John Kurtzweil, Senior Vice President and Chief Financial Officer David French, President and Chief Executive Officer

Jay Srivatsa, Roth Capital Partners Evan Wang, Piper Jaffray (Rich Greysetter?), Jefferies & Co Tayyib Shah, Longbow Research (Ral Conwalker?), Needham & Co Alberto Mann, Thomas Weisel Partners (Damal Haraproom, Iprom Securities?)

Operator instructions.: John Kurtzweil, Senior Vice President and Chief Financial Officer: Thank you and good afternoon. Joining me on today's call is David French, Cirrus Logic's President and Chief Executive Officer. Before we begin, I would like to remind you that during the course of this conference call, we will make projections and other forward-looking statements regarding, among other things, our estimates for the Q2 FY 2007 revenue, gross margin levels, combined R&D and SG&A expenses, stock compensation expense, as well as our estimates and assumptions regarding our future revenue growth and profitability. Please keep in mind that these statements are predictions that are subject to risks and uncertainties that may cause actual results to differ materially from our projections. By providing this information, we undertake no obligation to update or revise any projection or forward-looking statement, whether as a result of new developments or otherwise. Please refer to our press release issued today, which is available on our Website at www.Cirrus.com, our latest Form 10-K for the fiscal year ended March 25, 2006, as well as our other filings made with the Securities and Exchange Commission for additional discussion of risk factors that could cause actual results to differ materially from our current expectations. I want to mention before we proceed that all financial numbers are prepared, unless noted, in accordance with Generally Accepted Accounting Principles. A reconciliation of non-GAAP financial information to the most directly comparable GAAP information is included in the financial statements and issued with the financial release published today, as well as on our website in the investors section at www.Cirrus.com. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included solely for informational and comparative purposes. We believe that certain non-GAAP financial information is useful to investors because it may enhance their understanding of the results and trends of our business. We also use certain non-GAAP financial information internally to evaluate and manage our operation. As a note, the non-GAAP financial information we use may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP. Now I will turn the call over to David French. David French, President and Chief Executive Officer: Thank you, John, and thanks to all of you who are joining us here today. Let me briefly recap first the results for the quarter, which ended June 24. Total revenue was $45.2 million, up 7% from the previous quarter, gross margin was 60.1%, and net income was $7.7 million, including stock compensation expense of $1.4 million. I'd like to emphasize that the 200bps improvement from the prior quarter in gross margin allowed us to achieve for the first time our model of 60% gross margins a bit ahead of schedule. This resulted in a GAAP income this quarter of $0.09 per diluted share. I would also like to provide those investors who track our ongoing business activities with non-GAAP Q1 results, and our non-GAAP numbers differ from GAAP solely by the exclusion of stock compensation expense of $1.4 million, as mentioned earlier. When calculated on a non-GAAP basis, the Company would have produced a net income per share of $0.10 based on 88.8 million diluted shares. This non-GAAP result compares favorably with the current First Call mean estimate, for reference, of $0.09 net income per share on a like basis. Later during this call, I will provide more detail regarding our business operations, but now John will review in more detail our financial results for the June quarter. John Kurtzweil: Thank you, Dave. Our net revenue in the June quarter was $45.2 million, compared with $42.2 million in the March quarter and $43.7 million in the June quarter one year ago, for the revenue associated with our analog, mixed signal and embedded products. Our revenue by product line was as follows. Mixed signal audio products contributed $21.6 million in the June quarter, representing an 8% decline compared to the same quarter one year ago. Industrial products provided $10.9 million in the June quarter, representing 41% YoverY growth, and embedded products were $12.6 million in the June quarter, representing a 1% YoverY growth. Historical revenue breakdowns for these products may be found on our website in the investors section. We had no OEM customers representing more than 10% of revenue, and one distributor, Avnet, contributing 28% of revenue. Gross margin for the June quarter was 60.1%, compared with 58.1% gross margin in the March quarter and 51.7% one year ago. This 200bps increase from the March quarter was primarily attributable to a richer mix of industrial and embedded processor product sales and supply chain efficiency. Combined R&D and SG&A expense was $22.9 million in the June quarter. Included is stock based compensation expense of $527,000 in R&D and $809,000 in SG&A. Interest income for the first fiscal quarter was $3 million. We also recorded a gain of $193,000 on the sale of a public security and had $259,000 international tax benefit. Net income in the first fiscal quarter was $7.7 million and diluted earnings per share was $0.09, based on 88.8 million diluted shares. Please note, when stock based compensation expense is excluded, which is practiced by all First Call analysts for Cirrus Logic, net income on a non-GAAP basis would have been $9 million, and diluted earnings per share on a non-GAAP basis would have been $0.10. In the prior quarter the Company reported net income of $15.4 million. The March quarter also included a onetime $7 million gain associated with amendments to an existing licensing agreement, and a $1.2 million benefit from certain international tax related events. Our employee headcount as of the end of June was 409, compared with 424 at the close of the March quarter. Now on to the balance sheet. Total cash and marketable securities at the end of June increased to $252 million, from $243 million at the end of the March quarter. Our total cash per diluted share increased by $0.10 and ended at $2.84 per diluted share. We ended the June quarter with $21.5 million in net receivables, compared with $20.9 million at the end of the March quarter. DSOs, or day sales outstanding, were 43 days, compared with 45 days in the March quarter. Inventory at the close of the June quarter was $21.4 million, up $2.7 million from March, which is what we forecasted last April. Net inventory turns were 3.4 in the June quarter. The inventory at our distributors was relatively flat during the quarter and we continued to actively manage our distribution channel. Our capital expenditures were $636,000 in the June quarter, compared with $1.3 million in the March quarter. Depreciation and amortization expense totaled $1.7 million, compared with $1.9 million in the March quarter. Now Dave will discuss our business operations and guidance for the upcoming quarter.

Thanks again, John. I'm pleased with our start for FY 2007. We have focused our business on core analog and mixed signal technologies, and this move is paying off. Cirrus Logic's organization is performing better, in my opinion, than at any time in recent history, both in terms of operational execution and also in new product generation. Achievement of 60% gross margins this past quarter is one of many measures of our improving execution. In addition, we are closely managing inventories, our cash generation is strong, and we have improved the diversification of our product portfolio. Our new products are gaining good acceptance through a powerful global demand creation channel. We have enhanced this channel over the past year by establishing and expanding strong distributor relationships with leading global firms, including Digi-Key, Avnet and Nu Horizons, and with Internix in Japan and Azzurri in Europe, and a number of industrial partners in the fast growing China market. In addition to our existing consumer market strength, we have augmented demand creation efforts for our industrial products, including power meter ICs, precision amplifier products and seismic solutions. Overall, we've taken major strides in the enhancement of our sales channels to complement our product diversification initiatives. Building a great analog product franchise takes time, as technology based differentiation brings with it longer cycle times from new product introduction to revenue ramp. And though our revenue during FY 2007 is slightly lower than we'd earlier hoped, leading indicators for growth in FY 2008 are favorable. In combination with internal profit improvement activities, I am pleased to say that FY 2008 growth prospects now enable us to see a clearer path to the achievement of our near-term 20% operating profit model. I'd like now to provide product related updates, beginning with our industrial products. This product line includes integrated circuits designed for a variety of data acquisition, power metering, precision measurement and energy exploration applications. These products demonstrated strong QoverQ revenue growth and generated our strongest gross margins. Revenue in Q1 was $10.9 million for this product line, up from $10.1 million in the March quarter. Our industrial product line demonstrated 41% YoverY revenue growth, and many product families contributed to this growth. Our seismic products, for example, continued to demonstrate strong demand. The technical superiority of our offering relative to the competition in this area, along with a strong global energy market, resulted in better than expected growth for our seismic products. Recent emphasis on industrial product demand creation in the fast growing China market is also generating increased revenue opportunities for both power meter ICs and data acquisition products. In addition, during the June quarter we introduced a new family of operational amplifiers for scientific and industrial measurement applications. These products provide best in class performance and low power dissipation, and we're already seeing design win activity with multiple customers. With our industry leading high precision industrial technology expertise and our focus on new product development, we remain optimistic about our ongoing growth prospects within the industrial markets. Let me turn now to our mixed signal audio products. Semiconductor components in this product line, including data converters, class D amplification products, and interface devices are used in a wide array of consumer, professional and automotive audio applications. This product line contributed $21.6 million of our June quarter revenue, up from $20.2 million last quarter. The 8% YoverY decline in this product area was driven primarily by a reduction, as anticipated, in sales of discrete digital to analog audio converters in DVD player applications. Despite this YoverY decline, I remain encouraged by growth opportunities associated with new product sales in a number of consumer applications. For example, in April, we launched a class D power stage product, which provides the basis for a competitive two-channel solution for applications such as flat panel digital televisions and high volume home theater receivers. In addition, our broad family of audio data converters has been featured in several digital television reference designs, which are in turn being considered by many major television manufacturers in China. The digital television market represents a significant revenue growth opportunity for both our mixed signal audio and embedded product lines during FY 2007 and FY 2008. Overall, new product introduction initiatives in the mixed signal audio product area are showing early signs of success. And while the revenue this year for new low power products and for our audio converter win in PlayStation 3 have developed more slowly than we had previously anticipated, I believe FY 2008 will be a strong revenue growth year for this product line. Finally I'd like to comment on our embedded product line, which represented $12.6 million of our June quarter sales, up from $11.9 million in the March quarter. Products within this category include our general-purpose ARM based microprocessors, network audio components, and audio/digital signal processors. Revenue contribution in this product line was in line with our expectations. Our ARM based family of embedded processors continues to demonstrate solid YoverY improvement. Products that feature our ARM based processors, such as network media servers and intelligent industrial terminals, typically have long design cycles. So the increasing revenue from this product family reflects design wins secured more than a year ago. We also are continuing our design win emphasis for this product family, and have recently generated a wide array of design successes, including those at key accounts such as Harman Kardon, Yamaha, Kenwood, and others. Historic trends suggest that this product family could generate revenue growth for a long time, based on designs already won. This quarter we also introduced a new audio DSP, or digital signal processor, for audio/video receiver and automotive applications. This new 32bit DSP offers high performance and onboard memory to provide both enhanced features and reduced system costs. Cirrus Logic is now showing consistent profitability and is generating solid cash flow with expanding earnings. This confirms that the underlying value of our proprietary analog and mixed signal products is strong. We will continue to push our product diversification initiatives, even as we are faced with the lengthy revenue ramp period associated with our numerous product introductions in FY 2006 and already in 2007. It's difficult to predict when new products will drive revenue growth, even under good conditions. In addition, we're cautious regarding the potential adverse effects of higher energy costs on consumer spending, and other overall economic variables in the near term. Therefore, we're forecasting only modest sequential growth during the September quarter, which should bring further improvement in profitability and operational cash flow. Our guidance for Q2 of FY 2007, which ends on September 23, 2006, is as follows. Revenue is expected to range between $47-51 million, a sequential increase of 4-13%. Gross margin is anticipated to be between 58-60%, and combinedR&D and SG&A expenses are expected to range between $22-24 million, including share based compensation expense of approximately $1.4 million. To recap, I'm pleased with our Q1 results. Our analog strategy is paying off. Our organization is performing well, and we have significantly enhanced the diversification of our product portfolio. We understand that building a strong analog franchise takes time, and FY 2007 is going reasonably well, in spite of the challenging economic environment. While we hoped that revenues would be higher in FY 2007, we're still ahead of most analysts' previous earnings estimates for this year. And leading growth indicators are even more favorable, allowing me to confirm my commitment to achieve our 20% operating profit model during the course of the coming fiscal year. And as we look to FY 2008, I'm enthusiastic about this financial outlook and the value we can deliver to Cirrus Logic shareholders. We are now ready for your questions. Operator?

Operator instructions.: Q - Jay Srivatsa, Roth Capital Partners: Hi, Dave. Congratulations on beating the street DBS(?) consensus. A - David French: Thank you, Jay. Q - Jay Srivatsa, Roth Capital Partners: A couple of questions if I may. You spoke to the digital TV strategy a little bit. Could you expand on that? I know you've been working with Genesis on this. Could you tell us how the outlook is in terms of the second half of this year? A - David French: Digital television penetration has continued to be pretty strong. We sell data converters and embedded DSPs, data converters more broadly at a lower price point, and embedded DSPs in some high end branded equipment, particularly in Japan, at a little bit higher price point. The reference designs that we're designed into suggest, with the video chip suppliers such as Genesis, such as MediaTek andothers, suggest that we could participate pretty strongly selling A/D converters, D/A converters, and the like pretty strongly in the second half of the year. It's my sense that the revenue, or the manufacturing run rate during the second calendar quarter, our fiscal Q1 just completed, was a little lower than what people anticipated; might be up a little bit in total, but not up as much as a lot of people had anticipated, I believe. It's my sense that the second half should be pretty strong, if not very strong, though we've still got guided pretty cautiously on that front. So our assumption is a relatively modest growth in the second half; my gut says it ought to be a bit stronger. Q - Jay Srivatsa, Roth Capital Partners: Could you tell us what the status is in terms of the MP3 player market? We've heard multiple reports of maybe there was some weakness in that market in the June quarter. Could you kind of set the stage for us there? What are you seeing out there? A - David French: We're not necessarily the world's experts in the MP3 player market, but we do participate some, and we have a lot of design wins for the low power products we introduced in the first half of last year. Many of those design wins have not yet driven significant revenue. That's somewhat of a disappointment, as I pointed out during my earlier talk. And a lot of the reasons that have been provided to us have led me to conclude that overall retail channels might have a little bit too much inventory, not to mention that the major player in the branded space, that being iPod, has really done so well against some of the other competitors outside of China that other players are not doing exceptionally well, it appears to me. However, in China the volumes are pretty high. We've seen recently some more interest in our lower priced low power products in Asia of late that we brought out since our first introduction. And it's obvious that there is a relatively high volume demand over in Asia, in addition to the branded market that exists here in North America. I think second half should be pretty good for that market overall. Q - Jay Srivatsa, Roth Capital Partners: You had a nice jump in gross margins, but yet you're guiding to slightly lower gross margins going into the September quarter. Is it because the seismic business is a little lumpy, or do you expect the consumer electronics products to start getting more traction in September? A - David French: I appreciate you pointing out the gross margin number. 60% is the model we've had established publicly for a while, and it's the first time we ever achieved that, and I think that's a good start. Actually, our guidance for the September quarter supposes, particularly at the higher end of the revenue guidance range, that consumer applications will pick up through the quarter, thereby weakening the mix a little bit. We feel very confident that our customers in industrial overall, including seismic as well as the other product families inside of industrial, understand that our lead times are out, they are not getting any shorter, and we've got pretty good coverage on industrial that leads me to be very comfortable with the industrial number. So it's really just consumer going up a little bit during the September quarter. Q - Jay Srivatsa, Roth Capital Partners: Could you give us a sense on your backlog, how things were looking coming into the conference call? A - David French: Coming into the quarter, at the end of the June quarter a few weeks back, we came in with better overall backlog than we've had in quite some time in dollar terms, which is good. As I mentioned, we're quoting longer lead times than we have in quite a while. And bookings trends through the July, month of July have been very good. So actually, our backlog coverage is pretty good right now.

Our next question comes from Tore Svanberg of Piper Jaffray. Q - Evan Wang, Piper Jaffray: This is Evan calling in for Tore. I just have a quick question. There appears to be a lot of nervousness around consumer spending. And looking at how your different segments have performed in this past quarter, and also your comment about how the next quarter's performance on that basis will be based somewhat on the pickup in consumer. I was wondering if you can share with us any insight you might have into the end customer demand at this time? A - David French: Yes. Overall, I think that there is a broad sense of nervousness around consumer spending in North America, Europe, and to a lesser extent in Japan, which has been pretty good for us over the past few quarters. The build rates have been slower than most people would have estimated, in my opinion, through the June period. Digital TV has ramped a little bit more slowly, I think, than many people had anticipated. And DVD players, DVD recorders, home theater systems, and, I believe, MP3 players, have seen the same sort of thing, that manufacturing run rates are a little bit lower. That being said, I believe inventories throughout the channel, for us in particular I could say, our internal inventories, our distributor inventories, our end customer inventories, as well as what appears to be their end customer or retailer inventories seem pretty low. So any mitigation in the fears of consumer spending, or realization that the imminent demise of the American consumer spender is once again being overstated, might result in a pretty significant, though late, rush for semiconductor products during the third calendar quarter, or the quarter that we've already entered. I think that there's a reasonable chance that that's going to happen, but we're still going to base our second plan on a much more pessimistic view on consumer spending patterns, because I think we're just better off playing it that way. Q - Evan Wang, Piper Jaffray: That's very helpful. I have one quick follow-up question to that. How is this affecting the pricing environment for your different end markets? A - David French: For our customers, certainly they have a hard time getting clear visibility as to what it takes to get shelf space in retail in the entertainment side of things for consumer. For us, virtually everything we do is proprietary in nature. So there's not a lot of direct pricing pressure. We tend to push costs, our own internal costs, such that we can be aggressive in winning designs at a good price point for our customers, while driving model margins. But we don't have a lot of real-time pricing pressure like those people in the commodities spaces would see.

Our next call comes from Adam Benjamin of Jefferies. Q - (Rich Greysetter?), Jefferies & Co: Hi, this is (Rich Greysetter?) in for Adam. A question on inventories. You commented that you expect them to go up for this quarter. Can you just remind us what that cost was and how you see inventories moving over Q3? The count of Q3? A - David French: We had indicated 90 days ago that we plan to build inventory this quarter by a couple of million dollars, which we did. It's pretty much across the board on all our products, and again, we've stretched out lead times on pretty much all our products anyway. A lot of that is based on seasonal trends for the consumer-oriented products, which are usually stronger in the second half of the calendar year; and also for industrial products, where we pushed out our lead times pretty substantially, and demand appears to be pretty strong, so we decided to up our inventory there. So we've done that. During the September quarter, our plan is to hold inventories roughly flat if our revenue is around the middle range of guidance. If revenues go up above that, of course, we would anticipate inventories to come down pretty meaningfully. And during the December quarter, almost regardless, we plan to take inventories down substantially, which is our seasonally normal pattern. Q - (Rich Greysetter?), Jefferies & Co: Okay. And in industrial, your industrial segment, you've shown positive growth, a great job over the past six quarters. Just kind of curious if you can give us a little more color on what that's coming from, different, which segment, or if it's just broad based. A - David French: It's very broad-based. That's one of the great things, and the tough things, about the industrial segment, and about catalog mixed-signal/analog products as a whole, is it's made up of a lot of smaller areas. If you look at the traditional strength for many companies, including ourselves, you have instrumentation, medical equipment, lab equipment, intelligent shop floor data acquisition equipment; things that require precise measurements is a big chunk of that. North American distribution makes up one of the biggest channels for that business, which is roughly half of the overall revenue, if I recall correctly, for that product line. So that's a lot of it. It's very fragmented, with no major customers buying a lot of any one product type. We also have a significant play in oil exploration, which falls into that category, where we are the leading provider of data acquisition circuits for land-based as well as marine oil and gas exploration and field management, capital investment for which has been going up of late. We also have seen significant growth in the past year and a half in industrial as well as consumer digital power meter applications. So, in residential applications it's the digital equivalent of that box that's on the side of your house with the little wheel that spins around, measuring the amount of energy that you're consuming. The industrial application hits a much higher price point, and it's measuring efficiency, peak usage, and a lot of other parameters that is interesting to distributors and consumers of energy alike.

Our next call comes from Tayyib Shah of Longbow Research. Q - Tayyib Shah, Longbow Research: Nice job on the margins. David, if you could just talk about, in some detail about the new low power products that you guys are coming out with, and what is the customer traction. That would be very helpful. A - David French: We brought the first member of this product family out just over a year ago. We had hoped that during the second half of this past year we would generate some noticeable revenue, and it really didn't happen. We now see the trends ticking upward, which is nice to see, a little bit later than what we'd hoped. And what we sell is an audio CODEC. We sell various versions of that. We now have the ability to sell DEC-only products for lower-cost versions. We have the ability to integrate headphone amplifiers. We have the ability to integrate other high-precision clocking circuits. More recently we've looked for ways to continue to drive costs out of the system, as well as add additional features for applications in other areas. The leader in low-power portable-oriented audio converter products is Wilson. They were out there before we were. They've done quite well. I have to say good things about their products. We believe that the first, now that we're up to a few products in our portfolio, we think that we'll begin to see more and more traction. We have lower power. We have better audio performance. We have lower die costs, and therefore, lower price. And we also have a novel innovation in that we have the ability to have the output voltage of our components centered around ground, which the net effect of that is our customers can build equipment without the use of relatively bulky, somewhat expensive in terms of that kind of equipment, capacitors decoupling the output from supply. And that's actually getting us a lot of traction, in terms of many of the branded accounts worldwide are showing interest in our product because they can build sleeker product, they can build more energy efficient product, they can build smaller systems. And many of the Asian-oriented accounts are showing a lot of interest in our product because they can build a product - they can build an end product for $0.10 or $0.20 cheaper than they can with competitive alternatives. And that's a lot of money. In many cases in Asia for the high-volume applications, that's a pretty meaningful cost advantage. Q - Tayyib Shah, Longbow Research: So when did your product portfolio expand? And given the typical design cycle, when would we expect your expanded product portfolio to go to production? A - David French: We've got already a couple of components in production from last year. We've got a recent product that we're just now sampling, and we think that that can go to production as early as three to six months; more likely it won't generate revenue until the first part of next year. We've got follow-on products coming out, another product sampling next month, and a pretty substantial product oriented towards branded high-volume MP3 player-type products by the end of the year, or in January, which could generate meaningful revenue in the second half of next calendar year. Q - Tayyib Shah, Longbow Research: And then the same question for your DTV products. Can you talk about the new products that are coming out for DTV, especially and all the attraction, and especially the audio DSP part for DTV applications? A - David French: We sell many products into DTV. We sell a data, an A/D converter in the audio space, which is low-cost and very high-performance. And as all digital televisions support legacy applications. In other words, they take an analog signal in. Most DTVs are using some sort of A/D converter. We sell D/A converters in many TV reference designs, which basically drive the output stage into the amplifiers. These products are already in production and shipping today, and growing. We also have introduced new products in the area of digital amplifier, or class D amplifier subsystem power stage products that we think can offer very high performance and relatively low cost for stereo 10 to 20 watt per channel applications. We think that can generate some revenue in the second half of the year, more likely significant revenue growth next calendar year. The embedded DSP product is used for second channel decode in high-performance, high end branded systems in Japan, to allow headphone solutions that can decode a separate audio channel for picture-in-picture applications. We also have embedded DSP value-added propositions, which will offer augmented sound quality, enhanced bass, front speaker-only surround sound, or artificial surround sound-type of applications. There will be a headphone-type of application as well for high-end branded systems that attempt during calendar year 2006 and 2007 to differentiate their systems on audio performance. Q - Tayyib Shah, Longbow Research: Thank you. John, one question for you. You guys have now $250 million in cash, and I think last quarter the balance went up by about 20 million. So, any plans on buying back your shares, or any other use of the cash? A - John Kurtzweil: At this time we have no authorization from the board to buy back stock. It's a topic that we continue to discuss with them, but we have no plans at this time.

Our next question comes from (Ral Conwalker?) of Needham & Company. Please go ahead with your question. Q - (Ral Conwalker?), Needham & Co: Congratulations for the great quarter, and especially the gross margins. My first question is about modeling, and then a follow up. First of all, on the taxes front, could you explain the income tax benefit you realized this quarter? And what would be your tax rate going forward for fiscal 2007, as well as for '08? A - David French: I'll let John talk to that question. A - John Kurtzweil: The tax benefit this quarter was for some international dates that had expired, so we had a onetime relief that was like $250,000. As far as the tax rate going forward for this year, my expectation is that it would be zero. Q - (Ral Conwalker?), Needham & Co: Okay. You have net operating losses carried forward? A - John Kurtzweil: We have NOLs that are carried forward, and there's a big, long discussion of those in our last 10-K. Q - (Ral Conwalker?), Needham & Co: I'll refer to that. Thanks. The second question is what is the nature of your investment in this Magnum Semiconductor? A - David French: Magnum Semiconductor is fundamentally a spinout of what had previously been our video product group internal to the Company. When we spun that out, funding for further development, further growth prospects, pursuit of further growth prospects, etc. is coming from other sources. We maintained, based on our previous investment in that product line, a percentage ownership in that private equity, which was valued at… I don't remember; what was the number, John? Approximately $8 million on the balance sheet.

Your next question comes from Jason Pflaum of Thomas Weisel Partners. Please go ahead with your question. Q - Alberto Mann, Thomas Weisel Partners: This is actually Alberto Mann in for Jason. I just had a question about some of the leading indicators you spoke of for FY 2008. I was hoping that you could just dive into a little more detail, what specifically those were, maybe by product category. And then maybe discuss whether it's revenue or gross margin or opex that's really going to drive the increase in operating margins to hit your targets. A - David French: It's really design wins that is the strongest category or leading indicator for FY 2008 right now. If you look at the breadth of acceptance of our new products. If you look at the portfolio of new products introduced over the past year, it's actually been one of the stronger years in terms of number of new products, and the number of customers that are pursuing system designs based on those new products, that we've seen in recent times. And so that's the primary indicator. There are other indicators, such as the number of reference boards and development platforms that our customers have consumed, which further confirms the breadth of acceptance and the level of seriousness of the customer communities that we're pursuing for those products. In addition, the level of quote activity, which oftentimes is a leading indicator, but not a current indicator, of future purchases of customers on existing and new products, has been pretty strong. We spent a lot of energy in augmenting our demand creation capability, both directly with more field application engineers on the Cirrus payroll, and indirectly, with stronger global relationships on the demand creation side worldwide; has generated a lot of activity. We have had a lot of training programs and a lot of activity in Asia, in Europe, even in North America, oftentimes on pre-existing products, where the rejuvenation of the distribution channel and the demand creation channel has generated a level of quote activity, which oftentimes has been higher than what we've seen historically. So we've seen a resurgence in growth in some more mature products, as well as the design win activity on new products. Now in terms of driving operating margin improvement, I've said historically, and I maintain, that we shouldn't sit still, even once we established consistent performance at 60% gross margin. We should continue to try to expand gross margin. However, we think, and I personally have espoused within our internal and external demand creation capabilities, that if our gross margin goes down a little bit in order to drive more aggressive revenue growth, that's probably a better business model. So basically, revenue growth is one of the most substantial components of operating margin leverage going forward. We also have an ability to improve operating efficiencies, I think, still from year. And I think that that will help us a bit. Q - Alberto Mann, Thomas Weisel Partners: Just a quick follow-up on the operating expenses in the current quarter, in the June quarter. It looks like they were up about 9% on an absolute basis over the March quarter, and sounds like headcount went down. I was just wondering if you could reconcile that a little bit. And how do we look at that going forward? A - David French: FAS 123R. The increase in the June quarter included $1.4 million of expenses related to stock-based compensation since we began. We initiated reporting under 123R at the beginning of the fiscal year, which was at the beginning of the previous quarter. So that's the only increase. Actual expenses excluding that, or non-GAAP expenses, were roughly flat. Now, was there any onetime gain? There was no other onetime effects in the March quarter, right? A - John Kurtzweil: Not in the March quarter, no.

The next question comes from (Damal Haraproom, Iprom Securities?) Q - (Damal Haraproom, Iprom Securities?): Hi, this is (Damal from Iprom), thanks for the time. Good quarter, and also I'm very pleasantly surprised that you did not change your guidance, the quarter guidance, too much. Let's start with that. My question here is that - I know you have answered this question two or three times, so I don't want to take too much time, but I just want to understand better how this all worked out. When you said that you wanted to be somewhat cautious, somewhat conservative on the guidance in Q3, is that because it was a preemptive measure by you looking around and hearing reports from analysts and so on? Or did you see any specific customer come and cancel existing orders into the thirdquarter, or thirdly, any specific customer coming and telling you that they might be in a position not to take all the orders that have talked to you in Q3? Can you give us some idea here? A - David French: That's actually a good, insightful question. We have experienced, as best as I can recall - and I think I would know if there was anything significant to the contrary - no negative adjustments in our backlog. And as I mentioned earlier, our backlog coverage coming into the September quarter is pretty good. Bookings rates in June and in July have been at least pretty good and pretty broad-based. So generally we're quite positive based on the numbers that we see. We have had no particular indications saying from any customers or any distributors that things would be negative in the September quarter. We have heard anecdotally a lot of concerns from a lot of other people, and it's not like we can put our head down and just do our jobs without paying attention to the macro environment, which is a bit disturbing on the consumer front. Q - (Damal Haraproom, Iprom Securities?): I do understand that. A - David French: So it's more generic than anything else. And if I were just reading the numbers I might be a little bit more bullish. But in the June 2004 period, we did not have adequate visibility into distributor inventory, end customer inventory, channel inventory and all, and we did misinterpret positive signs at that time and get a little bit overly optimistic. While our controls and our visibility are quite a bit better now than they used to be, and we've managed inventory, I think, quite well in the channels into which we sell, I'm still a little bit concerned about people's ability to anticipate the effects of retail attitudes in North America. So it's more generic, and I really have no particular negative data points. Q - (Damal Haraproom, Iprom Securities?): Just a follow-up on that. The industrial market, embedded market, typically historically has been a good indicator, unfortunately somewhat of a lagging indicator, for the general GDP activities of many countries. Since you have some exposure to that market through your embedded application, are you seeing any of the industrial customers this time around being too antsy about how things are going to turn out in the second half, or even in 2007 because of higher interest rates? A - David French: Let's put it this way. The industrial customer base that we have in North America is predominantly distribution-oriented, and we don't get a lot of good feedback in terms of business visibility from these folks. That being said, their buying patterns, as reflected in point of sale numbers from our distributors into the industrial channel in North America, have been quite good. Now, they're not quite as strong in the past 30 to 60 days as they were in the 60 days prior, but that's normal in the summer, actually, in North America. So it all looks pretty strong. And I'd like to point out also that our industrial products are doing quite well on a relative basis in China. And if you look at the level of economic activity and growth that we see in China, we're excited about that country and our opportunities there, because it's really become the major home for almost all manufacturing of consumer-oriented products worldwide. But it's actually even more interesting to me over the past 90 to 180 days to see it's actually driving our industrial business growth as well, as they're trying to upgrade the infrastructure throughout that country at an incredible pace. Q - (Damal Haraproom, Iprom Securities?): Two more questions, if I may. The third one is that your top line has been stuck between 48 and around 50-52 for the last six quarters or so. If I read between the lines of the comments you made during the conference call, that would indicate that given your new product design and new activity with customers, that you might see fiscal 2008 as a year where you might break out of that $50 million quarter sales company. Is that a fairly safe assumption to make? A - David French: I think calling anything in semiconductors a year and a half away safe would probably be overly confident. I feel very good about our growth prospects for FY 2008, or calendar year 2007, based on the improving product stream, focus of the Company, diversification of product lines, just China in so many ways, and a lot of leading indicators along those lines. Q - (Damal Haraproom, Iprom Securities?): The final question. Would you be able to comment on whether you had any low power design wins with the Samsung, SanDisk or the Microsoft MP3 players? A - David French: We've had some indications that we've had wins there, as well as at Sony's mainstream portable line. I don't think we can confirm any of those things at this stage, not until we generate some revenue there.

Operator instructions.:

Again, I'd like to thank you all for your attendance here on the Cirrus Logic conference call, and we look forward to seeing you through the summer at various conferences. And thank you for your interest in our company.

Ladies and gentlemen, this concludes the Cirrus Logic Q1 FY 2007 financial results conference call. Thank you. You may now disconnect.