Cirrus Logic Announces Fourth Quarter and Fiscal Year 1998 Results.

FREMONT, Calif.--(BUSINESS WIRE)--April 22, 1998--Cirrus Logic Inc. (NASDAQ:CRUS) today announced net revenues for the fiscal year ended March 28, 1998, were $954.3 million, a year-to-year increase of 4 percent from $917.2 for fiscal 1997.

Net income was $36.5 million, or $0.52 per share compared to a net loss of $46.2 million, or $0.71 per share for fiscal 1997.

Net revenues for the fourth quarter of fiscal 1998 were $287.8 million, up 35 percent from $212.9 million for the corresponding quarter a year ago. Net income was $12.1 million, or $0.18 per share, compared with a net loss of $51.9 million, or $0.79 per share, for the year-ago quarter.

The results for the fourth quarter of fiscal 1998 include revenues related to certain licensing agreements totaling $60 million as well as charges of $53 million included in cost of sales which are related to anticipated manufacturing capacity variances due largely to reduced production in graphics chips. Without these events, and their related tax effects, net revenues would have been $227.8 million, net income would have been $9.2 million and diluted earnings would have been $0.13 per share.

"Fiscal 1998 was a turning-point year for Cirrus Logic," said Michael L. Hackworth, president and chief executive officer of the company. "We successfully returned the company to profitability in the first quarter and experienced sequential growth throughout the year with the exception of the seasonally weak fourth quarter. It also marked the year we focused our product development efforts on storage, communications, and mixed-signal linear integrated circuits.

"Year-over-year improvement in key financial indicators including a $133 million increase in cash, a 17 percent reduction in operating expenses, and increased revenue per employee for the year to $538,000, from $359,000 each provide evidence that we are operating under a markedly improved financial model."

New product development was strong during the year as Cirrus Logic announced more than 25 new products. Significant introductions include the recently announced highly integrated single chip solution for the DVD-ROM drive and DVD-Player markets and expansion of ARM-based system-on-a-chip solutions for the emerging Internet appliance market.

The company also introduced the industry's first multi-standard audio decoder for DTS and Dolby Digital, showcasing its strength in mixed-signal consumer applications.

"These introductions all support our ongoing strategy to pursue growth opportunities within the Mass Storage, Communications and Mixed-Signal markets, which leverage our deep algorithmic expertise and proven strength in high integration silicon solutions," said Hackworth.

"While we continue to make selective investments in mixed-signal intensive PC peripheral functions where we add value, our research and development activities now center around high volume market opportunities beyond the PC motherboard."

Hackworth noted that key products within the Mass Storage Division are currently sampling and on target for introduction later in the year. "The product transition to third generation read-channel products within our Mass Storage division is proceeding as expected and all indications suggest a return to growth for that division by the end of the year," he said.

FISCAL Q4 1998 BUSINESS REVIEW

- Excluding one-time events, overall gross margin for the March

quarter was 35 percent, compared with 33 percent for the year ago

quarter and 39 percent for the previous quarter. The decrease in

gross margin is primarily the result of an adverse product mix

within the PC Products Division.

- Operating expenses for the fourth quarter were $73 million,

compared with $85 million for the year ago quarter and $77

million for the previous quarter.

- Including $60 million in revenue related to licensing agreements,

annualized revenue per employee increased to $649,000 compared

with $333,000 for the year ago quarter and $504,800 for the

previous quarter.

- The quarter ended with a cash balance of $473 million compared to

$406 million at the previous quarter end. The increase is largely

due to cash generated from operations.

- Excluding $60 million in revenue related to licensing agreements,

revenue breakdown by division for the quarter was as follows:

                                    Q4-FY 1998  Q3-FY 1998  Q4-FY 1997

Mass Storage Products                   45%         48%        30%
PC Products                             35%         29%        46%
Communications Products                  9%          9%        16%
Crystal Semiconductor Products          11%          9%         7%
Other                                    0%          5%         1%

-    Excluding $60 million in revenue related to licensing agreements,
     revenue breakdown by geographic area for the quarter was as
     follows:

                                 Q4-FY 1998  Q3-FY 1998   Q4-FY 1997

Americas                            38%          47%           39%
Pacific Rim                         38%          33%           34%
Japan                               17%          12%           20%
Europe                               7%           8%            7%

Fiscal Q4 1998 Review by Division

MASS STORAGE PRODUCTS

- Cirrus Logic announced the industry's first single-chip DVD

solution for both the DVD-ROM and DVD-Player markets. The

CL-CR3700 DVD Drive Manager delivers the functionality currently

performed by as many as five chips with a single device, and

allows Cirrus Logic to reduce the current DVD drive cost

structure. As a result of this announcement, Cirrus Logic expects

to be a driving force behind the transition from CD-ROM to

DVD-ROM.

PC PRODUCTS

- In March, Cirrus Logic and 3Com Corporation announced the

successful completion of joint interoperability testing of both

company's V.90 modems. The testing ensures compatibility between

3Com (U.S Robotics) V.90 modems and Cirrus Logic's FastPath modem

chipset, and represents an important step towards providing

universal V.90 compatibility.

- Cirrus Logic announced that its Laguna3DA(TM) (CL-GD5465)

graphics accelerator -- the only accelerator that offers both

Accelerated Graphics Port (AGP) and Rambus (RDRAM) memory

performance advantages in the Windows 95 and Windows NT operating

environments -- has been selected by IBM for its new line of IBM

PC 300GL personal computers. Later in the quarter, Cirrus Logic

announced the accelerator had been designed into

Hewlett-Packard's new HP Vectra VL PC, a powerful and affordable

Intel Pentium II-based PC for the corporate market.

COMMUNICATIONS PRODUCTS

- In January, Cirrus Logic confirmed that it has joined the

Universal ADSL Working Group (UAWG) spearheaded by Compaq, Intel,

Microsoft and leading telecommunications companies, which is

chartered to accelerate the development, availability and

adoption of ADSL technology for high-speed digital Internet

access over existing copper phone lines.

- Cirrus Logic added a new member to its family of

highly-integrated chip solutions for the emerging Internet

appliance market. This new entry (CL-PS7500FE-56) incorporates a

32-bit ARM RISC processor and is believed to offer the most

highly-integrated system-on-a-chip solution for the Internet

appliance market. The CL-PS7500FE family has captured over 25

design wins for Internet-enabled appliances, such as set-top

boxes, screen-phones, game boxes and network computers, including

the RCA NC 1010 and NC 1020 Internet devices from Thomson

Consumer Electronics.

- Cirrus Logic introduced the first T1/E1 line interface unit (LIU)

that meets CTR-12 jitter specifications without requiring an

expensive frequency-pullable quartz crystal. The Crystal CS61581

supports all T1 and E1 modes, including both long-haul and

short-haul line requirements, allowing OEMs to design and deploy

on board for multiple applications, simplifying inventory

management, logistics and installation.

CRYSTAL SEMICONDUCTOR PRODUCTS

- In January, Cirrus Logic introduced a single-chip DSP audio

decoder that will support both Dolby Digital AC-3 and Digital

Theatre Systems (DTS) Digital Surround. Unlike competing

solutions that require two VLSI chips, the Crystal(TM) CS4926

supports both standards with a single smaller chip, thereby

lowering implementation costs and accelerating deployment of

digital audio.

- Cirrus Logic announced that it had licensed and integrated QSound

Labs QSurround Speaker Technology in its Crystal CS4924 Dolby

Digital Source Decoder. Through this partnership, the decoder is

capable of preserving the surround ambiance of 5.1 channel Dolby

Digital, providing a cost-effective entertainment environment

with just two speakers.

- Cirrus Logic introduced the industry's first digital audio

transmitters and receivers designed to support the emerging 96

kHz digital audio sampling rate. The new mixed signal receivers

and transmitters are targeted at both the professional audio and

consumer DVD audio markets, where 96kHz sample rates have emerged

to improve sound quality.

Cirrus Logic

Cirrus Logic is a premier supplier of system-level integrated circuits that demand high-performance mixed-signal processing. The company applies its system expertise to enable high-volume applications in data storage, networking, and multimedia for both computing and consumer electronics markets as well as ultra-precision data acquisition applications for industrial automation and instrumentation markets.

Except for historical information contained herein, the matters set forth in this news release are forward-looking statements that are dependent on certain risks and uncertainties including such factors, among others, as overall conditions in the PC market, customer cancellations of orders, or the failure to place orders consistent with forecasts, unforeseen manufacturing difficulties, or hardware or software deficiencies, or delays in customer qualification of key new products, achieving high utilization of the company's manufacturing resources, final determination of appropriate inventory write-downs based on the outlook at the end of each quarter, actual operational spending, obtaining financing sufficient to meet the company's needs and the risk factors listed in the company's Forms 10-K for the year ended March 29, 1997, and 10-Q for the quarter ended Dec. 29, 1997.

Cirrus Logic news releases may be obtained by fax by dialing 800/359-6414, or by dialing 510/249-4200 from outside the United States, or via Internet on the world wide web at http://www.cirrus.com/. -0-

Note to Editors: All trademarks are registered to their respective owners. -0-

                          CIRRUS LOGIC INC.
               CONSOLIDATED SUMMARY FINANCIAL STATEMENTS
                              (Unaudited)
                  CONDENSED STATEMENTS OF OPERATIONS
            Amounts in thousands, except per share amounts


                                                      Fiscal Year
                              Quarter Ended              Ended
                           March 28,  March 29,   March 28,  March 29,
                             1998       1997        1998       1997

Net sales                  $287,844   $212,917    $954,270   $917,154

Costs and expenses and
 gain on sale of assets
 and other, net:
  Cost of sales             201,380    163,905     605,484    598,795
  Research and development   42,989     51,249     179,552    230,786
  Selling, general and
   administrative            30,128     33,745     117,273    126,722
  Restructuring costs and
   other, net                   --      20,954      14,464     20,954
  Gain on sale of assets,
   net                       (4,700)         7     (20,781)   (18,915)
   Total costs and expenses,
    gain on sale of assets
    and other, net          269,797    269,860     895,992    958,342

Income (loss) from
 operations                  18,047    (56,943)     58,278    (41,188)
Interest and other
 (expense) income, net        3,179     (2,653)     (2,275)   (10,431)

Income (loss) before
 provision for income
 taxes                       21,226    (59,596)     56,003    (51,619)
Provision (benefit) for
 income taxes                 9,077     (7,737)     19,510     (5,463)

 Net income (loss)        $  12,149  $ (51,859)  $  36,493  ($ 46,156)

Net income (loss) per
 share:
  Basic                   $    0.18  ($   0.79)  $    0.54  ($   0.71)
  Diluted                 $    0.18  ($   0.79)  $    0.52  ($   0.71)

Weighted average common
 shares outstanding:
  Basic                      68,092     65,917      67,333     65,007
  Diluted                    69,241     65,917      69,548     65,007

                          CIRRUS LOGIC INC.
               CONSOLIDATED SUMMARY FINANCIAL STATEMENTS
                              (Unaudited)
                       CONDENSED BALANCE SHEETS
                          Amounts in thousands

                                        March 28,     March 29,
                                          1998           1997

Current assets:
   Cash and cash equivalents           $  347,421   $  151,540
   Short-term investments                 125,378      188,215
   Accounts receivable, net               103,073      173,743
   Inventories                            103,703      127,252
   Other current assets                   136,618      154,252
     Total current assets                 816,193      795,002

Property and equipment, net                99,364      130,855
Manufacturing agreements, net and
  investment in joint ventures            166,953      151,675
Deposits and other assets                  55,032       59,289
       Total assets                    $1,137,542   $1,136,821

Current liabilities:
   Accounts payable and
    accrued liabilities                $  275,432   $  304,074
   Obligations under equipment loans
    and capital leases, current            26,554       30,999
   Income taxes payable                    38,053       31,259
     Total current liabilities            340,039      366,332

Long-term obligations and
 convertible subordinated notes           341,160      366,292

Shareholders' equity:
   Capital stock                          366,914      351,261
   Retained earnings                       89,429       52,936
     Total shareholders' equity           456,343      404,197
       Total liabilities
        and shareholders' equity       $1,137,542   $1,136,821

CONTACT: Cirrus Logic Inc., Fremont

Ronald K. Shelton, 510/623-8300

Bonnie McBride, 510/226-2112

[e-mail]