FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 26, 1999
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission file number 0-17795
CIRRUS LOGIC, INC.
 (Exact name of registrant as specified in its charter)

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

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

Registrant's telephone number, including area code: (510) 623-8300
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
The number of shares of the registrant's common stock, $0.001 par value, was 60,457,448 as of June 26, 1999

Part 1. Financial Information
Item 1. Financial Statements
CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
(Unaudited)

                                                 Quarter ended
                                              June 26,    June 27,
                                                1999        1998
                                             ----------- -----------
Net sales                                      $120,553    $177,931

Costs and expenses:
Cost of sales                                    71,386     117,819
Research and development                         26,694      35,522
Selling, general and administrative              22,663      27,090
Restructuring costs, gain on sale of
   assets and other, net                        127,210      (3,006)
                                             ----------- -----------
Total costs and expenses                        247,953     177,425

Income (loss) from operations                  (127,400)        506
Interest and other income (expense), net           (346)        306
                                             ----------- -----------
Income (loss) before provision
   for income taxes                            (127,746)        812
Provision for income taxes                          -           296
                                             ----------- -----------
Net income (loss)                             ($127,746)       $516
                                             =========== ===========
Net income (loss) per share:
Basic                                            ($2.12)      $0.01
                                             =========== ===========
Diluted                                          ($2.12)      $0.01
                                             =========== ===========

Weighted average common shares outstanding:
Basic                                            60,171      66,650
Diluted                                          60,171      67,461	

[FN]
See Notes to the Unaudited Consolidated Condensed Financial Statements

CIRRUS LOGIC, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
 (In thousands)
(Unaudited)

                                                   June 26,    March 27,
                                                     1999        1999
                                                  ----------- -----------
Assets
Current assets:
   Cash and cash equivalents                        $178,858    $144,457
   Restricted cash                                    80,277      86,277
   Short-term investments                                -        74,616
   Accounts receivable, net                           67,431      66,063
   Inventories                                        45,409      40,262
   Other current assets                               44,385      19,039
                                                  ----------- -----------
     Total current assets                            416,360     430,714

Property and equipment, net                           47,732      48,024
Investment in joint venture                              -        14,000
Deposits and other assets                             37,278      39,892
                                                  ----------- -----------
                                                    $501,370    $532,630
                                                  =========== ===========

Liabilities and Net Capital Deficiency
Current liabilities:
   Accounts payable and accrued liabilities         $111,395    $201,669
   Restructuring accrual                             198,693       5,364
   Current maturities of long-term debt
        and capital lease obligations                 18,840      23,076
   Income taxes payable                               35,980      36,593
                                                  ----------- -----------
     Total current liabilities                       364,908     266,702

Long term obligations and convertible
   subordinated notes                                319,235     323,648

Commitments and contingencies

Net capital deficiency:
   Capital stock                                     328,878     326,185
   Accumulated deficit                              (511,651)   (383,905)
                                                  ----------- -----------
     Total net capital deficiency                   (182,773)    (57,720)
                                                  ----------- -----------
                                                    $501,370    $532,630
                                                  =========== ===========	

[FN]
See Notes to the Unaudited Consolidated Condensed Financial Statements

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

                                                          Quarter ended
                                                      June 26,    June 27,
                                                        1999        1998
                                                     ----------- -----------
Cash flows from operating activities:
   Net income (loss)                                  ($127,746)       $516
   Adjustments to reconcile net income to net
       cash flows from operations:
   Depreciation and amortization                          7,631      18,379
   Non-cash portion of restructuring charges             33,051         -
   Other non-cash charges                                   862         -
   Net change in operating assets and liabilities        51,530     (68,260)
                                                     ----------- -----------
Net cash used in operations                             (34,672)    (49,365)

Cash flows from investing activities:
   Purchase of short-term investments                       -       (69,617)
   Proceeds from sale of short-term investments          74,616      55,268
   Additions to property and equipment                     (890)     (5,838)
   Increase in deposits and other assets                 (4,007)     (8,056)
   Decrease in restricted cash                            6,000       9,934
                                                     ----------- -----------
Net cash provided by (used in) investing activities      75,719     (18,309)

Cash flows from financing activities:
   Proceeds from issuance of common stock                 2,003       2,686
   Payments on long-term debt and
           capital lease obligations                     (8,649)     (6,824)
   Repurchase and retirement of common stock                -       (52,787)
                                                     ----------- -----------
Net cash used in financing activies                      (6,646)    (56,925)

Net increase (decrease) in cash and cash equivalents     34,401    (124,599)
Cash and cash equivalents at beginning of period        144,457     307,184
                                                     ----------- -----------
Cash and cash equivalents at end of period             $178,858    $182,585
                                                     =========== ===========

Supplemental disclosure of cash flow information:
   Interest paid                                        $11,591     $10,102
   Income taxes paid                                       $158      $7,787	

CIRRUS LOGIC, INC.
NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The consolidated condensed financial statements have been prepared by Cirrus Logic, Inc. (the "Company", the "Registrant" or "Cirrus") pursuant to rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company, the financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial position, operating results and cash flows for those periods presented. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements, and notes thereto for the year ended March 27, 1999, included in the Company's 1999 Annual Report on Form 10-
K. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the entire year.
Certain reclassifications have been made to the 1999 financial statements to conform to the 2000 presentation. Such reclassifications had no effect on the results of operations or net capital deficiency.
2. Inventories
Net inventories are comprised of the following:

                   June 26,   March 27,
                     1999       1999
                   ---------  ---------
                        (in thousands)
Work in process     $27,963    $25,165
Finished goods       17,446     15,097
                   ---------  ---------
Total               $45,409    $40,262
                   =========  =========	

3. Income Taxes
In the first quarter of fiscal 2000, the Company did not provide for any income tax. The Company expects no net income tax provision in the current year due to the magnitude of the loss realized in the first quarter.
Statement of Financial Accounting Standards 109 provides for the recognition of deferred tax assets if realization of such assets is more likely than not. The Company has provided a valuation allowance equal to its net deferred tax assets due to uncertainties regarding their realization. The realizability of the deferred tax assets will be evaluated on a quarterly basis.
4. Restructuring of Joint Ventures
During the first quarter of fiscal 2000, the Company substantially completed the remaining restructuring activities previously announced in the second quarter of fiscal 1999. The Company finalized negotiations with International Business Machines Corporation ("IBM") to restructure the Company's interest in the MiCRUS joint venture and also finalized negotiations with Lucent Technologies, Inc. ("Lucent") to terminate the Company's interest in the Cirent joint venture. In connection with the finalization of these two agreements, the Company recorded restructuring charges of $128.2 million during the first quarter of fiscal 2000, $1 million of which is included in cost of sales. The restructuring charge includes $135 million in direct payments, $32 million worth of The Company's contributed common stock, $4.8 million fair value of the related embedded stock derivative, $9.3 million of lease buyout costs and $16.4 million of equipment write-offs. These charges were offset by the reversal of approximately $71.9 million of previously accrued wafer purchase commitment charges due to the renegotiated terms of the Company's purchase commitments with its former partners.
MiCRUS
The terms of the MiCRUS restructuring agreement, entered into during the first quarter of fiscal 2000, require the Company to pay $135 million in cash to IBM and issue into an escrow account shares of the Company's common stock with a fair value (based on the average closing price of the Company's common stock for the 20 days prior to closing) of $32 million. Under the escrow arrangement, the escrow period ends on April 1, 2000, wherein some or all of the shares will be released to IBM. If the fair value of the shares on April 1, 2000 is less than $32 million, Cirrus must pay the difference to IBM in cash. If the fair value of the shares exceeds $32 million, shares equal to one-half of the excess over $32 million are returned to the Company and the remaining shares are released to IBM. During the six month period following April 1, 2000, IBM may sell on the open market the Cirrus stock it received. If at the end of the six month period on October 1, 2000, IBM has sold at least 15% of the Cirrus stock, it can require Cirrus to purchase the remaining shares for cash such that the total received by IBM, including the amounts IBM received in open market sales is $32 million. If during the six month period ending on October 1, 2000, the Cirrus stock received by IBM appreciates to over $32 million, IBM may keep all proceeds from the sale of stock in excess of $32 million up to a maximum of $48 million. Amounts received by IBM in excess of $48 million must be returned to Cirrus.
Because Cirrus has guaranteed IBM a minimum of $32 million in cash, either through open market sales of Cirrus stock or through repurchase of the stock directly by Cirrus, the fair value of the shares placed in escrow as well as the value of the embedded stock derivative granted to IBM has been recorded in the balance sheet as a liabilitiy. The fair value of the embedded stock derivative of $4.8 million was estimated by the Company based on discussions with outside investment advisors.
The Company also transferred to IBM the Company's partnership interest and certain assets relating to the partnership's operation, and will forgive certain debts owed to the Company by IBM and/or MiCRUS relating to the use of certain assets prior to the closing, which occurred on July 19, 1999. See Note 10.
In exchange for this consideration, IBM will release the Company of its obligations to support the partnership and to maintain certain lease payment guarantees issued jointly and severally with IBM. IBM will be responsible for the costs associated with winding down the partnership, including costs associated with employee terminations and the dismantling of equipment, except costs incurred by the partnership prior to the closing date. The Company also committed to an amended wafer purchase agreement.
Cirent
The terms of the Cirent termination agreement, which was also entered into during the first quarter of fiscal 2000, require the Company to pay to Cirent $9.3 million which Cirent will use as partial payment in connection with the buyout of certain leases associated with assets utilized in the Cirent manufacturing facility. The Company will sell its interest in the joint venture and certain associated assets to an affiliate of Lucent for $14 million and will not be responsible for any future operating costs or equipment lease liabilities associated with the fab. The Company also committed to an amended wafer purchase agreement.
5. Net Income Per Share
The following table sets forth the computation of basic and diluted earnings per share (In thousands, except per share amounts):

                                                     Quarter Ended
                                                  June 26,     June 27,
                                                    1999         1998
                                                 -----------  -----------
Numerator:

Net income (loss)                                 ($127,746)        $516

Denominator:

Denominator for basic net income (loss)
per share - weighted-average shares                  60,171       66,650

Dilutive common stock equivalents,
using treasury stock method                             -            811
                                                 -----------  -----------
Denominator for diluted net income
(loss) per share                                     60,171       67,461
                                                 ===========  ===========

Basic net income (loss) per share                    ($2.12)       $0.01
                                                 ===========  ===========

Diluted net income (loss) per share                  ($2.12)       $0.01
                                                 ===========  ===========	

Incremental common shares attributable to the exercise of outstanding options of 7,106,849 shares for the three months ended June 26, 1999 were excluded from the computation of diluted net income per share because the effect would be antidilutive.
As of June 26, 1999, the Company had outstanding convertible notes to purchase 12,387,000 shares of common stock that were not included in the computation of diluted net income per share because the effect would be antidilutive.
On July 19, 1999, the Company placed 3,562,364 shares of common stock in escrow in connection with the restructuring of the MiCRUS joint venture. See Note 10.
On July 27, 1999, the Company issued 1,250,000 shares of common stock in connection with the Company's purchase of AudioLogic, Inc. See Note 10.
6. Commitments and Contingencies
As of June 26, 1999, the Company had approximately $8.4 million of forward exchange contracts denominated in yen, which expire in September, 1999.
Due to the terms of the MiCRUS restructuring agreement and pending closing on the Cirent termination agreement (both as discussed in Note 4), as of June 26, 1999 the Company remains contingently liable for MiCRUS and Cirent equipment leases which have remaining payments of approximately $450 million payable through 2004.
7. Comprehensive Income
The components of comprehensive income, net of tax, are as follows (in thousands):

                                                   Quarter Ended
                                               June 26,     June 27,
                                                 1999         1998
                                              -----------  -----------
Net income (loss)                              ($127,746)        $516
Change in unrealized loss on foreign
  currency translation adjustments                  (100)        (356)
                                              -----------  -----------
Total                                          ($127,846)        $160
                                              ===========  ===========	

8. Segment information
Information on reportable segments is as follows (in thousands):

                                             Quarter Ended
                                           June 26,   June 27,
                                             1999       1998
                                          ----------  ---------
AUDIO DIVISION
  Revenues                                   55,642     46,623
  Operating profit                            8,329      8,234

MASS STORAGE DIVISION
  Revenues                                   37,800     71,843
  Operating profit                            5,002     18,813

PRECISION DATA CONVERSION DIVISION
  Revenues                                   12,088     16,485
  Operating profit                            1,213      5,250

ALL OTHER
  Revenues                                   15,023     42,980
  Operating profit (loss)                  (141,944)   (31,791)

TOTAL
  Revenues                                  120,553    177,931
  Operating profit (loss)                  (127,400)       506	

9. Recently Issued Accounting Standards
In June 1998, the Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting for Derivative Instruments and Hedging Activities", was issued and, as amended by SFAS No. 137 "Deferral of Effective Date of FASB Statement 133", is effective for fiscal years commencing after June 15, 2000. SFAS 133 provides a comprehensive and consistent standard for the recognition and measurement of derivatives and hedging activities. The Company does not believe SFAS 133 will have a material impact on earnings or the financial condition of the Company.
10. Subsequent Events
On July 19, 1999 the Company placed 3,562,364 shares of common stock in escrow in connection with the restructuring of the MiCRUS joint venture as discussed in Note 4. These shares were valued at $32 million based on the 20-day average of the Company's quoted share price. Additionally, during July 1999 the Company has paid approximately $135 million in cash in connection with the restructuring of the MiCRUS joint venture.
On July 27, 1999 the Company issued 1,250,000 common shares in connection with the Company's purchase of AudioLogic, Inc. The agreement provides for additional contingent shares to be issued to the extent that the shares issued initially are valued at an amount less than $25 million at the one-year anniversary of the closing. This transaction will be accounted for in the second quarter of fiscal 2000 as a purchase. The Company anticipates that a portion of the purchase price will result in an in-process research and development charge during the second quarter of fiscal 2000.

Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This information should be read along with the unaudited consolidated condensed financial statements and the notes thereto included in Item 1 of this Quarterly Report and the audited consolidated financial statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended March 27, 1999, contained in the 1999 Annual Report on Form 10-K (the "1999 Form 10-K"). This Discussion and Analysis contains forward-looking statements. Such statements are subject to certain risks and uncertainties, including those discussed below or in the 1999 Form 10-K that could cause actual results to differ materially from the Company's expectations. Readers are cautioned not to place undue reliance on any forward-looking statements, as they reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revision to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Results of Operations
The following table discloses the percentages that income statement items are of net sales.

                                                  Percentage of Net Sales
                                                     Quarter Ended
                                                 June 26,      June 27,
                                                   1999          1998
                                                -----------  ------------
Net sales                                              100%          100%

Gross margin                                            41%           34%
Research and development                                22%           20%
Selling, general and administrative                     19%           15%
Restructuring costs, gain on sale of assets
     and other, net                                    106%           -2%
                                                -----------  ------------
Income (loss) from operations                         -106%            0%
                                                -----------  ------------
Income (loss) before income taxes                     -106%            0%
Provision for income taxes                               0%            0%
                                                -----------  ------------
Net income (loss)                                     -106%            0%
                                                ===========  ============	

Net Sales
Net sales for the first quarter of fiscal 2000 decreased by $57.4 million, or 32%, to $120.6 million from $177.9 million for the first quarter of fiscal 1999. Revenues in the first quarter of fiscal 1999 include amounts from businesses subsequently divested by the Company. Revenues from non-core businesses in the first quarter of fiscal 2000 were $12.9 million compared to $34 million in the first quarter of fiscal 1999. Excluding revenues from non-core businesses, net sales from core businesses, consisting of mass storage, audio, high-precision data conversion and embedded products decreased approximately $36.3 million primarily due to a significant decline in sales from the Company's mass storage products. This decline was somewhat offset by increased sales of the Company's audio products
Export sales (including sales to U.S.-based customers with manufacturing plants overseas) were 74% and 66% of total sales in the first quarter of fiscal 2000 and fiscal 1999, respectively.
The Company's sales are currently denominated primarily in U.S. dollars. The Company currently enters into foreign currency forward exchange and option contracts to hedge certain of its foreign currency exposures.
Sales to one customer comprised approximately 17% of sales in the first quarter of fiscal 2000 and 11% of sales in the first quarter of fiscal 1999. Sales to two other customers comprised approximately 14% and 10% of sales in the first quarter of fiscal 1999.
Gross Margin
Gross margin was 41% in the first quarter of fiscal 2000 compared to 34% for the first quarter of fiscal 1999. Gross margin increased for the first quarter of fiscal 2000 primarily due to lower margins during the first quarter of fiscal 1999 realized in the Company's non-core business units. Also contributing to the increase are lower wafer costs incurred in the Company's core businesses in the first quarter of fiscal 2000 versus the first quarter of fiscal 1999.
Research and Development
Research and development expenses for the first quarter of fiscal 2000 decreased by $8.8 million, or 25% to $26.7 million from $35.5 million in the first quarter of fiscal 1999. The decrease in research and development expenses for the first quarter of fiscal 2000 compared to the same period of fiscal 1999 is primarily due to spending in non-core businesses in the first quarter of 1999 and lower headcount during the first quarter of fiscal 2000.
Selling, General and Administrative Expenses
Selling, general and administrative expenses in the first quarter of fiscal 2000 decreased $4.4 million, or 16% to $22.7 million from $27.1 million in the first quarter of fiscal 1999. The decrease is primarily due to spending in non-core businesses in fiscal 1999 and lower headcount during the first quarter of fiscal 2000 as a result of restructuring and divestiture activities.
Restructuring Costs, Gain on Sale of Assets and Other, Net
During the first quarter of fiscal 2000 the Company recorded restructuring and other charges of $128.2 million relating to the termination of its interests in two manufacturing joint ventures, MiCRUS and Cirent, $1 million of which is included in cost of sales. The restructuring charge includes $135 million in direct payments, $32 million worth of the Company's contributed common stock, $4.8 million fair value of the related embedded stock derivative, $9.3 million of lease buyout costs and $16.4 million of equipment write-offs. These charges were offset by the reversal of approximately $71.9 million of previously accrued wafer purchase commitment charges due to the renegotiated terms of the Company's purchase commitments with its former partners.
To date, the Company has paid approximately $135 million in cash in connection with these restructuring activities. The Company expects to pay an additional $15 million during the second quarter of fiscal 2000. See Note 4 of Notes to the Unaudited Consolidated Condensed Financial Statements.
The Company believes that as a result of these transactions the Company has substantially completed the restructuring activities that it initiated during the second quarter of fiscal 1999 and the Company does not expect to incur significant accrued wafer purchase commitment or other charges in the future relating to these activities.
The fiscal 1999 first quarter gain was primarily due to the recovery of a holdback on the sale of a previously divested business unit.
Income Taxes
The Company did not provide for any income tax in the first quarter of fiscal 2000 compared to a provision of 36.5% in the first quarter of fiscal 1999. The Company does not expect to recognize any net income tax provision during the current fiscal year due to the magnitude of the loss realized in the first quarter.
Liquidity and Capital Resources
The Company used approximately $34.7 million of cash and cash equivalents in its operating activities during the first quarter of fiscal 2000 and used approximately $49.4 million during the first quarter of fiscal 1999. The cash used by operations in the first quarter of fiscal 2000 was primarily due to payments required for joint venture operations and lease payoffs.
The Company provided $75.7 million in cash from investing activities during the first quarter of fiscal 2000 compared to cash used by investing activities of $18.3 million during the comparable period of fiscal 1999. The cash provided by investing activities for fiscal 2000 is primarily due to sales of the Company's short-term investments.
The Company used $6.6 million in cash for financing activities during the first quarter of fiscal 2000 while using $56.9 million during the comparable period of fiscal 1999. During the first quarter of fiscal 1999, the Company repurchased $52.8 million worth of its common stock. Cash used in financing activities for fiscal 2000 is due to payments on the Company's outstanding debt partially offset by new issuances of stock relating to the exercise of stock options and the employee stock purchase plan.
At June 26, 1999, the Company had $259.1 million of cash, cash equivalents and restricted cash of which $80.3 million is restricted cash. During July 1999, the Company paid $135 million in cash in connection with the restructuring of the MiCRUS joint venture. The Company expects the restriction on $28.4 million of the restricted cash to be removed during the second quarter of fiscal 2000.
The semiconductor industry is extremely capital intensive. The Company has made investments in various external manufacturing arrangements and in its own facilities. The Company obtained most of the necessary capital through direct or guaranteed equipment lease financing with the balance through debt, equity financing, and cash balances.
Historically, the Company has generated cash in an amount sufficient to fund its operations. The Company anticipates that its existing capital resources and cash flow generated from future operations will enable it to maintain its current level of operations for the foreseeable future. The Company may revise its operating plans in response to future changes in the semiconductor industry in general and the demand for its products in particular. The Company believes that significant changes in the economic environment, which may affect worldwide demand for technology products, could materially and adversely impact the Company, including with respect to such matters as its ability to fund its future operations.
Future Operating Results
Quarterly Fluctuations
The Company's quarterly revenues and operating results have varied significantly in the past and are likely to vary substantially from quarter to quarter in the future. The Company's operating results are affected by a wide variety of factors, many of which are outside of the Company's control, including but not limited to, economic conditions and overall market demand in the United States and worldwide, the Company's ability to introduce new products and technologies on a timely basis, changes in product mix, fluctuations in manufacturing costs which affect the Company's gross margins, declines in market demand for the Company's and its customers' products, sales timing, the level of orders which are received and can be shipped in a quarter, the cyclical nature of both the semiconductor industry and the markets addressed by the Company's products, product obsolescence, price erosion, and competitive factors. The Company's operating results in the rest of fiscal 2000 are likely to be affected by these factors as well as others.
The Company must order wafers and build inventory well in advance of product shipments. Because the Company's markets are volatile and subject to rapid technology and price changes, there is a risk that the Company will forecast inaccurately and produce excess or insufficient inventories of particular products. This inventory risk is heightened because many of the Company's customers place orders with short lead times. Such inventory imbalances have occurred in the past and in fact contributed significantly to the Company's operating losses in fiscal 1997 and 1996. These factors increase not only the inventory risk but also the difficulty of forecasting quarterly operating results. Moreover, as is common in the semiconductor industry, the Company frequently ships more products 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. The concentration of sales in the last month of the quarter contributes to difficulty in predicting the Company's quarterly revenues and results of operations.
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 system manufacturers. Both revenues and margins may be affected quickly if new product introductions are delayed or if the Company's products are not designed into successive generations of products of the Company's customers. 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.
Issues Relating to Manufacturing and Raw Materials Procurement
During fiscal 1998 and fiscal 1999, excess production capacity in the industry led to significant price competition between merchant semiconductor foundries and the Company believes that in some cases this resulted in pricing from certain foundries that was lower than the Company's cost of production from its manufacturing joint ventures. The Company experienced pressures on its selling prices during fiscal 1998, which had a negative impact on its results of operations and it believes that this was partially due to the fact that certain of its competitors were able to obtain more favorable pricing from such foundries.
The Company's current strategy is to fulfill its wafer requirements using outside merchant wafer suppliers, including the Company's former joint venture partners. The Company also uses other outside vendors to package the wafer die into integrated circuits and to perform the majority of the Company's product testing.
The Company's results of operations could be adversely affected in the future, as they have been so affected in the past, if particular suppliers are unable to provide a sufficient and timely supply of product, whether because of raw material shortages, capacity constraints, unexpected disruptions at the plants, delays in qualifying new suppliers or other reasons, or if the Company is forced to purchase wafers or packaging from higher cost suppliers or to pay expediting charges to obtain additional supply, or if the Company's test facilities are disrupted for an extended period of time. Because of the concentration of sales at the end of each quarter, a disruption in the Company's production or shipping near the end of a quarter could materially reduce the Company's revenues for that quarter. Production may be constrained even though capacity is available at one or more wafer manufacturing facilities because of the difficulty of moving production from one facility to another. Any supply shortage could adversely affect sales and operating profits. The Company's reliance upon outside vendors for assembly and test could also adversely impact sales and operating profits if the Company was unable to secure sufficient access to the services of these outside vendors.
In connection with the financing of its operations, the Company has borrowed money and entered into substantial equipment lease obligations. The Company's ability to meet its debt service and other obligations will be dependent upon the Company's future performance, which will be subject to financial, business, and other factors affecting the operations of the Company, many of which are beyond its control.
Product development in the Company's markets is becoming more focused on the integration of functionality on individual devices and there is a general trend towards increasingly complex products. The greater integration of functions and complexity of operations of the Company's products increase the risk that latent defects or subtle faults could be discovered by customers or end users after volumes of product have been shipped. If such defects were significant, the Company could incur material recall and replacement costs for product warranty. The Company's relationship with customers could also be adversely impacted by the recurrence of significant defects.
Dependence on PC Market
Sales of many of the Company's products will continue to depend largely on sales of personal computers (PCs). Reduced growth in the PC market could affect the financial health of the Company as well as its customers. Moreover, as a component supplier to PC OEMs and to peripheral device manufacturers, the Company is likely to experience a greater magnitude of fluctuations in demand than the Company's customers themselves experience. In addition, many of the Company's products are used in PCs for the consumer market, and the consumer PC market is more volatile than other segments of the PC market.
Other integrated circuit (IC) makers, including Intel Corporation, have expressed their interest in integrating through hardware functions, adding through special software functions, or kitting components to provide some multimedia or communications features into or with their microprocessor products. Successful integration of these functions could substantially reduce the Company's opportunities for IC sales in these areas. In addition, the Company's de-emphasis of PC products and its focus on non-PC markets could have an adverse affect on the Company's PC product sales as customers seek other supply sources with greater commitments to the PC market.
A number of PC OEMs buy products directly from the Company and also buy motherboards, add-in boards or modules from suppliers who in turn buy products from the Company. Accordingly, a significant portion of the Company's sales may depend directly or indirectly on the sales to a particular PC OEM. Since the Company cannot track sales by motherboard, add-in board or module manufacturer, the Company may not be fully informed as to the extent or even the fact of its indirect dependence on any particular PC OEM, and, therefore, may be unable to assess the risks of such indirect dependence.
Issues Relating to Mass Storage Market
The mass storage market has historically been characterized by a relatively small number of magnetic disk drive manufacturers and by periods of rapid growth followed by periods of oversupply and contraction. Growth in the mass storage market is directly affected by growth in the PC market. Furthermore, the price competitive nature of the disk drive industry continues to put pressure on the price of all disk drive components. Recent market demands for sub-$1,000 PCs puts further pressure on the price of disk drives and disk drive components.
Revenues from mass storage products in fiscal 2000 are likely to depend heavily on the success of certain 3.5 inch magnetic disk drive products selected for use by various customers, which in turn depends upon obtaining timely customer qualification of the new products and bringing the products into volume production timely and cost effectively.
The Company's revenues from mass storage products are dependent on the successful introduction by its customers of new disk drive products and can be impacted by the timing of customers' transition to new disk drive products. Recent efforts by certain of the Company's customers to develop their own ICs for mass storage products could in the future reduce demand for the Company's mass storage products, which could have an adverse effect on the Company's revenues and gross margins from such products. In addition, in response to the current market trend towards integrating hard disk controllers with microcontrollers, the Company's revenues and gross margins from its mass storage products will be dependent on the Company's ability to introduce such integrated products in a commercially competitive manner.
Finally, while the Company believes it is well positioned for the trend toward integration of HDD electronic components with the first product on the market to combine the three primary electronic components, some of the Company's competitors have also announced plans to introduce integrated drive electronics components. Some of these competitors have substantially greater resources to accomplish the technical obstacles of integration and greater access to the advanced technologies necessary to provide integrated HDD electronic components.
Issues Relating to Audio Products
Most of the Company's revenues in the audio market derive from the sales of audio codecs and integrated 16-bit codec-plus-controller solutions for the PC market and consumer electronics equipment. In the PC market, the transition to the AC-link codecs attached to core logic using the multimedia features of the processor and single chip solutions are lowering the average selling price in the audio IC market. The Company's revenues from the sale of PC audio products in fiscal 2000 are likely to be significantly affected by this transition to core logic connected audio and by the introduction of cost reduced, fully-integrated, single- chip audio ICs. Moreover, aggressive competitive pricing pressures have adversely affected and may continue to adversely affect the Company's revenues and gross margins from the sale of audio ICs.
Three-dimensional, spatial-effects audio became an important feature in fiscal 1999, primarily in products for the consumer electronics marketplace. If the Company's spatial-effects audio products do not meet the cost or performance requirements of the market, revenues from the sale of audio products could be adversely affected.
Issues Relating to Precision Mixed-Signal Products
Precision Data Converter Products is a very broad market with many well established competitors. The Company's ability to compete in this market will be adversely affected if it cannot establish broad sales channels or if it does not develop and maintain a broad enough product line to compete effectively. In addition, the customer product design in time is long. Customer delays in product development and introductions creates risk relative to the Company's revenue plans. Further, the Company's products in this market are technically very complex. The complexity of the products contributes to risks in getting products to market on a timely basis, which could impact the Company's revenue plans. The scarcity of analog engineering talent also contributes to risks related to product development timing in this market.
Intellectual Property Matters
The semiconductor industry is characterized by frequent litigation regarding patent and other intellectual property rights. The Company and certain of its customers from time to time have been notified that they may be infringing certain patents and other intellectual property rights of others. In addition, customers have been named in suits alleging infringement of patents or other intellectual property rights 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 its customers. Although licenses are generally offered in situations where the Company or its customers are named in suits alleging infringement of patents or other intellectual property rights, there can be no assurance that any licenses or other rights can be obtained on acceptable terms. An unfavorable outcome occurring in any such suit could have an adverse effect on the Company's future operations and/or liquidity.
Foreign Operations and Markets
Because many of the Company's subcontractors and several of the Company's key customers which collectively account for a significant percentage of the Company's revenues are located in Japan and other Asian countries, the Company's business is subject to risks associated with many factors beyond its control. International operations and sales may be subject to political and economic risks, including political instability, currency controls, exchange rate fluctuations, and changes in import/export regulations, tariff and freight rates. Although the Company buys hedging instruments to reduce its exposure to currency exchange rate fluctuations, the Company's competitive position can be affected by the exchange rate of the U.S. dollar against other currencies, particularly the Japanese yen. Further, to the extent that volatility in foreign financial markets was to have an adverse impact on economic conditions in a country or geographic region in which the Company does business, demand for and supply of the Company's products could be adversely impacted, which would have a negative impact on the Company's revenues and earnings.
A significant number of the Company's customers and suppliers are in Asia. The recent turmoil in the Asian financial markets does not appear to have had a material impact on the Company's sales orders or bookings. However, the financial instability in these regions may have an adverse impact on the financial position of end users in the region which could impact future orders and/or the ability of such users to pay the Company or the Company's customers, which could also impact the ability of such customers to pay the Company. The Company performs extensive financial due diligence on customers and potential customers and generally requires material sales to Asia to either be secured by letters of credit or transacted on a cash on demand basis. Given the prior situation in Asia, the Company now requires that the letters of credit be established through American banking institutions. During this volatile period, the Company expects to carefully evaluate the collection risk related to the financial position of customers and potential customers. The results of such evaluations will be considered in structuring the terms of sale, in determining whether to accept sales orders, in evaluating the recognition of revenue on sales in the area and in evaluating the collectability of outstanding accounts receivable from the region. In situations where significant collection risk exists, the Company will either not accept the sales order, defer the recognition of related revenues, or, in the case of previously transacted sales, establish appropriate bad debt reserves. Despite these precautions, should the volatility in Asia have a material adverse impact on the financial position of end users of the customers products in Asia, the Company could experience a material adverse impact on its results of operations.
Competition
The Company's business is intensely competitive and is characterized by new product cycles, price erosion, and rapid technological change and new companies entering the markets. Competition typically occurs at the design stage, where the customer evaluates alternative design approaches that require integrated circuits. Because of shortened product life cycles and even shorter design-in cycles, the Company's competitors have increasingly frequent opportunities to achieve design wins in next generation systems. In the event that competitors succeed in supplanting the Company's products, the Company's market share may not be sustainable and net sales, gross margin, and results of operations would be adversely affected. Competitors include major domestic and international companies, many of which have substantially greater financial and other resources than the Company with which to pursue engineering, manufacturing, marketing and distribution of their products. Emerging companies are also increasing their participation in the market, as well as customers who develop their own integrated circuit products.
Competitors include manufacturers of standard semiconductors, application-specific integrated circuits and fully customized integrated circuits, including both chip and board-level products. The ability of the Company to compete successfully in the rapidly evolving area of high- performance integrated circuit technology depends significantly on factors both within and outside of its control, including, but not limited to, success in designing, manufacturing and marketing new products, wafer supply, protection of Company products by effective utilization of intellectual property laws, product quality, reliability, ease of use, price, diversity of product line, efficiency of production, the pace at which customers incorporate the Company's integrated circuits into their products, success of the customers' products, and general economic conditions. Also the Company's future success depends, in part, upon the continued service of its key engineering, marketing, sales, manufacturing, support, and executive personnel, and on its ability to continue to attract, retain, and motivate qualified personnel. The competition for such employees is intense, and the loss of the services of one or more of these key personnel could adversely affect the Company. Because of these and other factors, past results may not be a useful predictor of future results.
Impact of Year 2000
The "Year 2000 Issue" is the result of computer programs being written using two digits rather than four to define the applicable year. If the Company's computer programs with date-sensitive functions are not Year 2000 compliant, they may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing incorrect reporting and disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. The issue spans both information technology and non- information technology systems that use date data. In addition to the Company's own systems, the Company relies, directly and indirectly, on external systems of its customers, suppliers, creditors, financial organizations, utilities providers and government entities, both domestic and international ("Third Parties").
The Company currently has a project plan in place to address the Year 2000 Issue with its internal systems and Third Parties which is designed to deal with its most critical systems and processes first. Those identified as "mission critical" are systems and/or processes whose failure would cause a material impact on the Company's operations and financial statements. The project plan includes the identification, assessment, testing, remediation/validation and the development of contingency plans of the Company's Year 2000 issues primarily through the use of internal personnel. In addition, the Company has engaged the services of external consultants to provide Year 2000 progress assessment of the Company's efforts. The external consultants review the Company's activities regarding Year 2000 readiness and provide recommendations designed to improve the Company's Year 2000 readiness.
In the third quarter of calendar year 1996, the Company began a program to replace mission-critical internal business systems. The decision to purchase software to replace these systems was made primarily in order to meet the Company's future business requirements, which included consideration of Year 2000 Issues. The Company is currently in the process of installing software licensed from SAP America, Inc. The first phase of this project was completed in June 1998 and included finance, sales and logistics. The second phase of the project includes a human resource system completed in June of this year and manufacturing, estimated to complete in October of this year. This multi-phased implementation is expected to cover all major internal business systems used by the Company. While Year 2000 compliance is an important software feature the Company considered when purchasing the software replacement, the Company's decision to replace mission critical business systems was primarily to make important functional improvements necessary to remain competitive in the current business environment. Therefore, the Company has not allocated a portion of the total project cost as a Year 2000 Issue. The Company does not believe that any incremental project costs associated with Year 2000 compliance to be material, as this feature was included with the software purchased by the Company to satisfy its business needs. The Company presently believes that with the installation of this software into its internal business systems, the Year 2000 Issue will not pose significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Company. Therefore, the Company has completed a plan to remediate the existing manufacturing system as part of a company wide contingency plan.
To date, 99.5% of the Company's products have been tested and found to be Year 2000 compliant. A list of compliant products is available on the Company's web site (www.cirrus.com). The Company considers a product or system to be Year 2000 compliant if the date/time data is accurately processed (included, but not limited to, calculating, comparing, and sequencing) from, into and between the twentieth and twenty-first centuries, and the years 1999 and 2000 along with leap year calculations. To date, the Company has not identified any non-compliant products and therefore, no material costs have been incurred with respect to remediation. The Company believes that it is unlikely to experience a material adverse impact on its financial condition or results of operations due to product related Year 2000 compliance issues. However, since the assessment process is ongoing, Year 2000 implications are not fully known, and potential liability issues are not clear. Therefore, the full potential impact of the Year 2000 on the Company is not known at this time.
Another consequence related to the Company's products is the impact upon the Company's ability to ship to or collect payment from customers who themselves have business operational problems as a result of the Year 2000 Issue. Although the Company believes that it is unlikely to experience a material adverse impact on its financial conditions or results of operations due to customer-related problems, the Company could experience such an impact if any of its major customers or a large number of its other customers suffer a material disruption in their ability to accept or pay for the Company's product shipments.
The Company's project plan also includes a comprehensive program to assess the Year 2000 compliance of its key suppliers. The Company has initiated formal communications with its significant suppliers and financial institutions to determine the extent to which the Company is vulnerable to those Third Parties who fail to remedy their own Year 2000 Issues. As of June 1999, the Company has contacted its significant suppliers and financial institutions and has received assurances of Year 2000 compliance from a number of those contacted. To date the Company has received responses to its initial inquiries from 100% of its mission critical suppliers. However, some of these suppliers are still in the process of completing their work on the Year 2000 Issues and failure of these mission critical suppliers to be compliant would result in manufacturing shutdowns for a certain period of time. The Company is currently taking steps to assess whether these suppliers are taking all the appropriate actions to fix any Year 2000 Issues they might have and to be prepared to continue functioning effectively as a supplier to the Company. However, as there can be no guarantee that the Company's suppliers will be Year 2000 compliant prior to the millennium, many significant suppliers have been second sourced and most contingency plans have been developed during the first calendar quarter of 1999. This process was completed in the second calendar quarter of 1999. Contingency plans related to mission critical suppliers that are not considered to be making adequate steps to ensure Year 2000 compliance consist of the identification of substitutes and second-source suppliers, and in certain situations includes a planned increase in the level of inventory carried. No material cost related to Year 2000 compliance of Third Parties has been incurred to date. The Company believes that its reasonably most likely worst case Year 2000 scenario would involve problems with the systems of its Third Parties rather than with the Company's internal systems or its products. However, based upon information communicated to the Company from Third Parties, management believes that it is unlikely to experience a material adverse impact due to problems related to Third Parties and expects that the cost of these projects over the next two years will not have a material effect on the Company's financial position or overall trends in results of operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Reference is made to Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in the Registrant's Annual Report on Form 10-K for the Year Ended March 27, 1999.
Part II. Other Information
Item 1. Legal Proceedings
None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 12.1 Statement Regarding Computation of Ratios of Earnings to Fixed Charges
Financial Data Schedule
b. Reports on Form 8-K
The Registrant filed a Current Report on Form 8-K on August 3, 1999, pursuant to Item 2 of Form 8-K, reporting the disposition of the Company's interest in the MiCRUS joint venture.

CIRRUS LOGIC, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CIRRUS LOGIC, INC.
 (REGISTRANT)

                                                 /s/GLENN C. JONES
Date:  August 4, 1999                           -----------------------
                                                 Glenn C. Jones
                                                 Vice President, Chief
                                                 Financial Officer,
                                                 Treasurer and

                                                 Secretary	

[MULTIPLIER]1,000
Part II. Other Information, Item 6a
Exhibit 12.1
CIRRUS LOGIC, INC.
STATEMENT REGARDING COMPUTATION OF EARNINGS TO FIXED CHARGES
(in thousands, except ratio of earnings to fixed charges)

                                                  Quarter Ended
                                              June 26,     June 27,
                                                1999         1998
                                             -----------  -----------
Income (loss) before income taxes             ($127,746)        $812

Fixed Charges (1)                                 7,173        6,789
                                             -----------  -----------

Total earnings and fixed charges               (120,573)       7,601

Fixed Charges (1)                                 7,173        6,789

Ratio of earnings to fixed charges (2)               N/A         1.1x
                                             ===========  ===========

ADJUSTED FOR MiCRUS AND CIRENT FIXED CHARGES:

Fixed Charges (3)                                13,138       13,696

Ratio of earnings to fixed charges (4)               N/A          N/A
                                             ===========  ===========

(1)  Fixed charges consist of interest expense incurred, including capital
leases, amortization of interest costs and the portion of rental
expense under operating leases deemed by the Company to be
representative of the interest factor.
(2)  Earnings were inadequate to cover fixed charges for the quarter ended
June 26, 1999 by approximately $127.7 million.
(3)  Fixed charges consist of interest expense incurred, including capital
leases, amortization of interest costs, portion of rental expense
under operating leases deemed by the Company to be representative of
the interest factor, interest on capitalized leases and the interest
factor associated with operating leases of the Company's MiCRUS and
Cirent joint ventures.
(4)  Earnings would have been inadequate to cover fixed charges for the
quarters ended June 26, 1999 and June 27, 1998 by approximately $133.7
million and $6.1 million, respectively.

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER>1,000

<FISCAL-YEAR-END>                    <MAR-25-2000>
<PERIOD-START>                       <MAR-28-1999>
<PERIOD-END>                         <JUN-26-1999>
<PERIOD-TYPE>                        3-MOS
<CASH>                                    259,135
<SECURITIES>                                  -
<RECEIVABLES>                              67,431
<ALLOWANCES>                                  -
<INVENTORY>                                45,409
<CURRENT ASSETS>                          416,360
<PP&E>                                    188,750
<DEPRECIATION>                            141,018
<TOTAL-ASSETS>                            501,370
<CURRENT-LIABILITIES>                     364,908
<BONDS>                                   319,235
<PREFERRED-MANDATORY>                         -
<PREFERRED>                                   -
<COMMON>                                  328,878
<OTHER-SE>                               (511,651)
<TOTAL-LIABILITY-AND-EQUITY>              501,370
<SALES>                                   120,553
<TOTAL-REVENUES>                          120,553
<CGS>                                      71,386
<TOTAL-COSTS>                              71,386
<OTHER-EXPENSES>                          176,567
<LOSS-PROVISION>                              -
<INTEREST-EXPENSE>                            -
<INCOME-PRETAX>                          (127,746)
<INCOME-TAX>                                  -
<INCOME-CONTINUING>                      (127,746)
<DISCONTINUED>                                -
<EXTRAORDINARY>                               -
<CHANGES>                                     -
<NET-INCOME>                             (127,746)
<EPS-BASIC>                               (2.12)
<EPS-DILUTED>                               (2.12)

<F1>FOR PURPOSES OF THIS EXHIBIT, PRIMARY MEANS BASIC