Cirrus Logic Completes Acquisition of LuxSonor Semiconductors Inc.; Strengthens Position as Provider of Total DVD Solutions.

Business Editors & High-Tech Writers

AUSTIN, Texas--(BUSINESS WIRE)--Oct. 11, 2001

Cirrus Logic Inc. (Nasdaq:CRUS), the premier supplier of high-performance analog and DSP chip solutions for digital entertainment, today completed its acquisition of LuxSonor Semiconductors Inc., a leading provider of DVD video processors and audio/video semiconductor solutions.

This acquisition strengthens Cirrus Logic's position to provide Total Entertainment (Total-E(tm)) solutions for current DVD systems as well as next-generation, Internet-ready DVD players and networked entertainment systems. Cirrus Logic is now the only company that provides all the optical, video, audio, and networking chips needed to build integrated DVD solutions, significantly increasing its silicon content and revenue per system opportunities.

Cirrus Logic issued approximately 2.2 million shares of its common stock and paid approximately $10 million cash for LuxSonor. As of Aug. 31, 2001, Cirrus Logic had approximately 74 million shares outstanding and on Oct. 3, 2001, the company issued approximately 3.4 million shares of its common stock to acquire ShareWave Inc. Tangible net assets of LuxSonor total approximately $2 million. Cirrus estimates it will take a one-time non-cash charge in the December quarter for acquired in-process research and development in the range of $8 million to $13 million related to the acquisition. The remaining purchase price will be allocated primarily to amortizable intangibles and goodwill.

Based on current Cirrus Logic forecasts, the acquisition is anticipated to be accretive to pro forma EPS by the end of this fiscal year, which ends March 31, 2002. Given the expectations of continued strong growth in the DVD player market, revenue from LuxSonor's products is expected to grow from less than $3 million in the December 2001 quarter to $30 to $40 million in fiscal 2003. Long-term gross margins are expected to be greater than 45 percent. Cirrus Logic will provide overall company financial guidance when it reports quarterly results after the market closes on October 24.

"Cirrus now has an even bigger opportunity in DVDs, the fastest growing consumer electronics product in history," said David D. French, president and chief executive officer of Cirrus Logic. "This acquisition reinforces our capabilities with existing audio customers in addition to providing new DVD customers and LuxSonor's existing relationships with firms such as Aiwa in Japan and Oriental Power and Malata in China. Advanced DVD systems using our CS98K DVD processor are in stores now for the 2001 holiday season, and global DVD manufacturers are developing next-generation products that combine our audio and video technology leadership into one system."

Market research firm In-Stat forecasts that semiconductor revenue for total MPEG video chips will more than double, from $1.6 billion in 2000 to $3.4 billion in 2005. The Gartner Dataquest market research firm forecasts that DVD unit sales will grow from 20 million in 2000 to 90 million units in 2004, an annual growth rate of 46 percent.

LuxSonor's Fremont, Calif. operations will move into existing Cirrus facilities also located in Fremont; the 90-plus members of its Asian team will remain in Hong Kong, Shenzhen and Beijing, China, as well as Taiwan.

In related news, Cirrus also announced on Aug. 9, 2001, a definitive agreement to acquire Stream Machine Company, a leading provider of MPEG2 video recording technology in another stock-for-stock transaction. Stream Machine is located in Milpitas, Calif. This deal is expected to close in November.

About Cirrus Logic

Cirrus Logic is the premier supplier of high-performance analog and DSP chip solutions for consumer entertainment electronics that allow people to see, hear, connect and enjoy digital entertainment. Building on its global market share leadership in audio integrated circuits and its rich mixed-signal patent portfolio, the company targets mainstream audio, video and Internet entertainment applications in the consumer entertainment market. Cirrus Logic operates from headquarters in Austin, Texas and major sites located in Fremont and El Dorado Hills, Calif., Broomfield and Boulder, Colorado, as well as offices in Europe, Japan and Asia. More information about Cirrus Logic is available at www.cirrus.com.

Safe Harbor 

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 the ability of the Company to successfully integrate LuxSonor into its operation and the ability to realize synergies anticipated as a result of this acquisition; overall conditions in the semiconductor market; the rate of consumer electronics market adoption of new products; customer cancellations of orders, or the failure to place orders consistent with forecasts; hardware or software deficiencies; delays in customer qualification of key new products; actual operational spending; and the risk factors listed in the company's Form 10-K for the year ended March 31, 2001, and in other filings with the Securities and Exchange Commission. The foregoing information concerning Cirrus Logic's business outlook represents our outlook as of the date of this news release, and Cirrus Logic undertakes no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Cirrus Logic and Total-E are trademarks of Cirrus Logic Inc.