of one, two, three, or six
months, with the last day of such Interest Period determined in
accordance with the practices of the offshore currency inter-
bank market as from time to time in effect, provided that each
Offshore Rate Interest Period shall end not later than the last
of the Availability Period. Each Offshore Rate Advance shall be
in an amount not less than $250,000. The outstanding principal
balance of each Offshore Rate Advance shall bear interest until
principal is due (computed daily on the basis of a 360 day year
and actual days elapsed) at a rate per annum equal to the
Offshore Rate for such Offshore Rate Advance plus 0.75% per
annum. Interest on each Offshore Rate Advance shall be due and
payable on the last day of the Offshore Rate Interest Period for
such Advance and on the last day of each month. The entire
outstanding principal amount of each Offshore Rate Advance shall
be due and payable on the last day of the Offshore Rate Interest
Period for such Offshore Rate Advance.

(e) Offshore Currency Advances. Each Offshore
Currency Interest Period shall be a period of one, two, three,
or six months, with the last day of such Interest Period
determined in accordance with the practices of the offshore
currency inter-bank market as from time to time in effect,
provided that each Offshore Currency Interest Period shall end
not later than the last day of the Availability Period. Each
Offshore Currency Advance shall be in an Offshore Currency and
in an amount of such Offshore Currency which has an Equivalent
Amount not less than $250,000. The outstanding principal
balance of each Offshore Currency Advance shall bear interest
until principal is due (computed daily on the basis of a 360 day
year and actual days elapsed) at a rate per annum equal to the
Offshore Currency Rate for such Offshore Currency Advance.
Interest on each Offshore Currency Advance shall be due and
payable on the last day of the Offshore Currency Interest Period
for such Advance and on the last day of each month. The entire
outstanding principal amount of each Offshore Currency Advance
shall be due and payable on the last day of the Offshore
Currency Interest Period for such Offshore Currency Advance.

(f) Prepayment of the Advances. (i) A Borrower may
at any time prepay any Reference Rate Advance, any Fixed Rate
Advance, any Offshore Rate Advance, or Offshore Currency
Advance, in full or in part. Each partial prepayment shall be
in an amount not less than $250,000 or, in the case of an
Offshore Currency Advance, an amount with Equivalent Amount not
less than $250,000.

(ii) Each prepayment shall be made upon the
irrevocable written or telephone notice of a Borrower received
by the Bank not later than 10:00 a.m. San Francisco time on the
date of the prepayment of a Reference Rate Advance and not less
than two Banking Days prior to the date of the prepayment of a
Fixed Rate Advance, an Offshore Rate Advance, or Offshore
Currency Advance. The notice of prepayment shall specify the
date of the prepayment, the amount of the prepayment, and the
Advance or Advances to be prepaid.

(iii) Each prepayment of a Fixed Rate Advance,
Offshore Rate Advance, or Offshore Currency Advance shall be
accompanied by the payment of accrued interest on the amount
prepaid and any amount required by Section 4.04.

2.03 Local Currency Advances.

(a) From time to time during the Availability Period,
the Bank will make Local Currency Advances to a Borrower and, if
agreed to by the Bank in each case (in the Bank's sole
discretion), to other Borrowing Entities located outside of the
United States. The Bank shall have no obligation to make any
Local Currency Advance unless the Bank and the appropriate
Borrower or Borrowing Entity agree, at the time of the request
for a Local Currency Advance, on the date such Advance is to be
made, on the Local Currency in which such Advance is to be made,
and on the amount, principal payment dates, interest rate and
payment dates, prepayment and overdue payment terms, and the
reserve and tax provisions for such Advance. Each Local
Currency Advance shall be due and payable no later than the last
day of the Availability Period. Each request for a Local
Currency Advance and each confirmation of a telephone request
for a Local Currency Advance shall be in the form of a Borrowing
Certificate executed by the Company or, in the case of a Local
Currency Advance to Cirrus International, Cirrus International.

(b) A Borrower or Borrowing Entity obtaining a Local
Currency Advance shall execute such additional documents as the
Bank may require relating to such Local Currency Advance.

2.04 The Letter of Credit Facility. From time to time,
during the Availability Period, the Bank shall issue letters of
credit for the account of a Borrower. A Letter of Credit may be
denominated in Dollars or in an Offshore Currency. The Letter
of Credit Facility is a revolving facility.

(a) Terms of Letters of Credit. Each Letter of Credit
shall:

(i) if a commercial Letter of Credit, expire on
or before 180 days after the date thereof, but not later
than May 30, 1996; and if a standby Letter of Credit, expire
on or before one year after the date thereof, but not later
than November 30, 1996;

(ii) if a commercial Letter of Credit, require
drafts payable at sight or up to 180 days after sight, but
not later than May 30, 1996; and if a standby Letter of
Credit, require drafts payable at sight;

(iii) be otherwise in form and substance and in
favor of beneficiaries satisfactory to the Bank.

(b) Requests for Letters of Credit. Each Letter of
Credit shall be issued pursuant to a Letter of Credit
Application received by the Bank not less than two Banking Days
prior to the date of the issuance of the Letter of Credit. Each
such Letter of Credit Application shall be completed in a manner
satisfactory to the Bank.

(c) Fees. The Company will pay, or will cause Cirrus
International to pay, the following fees and commissions with
respect to Letters of Credit:

(i) with respect to commercial Letters of Credit,
upon issuance, an issuance fee equal to 0.125% of the face
amount of such commercial Letter of Credit, and upon
negotiation, a negotiation fee equal to 0.10% of the amount
negotiated under such commercial Letter of Credit,

(ii) with respect to each standby Letter of
Credit, upon issuance, a commission equal to 0.50% per annum
on the face amount of such standby Letter of Credit if the
Bank determines that such Letter of Credit is a performance
letter of credit under applicable federal regulations, and a
commission equal to .75% per annum on the face amount of
such standby Letter of Credit if the Bank determines that
such Letter of Credit is a financial letter of credit under
applicable federal regulations, and

(iii) the Bank's other standard Letter of Credit
and draft fees, including but not limited to other amendment
fees, presentation fees, negotiation fees, and cancellation
fees. The amount and payment date of such other fees shall
be those customarily charged by the Bank at the relevant
times.

(d) Expenses. The Company will pay or compensate, or
will cause Cirrus International to pay or compensate, the Bank,
promptly upon demand made from time to time for miscellaneous
expenses for the items and in the amounts customarily charged by
the Bank from time to time with respect to Letters of Credit.

2.05 Commitment Fee. The Company shall pay to the Bank a
commitment fee of 0.20% per annum on the average daily unused
portion of the Credit Facilities provided under this Agreement.
The commitment fee shall be computed on a calendar quarter
basis, except for the first period, which shall commence on the
date hereof and end on March 31, 1995, and the last period which
shall end on the last day of the Availability Period. The
commitment fee shall be payable on the last day of each
successive calendar quarter and on the last day of the
Availability Period.

2.06 Guaranties. The obligations of Cirrus International
under the Cirrus International Agreement and the Letter of
Credit Obligations under Letters of Credit issued for the
account of Cirrus International, and all other obligations of
Cirrus International under any other Credit Document shall be
guaranteed by the Company pursuant to a guaranty in the form and
substance of Exhibit C attached hereto and incorporated herein
(the "International Guaranty"). The credit extensions granted
to the Borrowing Entities pursuant to this Agreement and the
obligations of the Borrowing Entities under any document,
instrument, or agreement entered into in connection therewith
shall be guaranteed by the Company pursuant to guaranty
agreements in form and substance satisfactory to the Bank in its
sole discretion.

ARTICLE III

Disbursements, Payments, and Calculations

3.01 Lending Branches. Each Advance and each Letter of
Credit and each payment to Bank by the Borrowers or any
Borrowing Entity under this Agreement shall be made for the
account of the Bank's Lending Branch.

3.02 Loan Account. Principal, interest, and all other sums
owing by the Borrowers or any Borrowing Entity to the Bank under
this Agreement shall be evidenced by entries in records
maintained by the Bank. Each payment on and any other credits
with respect to principal, interest, and all other sums
outstanding under this Agreement shall be evidenced by entries
in such records.

3.03 Immediately Available Funds. Each disbursement to a
Borrower or a Borrowing Entity and each payment to the Bank
under this Agreement shall be made in Dollars (except, unless
otherwise agreed, disbursements and payments with respect to
each Offshore Currency Advance and each Local Currency Advance
shall be made in the relevant Offshore Currency or Local
Currency, as appropriate, and disbursements and payments with
respect to credit extensions to a Borrowing Entity shall be in
the currency agreed to by such Borrowing Entity and the Bank) in
immediately available funds (or such other funds as the Bank may
require).

3.04 Disbursements. Each disbursement of an Advance by the
Bank to a Borrower shall be by crediting such Borrower's account
at such bank or branch of the Bank as such Borrower and the Bank
may agree upon from time to time in writing.

3.05 Payments. (a) Each payment by a Borrower or a
Borrowing Entity under this Agreement shall be made to the Bank
by payment to such branch of the Bank as the Bank may specify
from time to time.

(b) Each payment by a Borrower or a Borrowing Entity
may be made only on a Banking Day. If the day on which a
payment would fall due is not a Banking Day, the day on which
such payment is due shall be the next succeeding Banking Day and
interest and fees shall accrue on such sums at the applicable
rate or rates for the additional day or days. Each such payment
shall be made without setoff or counterclaim not later than noon
San Francisco, California time on the day such payment is due.
All sums received after such time shall be deemed received on
the next Banking Day and interest and fees shall accrue on such
sums at the applicable rate or rates for the additional day or
days.

(c) With respect to regularly scheduled payments of
principal, interest and fees payable under the Credit Documents
which are payable in Dollars, each Borrower hereby authorizes
the Bank to debit such Borrower's accounts with the Bank in the
amount of principal, interest or fees due from the Borrowers
under this Agreement or under any other Credit Document. The
Bank shall debit the account of such Borrower on the date such
amounts become due, or if such due date is not a Banking Day, on
the next Banking Day after such due date. If there are
insufficient funds in the account to cover the amount debited to
the account in accordance with this Section 3.05(c), such debit
will be reversed (in whole or in part, in the Bank's sole
discretion) and such amount not debited will be deemed to remain
unpaid. No such debit under this Section 3.05(c) shall be
deemed a setoff.

3.06 Failure to Borrow. If a Borrower or a Borrowing
Entity requests a Fixed Rate Advance, an Offshore Rate Advance,
an Offshore Currency Advance, a Local Currency Advance, or other
Advance and for any reason (including the occurrence of an event
which is, or upon the lapse of time or notice or both would
become, an Event of Default) does not borrow such Advance, the
Company shall (or shall cause Cirrus International or the
relevant Borrowing Entity so to do), on demand by the Bank, pay
to the Bank the amount (if any) by which (a) the interest which
would have been payable on the amount which such Borrower or
Borrowing Entity failed to borrow had such amount been borrowed
and outstanding for the Interest Period or other applicable term
(in the case of a Local Currency Advance or extension of credit
to a Borrowing Entity) specified in the request for such Advance
exceeds (b) the interest which would have been recoverable by
the Bank by placing such unborrowed amount on deposit in the
certificate of deposit markets or the offshore Dollar interbank
markets, as the case may be, for the Interest Period or other
applicable term specified in the request for such Advance.

3.07 Default Interest. Any principal, interest, or other
sum payable by a Borrower hereunder if not paid when due shall
bear interest (payable on demand) from its due date until
payment in full (computed daily on the basis of a 360 day year
and actual days elapsed) at a rate per annum equal to the
Reference Rate plus 2.00% per annum.

3.08 Calculation of Interest and Fees. Except as otherwise
specifically provided in this Agreement, all interest, fees, and
other sums due under this Agreement shall be computed on the
basis of actual days elapsed and a year of 360 days, which
results in more interest or a larger fee or other amount payable
than if a year of 365 days were used.

ARTICLE IV

Taxes, Costs, Capital Adequacy, Etc.

4.01 Taxes. (a) (i) If any taxes (other than taxes on
net income imposed on or measured by the Bank's net income by
the jurisdiction under the laws of which the Bank is organized
or maintains a lending office from which extensions of credit
hereunder are made) are at any time imposed on any payments
under or in respect of this Agreement or any instrument or
agreement required hereunder including, but not limited to,
payments made pursuant to this Section 4.01, the Company shall,
or shall cause Cirrus International or the relevant Borrowing
Entity to, pay all such taxes and shall also pay to the Bank, at
the time interest is paid, all additional amounts which the Bank
specifies as necessary to preserve the after-tax yield the Bank
would have received if such taxes had not been imposed (as such
additional amounts are determined in accordance with Section
4.01(a)(ii)).

(ii) The additional amounts necessary to preserve
the after-tax yield the Bank would have received if such taxes
had not been imposed shall be calculated pursuant to the
formula:

(w)(t)(i)
y = -----------
1-w-t

where the terms are defined as follows:

y = additional payment to be made to the Bank

w = withholding tax rate levied by foreign
government

t = the Bank's combined Federal and state tax rate

i = amount of interest to be paid on sum due
(computed by using the base rate
plus quoted spread)

1 = one

(b) The Company will provide (or cause Cirrus
International or the relevant Borrowing Entity to provide) the
Bank with original tax receipts, notarized copies of tax
receipts, or such other documentation as will prove payment of
tax in a court of law applying the United States Federal Rules
of Evidence, for all taxes paid by any Borrower or Borrowing
Entity pursuant to Section 4.01(a) above. The Company will
deliver (or cause Cirrus International or the relevant Borrowing
Entity to deliver) receipts to the Bank within 30 days after the
due date for the related tax.

4.02 Costs. The Company shall (or shall cause Cirrus
International or the relevant Borrowing Entity to) reimburse or
compensate the Bank, upon demand by the Bank from time to time,
for all costs incurred, losses suffered and payments made by the
Bank which are applied or allocated by the Bank to any of the
Credit Facilities (all as determined by Bank in its sole and
absolute discretion) by reason of:

(a) any and all present and future reserve deposit or
similar requirements against (or against any class of or change
in or in the amount of) assets or liabilities of, or commitments
or extensions of credit by, the Bank;

(b) compliance by the Bank with any directive,
requirement or request from any governmental or regulatory
authority, whether or not having the force of law.

4.03 Capital Adequacy. If the Bank determines that any
law, rule, regulation, or guideline regarding capital adequacy
affects or would affect the amount of capital required to be
maintained by the Bank or any corporation controlling the Bank
and the Bank determines (taking into consideration the Bank's
policies with respect to capital adequacy and the Bank's desired
return on capital) that the amount of required capital is
increased as a result of the Bank's obligations under this
Agreement, then, upon demand by the Bank from time to time, the
Company shall (or shall cause Cirrus International or the
relevant Borrowing Entity to) pay the Bank additional amounts
sufficient as specified by the Bank to compensate the Bank for
such increase.

4.04 Breaking Deposits. If for any reason (including
voluntary or mandatory prepayment or acceleration) the Bank
receives all or part of the principal amount of a Fixed Rate
Advance, an Offshore Rate Advance, or an Offshore Currency
Advance prior to the last day of the Interest Period for such
Advance, the Company shall (or shall cause Cirrus International
to), on demand by the Bank, pay the Bank the amount (if any) by
which (a) the additional interest which would have been payable
on the amount so received had it not been received until the
last day of such Interest Period exceeds (b) the interest which
would have been recoverable by the Bank by placing the amount so
received on deposit in the certificate of deposit markets or the
offshore currency interbank markets, as the case may be, for a
period starting on the date on which it was so received and
ending on the last day of such Interest Period.

4.05 Availability. If at any time the Bank, in its sole
and absolute discretion, determines that:

(a) deposits in the amount of the Fixed Rate
Advances and for periods equal to the Fixed Rate Interest
Periods are not available to the Bank in the certificate of
deposit markets, or deposits in the currency or the amount
of the Offshore Rate Advances or Offshore Currency Advances
and for periods equal to the Offshore Rate Interest Periods
or Offshore Currency Interest Periods are not available to
the Bank in the offshore currency interbank markets, as the
case may be; or

(b) the Offshore Rate does not accurately reflect
the cost to the Bank of lending the Offshore Rate Advances
or the Offshore Currency Rate does not accurate reflect the
cost to the Bank of lending the Offshore Currency Advances;

then the Bank shall promptly give notice thereof to the Company,
and upon the giving of such notice, the Bank's obligation to
make Fixed Rate Advances, Offshore Rate Advances, or Offshore
Currency Advances, as the case may be, shall terminate.

4.06 Statement of the Bank. If the Bank claims any
reimbursement or compensation pursuant to this Article IV, the
Bank shall deliver to the Company a statement setting forth in
reasonable detail the amount payable to the Bank hereunder and
such statement shall be conclusive and binding on the Company,
Cirrus International, and the Borrowing Entities, in the absence
of manifest error.

ARTICLE V

Conditions to the Availability of Credit

5.01 Conditions to the First Extension of Credit. This
Agreement shall become effective on the Closing Date subject to
the condition precedent that, on the Closing Date, there shall
have been delivered to the Bank, in form and substance
satisfactory to the Bank:

(a) Opinion of Borrowers' Counsel. A written opinion,
dated the Closing Date, of Wilson, Sonsini, Goodrich & Rosati,
or of other counsel for the Borrowers (which counsel must be
acceptable to the Bank) in form and substance acceptable to the
Bank;

(b) Borrowers' Corporate Resolutions. Copies of the
resolutions passed by the Board of Directors of each of the
Borrowers, certified by the Secretary or an Assistant Secretary
of such Borrower as being in full force and effect on the
Closing Date, authorizing the borrowing provided for herein and
the other transactions contemplated hereby, and the execution,
delivery, and performance of this Agreement, the Cirrus
International Agreement, the International Guaranty, and any
other instrument or agreement required hereunder;

(c) Incumbency Certificates. From each Borrower, a
certificate, signed by the Secretary or an Assistant Secretary
of such Borrower and dated the Closing Date, as to the
incumbency, and containing the specimen signature or signatures,
of the person or persons authorized to execute and deliver this
Agreement, the Cirrus International Agreement, the International
Guaranty, and any other instrument or agreement required
hereunder on behalf of such Borrower;

(d) Borrowers' Compliance Certificate. A completed
Compliance Certificate, signed on behalf of the Company by a
responsible officer of the Company, calculated as of September
30, 1994, and dated the Closing Date;

(e) Approvals and Consents. Certified copies of all
approvals, consents, exemptions, and other actions by, and
notices to and filings with, any governmental or regulatory
authority and any trustee or holder of any indebtedness or
obligation of any Borrower which, in the Bank's opinion, are
required in connection with any transaction contemplated hereby;

(f) Cirrus International Agreement and Guaranty. An
agreement, fully executed, in the form and substance of Exhibit
D attached hereto and incorporated herein (the "Cirrus
International Agreement"), and the fully executed International
Guaranty.

(g) Other Evidence and Documents. Such other evidence
and documents as the Bank may reasonably request to establish or
effect fully the consummation of the transactions contemplated
hereby, the taking of all proceedings in connection herewith,
and compliance with the conditions set forth in this Agreement.

5.02 Conditions Precedent to Each Extension of Credit. The
obligation of the Bank to disburse an Advance, issue a Letter of
Credit, or amend a Letter of Credit, or make any other extension
of credit hereunder, is subject to the conditions precedent
that, on the date of each disbursement, issuance, or amendment
(including the first disbursement, issuance, or amendment), or
other extension of credit, there shall not exist any event which
is, or with the lapse of time or notice or both would be, an
Event of Default and there shall have been delivered to the
Bank, in form and substance satisfactory to the Bank:

(a) Borrowing Certificate. With respect to each
Advance, a Borrowing Certificate, signed on behalf of the
Borrower obtaining such Advance (and, in the case of an
extension of credit to a Borrowing Entity, signed by the Company
and such Borrowing Entity) by a duly authorized officer of such
Borrower (and the Company and such Borrowing Entity, as
appropriate) and dated the date of such Advance;

(b) Application for the Issuance or Amendment of a
Letter of Credit. In the case of the issuance or amendment of a
Letter of Credit, a duly completed Letter of Credit Application
for the issuance or amendment of such Letter of Credit, as
appropriate, executed on behalf of the Borrower obtaining such
Letter of Credit by a duly authorized representative of such
Borrower;

(c) Other Evidence and Documents. Such other evidence
or documents as the Bank may reasonably request to establish or
to effect fully the consummation of the transactions
contemplated hereby, the taking of all proceedings in connection
herewith, and compliance with the conditions set forth in this
Agreement.

5.03 Conditions Precedent to Extensions of Credit to
Borrowing Entities. The Bank shall not be obliged to grant any
credit extension to a Subsidiary requested by the Company unless
and until the Bank has decided, in its sole discretion, to make
such requested credit extension and there shall have been
delivered, in form and substance satisfactory to the Bank with
respect to each such requested credit extension:

(a) Credit Documentation. Credit documentation
relating to the requested credit extension executed by the
relevant Borrowing Entity (such credit documentation shall
contain such terms and provisions (including but not limited to
the amount of the credit extension, interest, fees, conditions
precedent, covenants, and events of default) as the Bank deems
appropriate for such requested credit extension in the Bank's
sole discretion); certified copies of corporate resolutions and
incumbency certificates; upon the first extension of credit to a
Borrowing Entity hereunder, and at such other times as the Bank
may request, opinions of counsel; and such other instruments,
agreements, document, and evidence that the Bank may require;

(b) Guaranties, Etc. A guaranty executed by the
Company guaranteeing the requested credit extension, as required
by Section 2.06; certified copies of corporate resolutions and
incumbency certificates; opinions of counsel; and such other
related documentation that the Bank may require with respect to
the Company as guarantor and such guaranty;

(c) Compliance with Conditions Precedent. Evidence
that all conditions precedent relating to such requested credit
extension have been complied with;

(d) Other Evidence. Such other evidence as the Bank
may reasonably request to establish and effect fully the
consummation of the transactions contemplated thereby, the
taking of all proceedings in connection therewith, and
compliance with the conditions set forth in the agreements
relating to such requested credit extension.

ARTICLE VI

Representations and Warranties

The Company represents and warrants that:

6.01 Organization of Borrowers. The Company is a
corporation duly organized and existing under the laws of the
state of California, and Cirrus International is a corporation
duly organized and existing under the laws of Bermuda; each
Borrower is properly licensed and in good standing in, and where
necessary to maintain such Borrower's rights and privileges, and
each Borrower has complied with the fictitious name statute of
every jurisdiction in which such Borrower is doing business,
except where failure so to be licensed or so to comply would
not, in the aggregate, have a Material Adverse Effect;

6.02 Organization of Subsidiaries. Each Subsidiary is duly
organized and existing under the laws of the jurisdiction of its
formation, and is properly licensed and in good standing in, and
where necessary to maintain its rights and privileges has
complied with the fictitious name statute of, every jurisdiction
in which it is doing business, except where failure so to be
licensed or so to comply would not, in the aggregate, have a
Material Adverse Effect; Cirrus International is a Subsidiary;

6.03 Authorization of Agreement. The execution, delivery,
and performance of this Agreement and any instrument or
agreement required hereunder are within Borrowers' powers, have
been duly authorized, and are not in conflict with the terms of
any charter, bylaw, or other organization papers of any
Borrower, or any instrument or agreement to which any Borrower
or any Subsidiary is a party or by which any Borrower or any
Subsidiary is bound or affected;

6.04 Government Approvals. No approval, consent,
exemption, or other action by, or notice to or filing with, any
governmental authority is necessary in connection with the
execution, delivery, performance, or enforcement of this
Agreement or any instrument or agreement required hereunder,
except as may have been obtained and certified copies of which
have been delivered to the Bank;

6.05 Compliance with Laws. There is no law, rule, or
regulation, nor is there any judgment, decree, or order of any
court or governmental authority binding on any Borrower or any
Subsidiary, which would be contravened by the execution,
delivery, performance, or enforcement of this Agreement or any
instrument or agreement required hereunder;

6.06 Enforceability of Agreement. This Agreement is a
legal, valid, and binding agreement of the Company, enforceable
against the Company in accordance with its terms, and any other
Credit Document or any instrument or agreement required
hereunder, when executed and delivered, will be similarly legal,
valid, binding, and enforceable, in each case except as
enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating
to enforceability;

6.07 Investment Company Act. Neither the Company nor any
of its Subsidiaries or Affiliates is an "investment company" or
a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940;

6.08 Title to Property. The Company and its Subsidiaries
have good and marketable title to their respective properties
and assets free and clear of all security interests, liens,
encumbrances or rights of others, except for:

(a) taxes which have resulted in a lien but are not
yet delinquent; and

(b) the rights of the Bank under any agreements
securing credit granted by the Bank to any Borrower or Borrowing
Entity; and

and the execution, delivery, or performance of this Agreement or
any other Credit Document or any instrument or agreement
required hereunder will not result in the creation of any such
security interest, lien, encumbrance, or right, other than
rights in favor of the Bank;

6.09 Hazardous Materials. To the best of the Company's
knowledge, the Company and each Subsidiary are in compliance
with all federal, state, and local laws, rules, and regulations
relating to hazardous or toxic materials, substances, or wastes;

6.10 No Litigation. (a) Except as described on Schedule
6.10, there are no suits, proceedings, claims, or disputes
pending or, to the knowledge of either of the Borrowers,
threatened in writing against or affecting any Borrower or any
Subsidiary, or their respective property, the adverse
determination of which could reasonably be expected to
materially affect the Company's consolidated financial condition
or results of operations or impair any Borrower's ability to
perform its obligations hereunder, under any other Credit
Document, or under any instrument or agreement required
hereunder;

(b) Except as described on Schedule 6.10, there are no
actions, proceedings, claims, or disputes pending or, to the
knowledge of either Borrower, threatened against or affecting
any Borrower or any Subsidiary or any of their respective
property alleging violation of any federal, state, or local law,
rule, or regulation relating to hazardous or toxic materials,
substances, or wastes;

6.11 Events of Default. No event has occurred and is
continuing or would result from the incurring of obligations by
any Borrower or any Borrowing Entity under this Agreement or any
other Credit Document which is, or with the lapse of time or
notice or both would be, an Event of Default;

6.12 Regulation U. If used in accordance with this
Agreement, the proceeds of the Credit Facilities would not be
used, directly or indirectly, to purchase or carry any margin
stock (as defined in Regulation U of the Board of Governors of
the Federal Reserve System) or to extend credit to others for
the purpose of purchasing or carrying any margin stock;

6.13 Subsidiaries. All of the Company's Subsidiaries are
listed on Schedule 6.13;

6.14 Financial Information. All financial statements dated
June 30, 1994, and all other information and data furnished by
the Borrowers to the Bank are complete and correct, and such
financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied
and fairly present the consolidated financial condition and
results of operations of Company as of such date. Since such
date there has been no change in the Company's consolidated
financial condition or results of operations sufficient to
impair Borrowers' ability to perform their obligations hereunder
or under any Credit Document or other instrument or agreement
required hereunder. Neither the Company nor any Subsidiary has
any contingent obligations, liabilities for taxes, or other
outstanding financial obligations which are material in the
aggregate, except as disclosed in such statements, information,
and data;

6.15 Renewal of Representations and Warranties. The
representations and warranties contained in this Article VI and
in any other Credit Document or other instrument or agreement
executed and delivered in connection herewith shall be deemed to
be made by the Company on and as of the date of each request for
and each disbursement of an Advance or the issuance or amendment
of a Letter of Credit or other extension of credit hereunder;

6.16 Permits, Franchises. Each Borrower possesses all
permits, memberships, franchises, contracts, and licenses
required and all trademark rights, trade name rights, patent
rights, and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged, except where
the lack of possession thereof would not, in the aggregate, have
a Material Adverse Effect;

6.17 Income Tax Returns. No Borrower has any knowledge of
any pending assessments or adjustments with respect to its
income tax liabilities for any year;

6.18 ERISA Plan Compliance.

(a) Each Borrower has fulfilled its obligations, if
any, under the minimum funding standards of ERISA and the
Internal Revenue Code of 1986, as amended from time to time,
(the "Code") with respect to each Plan and is in compliance in
all material respects with the presently applicable provisions
of ERISA and the Code, and has not incurred any liability with
respect to any ERISA Plan under Title IV of ERISA;

(b) No reportable event has occurred under Section
4043(b) of ERISA for which the Pension Benefit Guaranty
Corporation requires 30 day notice;

(c) No action by any Borrower to terminate or withdraw
from any Plan has been taken and no notice of intent to
terminate an ERISA Plan has been filed under Section 4041 of
ERISA;

(d) No proceeding has been commenced with respect to
an ERISA Plan under Section 4042 of ERISA, and no event has
occurred or condition exists which might constitute grounds for
the commencement of such a proceeding;

6.19 Full Disclosure. None of the representations or
warranties made by any Borrower in the Credit Documents as of
the date such representations and warranties are made or deemed
made, and none of the statements contained in each exhibit,
report, statement, or certificate furnished by or on behalf of
any Borrower in connection with the Credit Documents, contains
any untrue statement of a material fact or omits any material
fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under
which they are made, not misleading.

6.20 No Material Adverse Change. Since June 30, 1994,
there has been no Material Adverse Change in the Company's
consolidated financial condition or results of operations or
ability of the Borrowers to perform their obligations hereunder
or under any of the other Credit Documents. The representation
and warranty of this Section 6.20 shall be deemed to be a
continuing representation and warranty.

ARTICLE VII

Affirmative Covenants

Unless the Bank waives compliance in writing, the Company
covenants and agrees that so long as any credit shall remain
available hereunder, and until the full and final performance of
all obligations incurred hereunder, it will, and with respect to
Sections 7.02 and 7.05 through 7.12, will cause each Subsidiary
to:

7.01 Payment. Pay interest and principal on all sums due
under the Credit Facilities and all other sums outstanding under
or in respect of this Agreement and any instrument or agreement
required hereunder in accordance with the terms hereof and
thereof;

7.02 Use of Proceeds. Use the proceeds of the Credit
Facilities only to meet short term operating cash needs, to
facilitate the import of products, and to support the offshore
needs of the Borrowers and Subsidiaries, and not use any of the
proceeds of the Credit Facilities, directly or indirectly, to
purchase or carry margin stock (as defined in Regulation U of
the Board of Governors of the Federal Reserve System), and not
extend credit to others for the purpose of purchasing or
carrying margin stock;

7.03 Quick Ratio. Maintain at all times, on a consolidated
basis, the sum of (i) cash, (ii) short-term investments, (iii)
long-term United States Treasury obligations with maturities not
in excess of two years from the date of acquisition of such
obligations, and (iv) trade accounts receivable of the Company,
at least equal to 1.00 times current liabilities of the Company;

7.04 Tangible Net Worth. Maintain at all times, on a
consolidated basis, Consolidated Tangible Net Worth of at least
(i) 85% times Consolidated Tangible Net Worth as of December 31,
1994, plus (ii) plus 75% of net income after income taxes
(without subtracting losses) earned in each quarterly accounting
period commencing after December 31, 1994, plus (iii) 100% of
new equity of the Company issued after December 31, 1994;

7.05 Notices. Promptly give written notice to the Bank of:

(a) all litigation affecting any Borrower or any
Subsidiary where the amount claimed is $1,000,000 or more;

(b) any substantial dispute which may exist between
any Borrower or any Subsidiary and any governmental regulatory
body or law enforcement authority;

(d) any proposal by any public authority to acquire
the assets or business of any Borrower or any Subsidiary or to
compete with any Borrower or any Subsidiary;

(e) any reportable event under Section 4043(b)(5), (6)
or (9) of ERISA with respect to any Plan, any decision to
terminate or withdraw from a Plan affecting 10 or more
employees, any finding made with respect to a Plan under Section
4041(c) or (e) of ERISA, the commencement of any proceeding with
respect to a Plan under Section 4042 of ERISA, or any material
increase in the actuarial present value of unfunded vested
benefits under all Plans over the preceding year;

(f) any Event of Default or any event which, upon a
lapse of time or notice or both, would become an Event of
Default; and

(g) any other matter which has resulted or might
result in a material adverse change in any Borrower's
consolidated financial condition or results of operations;

7.06 Financial Statements, Reports, Etc. Deliver to the
Bank in form and detail satisfactory to the Bank, and in such
number of copies as the Bank may request:

(a) as soon as available but no later than 45 days
after the close of each of the first three quarters of each of
its fiscal years, the Company's consolidated balance sheet as of
the close of such quarter, and Company's consolidated statements
of income, retained earnings, and changes in financial position
for such quarter and that portion of the fiscal year ending with
such quarter, prepared on a consolidated basis and certified by
a responsible officer of the Company as fairly presenting the
Company's financial condition and results of operations;
submission of the Company's Form 10-Q Quarterly Report shall
satisfy the requirements of this subsection if it contains the
information and certification required by this subsection;

(b) as soon as available but no later than 120 days
after the close of each of its fiscal years, a complete copy of
the Company's audited financial statements, which financial
statements shall include at least the Company's consolidated
balance sheet as of the close of such year, and the Company's
consolidated statements of income, retained earnings, and
changes in financial position for such year, prepared on a
consolidated basis, and the unqualified opinion of an
independent certified public accountant selected by the Company
and satisfactory to the Bank stating that Company's financial
statements fairly present the financial condition and results of
operations of the Company and its consolidated Subsidiaries and
were prepared in accordance with generally accepted accounting
principles consistently applied. Such opinion shall not be
qualified or limited because of a restricted or limited
examination by such accountant of any material portion of the
Company's or any Subsidiary's records; submission of the
Company's Form 10-K Annual Report shall satisfy the requirements
of this subsection if it contains the information and opinion
required by this subsection;

(c) within 15 days after the date of filing with the
Securities and Exchange Commission, copies of the Company's Form
10-K Annual Report, Form 10-Q Quarterly Report, and Form 8-K
Current Report;

(d) within 45 days after the end of the first three
quarters of each fiscal year, and 120 days after the end of each
fiscal year, a Compliance Certificate signed by a responsible
officer of the Company stating that such officer is familiar
with this Agreement;

7.07 Cooperation. Perform, on request of the Bank and at
Borrowers' expense, such acts as may be necessary or advisable
to effect fully the transactions contemplated by this Agreement;

7.08 Existence, Etc. Maintain and preserve its existence
and all rights, privileges, and franchises now enjoyed, and keep
all its properties in good working order and condition;

7.09 Payment of Obligations. Pay all obligations,
including tax claims, when due, except such as may be contested
in good faith or as to which a bona fide dispute may exist, and
except for trade obligations, where such failure would not
result, in the aggregate, in a Material Adverse Effect;

7.10 Compliance with Laws. At all times comply with all
laws, rules, regulations, orders, and directions of any
governmental authority having jurisdiction over it or its
business, except to the extent that failure so to comply would
not, in the aggregate, result in a Material Adverse Effect;

7.11 Insurance. Maintain and keep in force in adequate
amounts such insurance as is usual in its business;

7.12 Books and Records, Inspection Rights. Maintain
adequate books, accounts, and records in accordance with
generally accepted accounting principles consistently applied,
and, during the existence and continuance of a Default, permit
employees or agents of the Bank at any reasonable time to
inspect its properties, and to examine or audit its books,
accounts and records and make copies and memoranda thereof.

7.13 Company Liquid Assets. The Company shall maintain, on
an unconsolidated basis, cash, short term investments, and U.S.
treasury instruments in an aggregate amount not less than 60% of
the cash, short term investments, and U.S. instruments of the
Company on a consolidated basis.

ARTICLE VIII

Negative Covenants

Unless the Bank waives compliance in writing, the Company
covenants and agrees that, so long as any of the Credit
Facilities shall remain available, and until full and final
performance of all obligations of the Borrowers and the
Borrowing Entities under this Agreement and the other Credit
Documents and any instrument or agreement required hereunder, it
will not, and with respect to Sections 8.03 through 8.10, will
not permit any Subsidiary to:

8.01 Leverage Ratio. Permit at any time (on a consolidated
basis) total liabilities of the Company and its consolidated
Subsidiaries to exceed Consolidated Tangible Net Worth;

8.02 Profitability. For the Company and its consolidated
Subsidiaries, incur a cumulative net or operating loss over any
period of four consecutive fiscal quarters ending during the
Availability Period;

8.03 Other Liabilities. Create or incur any liabilities
for borrowed money or for the deferred purchase price of
property or services or under leases which in accordance with
generally accepted accounting principles in effect at the time
such leases are entered into should be recorded as capital
leases, or become obligated as a surety, guarantor,
accommodation endorser, or otherwise for or upon the obligation
of any Person, or enter any other arrangement which has the
effect of assuring a creditor of any Person against loss
(including arrangements to purchase or repurchase or market or
remarket property or obligations, pay for property, goods or
services whether or not delivered or rendered, maintain working
capital, equity capital or other financial statement condition
of, or lend or contribute to or invest in, any such Person);
provided, however, that this Section 8.03 shall not be deemed to
prohibit:

(a) liabilities with respect to the Credit Facilities
provided for herein, and any other liabilities or obligations to
or in favor of the Bank;

(b) the acquisition of goods, supplies, or merchandise
on normal trade credit;

(d) the endorsement for deposit or collection of
negotiable instruments received in the ordinary course of its
business as presently conducted;

(e) purchase money security obligations related to
equipment hereafter acquired when the security interest does not
extend beyond the equipment purchased and the proceeds thereof
and the amount of the obligation does not exceed the value of
the equipment so purchased and the reasonable and necessary
transaction costs association with such purchase;

(f) indebtedness which is subordinate to the
Borrowers' obligations to the Bank on terms satisfactory to the
Bank in its sole discretion;

(g) obligations under capital leases of property to
the extent such obligations do not exceed the value of the
property so leased;

(h) obligations incurred under letters of credit with
First Interstate Bank, not to exceed in an aggregate amount
Seven Million U.S. Dollars (U.S. $7,000,000), on behalf of
Borrower and its Subsidiaries;

(i) contingent obligations, in a aggregate maximum
amount at any one time outstanding not to exceed $250,000,000,
incurred by the Company as guarantor of obligations relating to
the manufacturing joint venture between International Business
Machines Corporation and the Company;

(j) Swap Contracts entered into in the ordinary course
of business as bona fide hedging transactions;

(k) additional contingent obligations in an aggregate
maximum amount at any one time outstanding not to exceed
$25,000,000; and

(l) additional liabilities in an aggregate maximum
amount at any one time outstanding not to exceed $20,000,000.

8.04 Other Security Interests. Create, assume, or suffer
to exist any security interest, lien (including the lien of an
attachment, judgment, or execution) or encumbrance, securing a
charge or obligation, on or of any of its property, real or
personal, whether now owned or hereafter acquired, except:

(a) liens for current taxes, assessments, or other
governmental charges which are not delinquent or remain payable
without any penalty, or the validity of which is contested in
good faith by appropriate proceedings upon stay of execution of
the enforcement thereof;

(b) deposits or pledges to secure:

(i) statutory obligations;

(ii) surety or appeal bonds;

(iii) bonds for release of attachment, stay of
execution or injunction; or

(iv) performance of bids, tenders, contracts
(other than for the repayment of borrowed money) or leases, or
for purposes of like general nature in the ordinary course of
its business as presently conducted;

(c) purchase money security interests in equipment
hereafter acquired when the security interest does not extend
beyond the equipment purchased and the proceeds thereof and the
amount of the obligation does not exceed the value of the
equipment so purchased and the reasonable and necessary
transaction costs association with such purchase;

(d) liens securing obligations in respect of capital
leases on assets subject to such leases, provided that such
capital leases are otherwise permitted hereunder;

(e) liens in connection with workers' compensation,
unemployment insurance or social security obligations, and
mechanics', workmen's, materialmen's, landlords', carriers', or
other like liens arising in the ordinary and normal course of
business with respect to obligations which are not due or which
are being contested in good faith;

(f) liens on insurance policies and the proceeds
thereof, securing the financing of premiums owing by the Company
or any Subsidiary with respect thereto, not to exceed $1,000,000
in aggregate principal amount outstanding at any time;

(g) liens in favor of customs and revenues authorities
arising as a matter of law to secure any payment obligations of
the Company and its Subsidiaries in respect of customs duties in
connection with the importation of goods; and

(h) liens or security interests in favor of the Bank;

8.05 Dividends. Declare or pay any dividends on any of its
shares, except dividends payable in capital stock of such
Borrower or Subsidiary;

8.06 Liquidation, Merger, etc. (a) Liquidate or dissolve;
(b) enter into any consolidation or merger unless such
Subsidiary or the Company is the surviving entity and
immediately after such consolidation or merger there exists no
event which is, or with the lapse of time or notice would be, an
Event of Default;

(c) sell, lease, or dispose of assets with value, in
the aggregate for the Company and its Subsidiaries, greater than
15% of the Company's consolidated total assets as of the date
hereof, or sell, lease, or otherwise sell, lease, or dispose of
its business or assets as a whole or such as in the opinion of
the Bank constitute a substantial portion thereof;

8.07 Sale of Property for Fair Consideration. Dispose of
any of its assets except for full, fair, and reasonable
consideration; provided, that the Company and its Subsidiaries
may transfer assets at cost to one another in the ordinary
course of business;

8.08 Contracts. Enter into any material contracts, leases,
indentures, or other agreements except in the ordinary course of
its business as presently conducted;

8.09 Change in Business. Engage in any business activities
or operations substantially different from or unrelated to
present business activities and operations.

ARTICLE IX

Events of Default

9.01 Events of Default. Any of the following shall
constitute an "Event of Default":

(a) Nonpayment. Any Borrower or any Borrowing Entity
fails to pay any installment of principal when due under this
Agreement or any other Credit Document, or, within three Banking
Days after the same becomes due, interest or any other sum due
under this Agreement or any other Credit Document in accordance
with the terms hereof or thereof;

(b) Misrepresentation. Any representation or warranty
herein or in any Credit Document or in any agreement,
instrument, or certificate executed pursuant hereto or in
connection with any transaction contemplated hereby proves to
have been false or misleading in any material respect when made
or when deemed to have been made;

(c) Failure of Security Interest. The Bank fails to
have a valid and enforceable perfected security interest in or
lien on any collateral obtained by the Bank pursuant to Section
9.02(c) hereof or otherwise required by any Credit Document or
any other credit documentation relating to credit granted to a
Borrower or a Borrowing Entity, having, in the case of
collateral obtained by the Bank pursuant to Section 9.02(c), a
first priority status and, in the case of other collateral, the
priority required by the documentation with respect to such
security interest or lien;

(d) Involuntary Liens. Any involuntary lien or liens
in the aggregate amount of $1,000,000 or more for the Company
and its Subsidiaries, of any kind or character and whether or
not permitted by Section 8.04, attaches to any assets or
property of any Borrower or any Subsidiary, except for taxes due
but not in default, and such liens are not removed and
discharged within 20 days after their incurrence;

(e) Judgments. A judgment or judgments is entered
against any Borrower or any Subsidiary in the aggregate amount
of $1,000,000 or more on a claim or claims not covered by
insurance, and such judgments remain unvacated, unbonded, or
unstayed for a period of 30 days or in any event later than five
days prior to the date of any proposed sale thereunder;

(f) Bankruptcy. Any Borrower or any Subsidiary is
generally not paying its undisputed debts as such debts become
due, or files any petition or action for relief under any
bankruptcy, reorganization, insolvency, or moratorium law or any
other law for the relief of, or relating to, debtors, now or
hereafter in effect, or makes any assignment for the benefit of
creditors, or takes any corporate action in furtherance of any
of the foregoing;

(g) Involuntary Bankruptcy. An involuntary petition
is filed against any Borrower or any Subsidiary under any
bankruptcy statute now or hereafter in effect, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or
other similar official) is appointed to take possession, custody
or control of any property of any Borrower or any Subsidiary
unless such petition or appointment is set aside or withdrawn or
ceases to be in effect within 60 days from the date of said
filing or appointment;

(h) Condemnation. All, or such as in the opinion of
the Bank constitutes substantially all, of the property of any
Borrower or any Subsidiary, or of the Company and its
Subsidiaries as a whole, is condemned, seized, or appropriated;

(i) Regulatory Authority. Any governmental regulatory
authority takes or institutes action which, in the opinion of
the Bank, will materially adversely affect the Company's
consolidated condition, results of operations, or the ability of
any Borrower or Borrowing Entity to perform its obligations
hereunder or under any Credit Document;

(j) Approvals, Consents etc. Any approval, consent,
exemption, or other action of any governmental authority
required under this Agreement is modified, breached, or becomes
ineffective;

(k) Cross Default. Any breach or default occurs under
any other instrument or agreement involving the borrowing of
money or the extension of credit in amounts (including both
commitments and outstandings) exceeding $1,000,000 in the
aggregate, under which any Borrower or any Subsidiary may be
obligated as borrower, installment purchaser, or guarantor, if
such default consists of the failure to pay any indebtedness
when due or if such default causes (or upon a lapse of time or
notice or both would cause) the acceleration of any indebtedness
or the termination of any commitment to lend, or permits or
causes (or upon lapse of time or notice or both would permit or
cause) the acceleration of any indebtedness or the termination
of any commitment to lend and evidence satisfactory to the Bank
of cure of such default shall not have been provided to the Bank
within five days after the date such default first permits such
acceleration or termination;

(l) Breach of Certain Covenants. Any breach of
Section 7.06 occurs and is not cured within ten days after the
Borrower becomes aware thereof or notice from the Bank thereof
(whichever is earlier).

(m) Breach of Other Agreements. Any other breach or
default occurs under any Credit Document, or any breach or
default occurs under any agreement securing any credit granted
by the Bank to any Borrower or any Borrowing Entity or
guarantying such credit, or any such security agreement or
guaranty is revoked or becomes ineffective;

(n) Breach of Other Obligations. Any breach or
default occurs under any other obligation of any Borrower or any
Subsidiary to the Bank or any subsidiary or affiliate of the
Bank;

(o) ERISA Termination. Any Plan termination or any
full or partial withdrawal from a Plan or Plans occurs which
could result in liability of any Borrower, any Subsidiary, or
any Affiliate to the Pension Benefit Guaranty Corporation or to
the Plan or Plans in the aggregate amount of $500,000 or more,
or the actuarial present value of unfunded vested benefits under
all Plans shall exceed 3% of Tangible Net Worth (determined on a
consolidated basis);

(p) IBM Joint Venture Guaranty. Any breach or default
occurs under the Company's guaranty of obligations relating to
the manufacturing joint venture between International Business
Machines Corporation and the Company or under such guaranteed
obligations, if such default consists of the failure to pay any
guaranty obligation, indebtedness or guaranteed amount when due
or if such default permits or causes (or upon a lapse of time or
notice or both would permit or cause) the acceleration of any
guaranty obligation, indebtedness or guaranteed amount or the
termination of any commitment to lend;

(q) Material Adverse Change. Any material adverse
change occurs in the Company's consolidated financial condition
or results of operations or ability of any Borrower or Borrowing
Entity to perform its obligations hereunder or under any Credit
Document.

9.02 Remedies. If any Event of Default occurs, the Bank
may,

(a) terminate any obligation of the Bank to make
Advances, issue or amend Letters of Credit, or make any other
extensions of credit hereunder or under any other Credit
Document;

(b) declare the unpaid principal amount of all
outstanding Advances and Letter of Credit Obligations and
Borrowing Entity L/C Obligations, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder
or under any other Credit Document to be immediately due and
payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived by the
Borrowers and the Borrowing Entities;

(c) with respect to any and all contingent, unmatured,
or unliquidated Letter of Credit Obligations or Borrowing Entity
L/C Obligations, declare and require that cash in an amount
equal to the aggregate amount of such Letter of Credit
Obligations or Borrowing Entity L/C Obligations be paid over and
pledged to the Bank pursuant to a pledge and security agreement
in form and substance satisfactory to the Bank, to be held as
additional cash collateral, in which case such amounts shall be
immediately pledged and delivered to the Bank as demanded by the
Bank; and

(d) exercise all rights and remedies available to the
Bank under the Credit Documents or applicable law;

provided, however, that upon the occurrence of any event
specified in Section 9.01(f) or Section 9.01(g), the obligation
of the Bank to make Advances, issue or amend Letters of Credit,
or make other extensions hereunder or under the other Credit
Documents shall automatically terminate and the unpaid principal
amount of all outstanding Advances and Letter of Credit
Obligations and all interest and other amounts as aforesaid
shall automatically become due and payable without further act
of the Bank.

9.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Credit Documents are cumulative and are
not exclusive of any other rights, powers, privileges, or
remedies provided by law or in equity, or under any other
instrument, document, or agreement now existing or hereafter
arising.

ARTICLE X

Miscellaneous

10.01 Notices. Any communications between the parties
hereto to be given in writing shall be given by mailing the
same, postage prepaid, or by telex, cable, facsimile, or
personal delivery to each party at its address set forth on the
signature pages hereto, or to such other addresses as either
party may in writing hereafter indicate. Any communications
between the parties hereto to be given by telephone shall be
confirmed immediately in writing by the party initiating the
telephone call. The Company acknowledges and agrees that any
agreement of the Bank herein to receive notices by telephone or
facsimile is solely for the convenience and at the request of
the Company. Telephone requests may be made by any individual
identified in writing to the Bank on a form acceptable to the
Bank as being authorized to make such requests. The Bank shall
be entitled to rely upon any written or telephone request from
persons it reasonably believes to be authorized by a Borrower to
make such requests without making independent inquiry. The
Company assumes the full risk of, and the Bank shall not be
responsible for, any delays or errors in transmission, and the
obligation of the Borrowers to repay the loans and other
extensions of credit hereunder shall not be affected in any way
or to any extent by any failure by the Bank to receive written
confirmation of any telephonic or facsimile notice or the
receipt by the Bank of a confirmation which is at variance with
the terms understood by the Bank to be contained in the
telephonic or facsimile notice.

10.02 Application of Amounts Received. The Bank may apply
amounts received by the Bank with respect to the Credit
Facilities after the occurrence of an Event of Default in the
order and in the manner the Bank in its discretion may
determine.

10.03 Cash Collateral for Letters of Credit. Amounts to be
applied under Section 9.02(c) to the portion of the Letter of
Credit Obligations or Borrowing Entity L/C Obligations
consisting of the undrawn amount of outstanding Letters of
Credit or other letters of credit may, at the Bank's option, be
applied to the prepayment of, or be held as cash collateral to
secure, the Letter of Credit Obligations or Borrowing Entity L/C
Obligations. The Company hereby grants, and shall cause Cirrus
International and each Borrowing Entity to grant the Bank a
security interest in all such cash collateral. Cash collateral
shall be placed in an interest-bearing account (which account
shall be acceptable to the Bank) at the Bank.

10.04 Successors and Assigns. This Agreement shall bind
and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that the
Borrowers shall not assign this Agreement or any of the rights
of any Borrower hereunder without the prior written consent of
the Bank.

10.05 Participations; Novations. (a) The Bank may from
time to time, with the prior written consent of the Company at
all times other than during the existence of an Event of
Default, which consent shall not be unreasonably withheld, sell,
assign, grant participations in, or otherwise transfer to any
bank or affiliate of the Bank (each such Person is referred to
as a "Participant") all or part of the obligations of the
Borrowers and the Borrowing Entities to the Bank under this
Agreement or under any of the other Credit Documents.

(b) The Company agrees, and shall cause Cirrus
International and each other Borrowing Entity to agree, that
each transfer of its obligations under this Agreement or any
other Credit Document will give rise to a direct obligation of
such Borrower or Borrowing Entity to the Participant and that
Participant shall have the same rights and benefits under this
Agreement or such Credit Document as it would have if it were
party to this Agreement or such Credit Document.

(c) Except with respect to assignments, the Bank shall
remain liable for the performance of all of its obligations
under this Agreement notwithstanding any transfer by the Bank of
any Borrowers' or Borrowing Entity's obligations under this
Agreement or any Credit Document unless the Bank, the relevant
Borrower or Borrowing Entity, and such Participant agree to the
contrary in writing.

(d) The Company authorizes the Bank to disclose to any
prospective Participant and any Participant any and all
confidential information in the Bank's possession concerning
such Borrower or any Subsidiary, or this Agreement and the other
Credit Documents, subject to such prospective Participant or
Participant agreeing in writing to the Bank to keep such
information confidential to the same extent required of the Bank
hereunder. The Bank shall not be responsible if such
prospective Participant or Participant fails to comply with the
confidentiality agreement.

10.06 Setoff. The Company authorizes, and shall cause
Cirrus International and each other Borrowing Entity to
authorize, the Bank and each Participant, upon the occurrence of
an Event of Default, to proceed directly with respect to amounts
due and payable by right of setoff, banker's lien, or otherwise,
against any property of any Borrower or Borrowing Entity which
may be in the hands of the Bank or such Participant.

10.07 Confidentiality. The Bank agrees to maintain
confidentiality with respect to all information which is
furnished by or on behalf of the Borrowers to the Bank under
this Agreement except to the extent such information:

(a) was or becomes generally available to the public
other than as a result of a disclosure by the Bank;

(b) was or becomes available on a non-confidential
basis from a source other than a Borrower, provided that such
source is not bound by a confidentiality agreement with Borrower
known to the Bank;

(i) to any governmental or regulatory authority
in the course of its duties;

(ii) pursuant to subpoena or other legal process;

(iii) to legal counsel and other advisors
retained by the Bank;

(iv) to any Person and in any proceeding
necessary in the Bank's judgment to protect the Bank's interest
in connection with any claim or dispute involving the Bank; or

(v) to any prospective Participant and any
Participant.

10.08 Waivers; Writing Required. No delay or omission by
the Bank to exercise any right under this Agreement shall impair
any such right, nor shall it be construed to be a waiver
thereof. No waiver of any single breach or default under this
Agreement shall be deemed a waiver of any other breach or
default. Any amendment or waiver of any provision of this
Agreement must be in writing to be effective.

10.09 Remedies. All rights and remedies provided in this
Agreement, any other Credit Document, or any instrument or
agreement required hereunder are cumulative and are not
exclusive of any rights or remedies otherwise provided by law.
Any single or partial exercise of any right or remedy shall not
preclude the further exercise thereof or the exercise of any
other right or remedy.

10.10 Costs and Expenses. The Company agrees to pay, or
cause the relevant Borrower or Borrowing Entity to pay, to the
Bank on demand from time to time all costs, expenses, attorneys'
fees, and allocated costs for in-house legal services incurred
by the Bank in connection with the preparation, administration
(including any waivers and amendments), and enforcement of this
Agreement and the other Credit Documents, and in connection with
any refinancing or restructuring of the Credit Facilities in the
nature of a "work-out".

10.11 Indemnification for Hazardous Substances. The
Company shall indemnify, and cause Cirrus International and each
Borrowing Entity to indemnify, the Bank and its directors,
officers, agents, employees and counsel against and hold the
Bank and each such person harmless from any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature
whatsoever (including attorneys' fees and allocated costs for
in-house legal services) arising out of or attributable to the
use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence on, under or
about any Borrower's or Borrowing Entity's operations or
property or property leased by a Borrower or Borrowing Entity of
any material, substance, or waste which is or becomes designated
as hazardous or toxic under any federal, state, or local law,
rule, or regulation.

10.12 Indemnification for Judgment Currency. If any
judgment or order is given or made for the payment of any amount
due under this Agreement or other Credit Document and such
judgment or order is expressed in a currency other than the
currency required under this Agreement or any instrument or
agreement required hereunder, the Company shall, and shall cause
Cirrus International and each Borrowing Entity to, indemnify the
Bank against and hold the Bank harmless from all loss and damage
incurred by the Bank as a result of any variation in rates of
exchange between the date of such judgment or order and the date
of payment (or, in the case of partial payments, the date of
each partial payment) thereof. This indemnity shall constitute
an obligation separate and independent from the other
obligations contained in this Agreement or any other Credit
Document, shall give rise to a separate and independent cause of
action, shall apply irrespective of any indulgence granted by
the Bank from time to time, and shall continue in full force and
effect notwithstanding any judgment or order for a liquidated
sum in respect of an amount due under this Agreement, any Credit
Document, or any instrument or agreement required hereunder.

10.13 English Language. All writings furnished hereunder
shall be in the English language or accompanied by a certified
translation into the English language.

10.14 Section Headings. Section headings are for reference
only, and shall not affect the interpretation or meaning of any
provision of this Agreement. Unless otherwise provided,
references to Articles, Sections, and Exhibits shall be deemed
reference to Articles, Sections, and Exhibits of this Agreement.

10.15 Severability. The illegality or unenforceability of
any provision of this Agreement or any other Credit Document
shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or
the other Credit Documents.

10.16 Counterparts. This Agreement may be executed in as
many counterparts as may be deemed necessary or convenient, and
by the different parties hereto on separate counterparts each of
which, when so executed, shall be deemed an original but all
such counterparts shall constitute but one and the same
agreement.

10.17 Governing Law. This Agreement, and the other Credit
Documents, except to the extent otherwise specifically provided
therein, shall be governed by and construed under the laws of
the State of California.

10.18 Nature of Liabilities. Each representation and
warranty in each of the Credit Documents shall be deemed to have
been made by the Company.

10.19 Obligations of Foreign Subsidiaries. Except to the
extent that a Subsidiary becomes jointly liable with the Company
and other Subsidiaries for extensions of credit and other
obligations hereunder pursuant to the provisions of Section
7.13, the parties intend that each of Cirrus International and
each other Subsidiary incorporated in a jurisdiction outside of
the United States of America will be liable under this Agreement
only with respect to borrowings by it hereunder, and will not
have any obligation, direct or indirect, with respect to
borrowings by the Company or any other Borrowing Entity. The
entire Agreement, including in particular Section 7.01, shall be
interpreted and enforced accordingly.

In Witness Whereof, the parties hereto have executed
this Agreement by their duly authorized officers as of the day
and year first above written.

CIRRUS LOGIC, INC.

Title

Address for notices:

3100 West Warren Avenue
Fremont, CA 94538
Attn: Sam S. Srinivasan
Facsimile: (510) 226-2360
Tel: (510) 226-2083

BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION

Vice President

Address where notices to
Bank are to be sent:

530 Lytton Avenue, 2nd Floor
Palo Alto, CA 94301
Attn: Stephen L. Parry
Vice President, #3537

Facsimile: (415) 853-4476
Tel: (415) 853-4625

AMENDED AND RESTATED SUPPLEMENTARY AGREEMENT

This AMENDED AND RESTATED SUPPLEMENTARY AGREEMENT (this
"Supplementary Agreement") is entered into as of January 31,
1995, between CIRRUS LOGIC INTERNATIONAL, LTD., a Bermuda
corporation (the "Additional Borrower"), and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association (the "Bank"), with respect to the following:

Recitals.

A. Cirrus Logic, Inc., a California corporation (the
"Company") and the Bank are parties to a Credit Agreement, dated
as of November 9, 1992 (as amended from time to time, the "Prior
Parent Agreement"), pursuant to which the Bank has agreed to
make certain extensions of credit to the Company and certain of
its subsidiaries, including the Additional Borrower.

B. In connection with the Prior Parent Agreement, the Bank
and the Additional Borrower entered into the Supplementary
Agreement dated as of November 9, 1992 (the "Prior Supplementary
Agreement").

C. The Bank and the Borrower have agreed to amend and
restate the Prior Parent Agreement in its entirety, on and
subject to the terms and conditions of the Amended and Restated
Credit Agreement dated as of January 31, 1995 (as now in effect
or hereafter extended, renewed or amended, the "Parent
Agreement").

D. The Bank and the Additional Borrower are entering into
this Supplementary Agreement in order to amend and restate in
its entirety the Prior Supplementary Agreement to set forth
certain agreements with respect to extensions of credit to the
Additional Borrower pursuant to the Parent Agreement.

Accordingly, the Additional Borrower and the Bank agree as
follows:

ARTICLE I

Definitions and Financial Requirements.

1.01 Definitions. Capitalized terms used in this
Supplementary Agreement but not otherwise defined herein have
the meanings given to them in the Parent Agreement.

1.02 Financial Requirements. Unless otherwise specified in
this Supplementary Agreement, all accounting terms used in this
Supplementary Agreement shall be interpreted, all financial
information required under this Agreement shall be prepared, and
all financial computations required under this Agreement shall
be made, in accordance with generally accepted accounting
principles consistently applied.

ARTICLE II

The Credit.

2.01 Advances to the Additional Borrower. (a) Each
Advance to the Additional Borrower made under the Parent
Agreement shall be subject to the provisions, terms, and
conditions set forth in the Parent Agreement, whether or not
such provisions, terms, or conditions are also set forth herein
or specifically referred to herein.

(b) Each request by the Additional Borrower for an
Advance to it shall be made in accordance with the provisions of
Sections 2.02 and 2.03 of the Parent Agreement.

(c) The term of each Advance made to the Additional
Borrower shall be in accordance with the provisions of Sections
2.02 and 2.03 of the Parent Agreement.

(d) The Additional Borrower shall pay interest on each
Advance made to it at the rate and at the times set forth for
such Advance in Sections 2.02 and 2.03 of the Parent Agreement.

(e) The Additional Borrower shall pay the principal of
each Advance made to it at the times and in the amounts set
forth in Sections 2.02 and 2.03 of the Parent Agreement.

(f) The Additional Borrower may prepay any advance
made to it in accordance with the provisions of Sections 2.02
and 2.03 of the Parent Agreement.

2.02 Letters of Credit. (a) Each request for a Letter of
Credit to be issued for the account of the Additional Borrower
shall be made in accordance with the provisions of Section 2.04
of the Parent Agreement.

(b) Each Letter of Credit issued for the account of
the Additional Borrower shall have a term in accordance with the
provisions of Section 2.04(a) of the Parent Agreement.

(c) With respect to each Letter of Credit issued for
the account of the Additional Borrower, the Additional Borrower
shall pay the fees and commissions with respect to such Letter
of Credit which are set forth in Sections 2.04(c)(i), (ii), and
(iii) of the Parent Agreement.

(d) With respect to Letters of Credit issued for the
account of the Additional Borrower, the Additional Borrower will
pay or compensate the Bank, promptly upon demand made from time
to time, for miscellaneous expenses for the items and in the
amounts customarily charged by the Bank from time to time with
respect to Letters of Credit.

2.03 Guaranty. The obligations of the Additional Borrower
under this Supplementary Agreement and with respect to the
Letter of Credit Obligations under Letters of Credit issued for
the account of the Additional Borrower, and all other
obligations of the Additional Borrower under any other Credit
Document shall be guaranteed by the Company pursuant to the
International Guaranty.

ARTICLE III

Disbursements, Payments, and Calculations

3.01 Lending Branches. Each Advance and each Letter of
Credit and each payment to the Bank by the Additional Borrower
under this Supplementary Agreement shall be made for the account
of the Bank's Lending Branch.

3.02 Loan Account. Principal, interest, and all other sums
owing by the Additional Borrower to the Bank under this
Supplementary Agreement shall be evidenced by entries in records
maintained by the Bank. Each payment on and any other credits
with respect to principal, interest, and all other sums
outstanding under this Supplementary Agreement shall be
evidenced by entries in such records.

3.03 Immediately Available Funds. Each disbursement to the
Additional Borrower and each payment to the Bank under this
Supplementary Agreement or under any other extension of credit
made to the Additional Borrower under the Parent Agreement shall
be made in Dollars (except, unless otherwise agreed,
disbursements and payments with respect to each Offshore
Currency Advance and each Local Currency Advance shall be made
in the relevant Offshore Currency or Local Currency, as
appropriate, and disbursements and payments with respect to
credit extensions to a Borrowing Entity shall be in the currency
agreed to by such Borrowing Entity and the Bank) in immediately
available funds (or such other funds as the Bank may require).

3.04 Disbursements. Each disbursement of an Advance by the
Bank to the Additional Borrower shall be by crediting the
Additional Borrower's account at such bank or branch of the Bank
as the Additional Borrower and the Bank may agree upon from time
to time in writing.

3.05 Payments. (a) Each payment by the Additional
Borrower under this Supplementary Agreement or any other
extension of credit to the Additional Borrower under the Parent
Agreement shall be made to the Bank by payment to such branch of
the Bank as the Bank may specify from time to time.

(b) Each payment by the Additional Borrower may be
made only on a Banking Day. If the day on which a payment would
fall due is not a Banking Day, the day on which such payment is
due shall be the next succeeding Banking Day and interest and
fees shall accrue on such sums at the applicable rate or rates
for the additional day or days. Each such payment shall be made
without setoff or counterclaim not later than noon San
Francisco, California time on the day such payment is due. All
sums received after such time shall be deemed received on the
next Banking Day and interest and fees shall accrue on such sums
at the applicable rate or rates for the additional day or days.

(c) With respect to regularly scheduled payments of
principal, interest and fees payable under the Credit Documents
which are payable in Dollars, the Additional Borrower hereby
authorizes the Bank to debit the Additional Borrower's accounts
with the Bank in the amount of principal, interest or fees due
from the Additional Borrower under this Supplementary Agreement
or under any other Credit Document. The Bank shall debit the
account of the Additional Borrower on the date such amounts
become due, or if such due date is not a Banking Day, on the
next Banking Day after such due date. If there are insufficient
funds in the account to cover the amount debited to the account
in accordance with this Section 3.05(c), such debit will be
reversed (in whole or in part, in the Bank's sole discretion)
and such amount not debited will be deemed to remain unpaid. No
such debit under this Section 3.05(c) shall be deemed a setoff.

3.06 Failure to Borrow. If the Additional Borrower
requests a Fixed Rate Advance, an Offshore Rate Advance, an
Offshore Currency Advance, a Local Currency Advance, or other
Advance and for any reason (including the occurrence of an event
which is, or upon the lapse of time or notice or both would
become, an Event of Default) does not borrow such Advance, the
Additional Borrower shall, on demand by the Bank, pay to the
Bank the amount (if any) by which (a) the interest which would
have been payable on the amount which the Additional Borrower
failed to borrow had such amount been borrowed and outstanding
for the Interest Period or other applicable term (in the case of
a Local Currency Advance or extension of credit to a Borrowing
Entity) specified in the request for such Advance exceeds (b)
the interest which would have been recoverable by the Bank by
placing such unborrowed amount on deposit in the certificate of
deposit markets or the offshore Dollar interbank markets, as the
case may be, for the Interest Period or other applicable term
specified in the request for such Advance.

3.07 Default Interest. Any principal, interest, or other
sum payable by the Additional Borrower hereunder or under any
Credit Document if not paid when due shall bear interest
(payable on demand) from its due date until payment in full
(computed daily on the basis of a 360 day year and actual days
elapsed) at a rate per annum equal to the Reference Rate plus
2.00% per annum.

3.08 Calculation of Interest and Fees. Except as otherwise
specifically provided in this Supplementary Agreement or in the
Parent Agreement, all interest, fees, and other sums due under
this Supplementary Agreement or the Parent Agreement shall be
computed on the basis of actual days elapsed and a year of 360
days, which results in more interest or a larger fee or other
amount payable than if a year of 365 days were used.

ARTICLE IV

Taxes, Costs, Capital Adequacy, Etc.

4.01 Taxes. (a) If any taxes (other than taxes on net
income imposed on or measured by the Bank's net income by the
jurisdiction under the laws of which the Bank is organized or
maintains a lending office from which extensions of credit
hereunder are made) are at any time imposed on any payments
under or in respect of this Supplementary Agreement or any
instrument or agreement required hereunder including, but not
limited to, payments made pursuant to this Section 4.01, the
Additional Borrower shall pay all such taxes and shall also pay
to the Bank, at the time interest is paid, all additional
amounts which the Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such taxes had
not been imposed (as such additional amounts are determined in
accordance with Section 4.01(a)(ii) of the Parent Agreement).

(b) The Additional Borrower will provide the Bank
with original tax receipts, notarized copies of tax receipts, or
such other documentation as will prove payment of tax in a court
of law applying the United States Federal Rules of Evidence, for
all taxes paid by the Additional Borrower pursuant to Section
4.01(a) above. The Additional Borrower will deliver receipts to
the Bank within 30 days after the due date for the related tax.

4.02 Costs. The Additional Borrower shall reimburse or
compensate the Bank, upon demand by the Bank from time to time,
for all costs incurred, losses suffered and payments made by the
Bank which are applied or allocated by the Bank to any of the
Credit Facilities extended to the Additional Borrower (all as
determined by Bank in its sole and absolute discretion) by
reason of:

(b) compliance by the Bank with any directive,
requirement or request from any governmental or regulatory
authority, whether or not having the force of law.

4.03 Capital Adequacy. If the Bank determines that any
law, rule, regulation, or guideline regarding capital adequacy
affects or would affect the amount of capital required to be
maintained by the Bank or any corporation controlling the Bank
and the Bank determines (taking into consideration the Bank's
policies with respect to capital adequacy and the Bank's desired
return on capital) that the amount of required capital is
increased as a result of the Bank's extensions of credit to the
Additional Borrower under the Parent Agreement, then, upon
demand by the Bank from time to time, the Additional Borrower
shall pay the Bank additional amounts sufficient as specified by
the Bank to compensate the Bank for such increase.

4.04 Breaking Deposits. If for any reason (including
voluntary or mandatory prepayment or acceleration) the Bank
receives all or part of the principal amount of a Fixed Rate
Advance, an Offshore Rate Advance, or an Offshore Currency
Advance made to the Additional Borrower prior to the last day of
the Interest Period for such Advance, the Additional Borrower
shall, on demand by the Bank, pay the Bank the amount (if any)
by which (a) the additional interest which would have been
payable on the amount so received had it not been received until
the last day of such Interest Period exceeds (b) the interest
which would have been recoverable by the Bank by placing the
amount so received on deposit in the certificate of deposit
markets or the offshore currency interbank markets, as the case
may be, for a period starting on the date on which it was so
received and ending on the last day of such Interest Period.

4.05 Statement of the Bank. If the Bank claims any
reimbursement or compensation pursuant to this Article IV, the
Bank shall deliver to the Company a statement setting forth in
reasonable detail the amount payable to the Bank hereunder and
such statement shall be conclusive and binding on the Company
and the Additional Borrower in the absence of manifest error.

ARTICLE V

Conditions to the Availability of Credit

5.01 Conditions to the First Extension of Credit. This
Supplementary Agreement shall become effective on the Closing
Date subject to the condition precedent that, on the Closing
Date, all the conditions of Section 5.01 of the Parent Agreement
shall then have been met to the satisfaction of the Bank.

ARTICLE VI

Representations and Warranties

The Additional Borrower represents and warrants that:

6.01 Organization of the Additional Borrower. The
Additional Borrower is a corporation duly organized and existing
under the laws of Bermuda; the Additional Borrower is properly
licensed and in good standing in, and where necessary to
maintain the Additional Borrower's rights and privileges, and
the Additional Borrower has complied with the fictitious name
statute of every jurisdiction in which it is doing business,
except where failure so to be licensed or so to comply would
not, in the aggregate, have a Material Adverse Effect;

6.02 Parent Agreement. The Additional Borrower has been
provided with a copy of the Parent Agreement and is familiar
with the contents and provisions thereof;

6.03 Authorization of Agreement. The execution, delivery,
and performance of this Supplementary Agreement and any other
Credit Document to be executed by the Additional Borrower are
within the Additional Borrower's powers, have been duly
authorized, and are not in conflict with the terms of any
charter, bylaw, or other organization papers of the Additional
Borrower, or any instrument or agreement to which the Additional
Borrower is a party or by which the Additional Borrower is bound
or affected;

6.04 Government Approvals. No approval, consent,
exemption, or other action by, or notice to or filing with, any
governmental authority is necessary in connection with the
execution, delivery, performance, or enforcement of this
Supplementary Agreement or any instrument or agreement required
hereunder, except as may have been obtained and certified copies
of which have been delivered to the Bank;

6.05 Compliance with Laws. There is no law, rule, or
regulation, nor is there any judgment, decree, or order of any
court or governmental authority binding on the Additional
Borrower which would be contravened by the execution, delivery,
performance, or enforcement of this Supplementary Agreement or
any instrument or agreement required hereunder;

6.06 Enforceability of Agreement. This Supplementary
Agreement is a legal, valid, and binding agreement of the
Additional Borrower, enforceable against the Additional Borrower
in accordance with its terms, and any other Credit Document or
any instrument or agreement required hereunder to be executed by
the Additional Borrower, when executed and delivered, will be
similarly legal, valid, binding, and enforceable;

6.07 Investment Company Act. The Additional Borrower is
not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment
Company Act of 1940;

6.08 No Litigation. (a) Except as described on Schedule
6.10 of the Parent Agreement, there are no suits, proceedings,
claims, or disputes pending or, to the knowledge of the
Additional Borrower, threatened against or affecting the
Additional Borrower or its property, the adverse determination
of which might affect the Additional Borrower's financial
condition or results of operations or impair the Additional
Borrower's ability to perform its obligations hereunder or under
any instrument or agreement required hereunder;

(b) Except as described on Schedule 6.10 of the
Parent Agreement, there are no actions, proceedings, claims, or
disputes pending or, to the knowledge of the Additional
Borrower, threatened against or affecting the Additional
Borrower or any of its property alleging violation of any
federal, state, or local law, rule, or regulation relating to
hazardous or toxic materials, substances, or wastes;

6.09 Events of Default. No event has occurred and is
continuing or would result from the incurring of obligations by
the Additional Borrower under this Supplementary Agreement or
any other Credit Document which is, or with the lapse of time or
notice or both would be, an Event of Default;

6.10 Regulation U. If used in accordance with this
Supplementary Agreement and the Parent Agreement, the proceeds
of the extensions of credit to the Additional Borrower under the
Parent Agreement would not be used, directly or indirectly, to
purchase or carry any margin stock (as defined in Regulation U
of the Board of Governors of the Federal Reserve System) or to
extend credit to others for the purpose of purchasing or
carrying any margin stock;

6.11 Subsidiary. The Additional Borrower is a Subsidiary;

6.12 Renewal of Representations and Warranties. The
representations and warranties made by the Additional Borrower
in this Article VI and in any other Credit Document or other
instrument or agreement executed and delivered in connection
herewith shall be deemed to be made by the Additional Borrower
on and as of the date of each request for and each disbursement
of an Advance to the Additional Borrower or the issuance or
amendment of a Letter of Credit for the account of the
Additional Borrower;

6.13 Other Representations and Warranties. Each other
representation or warranty made by the Company in the Parent
Agreement which relates to or is made with respect to the
Additional Borrower is true and correct.

ARTICLE VII

Affirmative Covenants

Unless the Bank waives compliance in writing, the Additional
Borrower covenants and agrees that so long as any credit shall
remain available under the Parent Agreement, and until the full
and final performance of all obligations incurred thereunder, it
will:

7.01 Payment. Pay interest and principal on all sums due
under extensions of credit to the Additional Borrower under the
Parent Agreement and all other sums outstanding under or in
respect of this Supplementary Agreement and any instrument or
agreement required hereunder in accordance with the terms hereof
and thereof;

7.02 Use of Proceeds. Use the proceeds of the extensions
of credit made to the Additional Borrower under the Parent
Agreement only to meet short term operating cash needs, to
facilitate the import of products, and to support the offshore
needs of the Additional Borrower, and not use any of the
proceeds of the Credit Facilities, directly or indirectly, to
purchase or carry margin stock (as defined in Regulation U of
the Board of Governors of the Federal Reserve System), and not
extend credit to others for the purpose of purchasing or
carrying margin stock;

7.03 Other Affirmative Covenants. To the extent applicable
or relating to the Additional Borrower, comply with the
provisions of Sections 7.05 through 7.12 of the Parent
Agreement.

ARTICLE VIII

Negative Covenants

Unless the Bank waives compliance in writing, the Additional
Borrower covenants and agrees that, so long as any of the Credit
Facilities shall remain available, and until full and final
performance of all obligations of the Borrowers and the
Borrowing Entities under the Parent Agreement, this
Supplementary Agreement, and the other Credit Documents and any
instrument or agreement required hereunder or thereunder, it
will not take any action which is prohibited by Sections 8.03
through 8.10 of the Parent Agreement.

ARTICLE IX

Events of Default; Remedies

9.01 Remedies. If any Event of Default occurs, the Bank
may,

(a) terminate any obligation of the Bank to make
Advances, issue or amend Letters of Credit, or make any other
extensions of credit hereunder or under any other Credit
Document;

(d) exercise all rights and remedies available to the
Bank under the Credit Documents or applicable law;

provided, however, that upon the occurrence of any event
specified in Section 9.01(f) of the Parent Agreement or Section
9.01(g) of the Parent Agreement, the obligation of the Bank to
make Advances, issue or amend Letters of Credit, or make other
extensions hereunder or under the other Credit Documents shall
automatically terminate and the unpaid principal amount of all
outstanding Advances and Letter of Credit Obligations and all
interest and other amounts as aforesaid shall automatically
become due and payable without further act of the Bank.

9.02 Rights Not Exclusive. The rights provided for in this
Supplementary Agreement and the other Credit Documents are
cumulative and are not exclusive of any other rights, powers,
privileges, or remedies provided by law or in equity, or under
any other instrument, document, or agreement now existing or
hereafter arising.

ARTICLE X

Miscellaneous

10.03 Cash Collateral for Letters of Credit. Amounts to be
applied under Section 9.01(c) to the portion of the Letter of
Credit Obligations or Borrowing Entity L/C Obligations
consisting of the undrawn amount of outstanding Letters of
Credit or other letters of credit may, at the Bank's option, be
applied to the prepayment of, or be held as cash collateral to
secure, the Letter of Credit Obligations or Borrowing Entity L/C
Obligations. The Additional Borrower hereby grants the Bank a
security interest in all such cash collateral. Cash collateral
shall be placed in an interest-bearing account (which account
shall be acceptable to the Bank) at the Bank.

10.04 Successors and Assigns. This Supplementary Agreement
shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns; provided, however, that
the Additional Borrower shall not assign this Supplementary
Agreement or any of the rights of the Additional Borrower
hereunder or with respect to the Credit Facilities without the
prior written consent of the Bank.

10.05 Participations; Novations. (a) The Bank may from
time to time, with the prior written consent of the Company at
all times other than during the existence of an Event of
Default, which consent shall not be unreasonably withheld, sell,
assign, grant participations in, or otherwise transfer to any
bank or affiliate of the Bank all or part of the obligations of
the Borrowers and the Borrowing Entities to the Bank under the
Parent Agreement or under any of the other Credit Documents.

(b) The Additional Borrower agrees that each transfer
of its obligations under the Credit Documents will give rise to
a direct obligation of the Additional Borrower to the
Participant and that Participant shall have the same rights and
benefits under this Supplementary Agreement or such other Credit
Document as it would have if it were party to this Supplementary
Agreement or such Credit Document.

(c) Except with respect to assignments, the Bank shall
remain liable for the performance of all of its obligations
under this Agreement notwithstanding any transfer by the Bank of
the Additional Borrower's obligations under this Supplementary
Agreement or any Credit Document unless the Bank, the Additional
Borrower, and such Participant agree to the contrary in writing.

(d) The Additional Borrower authorizes the Bank to
disclose to any prospective Participant and any Participant any
and all confidential information in the Bank's possession
concerning the Additional Borrower or this Supplementary
Agreement and the other Credit Documents, subject to such
prospective Participant or Participant agreeing in writing to
the Bank to keep such information confidential to the same
extent required of the Bank hereunder. The Bank shall not be
responsible if such prospective Participant or Participant fails
to comply with the confidentiality agreement.

10.06 Setoff. The Additional Borrower authorizes the Bank
and each Participant, upon the occurrence of an Event of
Default, to proceed directly with respect to amounts due and
payable by right of setoff, banker's lien, or otherwise, against
any property of the Additional Borrower which may be in the
hands of the Bank or such Participant.

10.07 Waivers; Writing Required. No delay or omission by
the Bank to exercise any right under this Supplementary
Agreement shall impair any such right, nor shall it be construed
to be a waiver thereof. No waiver of any single breach or
default under this Supplementary Agreement shall be deemed a
waiver of any other breach or default. Any amendment or waiver
of any provision of this Supplementary Agreement must be in
writing to be effective.

10.08 Remedies. All rights and remedies provided in this
Supplementary Agreement, any other Credit Document, or any
instrument or agreement required hereunder are cumulative and
are not exclusive of any rights or remedies otherwise provided
by law. Any single or partial exercise of any right or remedy
shall not preclude the further exercise thereof or the exercise
of any other right or remedy.

10.09 Indemnification for Hazardous Substances. The
Additional Borrower shall indemnify the Bank and its directors,
officers, agents, employees and counsel against and hold the
Bank and each such person harmless from any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature
whatsoever (including attorneys' fees and allocated costs for
in-house legal services) arising out of or attributable to the
use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence on, under or
about the Additional Borrower's operations or property or
property leased by the Additional Borrower of any material,
substance, or waste which is or becomes designated as hazardous
or toxic under any federal, state, or local law, rule, or
regulation.

10.10 Indemnification for Judgment Currency. If any
judgment or order is given or made for the payment of any amount
due under this Supplementary Agreement or other Credit Document
and such judgment or order is expressed in a currency other than
the currency required under this Supplementary Agreement or any
instrument or agreement required hereunder, the Additional
Borrower shall indemnify the Bank against and hold the Bank
harmless from all loss and damage incurred by the Bank as a
result of any variation in rates of exchange between the date of
such judgment or order and the date of payment (or, in the case
of partial payments, the date of each partial payment) thereof.
This indemnity shall constitute an obligation separate and
independent from the other obligations contained in this
Supplementary Agreement or any other Credit Document, shall give
rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by the Bank from time to
time, and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in
respect of an amount due under this Supplementary Agreement, any
Credit Document, or any instrument or agreement required hereunder.

10.11 English Language. All writings furnished hereunder
shall be in the English language or accompanied by a certified
translation into the English language.

10.12 Section Headings. Section headings are for reference
only, and shall not affect the interpretation or meaning of any
provision of this Supplementary Agreement. Unless otherwise
provided, references to Articles, Sections, and Exhibits shall
be deemed reference to Articles, Sections, and Exhibits of this
Supplementary Agreement.

10.13 Severability. The illegality or unenforceability of
any provision of this Supplementary Agreement or any other
Credit Document shall not in any way affect or impair the
legality or enforceability of the remaining provisions of this
Supplementary Agreement or the other Credit Documents.

10.14 Counterparts. This Supplementary Agreement may be
executed in as many counterparts as may be deemed necessary or
convenient, and by the different parties hereto on separate
counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and
the same agreement.

10.15 Governing Law. This Supplementary Agreement shall be
governed by and construed under the laws of the State of
California.

10.16 Prior Supplementary Agreement. This Supplementary
Agreement amends and restates in its entirety, but does not
extinguish, the Prior Supplementary Agreement. All obligations
of the Additional Borrower under the Prior Supplementary
Agreement shall be subject to the terms of this Supplementary
Agreement.

In Witness Whereof, the parties hereto have executed
this Agreement by their duly authorized officers as of the day
and year first above written.

CIRRUS LOGIC INTERNATIONAL, LTD.

Title

Address:

c/o Cirrus Logic, Inc.
3100 West Warren Avenue
Fremont, CA 94538
Attn: Sam S. Srinivasan
Facsimile: (510) 226-2360
Tel: (510) 226-2083

BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION

By
Title: Vice President

Address:

530 Lytton Avenue, 2nd Floor
Palo Alto, CA 94301
Attn: Stephen L. Parry
Vice President, #3537

Facsimile: (415) 853-4476
Tel: (415) 853-4625