SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              _____________________
                                    FORM 10-K

     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     FOR THE FISCAL YEAR ENDED

[X]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     FOR THE TRANSITION PERIOD FROM JULY 2, 1995 TO DECEMBER 30, 1995

                         COMMISSION FILE NUMBER 0-13941
                           __________________________
                                        
                                        
                               AST RESEARCH, INC.
             (Exact name of registrant as specified in its charter)

          DELAWARE                                   95-3525565
     (STATE OR OTHER JURISDICTION OF               (IRS EMPLOYER
     INCORPORATION OR ORGANIZATION)             IDENTIFICATION NO.)

                               16215 ALTON PARKWAY
                            IRVINE, CALIFORNIA 92718
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 727-4141
                                        
                           __________________________

                                        
        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:  NONE
           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                              TITLE OF EACH CLASS    
                          COMMON STOCK, PAR VALUE $.01
                           __________________________
  
    
     Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.  Yes  X  No
_

     Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy
or information statements incorporated by reference in  Part III of this
Form 10-K or any amendment to this Form 10-K.  [X]

     The aggregate market value of the registrant's voting Common Stock
held by non-affiliates of the registrant was approximately $159,890,926
(computed using the closing price of $6.50 per share of Common Stock on
March 1, 1996 as reported by NASDAQ, based on the assumption that directors
and officers and more than 10% shareholders are affiliates).  There were
44,685,900 shares of the registrant's Common Stock, par value $.01 per
share, outstanding on March 1, 1996.

                           __________________________

  This Transition Report on Form 10-K includes certain forward-looking
statements, the realization of which may be impacted by certain important
factors discussed in "Additional Factors That May Affect Future Results." under
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations."

                                     PART I
ITEM 1.BUSINESS

GENERAL

  AST Research, Inc. ("AST" or "Company") was incorporated in California on
July 25, 1980 and reincorporated as a Delaware corporation effective July 1,
1987.  The Company designs, manufactures, markets, services and supports a broad
line of personal computers including desktop, notebook and server computer
systems marketed under the Advantage!(R), BravoTM, PremmiaTM, AscentiaTM, and
ManhattanTM brand names.  The Company's products feature advanced design
characteristics while remaining compatible with established industry standards.
The Company currently markets its products through an extensive worldwide
distribution network of retail computer dealers, consumer retailers,
international and regional distributors, value added dealers ("VADs") and value
added resellers ("VARs").  See further discussions under Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Additional Factors That May Affect Future Results" therein.

SIGNIFICANT BUSINESS DEVELOPMENTS IN TRANSITION PERIOD 1995

  Pursuant to a Stock Purchase Agreement ("Purchase Agreement") between the
Company and Samsung Electronics Co. Ltd. ("Samsung"), dated February 27, 1995,
as amended, Samsung purchased 6.44 million newly issued shares of common stock
from the Company, representing 19.9% of the then outstanding shares of common
stock, at $19.50 per share and commenced a cash tender offer to purchase 5.82
million shares of common stock from the Company's shareholders, representing 18%
of the then outstanding shares of common stock, at $22 per share.  Concurrently
with the acceptance of the shares for purchase under the tender offer, Samsung
also purchased 5.63 million additional newly issued shares of common stock from
the Company at $22 per share so that its aggregate ownership interest in the
Company, after completion of all of the purchases, was approximately 40%.  On
July 31, 1995, the transaction was completed and the Company received net
proceeds of approximately $240 million.

  On October 26, 1995, the Company changed its fiscal year-end from the
Saturday closest to June 30 to the Saturday closest to December 31.  The change
was made in order to align the Company's year-end with that of its largest
shareholder, Samsung.  The change in fiscal year-end was effective for the six
months ended December 30, 1995 ("transition period" or "transition period
1995").

  On December 21, 1995, the Company signed an Additional Support Agreement with
Samsung that provides additional financial support to the Company, principally
including a guaranty by Samsung of a line of credit of up to $200 million
through December 1997 and a vendor line of credit with Samsung of $100 million
through November 1997 for component purchases.  In exchange for the additional
financial support, the Company issued a five-year option to Samsung to purchase
4.4 million shares of the Company's common stock at an exercise price of $.01
per share, and allowed Samsung to add a sixth member to the Company's eleven
member Board of Directors.  The issuance of the option, which could be exercised
as early as July 1996, would increase Samsung's ownership in the Company to
approximately 45%.

  On December 27, 1995, the Company entered into a $100 million revolving
credit agreement, guaranteed by Samsung as part of the Additional Support
Agreement, with a final maturity date of December 25, 1996.  On March 6, 1996,
the total amount available for borrowings under the facility and guaranteed by
Samsung was increased to $200 million.  See further discussion included in
"Liquidity and Capital Resources" under Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

  In the second quarter of transition period 1995, the Company implemented a
restructuring plan designed to increase its utilization of third-party board
manufacturing and design and to realign its Asia Pacific manufacturing
operations.  In connection with this plan, the Company recorded a restructuring
charge of $13.0 million.

INDUSTRY SEGMENTS AND GEOGRAPHIC INFORMATION

  The Company operates in one industry segment: the manufacture and sale of
personal computers, including desktop, notebook, and server computer systems.
The Company currently markets its products through retail computer dealers,
consumer retailers, international and regional distributors, VADs and VARs.  A
summary of the Company's operations by geographic area including net sales,
operating income (loss) and identifiable assets is incorporated herein by
reference from Note 13 of the Notes to Consolidated Financial Statements.

BUSINESS STRATEGY AND MARKET

  The Company has recently revised its business strategy to focus on being
first to bring leading-edge personal computer technology to market within the
indirect sales channel, thereby positioning the Company's products to gain a
competitive advantage.  By concentrating its efforts on bringing new products to
market first, the Company will also utilize its technological expertise,
worldwide manufacturing capabilities, brand name recognition and distribution
channels to offer its customers a variety of personal computers to meet diverse
user needs.  In support of this goal, the Company is also focusing its efforts
on creating and maintaining short and flexible supply lines to become the most
reliable supplier to the indirect sales channel.  The Company believes that the
success of this strategy depends upon the ability to identify products and
product features required by customers and to design and bring to market ahead
of its competitors high quality, innovative products compatible with industry
standards at competitive prices.  The foregoing forward-looking statements
involve risks and uncertainties that could cause actual results to differ
materially.  See "Additional Factors That May Affect Future Results" under Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

  As new technology and faster, more powerful microprocessors have become
available, the Company is concentrating its efforts on working closely with
various industry leading component suppliers, including Samsung, to enable it to
achieve its goal of being first to deliver new products to the indirect channel.
These efforts include working together on technology issues as well as working
to shorten the supply lines and making supply arrangements more flexible.  In
addition to its goal of becoming the most reliable supplier to the indirect
sales channel, the Company is also attempting to leverage its worldwide
distribution activities such that it can become the supplier of choice for the
world's multinational corporations, delivering consistently high quality
products worldwide.  The foregoing forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially.  See
"Additional Factors That May Affect Future Results" under Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

  The Company's business strategy is focused on serving the indirect sales
channel worldwide, since the Company believes that the indirect sales channel is
the method by which the most users choose to purchase personal computers.  The
Company also believes that the indirect sales channel offers the highest level
of service and support to the purchaser and will continue to play the key role
in expanding the use of computers throughout the world.  The foregoing forward-
looking statements involve risks and uncertainties that could cause actual
results to differ materially.  See "Additional Factors That May Affect Future
Results" under Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

  The Company's business strategy focuses on the continued introduction of new
products that are aggressively priced to highlight the price and performance
advantages of the Company's products.  The personal computer industry is
characterized by intense price competition and the Company believes that the
price and performance features of its products are key factors in the purchase
decisions of its customers.  The Company intends for its products to maintain
their price/performance advantage and therefore generally adjusts its prices as
needed to maintain its advantage.

  In pursuing its business strategy, the Company has maintained its multi-
channel and multi-brand distribution approach to target a variety of price
points and user requirements, including the Advantage! computer product lines,
which are designed for the consumer retail market; the value oriented Bravo and
high performance Premmia business desktop lines; the Manhattan server line; and
the Ascentia line of notebook computers.  Within these multiple brands, the
Company offers a variety of products, including 486-based desktop systems, high-
end Pentium(R) and Pentium(R) Pro processor-based desktop systems and servers,
and color notebooks.  The Company's personal computers incorporate either
Industry Standard Architecture ("ISA"), Extended Industry Standard Architecture
("EISA"), or Peripheral Component Interconnect ("PCI") Bus Architecture and are
compatible with major industry standard operating systems including MS-DOS(R),
UNIX/XENIX, SCO UNIX, Novell NetWare(R), OS/2(R) and Windows NTTM.  The Company
continues to pursue a strategy whereby its products retain their compatibility
with new major industry standards as they are developed.

  The Company believes that its strategy of establishing a worldwide presence
in countries with established markets and those with developing markets for
computer products and of providing products that meet local needs, such as
customized systems and local language documentation, has provided significant
opportunity for revenue growth in these international markets.  The foregoing
forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially.  See "Additional Factors That May Affect
Future Results" under Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations."  In transition period 1995, international
revenues increased 26% over the comparable prior year period and contributed 55%
of total revenues.  International revenues contributed 44%, 35% and 39% of total
revenues in the fiscal years ended July 1, 1995 ("fiscal year 1995"), July 2,
1994 ("fiscal year 1994") and July 3, 1993 ("fiscal year 1993"), respectively.

PRODUCTS

  The Company's business strategy is to be first to market with leading-edge
technologies, which allows the Company's computer reseller and dealer customers
to provide attractive, profitable alternatives to the Company's indirect channel
competitors, as well as direct market competitors including mail order
companies.  The Company's products range from mobile systems to file servers
under the Advantage!, Bravo, Premmia, Ascentia and Manhattan brand names.
Products within these families are designed to meet multiple performance levels
and price points.  During fiscal year 1996, the Company intends to continue to
enhance its desktop computer product lines with faster processing power and
enhanced features to satisfy the complex needs of the home, small-business and
corporate user.  The Company also plans to expand its mobile computing solutions
with high-performance, leading-edge notebook solutions and value-based consumer
oriented models.  In addition, the Company intends to continue to introduce new
server products, technologies and computing solutions for the network
environment.  The foregoing forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially.  See
"Additional Factors That May Affect Future Results" under Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Advantage!

  Designed for the consumer retail market, the Company's Advantage! PCs include
the industry's leading educational and entertainment multimedia software titles
with the latest in hardware technologies, including Intel Pentium(R) processors
up to 166 MHz.  Systems are configured for ease of use, complete with CD stereo,
full-motion video, telephone answering and voice mail systems, high-speed
fax/data modems and a selection of pre-installed software titles, which include
on-line services.  These enhanced information and communications systems also
feature AST Works II, one of the industry's most comprehensive and easy-to-use
software interfaces that combines on-screen video help, numerous productivity
tools, and telephony capabilities.

Bravo

  The Bravo desktop line is the Company's value-based price/performance leader
providing entry-level to high-performance systems which are designed to handle
today's business applications including word processing, electronic mail,
database management, spreadsheet calculations, Computer Aided Design ("CAD"),
graphics, and financial/statistical analysis.  The mid-size Bravo MS series
offers users both minitower and low-profile configurations which the Company
believes are competitively priced with traditional desktop systems.  The Bravo
MS-T 6150 was the first desktop system based on Intel's Pentium(R) Pro processor
to ship to the indirect channel.  The Bravo LC line of business desktops
features powerful Pentium(R) processors, local-bus accelerated graphics, and
greater cache memory expandability.

Premmia

  The Premmia family of personal computer systems, which are competitively
priced against traditional workstations, provides customers with versatile,
solution-oriented platforms to run complex applications, such as Computer Aided
Design/Computer Aided Manufacturing ("CAD/CAM"), graphics and engineering
programs.   Supporting dual processing, 64-bit accelerated graphics, on-board
accelerated 3D hardware, integrated Fast-SCSI-2 and integrated Ethernet, these
systems are designated for advanced 32-bit operating system environments such as
Windows NTTM and SCO UNIX.

Ascentia

  The Company's line of Ascentia notebook computers provides traveling
professionals with a wide variety of total mobile computing solutions that
include the latest technologies such as full-size keyboards, large screens and
long-lasting lithium ion batteries.  The Ascentia 950N combines Intel's powerful
75 MHz, 90 MHz and 120 MHz Pentium(R) processors with high resolution displays,
full 16-bit audio support, and up to 1.2 GB hard drives.

  In February 1996, the Company announced its new line of notebook products,
the Ascentia P Series and Ascentia J Series notebooks.  These new notebook
systems incorporate leading-edge technologies, including Intel's 100-MHz and 
133-MHz Pentium(R) processors and 82430MX chipset, PCI bus, high-resolution SVGA
displays, 256KB of level 2 cache and CD-ROM drives on selected models, and are
expected to be released in spring 1996.  The foregoing forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially.  See "Additional Factors That May Affect Future Results"
under Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

Manhattan Servers

  The Company's Manhattan server products support a range of local area network
and enterprise applications.  The Company surrounds its hardware offerings with
easy-to-use software management tools, specialized service programs and
peripherals that are tested and optimized for the Company's systems.  The
Company's Manhattan P and Manhattan V mid-range multiprocessor servers meet the
needs of the fast-growing client/server market with features such as Pentium(R)
dual processing capability, PCI and EISA bus, FastSCSI disk controllers, RAID
support options and fault tolerant features.

Other Markets

  The Company's monitor line includes the ASTVisionTM 4I, 5L, 5M, 5V, 7L and
20H models.  These monitors consist of low-radiation, multi-sync color and are
designed to VESA DPMS (Display Power Management Signaling) standards.  ASTVision
offers personal computer users who operate with graphic-intensive Windows(R)
software applications a choice of high quality displays available in various
popular sizes.

PRODUCT DEVELOPMENT

  Due to the rapid pace of advances in personal computer technology, the
Company's success depends on, among other things, the timely introduction of new
products that are accepted in the marketplace.  Accordingly, the Company is
actively engaged in the design and development of new products and the
enhancement of existing products.  During transition period 1995, the Company's
engineering and development expenses were $19,608,000.  During fiscal year 1995,
fiscal year 1994 and fiscal year 1993, the Company's engineering and development
expenses were $36,383,000, $38,858,000 and $31,969,000, respectively.

  The Company's long standing relationships with major hardware and software
developers such as Intel Corporation, Microsoft Corporation and Novell Inc.
assist the Company in quickly bringing new technologies to the marketplace.  The
Company has recently placed an increased focus on working with these developers
to test the compatibility of new hardware and software and to design software
support programs enabling the Company to introduce products incorporating the
latest hardware technology that are capable of operating the most current
software available in the marketplace.

  The Company maintains its firm commitment to the establishment of industry
standards and actively participates in their development.  The Company was one
of the nine original high technology companies which participated in the
development of EISA and also played a key role as a steering committee member in
the development of the Desktop Management Interface (DMI) specification.  The
Company has also incorporated some of industry's latest technologies, including
the Pentium(R) and Pentium(R) Pro processors and PCI bus, across all product
lines.

  The Company believes that its technical expertise is a key factor in its
development of new and innovative products.  The Company's engineering staff
uses the latest tools to assist in the development of new products and enable
faster adaptation of the latest technologies within the manufacturing process.
In addition, the Company has begun to utilize third-party printed circuit boards
in the majority of its product lines in order to support its quick-to-market
business strategy.

MANUFACTURING

  The Company's manufacturing operations include procurement and inspection of
components, assembly and testing of printed circuit boards ("PCB"), and
assembly, testing and packaging of finished products.  The Company's
manufacturing and warehouse facilities include over 1.30 million square feet of
capacity and are located in Fort Worth, Texas, the People's Republic of China
("PRC"), Taiwan and Limerick, Ireland.

  During transition period 1995, the Company continued to alter its demand
fulfillment strategies in an effort to realize additional manufacturing
efficiencies.  The Company completed the closure of its Fountain Valley,
California facility in fiscal year 1995 and consolidated its manufacturing for
mobile computers, a high-growth segment of the personal computer market, in the
Company's Taiwan facility as part of a restructuring plan.  Desktop and server
products are manufactured in facilities located in Texas, Ireland, and the PRC
to better serve the Americas, Europe and Asia Pacific regions' desktop and
server product demand with lower costs and expedited time-to-market.  The
foregoing forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially.  See "Additional Factors That May
Affect Future Results" under Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

  In support of its worldwide systems manufacturing, the Company completed the
closure of its Texas PCB assembly facility in fiscal year 1995 and consolidated
the manufacture of PCB assemblies in Hong Kong and the PRC.  In transition
period 1995, the Company implemented a new restructuring plan designed to
significantly increase its utilization of third-party board manufacturing and
design and to realign its Asia Pacific manufacturing operations.  In connection
with this plan, the Company will close its Hong Kong PCB assembly operation and
transfer its function to the PRC.  The Company will continue to perform limited
PCB assembly in the PRC and expects the realignment to be completed in the
second quarter of fiscal year 1996.  Despite these recent changes, the Company
will continue to assess its worldwide manufacturing facilities and their
capacity in an effort to continue to increase efficiencies, reduce costs and
improve product deliveries.  The foregoing forward-looking statements involve
risks and uncertainties that could cause actual results to differ materially.
See "Additional Factors That May Affect Future Results" under Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

  The Company currently procures all of its components from outside suppliers
including Samsung and its related companies.  The Company's factory sites are in
close proximity to many key international vendors.  Source inspections are
conducted at the plants of selected strategic suppliers, while some other parts
are sampled for inspection upon receipt at the Company's manufacturing
facilities.

  Increases in demand for personal computers have created industrywide
shortages, which at times have resulted in premium prices being paid for key
components, such as flat panel video display screens, Dynamic Random Access
Memory chips ("DRAMs"), Static Random Access Memory chips, CD-ROM drives and
monitors.  These shortages have occasionally resulted in the Company's inability
to procure these components in sufficient quantities to meet demand for its
products.  In addition, a number of the Company's products include certain
components, such as microprocessors, video chips, core logic, lithium ion
batteries, modems, Static Random Access Memory chips and Application Specific
Integrated Circuits, that are currently purchased from single sources due to
availability, price, quality or other considerations.  Component suppliers and
single source suppliers vary over time.  The Company purchases components
pursuant to purchase orders placed in the ordinary course of business and has no
guaranteed supply arrangements with single source suppliers.  Reliance on
suppliers generally involves risks, including the possibility of defective
parts, a shortage of components, an increase in component costs and disruptions
in delivery of components.  Should delays, defects or shortages re-occur or
component costs significantly increase, the Company's net sales and
profitability could be adversely affected.  The Company attempts to mitigate
these potential risks by working closely with major suppliers on product plans
and coordinated product introductions.  Although no assurances can be given, the
strategic relationship formed with Samsung could further reduce the risk
associated with the procurement of some of these components.

  The Company has manufacturing capacity within the PRC which has a history of
political instability.  The Company attempts to reduce this potential risk
through a centralized management organization coordinated within its Hong Kong
operation.  The Company also has manufacturing capacity in Taiwan and utilizes
various notebook subcontractors in Taiwan.  Political tensions between the PRC
and Taiwan could adversely affect the Company's operations, particularly its
notebook production.

  Quality and reliability are emphasized in the development, design and
manufacture of the Company's products.  The Company continues to focus on new
product introductions through a process of concurrent product and process design
efforts, which attempt to simplify and streamline the manufacturing process in
the earliest stages of product design.  Products undergo quality inspection and
testing throughout the manufacturing process.  Additional manufacturing
verification and testing programs include root cause analysis, as well as
customer audit programs that consist of extended diagnostic, software and early
life reliability testing of products randomly taken from finished goods.  The
Company's goal is to continuously enhance its manufacturing procedures to
include comprehensive quality management processes.

  In transition period 1995, the Company achieved and/or maintained
certification and registration under ISO 9000, section 9002, for the quality
systems used in manufacturing operations at its subsidiary in Taiwan, its
service center in the United Kingdom and its manufacturing facility in Limerick,
Ireland.  In addition, the Company's Hong Kong manufacturing operations, which
are being closed as part of a restructuring plan, have been certified and
registered under ISO 9000, section 9001.  The Company is currently pursuing ISO
certification at its remaining non-certified locations in the PRC and at its
Fort Worth, Texas facility.

MARKETING AND SALES

  The Company employs a worldwide multi-channel indirect distribution strategy
which allows it to reach a variety of customers in most major market segments.
Each channel provides the Company with access to specific market and customer
segments.  The Company's strategy is to differentiate itself from others by
being the first to bring leading-edge products to market through its established
network of authorized dealers and resellers.  The Company believes that its
success in building its network of dealers and resellers is largely due to the
Company's product line breadth, the quality and reliability of its products, its
dedication to the channel, the responsiveness of its employees, and the high
level of service and support provided by the Company.  Building on the Company's
past success within these channels, the Company continues to focus on broadening
its distribution channels to further its growth objectives.  If the Company is
unable to deliver leading edge products to its channel on a timely basis, its
net sales and profitability will be adversely affected.

  The Company's worldwide sales organization is organized into three major
geographical groups:  the Americas, which includes the United States and Canada;
Europe; and Asia Pacific, which includes Asia, the Pacific Rim and the Middle
East.

Americas Distribution

  The Company's Americas indirect distribution channels include authorized
independent resellers and dealers, national reseller organizations, national and
regional distributors and aggregators, systems integrators and consumer
retailers.  The Company sells directly and indirectly to large VADs and VARs
that typically purchase personal computers and add enhancement hardware,
software and service to provide the total system solution, which are then sold
in a variety of vertical and horizontal markets.  The Company's national
reseller organization accounts include customers such as CompuCom Systems,
MicroAge, ENTEX Information Services, Inc. and Intelligent Electronics, Inc.
The Company also sells its products to smaller dealers and resellers through
major national distributors including Ingram Micro, Merisel and Tech Data
Corporation.

  The Company's Advantage! line is designed for small office and home use and
is marketed primarily by consumer retail chains including Computer City
Supercenters; Price/Costco Wholesale Club Stores; Sam's Wholesale Club and Wal-
Mart Stores.

  Transition period 1995 Americas revenues declined 34% to $453 million from
$688 million for the comparable prior year period.  This overall decline
occurred primarily in the Company's consumer retail channel and was the result
of the Company's decision to temporarily de-emphasize this channel.  Sales
through the Company's VAD/VAR and consumer retail channels represented 73% and
27%, respectively, of total Americas revenues in transition period 1995.

International Distribution

  The Company operates internationally through subsidiaries and sales offices
in 48 locations worldwide.  In countries where the Company does not have
subsidiary operations, products are sold to retail dealers and distributors.
The Company plans to continue to expand its international business within the
Europe and the Asia Pacific regions during fiscal year 1996.  The Company may
also pursue limited expansion plans within certain developing countries as
opportunities arise.

  Success and profitability of international operations could be adversely
affected by conditions that may not impact the Americas region, including local
economic conditions, political instability, tax laws and changes in the value of
the U.S. dollar.  See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Additional Factors That May Affect
Future Results" therein.

  In transition period 1995, international revenues rose 26% over the
comparable prior year period, from $448 million to $563 million.  This increase
in international revenues was attributable to the Company's broad product
selection and its ability to deliver product from regionalized facilities
located in Ireland, Hong Kong, Taiwan and the PRC.  Europe region revenues in
transition period 1995 were up 26% to $383 million from $304 million in the
comparable prior year period and represented 38% and 27% of total revenues for
each of the two periods, respectively.  Sales in the Company's Asia Pacific
region grew 25% to $180 million and accounted for 18% of total transition period
1995 worldwide revenue compared to $144 million and 13% of total revenue in the
comparable prior year period.

Service and  Support

  The Company believes that customer support, service and training are crucial
to maintaining strong relationships with its customers and that the high level
of its service and support helps differentiate it from other manufacturers in
the personal computer industry.  The Company provides a comprehensive collection
of services for its products through its "Customer Care" program.  AST Customer
Care offers technical support to resellers, dealers and end-users through access
to toll-free telephone lines; AST-Lifeline, an interactive technical support
system that incorporates Radish Communications Systems VoiceView(R) TALK SHOPTM
integrated voice and data protocol with custom AST technical support software;
AST On-Line!, a 24-hour electronic bulletin board system; AST Info-Fax, which
allows access to a broad selection of technical support documentation via
facsimile 24-hours a day; AST Pronto! Pro, a CD-ROM based reference utility
program; and a technical support alliance with leading network and operating
system suppliers for one-stop support in multi-vendor networked environments.
In addition, the AST On-Line! service has been expanded to be available through
the CompuServe(R) 24 hour on-line information service, Prodigy(R) interactive
network, America OnLine(R) service, and the bulletin board system which includes
Remote Imaging Protocol (RIPscrip).  The Company's support services are further
augmented by the new AST InfoLINE, an interactive voice response system which
includes automated problem diagnostics as well as automated fax-response
diagnostics.  Finally, corporate customers seeking additional software support
for their systems can contact Stream International, a fee-based third-party
software support organization.

  Parts and labor warranties on the Company's computers range from one to three
years in length, depending on product type.  Service is provided by AST
authorized dealers, third-party maintenance organizations and the Company's in-
house service and support organization.  Trained service technicians are
available in more than 1,500 AST authorized service centers.  Included among
these service centers are more than 800 Authorized Service Centers (ASC), over
100 Advanced System Support Centers (ASSC) and at least 400 third-party
maintenance locations.  In addition, international customers can be serviced on
a carry-in basis by any of the authorized AST Service Providers located in more
than 30 countries around the world.  AST Customer Care also provides
comprehensive protection for notebook users through the ExeCare PlusSM service
program.  Expedited repair of any AST notebook product anywhere in the
continental United States is available under the ExeCare PlusSM service program.
The Company offers the AST Premium Plus Support program to end-users who have a
large installed base of AST computers and internal information centers providing
service and support within the organization.  The Premium Plus support program
features priority toll-free technical support and a video-based core service
training program.

  Many of the Customer Care services provided in the U.S. are open to and used
by the Company's customers from around the world.  In addition, the Company's
international subsidiaries have developed service and support programs adapted
to the specific needs of local markets.  With a significant installed base of
system products and growth in sales throughout the Europe region, the Company
has supplemented these local initiatives by establishing a centralized service
and support capability within its European Operations Center in Limerick,
Ireland.  The European Call Center provides multi-lingual help line services and
technical support to resellers, service providers and end-users throughout the
region.  The Company's network of over 500 ASCs and Independent Service
Providers in Europe provides warranty repair and enhanced systems support
services for end-users.  Spare parts and repairs for the Company's Service
Channel are provided by the European Logistics Center in Limerick, which
utilizes express courier and freight handling companies to ensure prompt
delivery of replacement parts throughout the region.

  Within the Asia Pacific region, service is provided by AST authorized
dealers, third-party maintenance organizations and the Company's in-house
service and support organization.  Trained service technicians are available
throughout the Asia Pacific region in more than 150 ASCs and AST authorized
dealers, over 30 of which are inside the PRC.  Express courier and freight
handling companies are also utilized in the Asia Pacific region to ensure prompt
delivery of replacement parts throughout the region.  In addition, Asia Pacific
customers can be serviced on a carry-in basis by any of the authorized AST
Service Providers located in more than 30 countries around the world.  AST
Customer Care in the Asia Pacific region also provides comprehensive protection
for notebook users through the ExeCare service program.

  European Resellers and Authorized Service Providers are required to
participate in Training and Certification programs delivered through local
subsidiaries and can also take advantage of the high level product and customer
support resources of Systems and Field Engineers based in the subsidiaries.  The
Company maintains AST On-Line! bulletin boards in many countries in both the
Europe region and the Asia Pacific region ensuring ease of access to software
drivers and technical bulletins as well as providing a forum for distributing
more localized information.

Advertising

  The Company advertises its product domestically and internationally in
selected computer trade, business and consumer publications and via selected
broadcast and display mediums throughout the world.  Through the Company's
cooperative advertising programs, the Company encourages its channel partners to
advertise and promote the Company's products by funding a portion of joint
advertising and promotion efforts.  The Company also participates in major
computer and business trade shows and field seminars around the world.

  Beginning in fiscal year 1996, the Company is embarking on aggressive new
marketing initiatives to increase demand for the Company's products including a
new U.S. television advertising campaign that will be airing on selected
domestic cable networks, and an outdoor advertising campaign in major U.S.
cities and airports.  The foregoing forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially.  See
"Additional Factors That May Affect Future Results" under Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Major Customers

  During transition period 1995, no single customer accounted for more than 10%
of the Company's net sales.

BACKLOG

  The Company orders raw materials and components to manufacture products
according to its forecast of near-term demand and maintains inventories of
finished products in advance of receipt of orders from its customers.  Orders
from retail accounts are usually placed by the customer on an as-needed basis
and are usually shipped by the Company shortly after receipt.  Unfilled orders
can be, and often are, canceled or rescheduled to an earlier or later date with
little or no penalty.  For these reasons, the Company's backlog at any
particular time is generally not indicative of the future level of sales.  In
addition, cancellations and rescheduling can adversely impact the Company's
revenue and profitability.

PATENTS AND LICENSES

  The Company relies on a combination of contract, patent, copyright, trademark
and trade secret laws to protect its proprietary interests in its products.  The
Company owns trademark registrations in the United States and other countries
for many of its trademarks.  The Company owns numerous patents and patent
applications throughout the world relating to various aspects of its products.

  The Company has license agreements for various products, including operating
system software for its personal computer systems with Microsoft Corporation and
IBM Corporation, for which the Company makes payments.  In addition, the Company
has a patent cross-licensing agreement with IBM Corporation, that extends over
the life of the covered patents, which is prepaid and is being amortized over
the life of the patents.  The Company has a patent cross-licensing agreement
with Texas Instruments Inc., that expires December 31, 2000, for which the
Company makes periodic royalty payments.  The Company also has various license
agreements for application software which it distributes with its products, many
of which require the Company to make payments to the licensor.  Pursuant to the
Strategic Alliance Agreement with Samsung, the Company entered into a patent
cross-license agreement with Samsung that expires on July 31, 2005, for which no
payments are required.

COMPETITION

  Intense competition in the personal computer industry continued during
transition period 1995 and was characterized by frequent product introductions
and an aggressive pricing environment. The Company's primary competitors are
other computer companies that offer a full range of personal computing
solutions, including IBM, Compaq Computer Corporation, Hewlett-Packard Company,
Digital Equipment Corporation, Dell Computer Corporation, Gateway 2000, Inc. and
Packard Bell.

  The Company believes that one of its competitive advantages has been and
continues to be the Company's commitment to its indirect channel partners.  This
indirect channel focus, in addition to product branding, product line breadth
and service and support, has enabled the Company's products to remain
competitive within the highly competitive personal computer marketplace.  The
Company's new focus on being the first to bring leading-edge products to the
indirect channel should further strengthen its competitive position and improve
its relationship with the indirect sales channel.  The foregoing forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially.  See "Additional Factors That May Affect Future Results"
under Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

  The personal computer market continues to be intensely competitive.  As a
result, significant price reductions were required across all product lines
during transition period 1995, contributing to a decline in gross profit
margins.  Characteristic of the past few years, the Company expects these
pricing pressures to continue.  The ongoing introduction of new technologies
across all of the Company's product lines is intended to enable the Company to
keep pace with rapid market changes and to minimize the effect of continued
competitive pricing.  However, there can be no assurance that the Company will
have the financial resources, marketing and distribution capability, or the
technological knowledge to compete successfully.  In addition, the Company's
results of operations could be adversely impacted if it is unable to effectively
implement its technological and marketing alliances with other companies, such
as Microsoft and Intel, and manage the competitive risks associated with these
relationships.

REGULATORY COMPLIANCE

FCC Regulations

  The Federal Communications Commission ("FCC") in October 1979 and April 1980
adopted regulations imposing radio frequency emanation standards for computing
equipment.  The regulations distinguish between computing devices marketed for
use primarily in a commercial, industrial or business environment (designated
class A) and computing devices marketed for use primarily in a residential
environment (designated class B).  All of the Company's products are designed to
comply with applicable FCC standards.

European Regulations

  Effective December 31, 1995, all products entering the European Union ("EU")
or European Economic Area ("EEA") are required to bear the CE marking.  This
marking signifies compliance with the harmonized  Euro-Norm ("EN") standards
that are required for trade within the EU/EEA as adopted by CENELEC, the
European Committee for Electrotechnical Standardization.  On December 31, 1995,
the Electro-Magnetic Capability ("EMC") directive for Information Technology
Equipment ("ITE") became a mandatory standard and all other conflicting national
standards were withdrawn.  The Company tests all products sold into the European
community to verify compliance.  The regulations also require the maintenance of
a technical construction file, which generally consists of a collection of
information describing the products and how they conform to the European
requirements.  The Company maintains this file in its Ireland manufacturing
facility.  All required testing for the CE mark program is performed in-house
using a recently enhanced test chamber and testing site.

Effects of Environmental Laws

  Compliance with laws enacted for the protection of the environment to date
has had no material effect upon the Company's capital expenditures, earnings or
competitive position.  The Company has successfully been involved in such
programs as the Environmental Protection Agency's Energy Star program.  Although
the Company does not anticipate any material adverse effects in the future based
on the nature of its operations, there can be no assurance that such laws will
not have a material adverse effect on the Company.  To its knowledge, the
Company was not named as a defendant in any environmental lawsuits during
transition period 1995.

EMPLOYEES

  As of December 30, 1995, the Company had 6,006 employees, 3,136 of whom were
employed in manufacturing, 293 in engineering and 2,577 in the areas of general
management, sales, marketing and administration.  Of the total, 2,372 were
employed in the Company's Americas region, 2,277 were employed in the Asia
Pacific region and 1,357 were employed in the Europe region.  The Company
believes that it has been successful to date in attracting and retaining
qualified personnel, but believes its future success will depend in part on its
continued ability to attract and retain highly qualified engineers, technicians
and marketing and management personnel.  To assist in attracting qualified
employees at all levels, the Company has adopted stock option, performance based
incentive compensation, profit sharing and other benefit plans.  There can be no
assurance that this strategy will not require significant new grants or be
effective in any case, particularly in the event of a prolonged decline in the
price of the Company's common stock.  The Company considers its employee
relations to be good.  No employee of the Company is represented by a union.

BUSINESS SEASONALITY

  Although the Company does not consider its business to be highly seasonal, it
has historically experienced seasonally higher sales in the consumer retail
channel in the quarter ended in December, compared to other quarters, due to
strong holiday demand for some of its products.

ITEM 2.PROPERTIES

  The Company owns and occupies its worldwide headquarters facility in Irvine,
California.  The 232,000 square foot facility accommodates the Company's
executive, finance and administrative functions, the Americas region sales
organization, and the product divisions.  The Company owns and occupies a
212,000 square foot manufacturing facility in Fort Worth, Texas, with an
adjacent 202 acres of undeveloped land.  The Company leases an additional
291,000 square feet of manufacturing, engineering, and customer support and
warehouse space in the Fort Worth area.  The Company also leases approximately
72,000 square feet for regional sales offices and 138,000 square feet for
warehouse and distribution space for its Americas sales operations.  The Company
is currently obligated under a ten-year lease agreement for a 246,000 square
foot facility in Fountain Valley, California, which expires in 1999.  This
facility was closed in February 1995 as part of a restructuring plan; 101,000
square feet of the facility are being subleased with the remainder being
marketed for sublease.

  The Company owns a 340,000 square foot manufacturing facility in Limerick,
Ireland, which supplies nearly all the desktop requirements for the Europe
region.  In addition, the Company also leases approximately 281,000 square feet
of sales, marketing, administration and warehouse facilities in various other
countries throughout Europe.

  The Company leases an aggregate of 390,000 square feet of manufacturing space
in the PRC to service the domestic PRC and other Asia Pacific region markets.
The Company's Taiwanese manufacturing operations include 72,000 square feet of
leased property, which includes manufacturing, warehouse and office space.  In
addition, the Company leases approximately 114,000 square feet for sales,
marketing and administration offices and warehouse facilities in the Asia
Pacific region.  The Company entered into a two-year agreement for the sale and
leaseback of its 68,000 square foot manufacturing facility in Hong Kong that
expires in June 1996, and the Company leases an additional 67,000 and 31,000
square feet for warehouse and manufacturing activities and office space,
respectively, in Hong Kong.  In transition period 1995, the Company implemented
a new restructuring plan designed to increase its utilization of third-party
board manufacturing and design and to realign its Asia Pacific manufacturing
operations.  In connection with this restructuring, the Company will close its
Hong Kong PCB assembly operation.  The 68,000 square foot facility in Hong Kong
will be closed, along with an additional 73,000 square feet of manufacturing,
warehouse and office space.  The Company also leases 32,000 square feet for
warehouse and office space in the Middle East with an additional 182,000 square
feet available for possible expansion.

ITEM 3.LEGAL PROCEEDINGS

  On March 3 and March 14, 1994, complaints were filed by two shareholders
against the Company and certain of its officers and directors requesting
certification of class action, asserting claims under state and federal
securities laws based on allegations that the Company made inadequate and false
disclosures and seeking unspecified compensatory damages and related fees and
costs.  The complaints were filed in the United States District Court for the
Central District of California.  On September 12, 1994, a complaint was filed by
a shareholder against the Company and certain of its officers and directors
requesting certification of class action, asserting claims under state and
federal securities laws based on allegations that the Company made inadequate
and false disclosures and seeking unspecified compensatory damages and related
fees and costs.  The September 12, 1994 complaint was filed in the United States
District Court for the Central District of California under the case name Steven
A. Kornfeld v. James L. Forquer, et al.  On October 6, 1994, a complaint was
filed by a shareholder in the United States District Court for the Central
District of California.  The October 6, 1994 complaint named the Company and
certain of its officers and directors as  defendants,  asserted claims under
state and  federal  securities  laws  based  on  allegations  that  the Company
made inadequate and false disclosures, and sought unspecified compensatory
damages and related fees and costs.  The cases with complaints filed on March 3,
1994, March 14, 1994 and October 6, 1994 were consolidated under the case name
In re AST Research Securities Litigation.  The In re AST Research Securities
Litigation and Kornfeld cases were treated as related cases by the court.  A
settlement agreement dated August 28, 1995 was signed to end the In re AST
Research Securities Litigation and Kornfeld cases, and was preliminarily
approved by the court.  It required the payment of $12.5 million by the
defendants to the plaintiffs.  Such amounts were paid in November 1995.  Of the
settlement amount of $12.5 million, approximately $10.4 million was funded by
three insurance carriers.  Final approval of the settlement was ordered by the
court, but further proceedings are occurring to determine the portion of the
settlement amount that will be distributed to class members.

  The Internal Revenue Service ("IRS") is currently examining the Company's
1989, 1990 and 1991 federal income tax returns.  In addition, the IRS has
completed its examination of the Company's 1987 and 1988 federal income tax
returns and has proposed adjustments to the Company's federal tax liabilities
for such years of approximately $8.3 million, excluding interest, relating to
the allocation of income between the Company and its foreign subsidiaries.
Management believes that the Company's position has substantial merit and
intends to vigorously contest these proposed adjustments.  Management further
believes that any liability that may result upon the final resolution of the
proposed adjustments for 1987 and 1988 or current examinations of 1989, 1990 and
1991 will not have a material adverse effect on the Company's consolidated
financial position or results of operations.  The foregoing forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially.  See "Additional Factors That May Affect Future Results"
under Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

  The Company has been named as a defendant or co-defendant, generally with
other personal computer manufacturers, including such companies as IBM, AT&T,
Unisys, Digital Equipment Corporation, NEC, Olivetti, NCR, Panasonic, and
Matsushita, in eighteen similar lawsuits each of which alleges as a factual
basis the occurrence of carpal tunnel syndrome or repetitive stress injuries.
The suits naming the Company are just a few of the many lawsuits of this type
which have been filed, often naming IBM and other major computer companies. The
claims against the Company total in excess of $100 million in compensatory
damages and punitive damages and additional unspecified amounts.  The Company
has denied or is in the process of denying the claims and intends to vigorously
defend the suits. The Company is unable at this time to predict the ultimate
outcome of these suits.  Ultimate resolution of the litigation against the
Company may depend on progress in resolving this type of litigation overall.
Before consideration of any potential insurance recoveries, the Company believes
that the claims in the suits filed against it will not have a material impact on
the Company's consolidated financial position or results of operations; however,
the Company is unable to estimate the amount of any loss that may be realized in
the event of an unfavorable outcome.  The Company has maintained various
liability insurance policies during the periods covering the claims filed above.
While such policies may limit coverage under certain circumstances, the Company
believes that it is adequately insured.  The foregoing forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially.  See "Additional Factors That May Affect Future Results"
under Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations."  Should the Company not be successful in defending
against such lawsuits or not be able to claim compensation under its liability
insurance policies, the Company's profitability and financial condition may be
adversely affected.

  The Company was named, along with twelve other personal computer companies,
as a defendant in a lawsuit filed on March 27, 1995 in the Superior Court for
the County of Merced, California.  The case name for this March 27, 1995 filing
is People v. Acer, et al., and the complaint alleges that the Company has
engaged in deceptive advertising and unlawful business practices in relation to
computer monitor screen measurements.  The People v. Acer lawsuit was resolved
by a Stipulated Judgment that the Company signed along with representatives of
all other defendants.  The Company was named, along with three other personal
computer or monitor companies, as a defendant in a class action lawsuit filed on
May 2, 1995 in the Superior Court for the County of Marin, California.  The case
name for this May 2, 1995 filing is Kaplan, et al. v. Viewsonic, et al., and
alleges that the defendants have engaged in unfair business practices, false
advertising and breach of implied warranty concerning the advertisement of the
size of computer monitor screens.  The Company was named, along with 37 other
defendants, in a class action lawsuit, Long v. Packard Bell, et al., filed on
August 21, 1995 in the Superior Court for the County of Orange, California,
which alleges certain claims concerning the advertising of the sizes of computer
monitors.  The Company was named, along with nine other defendants, in a class
action lawsuit, Randy Davis, Ph.D., Inc. v. AST Research, et al., filed on
August 23, 1995 in Superior Court for the County of Orange, California, which
alleges certain claims concerning the advertising of the sizes of computer
monitors.  The Company was named, along with 35 other defendants, in a class
action lawsuit, Sutter v. Acer, et al., filed on September 7, 1995 in the
Superior Court for the County of Sacramento, California, which alleges certain
claims concerning the advertising of the sizes of computer monitors.  The
Company was named, along with 41 other defendants, in a class action lawsuit,
Shapiro v. ADI Systems, Inc., et al, filed on August 14, 1995 in Santa Clara
County, California, which alleges certain claims concerning the advertising of
the sizes of computer monitors.  The Company was named, along with 29 other
defendants, in a class action lawsuit, Maizes & Maizes, et al,  v. Apple
Computer Inc., et al, filed on December 15, 1995 in Essex County, New Jersey,
which alleges certain claims concerning the advertising of the sizes of computer
monitors.  Management does not believe that the outcome of these disputes will
have a material adverse impact on the Company's consolidated financial position
or results of operations; however, the Company is unable to estimate the amount
of any loss that may be realized in the event of an unfavorable outcome.  The
foregoing forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially.  See "Additional Factors That May
Affect Future Results" under Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

  The Company is also subject to other legal proceedings and claims that arise
in the normal course of business.  While the outcome of these proceedings and
claims cannot be predicted with certainty, management does not believe that the
outcome of any of these matters will have a material adverse effect on the
Company's consolidated financial position or results of operations.  The
foregoing forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially.  See "Additional Factors That May
Affect Future Results" under Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

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

  No matters were submitted to a vote of security holders during the three
months ended December 30, 1995.

                                     PART II


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

  AST's common stock is traded on the over-the-counter market (NASDAQ National
Market System) under the symbol ASTA.  Set forth below are the high and low
closing sales prices for the Company's common stock for the periods indicated.
On October 26, 1995, the Company changed its fiscal year-end from the Saturday
closest to June 30 to the Saturday closest to December 31.  The change was made
in order to align the Company's year-end with that of its largest shareholder,
Samsung.  The change in fiscal year-end was effective for the six months ended
December 30, 1995.

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

                                                HIGH            LOW

        Six months ended December 30, 1995:
        1st Quarter                            $16 - 3/8       $10
        2nd Quarter                             10 - 1/16        7 - 7/8

        Fiscal year ended July 1, 1995:
        1st Quarter                            $19 - 1/4       $12
        2nd Quarter                             16 - 1/4        10 - 3/8
        3rd Quarter                             17              13 - 1/8
        4th Quarter                             19 - 1/8        13 - 1/2

        Fiscal year ended July 2, 1994:
        1st Quarter                            $18 - 1/2       $13 - 3/4
        2nd Quarter                             25 - 1/2        16 - 3/4
        3rd Quarter                             33              20 - 1/4
        4th Quarter                             22 - 1/2        12 - 1/2

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


  There were approximately 995 security holders of record as of March 1, 1996.
The Company has not paid dividends to date and intends to retain earnings for
use in the business for the foreseeable future.

ITEM 6.  SELECTED FINANCIAL DATA

  The following data has been derived from consolidated financial statements
that have been audited by Ernst & Young LLP, independent auditors.  The
information set forth below is not necessarily indicative of the results of
future operations and should be read in conjunction with the consolidated
financial statements and notes thereto appearing elsewhere in this Annual Report
on Form 10-K.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                              As of or for the                           As of or for the Fiscal Year Ended 
                              Six Months Ended     ------------------------------------------------------------------------------
(In thousands, except           December 30,           July 1,          July 2,          July 3,         June 27,       June 28,
  per share amounts)               1995                 1995             1994             1993             1992           1991  
---------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>               <C>              <C>              <C>              <C>            <C>        
Net sales                         $ 1,016,283       $ 2,467,783      $ 2,367,274      $ 1,412,150      $ 944,079      $ 688,477

Gross profit (loss)                   (16,875)          245,675          347,733          285,698        293,260        248,347

Operating income (loss)              (215,196) (3)     (105,690)          53,989 (2)      (64,578) (1)    97,526         94,083

Net income (loss)                    (225,006)          (99,309)          31,309          (53,738) (4)    68,504         64,724

Net income (loss) per share (5)   $     (5.27)      $     (3.07)      $     0.96      $     (1.72)      $    2.16      $    2.13

Shares used in computing net
  income (loss) per share   (5)        42,721            32,371           32,548           31,289         31,758         30,413

---------------------------------------------------------------------------------------------------------------------------------
Cash and short-term investments   $   125,387       $    95,825      $   153,118      $   121,600      $ 140,705      $ 153,305

Working capital                       223,546           306,872          444,974          301,046 (4)    332,793        282,678

Total assets                        1,056,042         1,021,501        1,005,620          886,159 (4)    580,613        485,431

Long-term debt                        125,540           219,224          215,294           92,258 (4)      2,431         30,110

Total shareholders' equity        $   310,882       $   263,238       $  361,762      $   318,806      $ 363,267      $ 282,162

Shares outstanding at end of 
period                                 44,679            32,413           32,334           31,579         30,787         30,228

---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Includes a $125 million pretax restructuring charge.  See Note 3 of Notes
     to Consolidated Financial Statements.

(2)  Includes a $12.5 million pretax credit from the reversal of excess
     restructuring charge amounts not utilized.  See Note 3 of Notes to
     Consolidated Financial Statements.

(3)  Includes a  $13 million pretax restructuring charge.  See Note 3 of Notes
     to Consolidated Financial Statements.

(4)  Effective June 30, 1993, the Company purchased certain net assets of Tandy
     Corporation's personal computer business.  The Company's Consolidated
     Statements of Operations do not include the revenues and expenses of the
     acquired business until fiscal year 1994.  See Note 3 of Notes to
     Consolidated Financial Statements.

(5)  Fully diluted earnings (loss) per share and shares used in computing fully
     diluted earnings (loss) per share were not materially different from 
     primary earnings (loss) per share and shares used in computing primary 
     earnings (loss) per share, except in fiscal year 1994 when such amounts 
     were $0.95 and 34,866 shares, respectively.

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

(Amounts in tables in thousands, except per share amounts)

  The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                                (UNAUDITED)
                                    SIX MONTHS                  SIX MONTHS
                                       ENDED                       ENDED
                                    DECEMBER 30,                DECEMBER 31,
RESULTS OF OPERATIONS                   1995        CHANGE          1994
------------------------------------------------------------------------------------------------------------
<S>                                <C>             <C>         <C>              
Net sales                           $ 1,016,283      (11%)      $ 1,135,605
Gross profit (loss)                 $   (16,875)    (116%)      $   103,617
   Percentage of net sales                 (1.7%)                       9.1%
Operating expenses (excluding
   restructuring charges)           $   185,354        8%       $   171,899
   Percentage of net sales                 18.2%                       15.1%
Restructuring charges               $    12,967      100%       $         -
   Percentage of net sales                  1.3%                          -%
Net loss                            $  (225,006)     268%       $   (61,130)
Net loss per share, fully diluted   $     (5.27)     179%       $     (1.89)
------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------

                                                              FISCAL YEAR ENDED
                                    ------------------------------------------------------------------------
                                       JULY 1,                     JULY 2,                   JULY 3,
RESULTS OF OPERATIONS                   1995        CHANGE          1994        CHANGE          1993
------------------------------------------------------------------------------------------------------------
<S>                                <C>             <C>         <C>             <C>         <C>
Net sales                           $ 2,467,783        4%       $ 2,367,274       68%       $ 1,412,150
Gross profit                        $   245,675      (29%)      $   347,733       22%       $   285,698
  Percentage of net sales                  10.0%                       14.7%                       20.2%
Operating expenses (excluding
 restructuring charges (credits))   $   351,365       15%       $   306,244       36%       $   225,276
  Percentage of net sales                  14.2%                       12.9%                       16.0%
Restructuring charges (credits)     $         -     (100%)      $   (12,500)    (110%)      $   125,000
  Percentage of net sales                     -                        (0.5%)                       8.9%
Net income (loss)                   $   (99,309)    (417%)      $    31,309      158%       $   (53,738)
Net income (loss) per share, 
fully diluted                       $     (3.07)    (423%)      $      0.95      155%       $     (1.72)
------------------------------------------------------------------------------------------------------------

SIX MONTHS ENDED DECEMBER 30, 1995 AND DECEMBER 31, 1994

Net Sales

  Net sales for the six months ended December 30, 1995 ("transition period
1995") decreased 11% to $1.016 billion from $1.136 billion for the six months
ended December 31, 1994 ("comparable prior year period").  The decrease in
transition period 1995 revenues was primarily due to lower 486-based desktop and
notebook system sales, partially offset by higher Pentium(R) processor-based
desktop systems sales.  In transition period 1995, the Company's worldwide unit
shipments decreased 17% to 584,000 from 707,000 in the comparable prior year
period.  The decrease in revenues resulting from decreased unit shipments was
partially offset by increased shipments of Pentium(R) processor-based desktop
systems, which generally sell at a higher value per unit.

  Revenues from desktop system products decreased 2% to $753 million in
transition period 1995 from $765 million in the comparable prior year period.
The decrease can primarily be attributed to lower 486-based desktop system sales
including the Advantage! and Bravo 486DX and 486SX systems.  Also contributing
to the decline was lower revenue per unit on older products as the Company
sought to aggressively sell these products.  These declines were partially
offset by higher revenue per unit on Pentium(R) processor-based Advantage! and
Bravo desktop systems.  Decreased sales of the Company's 486-based desktop
systems in transition period 1995 are consistent with the shift in demand toward
the Pentium(R)  processor-based desktop systems, which accounted for 78% of
total desktop systems sales dollars and 68% of total desktop system units in
transition period 1995 versus 18% and 9%, respectively, in the comparable prior
year period.

  The Company's notebook computer product revenues decreased 28% to $168
million in transition period 1995 from $235 million in the comparable prior year
period.  The decrease in net sales of notebook computers reflects a 39% decrease
in unit shipments to 70,000 in transition period 1995 from 115,000 in the
comparable prior year period.  The decline in notebook systems sales occurred in
the Advantage! and Bravo notebook product lines.  Declines in sales in the
Company's 486-based Ascentia notebook computer line were generally offset by
increased sales of Pentium(R) processor-based Ascentia notebook computers, which
have higher revenue per unit.  The 39% decrease in unit shipments was partially
offset by higher revenue per unit on the Pentium(R) processor-based based
Ascentia notebook computer line, leading to the overall notebook revenue decline
of 28%.  Revenues from the Company's notebook computer products represented 17%
and 21% of net sales for transition period 1995 and the comparable prior year
period, respectively.

  Americas revenues, which include the United States and Canada, decreased 34%
to $453 million in transition period 1995, compared to $688 million in the
comparable prior year period.  Sales to the independent reseller/dealer channel
for transition period 1995 decreased 24% compared to the comparable prior year
period, and accounted for 73% of total Americas revenues.  Sales to the consumer
retail channel decreased 51% compared with the comparable prior year period due
to lower Tandy branded system sales and the Company's decision to temporarily 
re-assess its position within the consumer retail channel.

  International revenues increased 26% to $563 million in transition period
1995 from $448 million in the comparable prior year period.  International
revenues represented 55% and 39% of net sales in transition period 1995 and the
comparable prior year period, respectively.  Europe region revenues increased
26% over the comparable prior year period.  The United Kingdom and Sweden
continued to be major contributors of total Europe region revenues with
significant transition period 1995 revenue growth also occurring in France,
Norway and Denmark.  The Company's Ireland manufacturing facility supplied
nearly all of the desktop product requirements for the Europe region.  The
Company believes that its localized manufacturing, centralized distribution and
service operation in Limerick, Ireland has continued to contribute to its
European regional growth.

  Revenues from the Company's Asia Pacific region, which includes Asia, the
Pacific Rim, and the Middle East, combined to contribute to a 25% increase in
transition period 1995 sales over the comparable prior year period.  The
increase in transition period 1995 sales was attributable to revenue growth in
the People's Republic of China ("PRC"), Australia and Singapore.  Sales into the
PRC accounted for approximately 7% of the Company's total transition period 1995
revenues, compared with approximately 5% in the comparable prior year period.
Although the PRC has historically provided the Company with significant
revenues, future sales of the Company's products into the PRC are highly
dependent upon continuing favorable trade relations between the United States
and the PRC and the general economic and political stability of the region.
Economic and political risks in the countries in this geographical area could
have a corresponding impact on future sales and operating results.  Economic
factors such as competitive pricing, a lower margin customer mix and changes in
manufacturing strategies have all impacted sales and operating results.  The
Company believes that these factors will continue to impact future sales and
operating results.

  The Company experienced product development and production delays throughout
transition period 1995, which in part have contributed to lower desktop and
notebook systems sales.  In addition, continued industrywide competitive pricing
pressures have prompted aggressive pricing adjustments that have further reduced
desktop and notebook system revenues.  The Company anticipates that additional
pricing actions will be necessary as it attempts to maintain its competitive
price and performance product profile; however, there can be no assurance that
future pricing actions will be effective in stimulating sales growth.

  The results of the Company's international operations are subject to currency
fluctuations.  As the value of the U.S. dollar weakens relative to other
currencies, revenues from sales in those currencies convert to more U.S.
dollars; conversely, when the value of the U.S. dollar strengthens relative to
other currencies, revenues from sales in those countries convert to fewer U.S.
dollars.   The Company's net sales were increased by 2.3% in transition period
1995 compared to an increase of 2.0% in the comparable prior year period, due to
fluctuations in the average value of the U.S. dollar relative to other
currencies.

Gross Profit (Loss)

  The Company's transition period 1995 gross loss was 1.7% compared to a gross
profit of 9.1% in the comparable prior year period.  The decrease in the
Company's gross margin resulted primarily from product development and
production delays which led to delays in shipment of the Company's fall product
lines in transition period 1995, as well as continued intense industrywide
competitive pricing pressures.  In addition, gross margins were negatively
impacted due to the Company's aggressive inventory reduction efforts which
resulted in both lower average selling prices and lower margins.  The Company's
margins were also negatively impacted by increased warranty and service
inventory provisions.  Increased levels of service inventory reserves were
required due to the continued accelerated rate of product transitions and the
resulting reduction in service inventory valuations.  The increase in the
warranty provision was due to an increase in both the cost and volume of
warranty claims compared with the prior year.

  The Company believes that the industry will continue to be characterized by
rapid technological advances and short product life-cycles resulting in
continued risk of product obsolescence.  If the Company's products become
technically obsolete, the Company's net sales and profitability may be adversely
affected.

  The personal computer industry continues to experience significant pricing
pressures and the Company believes that industry consolidation and restructuring
will continue to result in an aggressive pricing environment and continued
pressure on the Company's gross profit margins during fiscal year 1996.  During
transition period 1995, the Company and the majority of its competitors
continued to introduce new, lower-priced, higher-performance personal computers
resulting in continued pricing pressures on both new and older technology
products.  Future pricing actions by the Company and its competitors may
continue to adversely impact the Company's gross margins and profitability,
which could also result in decreased liquidity and adversely affect the
Company's financial position.

  The effect of foreign currency fluctuations on revenue has a corresponding
impact on gross profit, as the Company's production costs are incurred primarily
in U.S. dollars.  When comparing transition period 1995 to the comparable prior
year period, the U.S. dollar declined against nearly all European currencies.
This period-to-period currency fluctuation resulted in an approximate two
percentage point increase in gross margin in transition period 1995 compared to
the comparable prior year period.  If the value of the U.S. dollar strengthens
in the future, gross margins of the Company will be negatively impacted.


Operating Expenses

</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                              (Unaudited)
                                    Six Months                Six Months
                                       Ended                     Ended
                                    December 30,              December 31,
                                        1995        Change        1994
------------------------------------------------------------------------------------------------------------
<S>                                <C>               <C>      <C>
Selling and marketing               $ 117,560         6%       $ 110,413
Percentage of net sales                  11.6%                       9.7%
</TABLE>

  Total transition period 1995 selling and marketing expenses rose by $7.1
million and represented 11.6% of net sales, compared to 9.7% in the comparable
prior period.  Continued expansion into new and existing international markets,
new product introductions and a greater emphasis on advertising, sales and
marketing programs contributed to increased media advertising, marketing
promotion, sales literature, cooperative advertising expenses and technical
support costs.

  Beginning in fiscal year 1996, the Company is embarking on aggressive new
marketing initiatives to increase demand for the Company's products including a
new U.S. television advertising campaign that will be airing on selected
domestic cable networks, and an outdoor advertising campaign in major U.S.
cities and airports.  The new marketing initiatives are expected to have a
corresponding increase in selling and marketing expenses in fiscal year 1996.
The foregoing forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially.  See "Additional Factors That
May Affect Future Results" herein.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                           (Unaudited)
                                    Six Months              Six Months
                                      Ended                   Ended
                                   December 30,            December 31,
                                       1995      Change        1994
------------------------------------------------------------------------------------------------------------
<S>                                <C>            <C>       <C>
General and administrative          $ 48,186       12%       $ 42,936
Percentage of net sales                  4.7%                     3.8%
</TABLE>

  In transition period 1995, general and administrative expenses increased in
absolute dollars and as a percentage of net sales to 4.7% from 3.8% in the
comparable prior year period.  The increase can primarily be attributed to one-
time severance payments of approximately $4.1 million to executive officers
pursuant to severance compensation agreements.  Also contributing to the higher
costs were consulting fees incurred in connection with the preparation of the
Company's turnaround plan and professional fees associated with the change in
the Company's fiscal year-end.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                            (Unaudited)
                                    Six Months               Six Months
                                      Ended                    Ended
                                   December 30,             December 31,
                                       1995       Change        1994
------------------------------------------------------------------------------------------------------------
<S>                                <C>             <C>      <C>    
Engineering and development         $ 19,608        6%       $ 18,550
Percentage of net sales                  1.9%                     1.6%
</TABLE>

  Transition period 1995 engineering and development costs increased in
absolute dollars and as a percentage of net sales due to higher engineering
materials expense related to new product introductions.  Products introduced in
transition period 1995 included additions to the Advantage!, Bravo, Premmia,
Ascentia, and Manhattan product lines.

  The personal computer industry is characterized by increasingly rapid product
life cycles.  Accordingly, the Company is committed to continued investment in
research and development and believes that the timely introduction of enhanced
products with favorable price/performance features is critical to the Company's
future growth and competitive position in the marketplace.  However, there can
be no assurance that the Company's products will continue to be commercially
successful or technically advanced, or that it will be able to deliver
commercial quantities of new products in a timely manner.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                             (Unaudited)
                                    Six Months                Six Months
                                      Ended                     Ended
                                   December 30,              December 31,
                                       1995       Change         1994
------------------------------------------------------------------------------------------------------------
<S>                                <C>            <C>        <C>
Restructuring charge                $ 12,967       100%       $    -
Percentage of net sales                  1.3%                      -%
</TABLE>

  In the second quarter of transition period 1995, the Company implemented a
restructuring plan designed to increase its utilization of third-party board
manufacturing and design and realign its Asia Pacific manufacturing operations.
As a result, the Company recorded a restructuring charge of $13.0 million during
the second quarter of transition period 1995.  Costs included in the
restructuring charge consist primarily of employee severance, asset write-downs,
vendor cancellation charges and lease write-offs for closed offices.  The
employee severance includes approximately 1,500 employees primarily in semi-
skilled and skilled manufacturing positions.  Approximately $7.6 million of the
charge is expected to involve cash disbursements with the remaining costs
primarily relating to reductions in net asset values.  During transition period
1995, the Company incurred cash expenditures of approximately $.8 million
related to severance payments to terminated employees.  At December 30, 1995,
approximately $12.2 million of the original restructuring accrual remained on
the Company's consolidated balance sheet.  The Company expects that the majority
of the restructuring plan will be completed by June 1996.

  Although the Company believes that the restructuring activities were
necessary in order to implement its strategy of increased utilization of third-
party board manufacturing and to realign its Asia Pacific manufacturing
operations, no assurance can be given that these restructuring actions or its
strategy will be successful or that similar actions will not be required in the
future.

Other Income and Expense
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                             (Unaudited)
                                    Six Months               Six Months
                                      Ended                     Ended
                                   December 30,              December 31,
                                       1995        Change        1994
------------------------------------------------------------------------------------------------------------
<S>                                <C>             <C>       <C>
Interest and other expense, net     $ (9,810)       28%       $ (7,656)
</TABLE>

  In transition period 1995, the Company had net interest expense of $6.0
million compared to $5.9 million in the comparable prior year period.  Interest
expense increased by $1.7 million as a result of higher short-term borrowings
from the Company's bank revolving credit facilities as well as from short-term
loans during transition period 1995, which were utilized to fund the Company's
transition period 1995 operations.  Also contributing to higher interest expense
were higher average interest rates on those short-term borrowings as well as
amortization of the Samsung credit line guaranty of $.5 million, which was
recorded during transition period 1995.  The increase in interest expense was
partially offset by an increase in interest income of $1.6 million due to higher
average cash balances during transition period 1995 due to the Samsung
investment.

  In transition period 1995, the Company recognized net other expense of $3.8
million compared to net other expense of $1.8 million in the comparable prior
year period.  Other expense relates primarily to net foreign currency
transaction and remeasurement gains and losses and the costs associated with the
Company's foreign currency hedging activities.  The increase in transition
period 1995 was primarily due to losses incurred as a result of the unfavorable
movement of the U.S. dollar relative to other currencies in transition period
1995 over the comparable prior year period.  The Company utilizes a limited
hedging strategy which is designed to minimize the effect of remeasuring the
local currency balance sheets of its foreign subsidiaries on the Company's
consolidated financial position and results of operations.  See further
discussion included under "Liquidity and Capital Resources."

Income Tax Provision (Benefit)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                              (Unaudited)
                                    Six Months                Six Months
                                       Ended                     Ended
                                    December 30,              December 31,
                                        1995       Change         1994
------------------------------------------------------------------------------------------------------------
<S>                                <C>             <C>        <C>
Income tax provision (benefit)      $       -       100%       $ (14,808)
Effective tax rate                          -%                     (19.5%)
</TABLE>

  The Company recorded an effective income tax provision (benefit) rate of 0%
and (19.5%) in transition period 1995 and for the comparable prior year period,
respectively.  The decrease in the transition period 1995 effective tax benefit
rate was primarily due to the Company's provision of a 100% valuation allowance
against additional deferred tax assets (including loss carryforwards) that arose
during the transition period.

  The Company recorded net deferred tax assets of $63.5 million at December 30,
1995.  Realization of the deferred tax assets, which primarily relate to net
operating loss carryforwards, inventory reserves and other accrued liabilities,
is dependent on the Company generating approximately $141 million of future
taxable income.  Although the Company is primarily relying on certain tax
planning strategies to generate such future taxable income, such income could
also arise from reversals of existing taxable temporary differences and/or sales
of new and existing products.  The timing and amount of such future taxable
income may be impacted by a number of factors, including those discussed below
under "Additional Factors That May Affect Future Results."  To the extent that
estimates of future taxable income are reduced or not realized, the amount of
the deferred tax asset considered realizable could be adversely affected.


FISCAL YEARS ENDED JULY 1, 1995, JULY 2, 1994 AND JULY 3, 1993

Net Sales

  Net sales increased to $2.468 billion in fiscal year 1995 from $2.367 billion
in fiscal year 1994 and $1.412 billion in fiscal year 1993.  The slight
improvement in fiscal year 1995 revenues was due to higher Pentium(R) processor-
based desktop systems sales partially offset by lower 386 and 486 desktop
systems sales and decreased shipments of the Company's notebook system products.
The Company's net sales (expressed in U.S. dollars) were also increased by 2.3%
in fiscal year 1995 compared with decreases of 2.7% and 1.3% in fiscal years
1994 and 1993, respectively, due to fluctuations in the average value of the
U.S. dollar relative to its average value in the comparable periods of the prior
years.  In fiscal year 1995, the Company's worldwide unit shipments increased 5%
to 1,503,000, compared with a 78% increase in unit volume for fiscal year 1994.

  The Company experienced product development and production delays throughout
fiscal year 1995, which in part have contributed to lower desktop and notebook
systems sales.  In addition, continued industrywide competitive pricing
pressures prompted aggressive pricing adjustments that further reduced desktop
and notebook system revenues, particularly in the domestic marketplace.

  Revenues from desktop system products increased 15% to $1.741 billion in
fiscal year 1995 from $1.509 billion in fiscal year 1994, compared with an
increase of 56% in fiscal year 1994 over fiscal year 1993.  Major contributors
to the improved year-over-year revenue performance included the Company's
Pentium(R) processor-based desktop systems and selected 486-based desktop
systems including the Advantage! and Bravo 486DX.  Despite the overall increase,
a decline in the fiscal year 1995 revenue growth rate compared to the prior year
was primarily due to declines in Premmia 486-based and Tandy branded desktop
systems sales.  Decreased sales of the Company's 486-based desktop systems in
fiscal year 1995 are consistent with the shift in demand toward the Pentium(R)
processor-based desktop systems, which accounted for 35% of total desktop
systems sales in fiscal year 1995 versus 3% in fiscal year 1994.

  The Company's notebook computer product revenues decreased 11% to $464
million in fiscal year 1995 from $519 million in fiscal year 1994, compared to
an increase of 79% in fiscal year 1994 over fiscal year 1993.  The decline in
notebook revenues is primarily attributable to the expiration of two large OEM
notebook agreements and the Company's decision to de-emphasize the OEM channel.
The decrease in net sales of notebook computers reflects a 19% decrease in unit
shipments to 218,000 in fiscal year 1995 from 268,000 in fiscal year 1994
compared to a 74% unit volume increase in fiscal year 1994 over fiscal year
1993. The fiscal year 1995 decline in notebook systems sales occurred in the
Advantage!, Bravo and PowerExecTM notebook product lines, which was partially
offset by a significant increase in the Ascentia notebook computer line.
Revenues from the Company's notebook computer products represented 19%, 22% and
21% of net sales for fiscal years 1995, 1994 and 1993, respectively.

  Americas revenues, which includes the United States and Canada, decreased 10%
to $1.387 billion in fiscal year 1995, compared with an increase of 81% in
fiscal year 1994 over fiscal year 1993.  As previously noted, the fiscal year
1995 revenue decline was due primarily to the completion of two large OEM
contracts in the fourth quarter of fiscal year 1994.  Total OEM channel revenues
decreased to one percent of total fiscal year 1995 Americas revenues compared to
11% in fiscal year 1994 and 14% in fiscal year 1993.  Sales to the independent
reseller/dealer channel for fiscal year 1995 decreased 2% compared to fiscal
year 1994 and accounted for 63% of total Americas revenues.  Within the overall
decrease in Americas revenues, sales to the consumer retail channel grew
slightly, increasing 2% over the prior year compared with an increase of 218% in
fiscal year 1994 over 1993.  The decline in the fiscal year 1995 growth rate was
attributable to lower revenues related to Tandy branded systems sales in the
United States.

  International revenues increased 32% to $1.081 billion in fiscal year 1995
from $821 million in fiscal year 1994, compared to a 47% growth rate in fiscal
year 1994 over fiscal year 1993.  International revenues represented 44%, 35%,
and 39% of net sales in fiscal years 1995, 1994 and 1993, respectively.
Revenues for the Europe region increased 40% over the prior year, compared with
an increase of 79% in fiscal year 1994 over fiscal year 1993.  The United
Kingdom and Sweden continued to be major contributors of total Europe region
revenues with significant fiscal year 1995 revenue growth also occurring in
Italy, Norway and Switzerland.  Commencing during the second quarter of fiscal
year 1995, the Company's Ireland manufacturing facility supplied nearly all of
the desktop product requirements for the Europe region.  The Company believes
that it's localized manufacturing, centralized distribution and service
operation in Limerick, Ireland contributed to its Europe region growth.

  Revenues from the Company's Asia Pacific region, which includes Asia, the
Pacific Rim, and the Middle East, combined to contribute to a 17% increase in
fiscal year 1995 sales, compared with an 11% increase in fiscal year 1994 sales
over 1993.  The increase in the fiscal year 1995 growth rate was attributable to
higher revenue growth in Australia, Singapore, Taiwan and the Middle East,
partially offset by a reduction in revenues into the PRC due to significantly
increased competition and lower fiscal year 1995 sales to one of the Company's
major customers in the PRC.  Sales into the PRC accounted for approximately 5%
of the Company's total fiscal year 1995 revenues, compared with approximately 6%
and 11% in fiscal year 1994 and 1993, respectively.

Gross Profit

  The Company's fiscal year 1995 gross profit margins of 10.0% declined from
14.7% in fiscal year 1994 and 20.2% in fiscal year 1993.  The downward trend in
gross profit margins resulted primarily from product development and production
delays, manufacturing related costs associated with product transitions and
continued intense industrywide competitive pricing pressures, particularly in
the consumer retail sector of the market.  Further contributing to reduced gross
profit margins in fiscal year 1995 was the increased percentage of revenues
generated by the consumer retail channel (including sales to Tandy's retail
operations) which typically yields lower gross margins.  The consumer retail
channel increased to 37% of total fiscal year 1995 Americas revenues versus 32%
in fiscal year 1994 and 19% in fiscal year 1993.

  During fiscal year 1995, the Company and the majority of its competitors
continued to introduce new, lower-priced, higher-performance personal computers
resulting in continued pricing pressures on both new and older technology
products.

  The effect of foreign currency fluctuations on revenue has a corresponding
impact on gross profit, as the Company's production costs are incurred primarily
in U.S. dollars.  When comparing fiscal year 1995 to fiscal year 1994, the U.S.
dollar declined against nearly all European currencies.  This year-to-year
currency fluctuation resulted in an approximate two percentage point gross
margin increase in fiscal year 1995 results compared to fiscal year 1994, versus
an approximate two percentage point reduction in fiscal year 1994 results
compared to fiscal year 1993.

Operating Expenses
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                           Fiscal Year Ended
                                    ----------------------------------------------------------------
                                      July 1,                   July 2,                    July 3,
                                       1995       Change         1994        Change         1993
------------------------------------------------------------------------------------------------------------
<S>                                <C>             <C>       <C>              <C>       <C>
Selling and marketing               $ 233,524       21%       $ 193,053        36%       $ 141,752
Percentage of net sales                   9.5%                      8.2%                      10.0%
</TABLE>

  Total fiscal year 1995 selling and marketing expenses rose by $40.5 million
and represented 9.5% of net sales compared to 8.2% in fiscal year 1994 and 10.0%
in fiscal year 1993.  Expanded worldwide sales and marketing efforts in both new
and existing subsidiary locations resulted in higher payroll and payroll-related
expenses. Entry into new international markets, new product introductions and a
greater emphasis on advertising, sales and marketing programs contributed to
increased media advertising, marketing promotion, sales literature and
cooperative advertising expenses.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                         Fiscal Year Ended
                                    ------------------------------------------------------------
                                      July 1,                  July 2,                 July 3,
                                       1995       Change        1994       Change       1993
------------------------------------------------------------------------------------------------------------
<S>                                <C>            <C>       <C>            <C>       <C>       
General and administrative          $ 81,458       10%       $ 74,333       44%       $ 51,555
Percentage of net sales                  3.3%                     3.1%                     3.7%
</TABLE>

  In fiscal year 1995, general and administrative expenses increased in
absolute dollars and as a percentage of net sales to 3.3% from 3.1% in fiscal
year 1994 and 3.7% in fiscal year 1993.  During fiscal year 1995, the Company
continued to expand its Asia Pacific and Europe region operations.  Costs
associated with this international expansion resulted in increased expenses for
staffing, telephone service, insurance, and outside professional services.  The
Company also incurred higher legal fees due to increased litigation activity.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                          Fiscal Year Ended
                                    -------------------------------------------------------------
                                      July 1,                  July 2,                  July 3,
                                       1995       Change        1994       Change        1993
------------------------------------------------------------------------------------------------------------
<S>                                <C>            <C>       <C>            <C>       <C>      
Engineering and development         $ 36,383       (6%)      $ 38,858       22%       $ 31,969
Percentage of net sales                  1.5%                     1.6%                     2.3%
</TABLE>

  Fiscal year 1995 engineering and development costs decreased in absolute
dollars and as a percentage of net sales due to lower payroll and engineering
materials expense as compared to 1994.  Products introduced in fiscal year 1995
included additions to the Advantage!, Bravo, Premmia, Ascentia, and Manhattan
product lines.  Engineering and development costs increased in absolute dollars
in fiscal year 1994 as compared to fiscal year 1993 due to net additions to the
Company's engineering staff and higher costs for engineering materials as the
Company invested in the development of new products and in enhancements to
existing products.  Such costs declined as a percentage of net sales in fiscal
year 1994 compared to fiscal year 1993 due to significant revenue growth in
fiscal year 1994 over 1993.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                           Fiscal Year Ended
                                    -----------------------------------------------------------------
                                      July 1,                   July 2,                     July 3,
                                       1995      Change          1994       Change           1993
------------------------------------------------------------------------------------------------------------
<S>                                <C>          <C>         <C>            <C>           <C>        
Restructuring charges (credits)     $      -     (100%)      $ (12,500)     (110%)        $ 125,000
Percentage of net sales                    -%                     (0.5%)                        8.9%
</TABLE>

  In June 1993, the Company acquired certain assets and assumed certain
liabilities relating to Tandy Corporation's ("Tandy") personal computer
manufacturing operations and the GRiD North American and European sales
divisions.  On September 1, 1993, the Company also purchased certain assets and
assumed certain liabilities of Tandy/GRiD France.  The total purchase price
(including Tandy/GRiD France) was $111.7 million and included a cash payment of
$15 million and a three-year promissory note in the principal amount of $96.7
million.  Restructuring charges of $125 million were recorded in June 1993 in
connection with the Company's acquisition of Tandy's personal computer
manufacturing and engineering operations and GRiD's North American and European
sales and marketing operations.

  During fiscal year 1994, the Company completed most of its previously
identified restructuring activities and incurred asset write-downs of $50
million and cash expenditures of $47 million related directly to its fiscal year
1994 restructuring activities.  The Company recorded a $12.5 million credit in
the fourth quarter of fiscal year 1994 after concluding that most of its
restructuring activities had been completed or were adequately provided for
within the remaining restructuring accrual.  At July 2, 1994, $15.2 million of
the restructuring accrual remained on the Company's consolidated balance sheet.
During fiscal year 1995, the Company completed the consolidation of its
worldwide mobile computing manufacturing in Taiwan and the concurrent closure of
its Fountain Valley, California manufacturing facility.  During fiscal year
1995, the Company incurred cash expenditures of approximately $4.7 million
related primarily to the closure of its Fountain Valley, California
manufacturing facility.  At July 1, 1995, approximately $10.5 million of the
original restructuring accrual remained, consisting primarily of amounts
provided for the net present value of minimum lease payments for facilities that
have been closed and the write-down to net realizable value of related leasehold
improvements.

  The Company believes that its restructuring activities were necessary in
order to reorganize its worldwide manufacturing, engineering, sales and service
operations as well as to reposition its product lines after the June 1993
acquisition of Tandy's personal computer operations.  However, no assurance can
be given that these restructuring actions will be successful or that similar
actions will not be required in the future.

Other Income and Expense
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                          Fiscal Year Ended
                                    -------------------------------------------------------------
                                       July 1,                 July 2,                   July 3,
                                        1995      Change         1994      Change         1993
------------------------------------------------------------------------------------------------------------
<S>                                <C>            <C>        <C>          <C>          <C>      
Interest and other expense, net     $ (17,675)     130%       $ (7,677)    1,063%       $ (660)
</TABLE>

  In fiscal year 1995, the Company had net interest expense of $15.1 million
compared to $7.8 million in fiscal year 1994 and net interest income of $2.1
million in fiscal year 1993.  Interest expense increased as a result of the
increased utilization of the Company's bank revolving credit facilities during
fiscal year 1995, which were utilized to fund the Company's fiscal year 1995
operations.  Interest expense for fiscal year 1995 also increased due to a full
year's inclusion of interest on the Company's Liquid Yield OptionTM Notes, which
were originally issued in December 1993, generating slightly less than seven
months of interest expense for fiscal year 1994.  Additionally, interest expense
for fiscal year 1995 increased due to the increase in the interest rate on the
note payable to Tandy Corporation from 3.75% to 4.94%, effective July 1994.

  In fiscal year 1995, the Company recognized net other expense of $2.6 million
compared to net other income of $.1 million in fiscal year 1994 and net other
expense of $2.7 million in fiscal year 1993.  The fiscal year 1994 other income
was attributable to the one-time $4.3 million pretax gain from the sale of the
Company's Hong Kong manufacturing facility in June 1994.  Other expenses relate
primarily to foreign currency transaction and remeasurement gains and losses and
the costs associated with the Company's foreign currency hedging activities.
The Company utilizes a limited hedging strategy which is designed to minimize
the effect of remeasuring the local currency balance sheets of its foreign
subsidiaries on the Company's consolidated financial position and results of
operations.  See further discussion included under "Liquidity and Capital
Resources."

Income Tax Provision (Benefit)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                                          Fiscal Year Ended
                                     -------------------------------------------------------------
                                       July 1,                  July 2,                  July 3,
                                        1995      Change         1994      Change          1993
--------------------------------------------------------------------------------------------------------------
<S>                                <C>           <C>         <C>           <C>        <C>          
Income tax provision (benefit)      $ (24,056)    (260%)      $ 15,003      230%       $ (11,500)
Effective tax rate                      (19.5%)                   32.4%                    (17.6%)
</TABLE>

  In fiscal years 1995, 1994 and 1993, the Company recorded an effective income
tax provision (benefit) of (19.5%), 32.4% and (17.6%), respectively.  The
decrease in the fiscal year 1995 effective tax rate was attributable to changes
in the proportion of income earned or losses sustained within various taxing
jurisdictions and the tax rates in the locations in which those earnings or
losses were generated, as well as the Company's inability to benefit certain
deferred tax assets that include loss carryforwards.  The increase in the fiscal
1994 effective tax rate was attributable to the one percent increase in the
federal income tax rate and changes in the proportion of income earned within
various taxing jurisdictions.  The Company recorded net deferred tax assets of
$65.6 million and $40.2 million at July 1, 1995 and July 2, 1994, respectively.


<TABLE>
<CAPTION>
LIQUIDITY AND CAPITAL RESOURCES
------------------------------------------------------------------------------------------------------------
                                 As of or for the        As of or for the Fiscal Year Ended
                                 Six Months Ended    -----------------------------------------
                                   December 30,       July 1,         July 2,         July 3,
                                       1995            1995            1994            1993
------------------------------------------------------------------------------------------------------------
<S>                                <C>              <C>            <C>             <C>         
Cash and cash equivalents           $ 125,387        $ 95,825       $ 153,118       $ 121,600
Working capital                       223,546         306,872         444,974         301,046
Cash provided by (used in):
 Operating activities                (107,328)       (119,774)        (40,260)        (68,418)
 Investing activities                 (11,849)        (33,628)        (35,856)         32,523
 Financing activities                 153,728         106,417         107,798          63,010
------------------------------------------------------------------------------------------------------------
</TABLE>

  During transition period 1995, the Company's working capital decreased $83.3
million primarily due to increases in current liabilities and a decrease in
inventory.  Current liabilities increased as a result of a reclassification of
the note payable to Tandy Corporation from long-term debt to the current portion
of long-term debt, higher accrued warranty balances due to increases in both the
cost and volume of warranty claims and an increase in accrued restructuring
charges related to the Company's Asia Pacific restructuring plan.  These
increases in current liabilities were partially offset by lower short-term
borrowings.  The Company had short-term borrowings of $75.0 million and $156.0
million at December 30, 1995 and July 1, 1995, respectively.

  In transition period 1995, the net cash used in operating activities of $107.3
million was primarily due to the Company's operating loss, partially offset by
lower inventory levels and increases in certain accrued liabilities.
Improvement in cash flow from operations in fiscal year 1996 is dependent upon
the Company's ability to improve both its operating results and asset management
ratios.

  Net cash used in investing activities of $11.8 million during transition
period 1995 was primarily due to capital expenditures.  Capital expenditures
totaled $10.6 million in transition period 1995 and consisted primarily of
additions to plant and production equipment at the Company's Fort Worth, Texas
and Ireland manufacturing facilities.  The Company expects its fiscal year 1996
capital expenditures to be somewhat greater than those incurred in transition
period 1995, annualized for a full year of expenditures.  The foregoing forward-
looking statement involves risks and uncertainties that could cause actual
results to differ materially.  See "Additional Factors That May Affect Future
Results" herein.

  Net cash provided by financing activities of $153.7 million was primarily due
to the proceeds of approximately $240 million received in connection with the
issuance of common stock to Samsung as part of a stock purchase agreement,
partially offset by the repayment of short-term borrowings and long-term debt.

  The Company regularly reviews its cash funding requirements on a consolidated
basis and attempts to meet those requirements through a combination of cash on
hand, cash provided by operations, available borrowings under any revolving
credit facilities and possible future public or private debt and/or equity
offerings.  The Company utilizes a centralized approach for its cash management
activities and attempts to maximize the use of its consolidated cash resources
so as to minimize additional debt requirements while complying with any legal or
other restrictions upon the free flow of funds from one segment, division or
subsidiary to another.  The Company invests its excess cash in investment grade
short-term money market instruments.

  During fiscal year 1995, the Company had a $225 million revolving credit
facility secured by a pledge of all of the Company's domestic U.S. assets with a
final maturity date of September 30, 1996.  At July 1, 1995, $116 million was
outstanding as drawings under this credit facility and $67.7 million outstanding
in the form of a letter of credit issued to Tandy Corporation in support of the
acquisition note payable.  On July 21, 1995, the Company amended the $225
million credit facility and reduced the size of the credit facility to $185
million.  On August 1, 1995, the Company repaid all amounts outstanding under
the $185 million credit facility and reduced the amount of the facility to $68
million.  On August 28, 1995, the Company canceled the letter of credit issued
to Tandy Corporation under the credit facility and terminated the credit
agreement on August 31, 1995.

  On February 9, 1995, the Company and four of its foreign subsidiaries entered
into a $50 million revolving credit agreement provided by one bank with an
expiration date of August 9, 1995.  As of July 1, 1995, there was $40 million
outstanding as drawings under this credit facility.  On July 21, 1995, the
Company amended the $50 million credit facility and extended the maturity date
to August 31, 1995.  On August 1, 1995, the Company repaid all amounts
outstanding under the $50 million credit facility and terminated the agreement.

  On February 27, 1995, the Company entered into a Stock Purchase Agreement
("Purchase Agreement") with Samsung providing for a significant minority
ownership interest in the Company of approximately 40%.  On June 30, 1995, the
Company's shareholders approved the strategic investment and all regulatory
approval was received as of July 1, 1995.  Under the terms of the Purchase
Agreement, as amended by Amendment No. 1 thereto dated June 1, 1995, and
Amendment No. 2 thereto dated July 29, 1995, Samsung purchased 6.44 million
newly issued shares of common stock from the Company, representing 19.9% of the
then outstanding shares of common stock, at $19.50 per share and commenced a
cash tender offer to purchase 5.82 million shares of common stock from the
Company's shareholders, representing 18% of the then outstanding shares of
common stock, at $22 per share.  Concurrently with the acceptance of the shares
for purchase under the tender offer, Samsung also purchased 5.63 million
additional newly issued shares of common stock from the Company at $22 per share
so that its aggregate ownership interest in the Company, after completion of all
of the purchases, was approximately 40%.  On July 31, 1995, the transaction was
completed and the Company received net proceeds of approximately $240 million.

  The proceeds received from the Samsung investment were utilized to repay the
amounts outstanding under both the $185 million and $50 million revolving credit
facilities.  The remaining proceeds were utilized for working capital and
capital expenditure requirements.

  On November 22, 1995, Samsung provided a $50 million short-term loan to the
Company at an interest rate of 7.3125% per annum.  The Company repaid this loan
on December 28, 1995 with proceeds from the credit agreement guaranteed by
Samsung as part of the Additional Support Agreement, discussed below.

  On December 21, 1995, the Company signed an Additional Support Agreement with
Samsung that provides additional financial support to the Company, principally
including a guaranty by Samsung of a line of credit of up to $200 million
through December 1997 and a vendor line of credit with Samsung of $100 million
through November 1997 for component purchases.  In exchange for the additional
financial support, the Company issued an option to Samsung to purchase 4.4
million shares of the Company's common stock at an exercise price of $.01 per
share, exercisable between July 1, 1996 and June 30, 2001, and allowed Samsung
to add an additional member to the Company's Board of Directors.  The issuance
of the option increases Samsung's potential ownership in the Company to
approximately 45%.  The benefits received in exchange for the option were
recorded in "Other assets" based on the fair value of the option at the date of
issuance, or $31 million.  In connection with this agreement, the Company
incurred professional fees of approximately $2 million, which were also
capitalized.  This other asset will be amortized on a straight-line basis to
interest expense over the benefit period ending December 1997.

  On December 27, 1995, the Company entered into a $100 million revolving
credit agreement, guaranteed by Samsung as part of the Additional Support
Agreement, with a final maturity date of December 25, 1996.  The revolving
credit agreement allows the Company to borrow at a rate of LIBOR plus .25% per
annum, or the bank's reference rate, at the Company's option.  The Company is
required to pay a commitment fee equal to .125% per annum based on the average
daily unused portion of the facility.  The fee is payable quarterly in arrears.
At December 30, 1995, there was $75 million outstanding as borrowings under this
credit facility at an  interest rate of 8.50% per annum.  On March 6, 1996, the
total amount available for borrowings under the facility and guaranteed by
Samsung was increased to $200 million.  All other terms of the credit agreement
remained unchanged.

  In connection with the Tandy acquisition, the Company issued a $96.7 million
promissory note to Tandy Corporation which is due on July 11, 1996.  Interest
due related to fiscal year 1995 was paid on July 11, 1995 at a rate of 4.94% per
annum.  The interest rate was adjusted to 5.00%, effective July 11, 1995, based
on the lower of either 5% or the "lowest three month rate" within the meaning of
Section 1274(d)(2) of the Internal Revenue Code of 1986 as of July 11, 1995.
Interest is paid once per year on July 11th and there are no sinking fund
requirements.  The note also required the Company to maintain a standby letter
of credit payable to Tandy in the amount of 70% of the face value of the note or
$67.7 million.  Upon maturity of the note, up to 50% of the initial principal
amount of the promissory note was convertible, at the option of the Company,
into common stock of the Company based upon its then fair market value, as
defined in the promissory note.  Under the terms of the Stock Purchase
Agreement,  Samsung agreed to provide a letter of credit to support the
promissory note due to Tandy Corporation replacing the Company's letter of
credit and to provide funds to satisfy $75 million of the note obligation upon
maturity of the note.

  On August 23, 1995, the Company and Tandy Corporation amended the terms of the
$96.7 million promissory note.  Pursuant to such amendments, the Company paid
$6.7 million on August 25, 1995, thereby reducing the note balance to $90
million.  Tandy allowed the substitution of a letter of guarantee from both
Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc. for the
letter of credit previously required from the Company.  Additionally, the
maximum principal amount of the note that may be converted, at the option of the
Company, into common stock of the Company upon maturity of the note, based upon
its then fair market value as defined in the note, was reduced to $30 million.
All other terms of the promissory note remained unchanged.  Although the Company
has made no decision as to the source of funds to be used to repay this note, or
whether it will exercise its option to repay a portion of the note through the
issuance of common stock, the Company currently expects to fund the repayment
through cash from operations and/or through a borrowing from Samsung of up to
$75 million that is available to the Company upon maturity of the note pursuant
to the Stock Purchase Agreement with Samsung.

  On December 14, 1993, the Company issued $315 million par value of Liquid
Yield Option Notes ("LYONs") due December 14, 2013 and received total proceeds
of approximately $111.7 million.  The LYONs are zero coupon convertible
subordinated notes which were sold at a significant discount from par value with
a yield to maturity of 5.25% and a total value at maturity of $315 million
payable in cash.  There are no periodic payments of interest on the LYONs.  Each
$1,000 principal amount at maturity of LYONs is convertible into 12.993 shares
of the Company's common stock at any time.  Upon conversion of a LYON, the
Company may elect to deliver shares of common stock at the conversion rate or
cash equal to the market value of the shares of common stock into which the
LYONs are convertible.  The holder of a LYON may require the Company to purchase
all or a portion of its LYONs on December 14, 1998, December 14, 2003 and
December 14, 2008 (the "Purchase Dates"), and such payments may reduce the
liquidity of the Company.  However, the Company may, subject to certain
exceptions, elect to pay the purchase price on any of the three Purchase Dates
in cash or shares of common stock based upon its then fair market value as
defined in the indenture, or any combination thereof.  The Company has made no
decision as to whether it will meet these future purchase obligations in cash,
common stock, or any combination thereof.  Such decision will be based on market
conditions at the time a decision is required, as well as management's view of
the liquidity of the Company at such time.  In addition, as of 35 business days
after the occurrence of any change in control of the Company occurring on or
prior to December 14, 1998, each LYON will be purchased for cash by the Company,
at the option of the holder, for a change in control purchase price equal to the
issue price of the LYONs plus accrued original issue discount through the date
set for such purchase.  A change in control of the Company is deemed to have
occurred under the terms of the LYONs at such time as any person, other than the
Company, has become the beneficial owner of 50% or more of the Company's common
stock or the Company is not the surviving corporation of any consolidation or
merger of the Company.  The Stock Purchase Agreement and ownership by Samsung of
approximately 40% of the common stock of the Company does not have any impact on
the terms of the LYON securities.  In addition, the potential increase in
ownership by Samsung to 45% assuming exercise of its option on 4.4 million
shares of common stock as part of the Additional Support Agreement would not
have any impact on the terms of the LYONs.

  The Company's ability to fund its activities from operations is directly
dependent upon its rate of growth, ability to effectively manage its inventory,
the terms under which suppliers extend credit to the Company, the terms under
which the Company extends credit to its customers and its ability to collect
under such terms, the manner in which it finances any capital expansion, and the
Company's ability to access external sources of financing.  While the Company
currently has adequate sources of external financing available to meet its
current operating requirements, the majority of these sources of external
financing are supported by a guarantee provided to the Company by Samsung.  The
Company has not determined what steps it will take when the existing additional
support agreements terminate in December 1997.  The Company believes that it
will have adequate time prior to the expiration of the support agreements to
arrange for new sources of external financing.  The foregoing forward-looking
statement involves risks and uncertainties that could cause actual results to
differ materially.  See "Additional Factors That May Affect Future Results"
herein.  However, if the Company is unable to arrange for external financing in
December 1997, there would be a material adverse effect on the Company's
business, financial position and results of operations.

Foreign Exchange Hedging

  In the ordinary course of business and as part of the Company's asset and
liability management, the Company enters into various types of transactions that
involve contracts and financial instruments with off-balance sheet risk.  The
Company utilizes foreign exchange contracts and foreign currency borrowings to
hedge its exposure to foreign exchange rate fluctuations impacting its U.S.
dollar consolidated financial statements.  The Company attempts to minimize its
exposure to foreign currency transaction and remeasurement gains and losses due
to the effect of remeasuring the local currency balance sheets of its foreign
subsidiaries on the Company's consolidated financial position and results of
operations by utilizing a limited hedging strategy which includes the use of
foreign currency  borrowings, the netting of foreign currency assets and
liabilities and forward exchange contracts.  The actual gain or loss associated
with forward exchange contracts are limited to the contract amount multiplied by
the value of the exchange rate differential between the time the contract is
entered into and the time it matures.  The Company typically holds all of its
contracts until maturity and enters forward contracts ranging in maturity dates
from one to nine months.  Realized and unrealized gains and losses on the
forward contracts are recognized currently in the consolidated statement of
operations, and any premium or discount is recognized over the life of the
contract.  Some foreign locations, such as the People's Republic of China
("PRC"), do not allow open market hedging of their currencies and, therefore,
the Company is not able to hedge all of its exposure to foreign currency
fluctuations.

  The Company held forward exchange contracts maturing at various dates through
April 1996 with a face value of approximately $162.0 million at December 30,
1995, $162.0 million at July 1, 1995 and $143.0 million at July 2, 1994, which
approximate the Company's hedgeable net monetary asset exposure to foreign
currency fluctuations at those respective dates.  For the transition period
1995, and for fiscal years 1995, 1994 and 1993, a net foreign currency
transaction loss of $2.9 million, gain of $1.7 million, loss of $2.1 million and
gain of $.6 million, respectively, is included in the caption "Other income
(expense), net" in the accompanying consolidated statements of operations.
Foreign currency borrowings at December 30, 1995, July 1, 1995 and July 2, 1994,
totaled $4.0 million, $4.2 million and $3.8 million, respectively.

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

  Future operating results may be impacted by a number of factors that could
cause actual results to differ materially from those stated herein, which
reflect management's current expectations.  These factors include worldwide
economic and political conditions, industry specific factors, the Company's
ability to maintain access to external financing sources and its financial
liquidity, the Company's ability to timely develop and produce commercially
viable products at competitive prices, the availability and cost of components,
the Company's ability to manage expense levels, the continued financial strength
of the Company's dealers and distributors, and the Company's ability to
accurately anticipate customer demand.

  The Company's future success will be highly dependent upon its ability to
develop, produce and market products that incorporate new technology, are priced
competitively and achieve significant market acceptance.  There can be no
assurance that the Company's products will be technically advanced or
commercially successful due to the rapid improvements in computer technology and
resulting product obsolescence.  There is also no assurance that the Company
will be able to deliver commercial quantities of new products in a timely
manner.  The success of new product introductions is dependent on a number of
factors, including market acceptance, the Company's ability to manage risks
associated with product transitions, the effective management of inventory
levels in line with anticipated product demand and the timely manufacturing of
products in appropriate quantities to meet anticipated demand. The Company
regularly introduces new products designed to replace existing products.  While
the Company attempts to closely monitor new product introductions and product
obsolescence, there can be no assurance that such transitions will occur without
adversely affecting the Company's net sales, cash flow and profitability, as
occurred in transition period 1995.  In addition, if the Company is unable to
successfully anticipate and manage shifts in personal computer technology, the
Company's product life cycles could be negatively impacted and may continue to
have a material adverse effect on the Company's net sales, cash flow and
profitability.

  Increases in demand for personal computers have created industrywide
shortages, which at times have resulted in premium prices being paid for key
components, such as flat panel display screens, Dynamic Random Access Memory
chips ("DRAMs"), Static Random Access Memory chips, CD-ROM drives and monitors.
These shortages have occasionally resulted in the Company's inability to procure
these components in sufficient quantities to meet demand for its products.  In
addition, a number of the Company's products include certain components, such as
microprocessors, video chips, core logic, modems, lithium ion batteries, Static
Random Access Memory chips and Application Specific Integrated Circuits, that
are currently purchased from single sources due to availability, price, quality
or other considerations.  The Company purchases components pursuant to purchase
orders placed in the ordinary course of business and has no guaranteed supply
arrangements with single source suppliers.  Reliance on suppliers generally
involves risks, including the possibility of defective parts, a shortage of
components, an increase in component costs and disruptions in delivery of
components.  Should delays, defects or shortages re-occur or component costs
significantly increase, the Company's net sales and profitability could be
adversely affected.

  Effective July 31, 1995, the Company and Samsung entered into strategic
agreements covering a broad range of commercial relationships including, among
others, component supply agreements for certain critical components manufactured
by Samsung and used by the Company in the manufacture of personal computers and
a joint procurement agreement providing a mechanism for Samsung and the Company
to coordinate their purchases from third parties in order to obtain more
favorable pricing.  However, as Samsung is a supplier of critical components in
a highly competitive marketplace, other suppliers may be less likely to extend
attractive terms to or to do business with the Company.  In addition, because
Samsung has other business involvements typical of large, multi-national
companies and is not based in the U.S., it is possible that some additional
suppliers, customers, employees and others will not react favorably to Samsung's
investment in the Company.

  In the second quarter of transition period 1995, the Company implemented a
restructuring plan designed to increase its utilization of third-party board
manufacturing and design and to realign its Asia Pacific manufacturing
operations.  The Company's increased reliance on third-party board manufacturers
involves risks, including the possibility of defective boards, a shortage of
boards, an increase in board costs and disruptions in delivery of boards.
Should delays, defects or shortages occur or board costs significantly increase,
the Company's net sales and profitability could be adversely affected.  Although
the Company believes that the restructuring activities were necessary, no
assurance can be given that the restructuring action will be successful or that
similar action will not be required in the future.

  The ongoing introduction of new technologies across all of the Company's
product lines is intended to enable the Company to keep pace with rapid market
changes and to minimize the effect of continued competitive pricing.  However,
there can be no assurance that the Company will have the financial resources,
marketing and distribution capability, or the technological knowledge to compete
successfully.  In addition, the Company's results of operations could be
adversely impacted if it is unable to effectively implement its technological
and marketing alliances with other companies, such as Microsoft and Intel, and
manage the competitive risks associated with these relationships.

  The Company participates in a highly competitive and volatile industry that
is characterized by dynamic customer demand patterns, rapid introduction of new
products, technological advances and product obsolescence resulting in an
extremely competitive pricing environment with downward pressure on gross
margins.  The Company anticipates that the personal computer industry will
continue to experience intense price competition and dramatic price reductions
during fiscal year 1996.  There can be no assurance that future pricing actions
by the Company and its competitors will not adversely impact the Company's net
sales and profitability.

  On March 21, 1996, the Company announced that it has encountered excess
competitor inventory in the channel, overall lower demand for PCs and greater
pricing pressures than originally anticipated through the first two months of
fiscal year 1996.  There can be no assurance that these trends will not continue
and will not adversely impact the Company's net sales and profitability.

  The Company's ability to compete is largely dependent upon its financial
strength and its ability to adequately fund its operations.  Many of the
Company's competitors are significantly larger and have significantly greater
financial resources than the Company.  The Company's sources of financing
include cash on hand, cash provided by operations, available borrowings under
its revolving credit facilities and possible future public or private debt
and/or equity offerings.  The Company's future success is highly dependent upon
its continued access to sources of financing which it believes are necessary for
the continued growth of the Company.  The Company currently has a $200 million
revolving credit facility guaranteed by Samsung.   However, in the event the
Company is unable to maintain access to its existing financing sources, there
would be a material adverse effect on the Company's business, financial position
and results of operations.

  Consistent with industry practice, the Company provides certain of its larger
distributors, consumer retailers and dealers with stock re-balancing and price
protection rights that permit these distributors, retailers and dealers to
return slow-moving products to the Company for credit or to receive price
adjustments if the Company lowers the price of selected products within certain
time periods.  Stock re-balancing and price protection credits represented 4.2%
of net sales during transition period 1995, compared to 4.0% for fiscal year
1995, 2.1% in fiscal year 1994, and 2.8% in fiscal year 1993.  If sales and
pricing trends experienced in the current year continue or accelerate, there can
be no assurance that the Company will not experience rates of return or price
protection adjustments that could adversely impact on the Company's net sales
and profitability in the future.

  The Company believes that its production capacity should be sufficient to
support anticipated unit volumes for the foreseeable future.  However, if the
Company is unable to obtain certain key components, or to effectively forecast
customer demand or manage its inventory, increased inventory obsolescence or
reduced utilization of production capacity could adversely impact the Company's
gross margins and results of operations.

  General economic conditions have an impact on the Company's business and
financial results.  From time to time, the markets in which the Company sells
its products experience weak economic conditions that may negatively affect
sales of the Company's products.  Although the Company does not consider its
business to be highly seasonal, it has historically experienced seasonally
higher sales in the consumer retail channel in the quarter ended in December due
to strong holiday demand for some of its products in certain regions.  The
Company's international operations are also affected by foreign currency
fluctuations.  The financial statements of the Company's foreign subsidiaries
are remeasured into the United States dollar functional currency for
consolidated reporting purposes.  Gains and losses resulting from this
remeasurement process are recognized currently in the consolidated results of
operations.  The Company attempts to minimize the impact of these remeasurement
gains and losses by utilizing a limited hedging strategy which includes the use
of foreign currency borrowings, the netting of foreign currency assets and
liabilities, and forward exchange contracts.  The Company's exposure to currency
fluctuations will continue to increase as a result of the expansion of its
international operations.  Significant fluctuations in currency values could
have an adverse effect on the Company's net sales, gross margins and
profitability.

  The Company's international operations may also be affected by changes in
United States trade relationships, increased competition and the economic
stability of the locations in which sales occur.  The Company operates in
foreign locations, such as the PRC, where future sales may be dependent upon
continuing favorable trade relations.  Additionally, foreign locations such as
the PRC and Taiwan may experience changes in their general economic stability
due to such factors as increased inflation and political turmoil.  Also,
political tensions between the PRC and Taiwan could adversely affect the
Company's operations, particularly its notebook production.  Any significant
change in United States trade relations or the economic or political stability
of foreign locations in which the Company operates could have an adverse effect
on the Company's net sales and profitability.

  The personal computer industry presents risks for claims of infringement of
patents, trademarks and copyrights.  From time to time, the Company is notified
that certain of its products may infringe upon the intellectual property rights
of others.  The Company generally evaluates all such notices on a case-by-case
basis to determine whether licenses are necessary or desirable.  If such claims
are made, there can be no assurance that licenses will be available on
commercially reasonable terms or that retroactive royalty payments on sales of
the Company's computer products will not be required.  In addition, substantial
costs may be incurred in disputing such claims.  The Company believes that the
actions it takes to avoid or minimize the impact to the Company of such claims
are prudent; however, there can be no assurance that such claims will not occur
or, if successful, would not have a material adverse effect on the Company's
business operations and profitability. Pursuant to its Strategic Alliance
Agreement with Samsung Electronics Co., Ltd. dated February 27, 1995, the
Company has a patent cross license agreement with Samsung dated July 31, 1995
that expires on July 31, 2005.

  The Company's primary means of distribution continues to be third-party
computer resellers and consumer retailers.  While the Company continuously
monitors and manages the credit it extends to its customers to limit its credit
risk, the Company's business could be adversely affected in the event that the
financial condition of its customers weakens.  In the event of the financial
failure of a major customer, the Company would experience disruptions in its
distribution as well as the loss of the unsecured portion of any outstanding
accounts receivable.

  In determining the amount of the valuation allowance required to be
established against deferred tax assets in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", the Company has primarily relied upon its ability to generate future
taxable income using certain available tax planning strategies.  The amount of
taxable income that could actually be generated from such tax planning
strategies is dependent upon the Company being able to sell certain appreciated
assets at the current estimated fair market value.  Although the Company has
utilized an outside valuation firm to determine the current estimated fair
market value of such assets, changes in market conditions could result in a
reduction of the estimated fair market value of these assets that would
adversely affect the amount of the valuation allowance and reduce the amount of
net deferred tax assets considered realizable.

  The Company's corporate headquarters facility, at which the majority of its
research and development activities are conducted, is located near major
earthquake faults which have experienced earthquakes in the past.  While the
Company does carry insurance at levels management believes to be prudent, in the
event of a major earthquake or other disaster affecting one or more of the
Company's facilities, it is likely that insurance proceeds would not cover all
of the costs incurred and, therefore, the operations and operating results of
the Company could be adversely affected.

  Because of these and other factors affecting the Company's operating results,
past financial performance should not be considered a reliable indicator of
future performance, and investors should not use historical trends to anticipate
results or trends in future periods.  In addition, the Company's participation
in the highly competitive personal computer industry often results in
significant volatility in the Company's common stock price.

  This Transition Report on Form 10-K contains certain forward-looking
statements that are based on current expectations.  In light of the important
factors that can materially affect results, including those set forth above and
elsewhere in this Form 10-K, the inclusion of forward-looking information herein
should not be regarded as a representation by the Company or any other person
that the objectives or plans of the Company will be achieved.  The Company may
encounter competitive, technological, financial and business challenges making
it more difficult than expected to continue to develop, market, manufacture and
ship new products on a timely basis; competitive conditions within the personal
computer industry may change adversely; demand for the Company's products may
weaken; the market may not accept the Company's new products; the Company may be
unable to retain existing key management personnel; inventory risks may rise due
to shifts in market demand; the Company's forecasts may not accurately
anticipate market demand; and there may be other material adverse changes in the
Company's operations or business.  Certain important factors affecting the
forward looking statements made herein include, but are not limited to (i)
timely identifying, designing, and delivering new products as well as enhancing
existing products, (ii) implementing current restructuring plans, (iii)
improving efficiencies in world wide distribution activities, (iv) predicting
the significance of the indirect sales channel, (v) defending positions with the
IRS and in the legal proceedings described above, (vi) accurately forecasting
capital expenditures, and (vii) obtaining new sources of external financing
prior to the expiration of existing support arrangements entered into with
Samsung.  Assumptions relating to budgeting, marketing, advertising, product
development and other management decisions are subjective in many respects and
thus susceptible to interpretations and periodic revisions based on actual
experience and business developments, the impact of which may cause the Company
to alter its marketing, capital expenditure or other budgets, which may in turn
affect the Company's financial position and results of operations.

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Financial Statements:

        Report of Independent Auditors.
        Consolidated Balance Sheets at December 30, 1995, July 1, 1995 and July 
             2, 1994.
        Consolidated Statements of Operations for the six months ended December
             30, 1995 and for the years ended July 1, 1995, July 2, 1994 and 
             July 3, 1993.
        Consolidated Statements of Shareholders' Equity for the six months ended
             December 30, 1995 and for the years ended July 1, 1995, July 2, 
             1994 and July 3, 1993.
        Consolidated Statements of Cash Flows for the six months ended December
             30, 1995 and for the years ended July 1, 1995, July 2, 1994 and 
             July 3, 1993.
        Notes to Consolidated Financial Statements.

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

     Not applicable.
                                        
                         REPORT OF INDEPENDENT AUDITORS


The Board of Directors and Shareholders
AST Research, Inc.


  We have audited the accompanying consolidated balance sheets of AST Research,
Inc. as of December 30, 1995, July 1, 1995 and July 2, 1994, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the six months ended December 30, 1995 and for each of the three years in the
period ended July 1, 1995.  Our audits also included the financial statement
schedule listed in the Index at Item 14(a).  These financial statements and
schedule are the responsibility of the Company's management.  Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.

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

  In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of AST Research, Inc.
at December 30, 1995, July 1, 1995 and July 2, 1994, and the consolidated
results of its operations and its cash flows for the six months ended December
30, 1995 and for each of the three years in the period ended July 1, 1995, in
conformity with generally accepted accounting principles.  Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.


                                             Ernst & Young LLP



Orange County, California
January 23, 1996, except for Note 5,
as to which the date is March 6, 1996


                               AST RESEARCH, INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                           December 30,           July 1,          July 2,
(In thousands, except share amounts)                           1995                1995             1994
------------------------------------------------------------------------------------------------------------
<S>                                                       <C>              <C>                <C>
ASSETS
 Current assets:
  Cash and cash equivalents                                $   125,387      $    95,825        $   153,118
  Accounts receivable, net of allowance for doubtful
   accounts of $18,629, $17,452 and $17,564 at December
   30, 1995, July 1, 1995 and July 2, 1994, respectively       392,598          394,927            326,057
  Inventories                                                  252,339          311,469            333,729
  Deferred income taxes                                         19,495           31,973             43,266
  Other current assets                                          47,802            6,938              9,797
------------------------------------------------------------------------------------------------------------
     Total current assets                                      837,621          841,132            865,967

 Property and equipment                                        170,897          165,261            159,530
 Accumulated depreciation and amortization                     (72,172)         (64,006)           (56,089)
------------------------------------------------------------------------------------------------------------
 Net property and equipment                                     98,725          101,255            103,441

 Other assets                                                  119,696           79,114             36,212
------------------------------------------------------------------------------------------------------------
                                                           $ 1,056,042      $ 1,021,501        $ 1,005,620
============================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
  Short-term borrowings                                    $    75,000      $   156,000        $    50,000
  Accounts payable, including payable to related
   party of $31,562 at December 30, 1995                       199,346          213,202            209,579
  Accrued salaries, wages and employee benefits                 19,827           17,760             21,465
  Other accrued liabilities                                    200,639          119,689            112,096
  Income taxes payable                                          26,902           25,189             27,455
  Current portion of long-term debt                             92,361            2,420                398
------------------------------------------------------------------------------------------------------------
     Total current liabilities                                 614,075          534,260            420,993

 Long-term debt                                                125,540          219,224            215,294
 Other non-current liabilities                                   5,545            4,779              7,571

 Commitments and contingencies

 Shareholders' equity:
  Common stock, par value $.01; 200,000,000 shares
   authorized, 44,679,400, 32,412,500 and 32,333,750
   shares issued and outstanding  at December 30, 1995,
   July 1, 1995 and July 2, 1994, respectively                    447               324                323
  Additional capital                                          414,735           142,208            141,424
  Retained earnings (deficit)                                (104,300)          120,706            220,015
-----------------------------------------------------------------------------------------------------------
     Total shareholders' equity                               310,882           263,238            361,762
-----------------------------------------------------------------------------------------------------------
                                                          $ 1,056,042      $  1,021,501        $ 1,005,620
===========================================================================================================
</TABLE>
                             See accompanying notes.

                               AST RESEARCH, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                           Six Months
                                              Ended         ----------------------------------------------  
                                           December 30,        July 1,          July 2,          July 3,
(In thousands, except per share amounts)       1995             1995             1994             1993
------------------------------------------------------------------------------------------------------------
<S>                                       <C>              <C>              <C>              <C>           
Net sales                                  $ 1,016,283      $ 2,467,783      $ 2,367,274      $ 1,412,150

Cost of sales                                1,033,158        2,222,108        2,019,541        1,126,452
------------------------------------------------------------------------------------------------------------
Gross profit (loss)                            (16,875)         245,675          347,733          285,698

Selling and marketing expenses                 117,560          233,524          193,053          141,752
General and administrative expenses             48,186           81,458           74,333           51,555
Engineering and development expenses            19,608           36,383           38,858           31,969
Restructuring charge (credit)                   12,967                -          (12,500)         125,000
------------------------------------------------------------------------------------------------------------
Total operating expenses                       198,321          351,365          293,744          350,276
------------------------------------------------------------------------------------------------------------
Operating income (loss)                       (215,196)        (105,690)          53,989          (64,578)

Interest income                                  2,631            2,362            2,125            3,341
Interest expense                                (8,634)         (17,436)          (9,937)          (1,269)
Other income (expense), net                     (3,807)          (2,601)             135           (2,732)
------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes             (225,006)        (123,365)          46,312          (65,238)

Income tax provision (benefit)                       -          (24,056)          15,003          (11,500)
------------------------------------------------------------------------------------------------------------
Net income (loss)                          $  (225,006)     $   (99,309)     $    31,309      $   (53,738)
============================================================================================================

Net income (loss) per share:
  Primary                                  $     (5.27)     $     (3.07)     $      0.96      $     (1.72)
  Fully diluted                            $     (5.27)     $     (3.07)     $      0.95      $     (1.72)
============================================================================================================

Shares used in computing net income
 (loss) per share:
   Primary                                      42,721           32,371           32,548           31,289
   Fully diluted                                42,721           32,371           34,866           31,289
============================================================================================================
</TABLE>                                
                             See accompanying notes.

                               AST RESEARCH, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                        Common Stock       Additional     Retained
(In thousands)                                        Shares    Amount       Capital      Earnings
------------------------------------------------------------------------------------------------------------
<S>                                                  <C>        <C>       <C>           <C>         
Balance at June 27, 1992                              30,787     $ 308     $ 120,515     $  242,444
  Exercise of stock options                              867         9         4,939              -
  Tax benefit related to employee stock options            -         -         3,980              -
  Vesting of restricted stock                              -         -           450              -
  Cancellation of restricted stock                       (75)       (1)         (100)             -
  Net loss                                                 -         -             -        (53,738)
------------------------------------------------------------------------------------------------------------
Balance at July 3, 1993                               31,579       316       129,784        188,706
  Exercise of stock options and warrants                 755         7         9,554              -
  Tax benefit related to employee stock options            -         -         1,823              -
  Vesting of restricted stock                              -         -           263              -
  Net income                                               -         -             -         31,309
------------------------------------------------------------------------------------------------------------
Balance at July 2, 1994                               32,334       323       141,424        220,015
  Exercise of stock options                               79         1           784              -
  Net loss                                                 -         -             -        (99,309)
------------------------------------------------------------------------------------------------------------
Balance at July 1, 1995                               32,413       324       142,208        120,706
  Issuance of common stock to related party,
    net of issuance costs of $8,876                   12,070       121       240,443              -
  Issuance of stock option to related party in
    exchange for additional support                        -         -        31,045              -
  Exercise of stock options                              196         2         1,039              -
  Net loss                                                 -         -             -       (225,006)
------------------------------------------------------------------------------------------------------------
Balance at December 30, 1995                          44,679     $ 447     $ 414,735     $ (104,300)
============================================================================================================
</TABLE>
                             See accompanying notes.

                               AST RESEARCH, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                         Six Months                    Fiscal Year Ended     
                                                           Ended       ---------------------------------------------
                                                        December 30,        July 1,         July 2,         July 3,
(In thousands)                                              1995             1995            1994            1993
--------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>              <C>             <C>             <C>       
Cash flows from operating activities:
  Cash received from customers                          $  1,052,845     $  2,423,705    $  2,274,978    $  1,322,831 
  Cash paid to suppliers and employees                    (1,152,385)      (2,537,459)     (2,294,380)     (1,373,528)     
  Interest received                                            2,441            2,428           2,052           4,583
  Interest paid                                               (7,717)          (9,937)         (3,149)         (1,373)
  Income tax refunds received                                    210            6,099           1,989               -
  Income taxes paid                                             (913)          (9,895)        (22,210)        (13,008)
  Other cash received (paid)                                  (1,809)           5,285             460          (7,923)
--------------------------------------------------------------------------------------------------------------------------
    Net cash used in operating activities                   (107,328)        (119,774)        (40,260)        (68,418)

Cash flows from investing activities:
  Purchases of capital equipment                             (10,649)        (26,080)        (30,045)         (20,894)
  Proceeds from disposition of capital equipment               1,611           4,474          10,673            1,146
  Purchases of other assets                                   (2,811)        (12,022)         (1,484)            (560)
  Payment related to Tandy/GRiD acquisition                        -               -         (15,000)               -
  Purchases of short-term investments                              -               -               -          (35,155)
  Proceeds from short-term investments                             -               -               -           87,986
--------------------------------------------------------------------------------------------------------------------------
    Net cash provided by (used in) investing activities      (11,849)        (33,628)        (35,856)          32,523

Cash flows from financing activities:
  Short-term borrowings, net                                 (81,000)        106,000          (9,217)          58,417
  Repayment of long-term debt                                 (6,877)           (391)           (520)            (355)
  Proceeds from issuance of long-term debt                         -              23         107,974                -
  Proceeds from issuance of common stock:
     To related party                                        240,564               -               -                -
     Other                                                     1,041             785           9,561            4,948
--------------------------------------------------------------------------------------------------------------------------
    Net cash provided by financing activities                153,728         106,417         107,798           63,010

Effect of exchange rate changes on cash and 
  cash equivalents                                            (4,989)        (10,308)           (164)           6,611
--------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents          29,562         (57,293)         31,518           33,726

Cash and cash equivalents at beginning of year                95,825         153,118         121,600           87,874
--------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                $    125,387    $     95,825    $    153,118     $    121,600
==========================================================================================================================
</TABLE>
                             See accompanying notes.
                                        
                               AST RESEARCH, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (CONTINUED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                         Six Months
                                                           Ended        -----------------------------------------
                                                        December 30,       July 1,       July 2,        July 3,
(In thousands)                                              1995            1995          1994           1993
--------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>           <C>            <C>        
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
  USED IN OPERATING ACTIVITIES:

Net income (loss)                                       $ (225,006)    $  (99,309)   $   31,309     $  (53,738)
Adjustments to reconcile net income (loss) to net
    cash used in operating activities:
  Depreciation and amortization                             15,270         25,311        25,861         13,222
  Provision (benefit) for deferred income taxes              2,047        (25,318)        8,983        (55,438)
  Gain on sale of capital equipment                           (435)          (870)       (4,286)             -
  Pen-based inventory write-off                                  -              -        33,600              -
  Change in operating assets and liabilities, net
      of effects of acquisition:
    Accounts receivable                                      4,620        (58,714)      (86,290)       (97,059)
    Inventories                                             59,130         22,260       (19,808)       (59,809)
    Other current assets                                   (17,318)        12,798         3,317           (552)
    Accounts payable and accrued expenses                   22,557          1,446       (14,093)       137,496
    Income taxes payable                                     1,713         (2,266)      (17,377)        28,230
    Other current liabilities                               27,187          6,546        (3,573)        19,785
  Exchange (gains) losses                                    2,907         (1,658)        2,097           (555)
--------------------------------------------------------------------------------------------------------------------------
    Net cash used in operating activities               $ (107,328)    $ (119,774)   $  (40,260)    $  (68,418)
==========================================================================================================================
</TABLE>
                            See accompanying notes.


                               AST RESEARCH, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (CONTINUED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                           Six Months                 Fiscal Year Ended
                                                              Ended        --------------------------------------
                                                           December 30,        July 1,       July 2,        July 3,
(In thousands)                                                1995              1995          1994           1993
--------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>              <C>           <C>             <C>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND  
  FINANCING ACTIVITIES:

Issuance to related party of a five-year option to 
  purchase 4.4 million shares of common stock at an 
  exercise price of  $.01 per share principally in 
  exchange for a guaranty on a two-year $200 million 
  line of credit, and a two-year vendor line of $100 
  million                                                  $   31,045       $       -     $       -       $       -
==========================================================================================================================
The Company purchased certain assets relating to
  Tandy Corporation's personal computer operations
  effective June 30, 1993.  In addition, the Company
  purchased certain assets relating to Tandy/GRiD
  France's personal computer operations effective
  September 1, 1993.  In conjunction with the
  acquisitions, liabilities were assumed as follows:

  Fair value of assets acquired                            $       -        $     -       $  16,571       $ 151,000
  Note payable and cash due Tandy                                  -              -          (6,720)       (105,000)
--------------------------------------------------------------------------------------------------------------------------
  Liabilities assumed                                      $       -        $     -       $   9,851       $  46,000
==========================================================================================================================

Tax benefit of employee stock options                      $       -        $     -       $   1,823       $   3,980
==========================================================================================================================
</TABLE>
                     See accompanying notes.

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                        

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation
  The accompanying consolidated financial statements include the accounts of
AST Research, Inc. ("Company") and its wholly and majority owned subsidiaries.
All intercompany accounts and transactions have been eliminated in
consolidation.  Accounts denominated in foreign currencies have been remeasured
into the functional currency in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation," using the
U.S. dollar as the functional currency.

  The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.

Business
  The Company designs, manufactures, markets, services and supports a variety
of personal computers, including desktop, notebook, and server systems marketed
under the Advantage!, Bravo, Premmia, Ascentia and Manhattan brand names.

Cash and Cash Equivalents
  Cash and cash equivalents generally consist of cash, certificates of deposit,
time deposits, commercial paper, short-term government obligations and other
money market instruments.  The Company invests its excess cash in deposits with
major international banks, government securities and money market securities of
investment grade companies from a variety of industries and, therefore, bears
minimal risk.  These securities have original maturity dates not exceeding three
months.

Fair Values of Financial Instruments
  Fair values of cash and cash equivalents, short-term borrowings and the
current portion of long-term debt approximate cost due to the short period of
time to maturity.  Fair values of long-term debt are based on quoted market
prices or on borrowing rates currently available to the Company for loans with
similar terms or maturity.  The carrying amounts of the forward exchange
contracts equal their fair value and are adjusted at each balance sheet date for
changes in exchange rates.  The estimated fair value amounts disclosed in Note 8
have been determined by the Company using available market information.
However, considerable judgment is necessary in interpreting market data to
develop estimates of fair value.  Accordingly, the estimates presented are not
necessarily indicative of the amounts that the Company could realize in a
current market exchange.  Changes in assumptions could significantly affect the
estimates.

Inventories
  Inventories are stated at the lower of cost, determined on a first-in, first-
out basis, or market.

Property and Equipment
  Property and equipment are stated at cost.  Depreciation and amortization are
provided on the straight-line method over the following estimated useful lives:

<TABLE>
-------------------------------------------------------------------------------------------------
       <S>                                    <S>
        Buildings                                                                       40 years
        Machinery and equipment                                                        3-5 years
        Furniture and fixtures                                                           5 years
        Leasehold improvements                 Shorter of 5 years or remaining term of the lease
-------------------------------------------------------------------------------------------------
</TABLE>

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                                        
NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Intangible Assets
  Goodwill, representing the excess of the purchase price over the fair value
of the net assets of the acquired entities, is being amortized on a straight-
line basis over the period of expected benefit of ten years.  Patents are
amortized using the straight-line method over the lives of the patents.
Licenses are amortized on a straight-line basis over the estimated economic
lives of the related assets.  During the fiscal year ended July 1, 1995, the
Company elected the early adoption of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
Prior to the adoption of SFAS No. 121, the carrying value of goodwill was
reviewed periodically based on the undiscounted cash flows of the entity
acquired over the remaining amortization period.

  In accordance with SFAS No. 121, long-lived assets and certain identifiable
intangibles held and used by the Company will be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.  The recoverability test is performed at a
consolidated level based on undiscounted net cash flows since the assets being
tested do not have identifiable cash flows that are largely independent of other
asset groupings.  Based upon the Company's analysis under SFAS No. 121, the
Company believes that no impairment of the carrying value of its long-lived
assets inclusive of goodwill existed at December 30, 1995.  The Company's
analysis at December 30, 1995 has been based on an estimate of future
undiscounted cash flows using forecasts contained in the Company's operating
plan.  Should the results of the operating plan not be achieved, future analyses
may indicate insufficient future undiscounted net cash flows to recover the
carrying value of the Company's long-lived assets, in which case SFAS No. 121
would require the carrying value of such assets to be written down to fair value
if lower than the carrying value.  The Company would then be required to make a
determination of the fair value of its long-lived assets.  The Company is unable
to predict whether any write-down would be required in such circumstances.  The
Company's historical results of operations and its cash flows in transition
period 1995 and in fiscal years 1995, 1994 and 1993 indicate that it is at least
reasonably possible that such circumstances could arise in fiscal year 1996.

Revenue Recognition
  The Company recognizes revenue from product sales at the time of shipment.
The Company has established programs which, under specified conditions, provide
price protection rights and/or enable its customers to return product.  The
effect of these programs is estimated and current period sales and cost of sales
are reduced accordingly.

Engineering and Development
  Engineering and development costs are expensed as incurred.  Substantially
all engineering and development expenses are related to developing new products
and designing significant improvements to existing products.

Advertising Costs
  Advertising costs are expensed as incurred.  Advertising expense for the six
months ended December 30, 1995, and for the years ended July 1, 1995, July 2,
1994 and July 3, 1993 was $32,795,000, $59,262,000, $41,138,000 and $28,582,000,
respectively.

Warranty Costs
  The Company provides, by a current charge to income, an amount it estimates
will be needed to cover future warranty obligations for products sold during the
year.  The accrued liability for warranty costs is included in the caption
"Other accrued liabilities" in the accompanying consolidated balance sheets.

Deferred Grants
  During fiscal year 1994, the Company obtained various grants from the
Industrial Development Authority of the Republic of Ireland.  These grants
include employment, training and capital grants and extend through December
1996.  Employment grants are amortized into income over a period of one year.
Employee training grants are recognized in income in the period in which the
training costs are incurred by the Company.  Grants for the acquisition of
property and equipment are deferred and recognized in income on the same basis
as the related property and equipment is depreciated.

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                                        
NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

  During the six months ended December 30, 1995, fiscal year 1995 and fiscal
year 1994, the Company recorded approximately $2.1 million, $8.0 million and
$5.1 million, respectively, in grant funds received or receivable.  The amount
deferred under these grants at December 30, 1995, July 1, 1995 and July 2, 1994
was $6.0 million, $6.7 million and $4.5 million, respectively, and is included
in "Other accrued liabilities" in the accompanying consolidated balance sheets.
Total grant amounts amortized into income during the six-month period ended
December 30, 1995, fiscal year 1995 and fiscal year 1994 were $2.8 million, $5.8
million and $0.6 million, respectively.

  The Company has a ten year contingent liability to repay, in whole or in
part, grants received under certain circumstances pursuant to the Capital and
Employment Grant Agreements which began February 1994.  In addition, the Company
has a five year contingent liability under the Employment Grant Agreement from
the date of first payment to repay employment grants paid in respect to any job
if such job remains vacant for a period in excess of six months.  At December
30, 1995, the Company also has eight years remaining on a one million Irish
pounds (U.S. $1.6 million) ten year contingent liability related to the purchase
of the manufacturing facility which began in November 1993 and is payable in the
event that the Company terminates operations in Ireland.

Income Taxes
  The income tax provision (benefit) is computed on the pretax income (loss) of
the consolidated entities located within each taxing country based on the
current tax law.  Deferred taxes result from the future tax consequences
associated with temporary differences between the amount of assets and
liabilities recorded for tax and financial accounting purposes.  A valuation
allowance for deferred tax assets is recorded to the extent the Company cannot
determine, in accordance with the provisions of SFAS No. 109, "Accounting for
Income Taxes," that the ultimate realization of net deferred tax assets is more
likely than not.  In making such determination, the Company considers estimated
future reversals of existing taxable temporary differences, estimated future
earnings and available tax planning strategies.  To the extent that the
estimates of these items are reduced or not realized, the amount of the deferred
tax assets considered realizable could be adversely affected.

  Incremental United States income taxes have not been provided on $84.3
million of cumulative undistributed earnings of the Company's foreign
subsidiaries.  These earnings, which reflect full provision for non-U.S. income
taxes, are expected to be reinvested indefinitely in non-U.S. operations or to
be remitted substantially free of additional tax.  Accordingly, no material
provision has been made for taxes that might be payable upon remittance of such
earnings nor is it practicable to determine the amount of this liability.  As a
result of the restructuring plan completed in the second quarter of the six-
month period ended December 30, 1995 (Note 3), the Company provided for U.S.
taxes on $98.9 million of undistributed foreign earnings that management
believes will no longer be indefinitely reinvested in non-U.S. operations.

  During fiscal year 1993, the Company elected the early adoption of the asset
and liability method of accounting for income taxes pursuant to SFAS No. 109,
"Accounting for Income Taxes."  This change had no material effect on the net
loss previously reported in fiscal year 1993.

Per Share Information
  Primary and fully diluted loss per share have been computed based upon the
weighted average number of common shares outstanding.

  Primary net income per common share has been computed based upon the weighted
average number of common and common equivalent shares outstanding.  Common
equivalent shares result from the assumed exercise of outstanding stock options
that have a dilutive effect when applying the treasury stock method.  The fully
diluted per share calculation assumes, in addition to the above, that the
Company's Liquid Yield Option Notes were converted from the date of issuance
with earnings being increased for interest expense, net of taxes, that would not
have been incurred had conversion taken place.

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                                        
NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock Option Plans
  The Company follows Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," ("APB 25"), and related Interpretations in
accounting for its employee stock options.  Under APB 25, because the exercise
price of the Company's employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

  The Company follows the practice of recording amounts received upon the
exercise of options by crediting common stock and additional capital.  The
Company realizes an income tax benefit from the exercise or early disposition of
certain stock options.  This benefit results in a decrease in current income
taxes payable and an increase in additional capital.

NOTE 2.  CHANGE IN FISCAL YEAR-END

  The Company operates within a conventional 52/53 week accounting fiscal year.
On October 26, 1995, the Company changed its fiscal year-end from the Saturday
closest to June 30 to the Saturday closest to December 31, with the exception of
certain foreign subsidiaries that will operate on a December 31 fiscal year-end.
The change was made in order to align the Company's year-end with that of its
largest shareholder, Samsung Electronics Co. Ltd. ("Samsung").  The change in
fiscal year is effective for the six months ended December 30, 1995 ("transition
period" or "transition period 1995").  Transition period 1995 included 26 weeks.
The fiscal years ended July 1, 1995, July 2, 1994 and July 3, 1993 included 52,
52 and 53 weeks, respectively.

  The following sets forth the results of operations for the transition period
ended December 30, 1995, and the unaudited results of operations for the six
months ended December 31, 1994, the prior period comparable to the transition
period:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
                                                                (Unaudited)
                                               Six Months        Six Months
                                                 Ended             Ended
                                              December 30,      December 31,
(In thousands, except per share amounts)          1995              1994
------------------------------------------------------------------------------
<S>                                          <C>               <C>
Net sales                                     $ 1,016,283       $ 1,135,605
Gross profit (loss)                               (16,875)          103,617
Operating loss                                   (215,196)          (68,282)
Loss before income taxes                         (225,006)          (75,938)
Income tax benefit                                      -           (14,808)
Net loss                                         (225,006)          (61,130)
Net loss per share                            $     (5.27)      $     (1.89)
------------------------------------------------------------------------------
</TABLE>

NOTE 3.  ACQUISITIONS AND RESTRUCTURING

  In June 1993, the Company acquired certain assets and assumed certain
liabilities relating to Tandy Corporation's ("Tandy") personal computer
manufacturing operations and the GRiD North American and European sales
divisions.  In September 1993, the Company also purchased certain assets and
assumed certain liabilities of Tandy/GRiD France.  The total purchase price
(including Tandy/GRiD France) was $111.7 million and included a cash payment of
$15 million and a three-year promissory note in the principal amount of $96.7
million.  The acquisitions were accounted for in accordance with the purchase
method of accounting and, accordingly, the net assets acquired were included in
the Company's consolidated balance sheets based upon their estimated fair values
at the transactions' effective dates.  The Company's consolidated statements of
operations include the revenues and expenses of the acquired businesses after
the effective dates of the respective transactions.


                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 3.  ACQUISITIONS AND RESTRUCTURING (CONTINUED)

  Restructuring charges of $125 million were recorded in June 1993 in connection
with the Company's acquisition of Tandy's personal computer manufacturing and
engineering operations and GRiD's North American and European sales and
marketing operations.  During fiscal year 1994, the Company completed most of
its restructuring activities and incurred asset write-downs of $50 million and
cash expenditures of $47 million related directly to its fiscal year 1994
restructuring activities.  The Company recorded a $12.5 million credit in the
fourth quarter of fiscal year 1994 after concluding that most of its
restructuring activities had been completed or were adequately provided for
within the remaining restructuring accrual.  At July 2, 1994, $15.2 million of
restructuring accrual remained on the Company's consolidated balance sheet.
During fiscal year 1995, the Company completed the consolidation of its
worldwide mobile computing manufacturing in Taiwan and the concurrent closure of
its Fountain Valley, California manufacturing facility.  During fiscal year
1995, the Company incurred cash expenditures of approximately $4.7 million
related primarily to the closure of its Fountain Valley, California
manufacturing facility.  At July 1, 1995, approximately $10.5 million of the
original restructuring accrual remained on the Company's consolidated balance
sheet.  During transition period 1995, the Company incurred cash expenditures of
approximately $1.3 million related primarily to the closure of its Fountain
Valley, California manufacturing facility and at December 30, 1995, $9.2 million
of the restructuring accrual remained on the Company's consolidated balance
sheet.  The remaining accrual consists of amounts provided for the net present
value of minimum lease payments for facilities that have been closed and the
write-down to net realizable value of related leasehold improvements being
disposed of. The Company believes that these restructuring activities were
necessary in order to reorganize its worldwide manufacturing, engineering, sales
and service operations as well as reposition its product lines after the June
1993 acquisition of Tandy's personal computer operations.

  In the second quarter of transition period 1995, the Company implemented a
restructuring plan, separate and apart from the June 1993 charge, designed to
increase its utilization of third party board manufacturing and design and to
realign its Asia Pacific manufacturing operations.  In accordance with this
plan, the Company recorded a restructuring charge of $13.0 million.  Costs
included in the restructuring charge consist primarily of employee severance,
asset write-downs, vendor cancellation charges and lease write-offs for closed
offices.  The employee severance will include approximately 1,500 employees
primarily in semi-skilled and skilled manufacturing positions.  Approximately
$7.6 million of the charge is expected to involve cash disbursements with the
remaining costs primarily relating to reductions in net asset values.  During
transition period 1995, the Company incurred cash expenditures of approximately
$.8 million related to severance payments to terminated employees.  At December
30, 1995, approximately $12.2 million of the original restructuring accrual
remained on the Company's consolidated balance sheet.

  Although the Company believes that the restructuring activities were
necessary, no assurance can be given that these restructuring actions will be
successful or that similar actions will not be required in the future.


NOTE 4.  COMPOSITION OF SELECTED BALANCE SHEET ACCOUNTS

Inventories
  Inventories consist of the following:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                   December 30,      July 1,      July 2,
(In thousands)                        1995            1995         1994
--------------------------------------------------------------------------------
<S>                               <C>            <C>            <C>
Purchased parts                    $  73,012      $  67,296      $  99,959
Work in process                       33,823         36,686         53,765
Finished goods                       145,504        207,487        180,005
--------------------------------------------------------------------------------
Total                              $ 252,339      $ 311,469      $ 333,729
================================================================================
</TABLE>

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                                        
NOTE 4.  COMPOSITION OF SELECTED BALANCE SHEET ACCOUNTS (CONTINUED)

Property and Equipment
  Property and equipment consists of the following:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                 December 30,      July 1,        July 2,
(In thousands)                       1995           1995           1994
--------------------------------------------------------------------------------
<S>                             <C>            <C>            <C>
Land                             $  15,961      $  15,961      $  15,729
Buildings                           34,253         34,824         35,547
Machinery and equipment             93,990         88,476         84,004
Furniture and fixtures              13,519         12,860         11,926
Leasehold improvements              13,174         13,140         12,324
--------------------------------------------------------------------------------
Total                            $ 170,897      $ 165,261      $ 159,530
================================================================================
</TABLE>

Other Assets
  Other assets consist of the following:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                                                December 30,     July 1,        July 2,
(In thousands)                                                      1995          1995           1994
--------------------------------------------------------------------------------------------------------
<S>                                                            <C>            <C>           <C>      
Deferred income taxes                                           $  44,016      $ 33,585      $      -
Credit line guaranty, less accumulated amortization of $506 
at December 30, 1995                                               32,519             -             -
Goodwill, less accumulated amortization of $8,218, $6,615 
  and $3,479 at December 30, 1995, July 1, 1995 and 
  July 2, 1994, respectively                                       24,250        25,853        29,220
Patents, licenses and other intangibles, less accumulated
  amortization of $3,672, $2,130 and $436 at December
  30, 1995, July 1, 1995 and July 2, 1994, respectively            10,890        11,382         1,179
Other, net                                                          8,021         8,294         5,813
--------------------------------------------------------------------------------------------------------
Total                                                           $ 119,696      $ 79,114      $ 36,212
========================================================================================================
</TABLE>

Other Current Accounts
  Prepaid value added taxes of $22.2 million were included in "Other current
assets," and amounts payable for value added taxes of $45.3 million were
included in "Other accrued liabilities" at December 30, 1995.

NOTE 5.  FINANCING ARRANGEMENTS

  On December 27, 1995, the Company entered into a $100 million revolving
credit agreement, guaranteed by Samsung as part of the Additional Support
Agreement (Note 7), with a final maturity date of December 25, 1996.  The
revolving credit agreement allows the Company to borrow at a rate of LIBOR plus
 .25% per annum, or the bank's reference rate, at the Company's option.  The
Company is required to pay a commitment fee equal to .125% per annum based on
the average daily unused portion of the facility.  The fee is payable quarterly
in arrears.  At December 30, 1995, there was $75 million outstanding as
borrowings under this credit facility at an  interest rate of 8.50% per annum.
The weighted average interest rate on total short-term borrowings as of December
30, 1995, July 1, 1995 and July 2, 1994 was 8.50%, 8.22% and 7.01%,
respectively.   On March 6, 1996, the total amount available for borrowings
under the facility and guaranteed by Samsung was increased to $200 million.  All
other terms of the credit agreement remained unchanged.
                                        
                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                                        
NOTE 6.  LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                                              December 30,      July 1,       July 2,
(In thousands)                                                                    1995           1995          1994
----------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>           <C>            <C> 
Liquid Yield Option Notes (zero coupon convertible subordinated notes) due
  2013, less original issue discount of $191,063, $194,232 and $200,334,
  at December 30, 1995, July 1, 1995 and July 2, 1994, respectively,
  5.25% yield to maturity                                                     $ 123,937      $ 120,768     $ 114,666

Promissory note payable, interest due annually at current rate
  of 5.00%, principal due July 1996                                              90,000         96,720        96,720

Other notes payable due in various installments through April 2002                3,964          4,156         4,306
----------------------------------------------------------------------------------------------------------------------
                                                                                217,901        221,644       215,692
Less current portion of long-term debt                                          (92,361)        (2,420)         (398)
----------------------------------------------------------------------------------------------------------------------
Long-term debt                                                                $ 125,540     $  219,224     $ 215,294
======================================================================================================================
</TABLE>

  On December 14, 1993, the Company issued $315 million par value of Liquid
Yield Option Notes ("LYONs") due December 14, 2013 and received total proceeds
of approximately $111.7 million.  The LYONs are zero coupon convertible
subordinated notes which were sold at a significant discount from par value with
a yield to maturity of 5.25% and a total value at maturity of $315 million
payable in cash.  There are no periodic payments of interest on the LYONs.  Each
$1,000 principal amount at maturity of LYONs is convertible into 12.993 shares
of the Company's common stock at any time.  Upon conversion of a LYON, the
Company may elect to deliver shares of common stock at the conversion rate or
cash equal to the market value of the shares of common stock into which the
LYONs are convertible.  The holder of a LYON may require the Company to purchase
all or a portion of its LYONs on December 14, 1998, December 14, 2003 and
December 14, 2008 (the "Purchase Dates"), and such payments may reduce the
liquidity of the Company.  However, the Company may, subject to certain
exceptions, elect to pay the purchase price on any of the three Purchase Dates
in cash or shares of common stock based upon its then fair market value as
defined in the indenture, or any combination thereof.  The Company has made no
decision as to whether it will meet these future purchase obligations in cash,
common stock, or any combination thereof.  Such decision will be based on market
conditions at the time a decision is required, as well as management's view of
the liquidity of the Company at such time.  In addition, as of 35 business days
after the occurrence of any change in control of the Company occurring on or
prior to December 14, 1998, each LYON will be purchased for cash by the Company,
at the option of the holder, for a change in control purchase price equal to the
issue price of the LYONs plus accrued original issue discount through the date
set for such purchase.  A change in control of the Company is deemed to have
occurred under the terms of the LYONs at such time as any person, other than the
Company, has become the beneficial owner of  50%  or more of the Company's
common stock or the Company is not the surviving corporation of any
consolidation or merger of the Company.  The Stock Purchase Agreement and
ownership by Samsung of approximately 40% of the common stock of the Company
(Note 7) does not have any impact on the terms of the LYON securities.  In
addition, the potential increase in ownership by Samsung to 45% assuming
exercise of its option on 4.4 million shares of common stock (Note 7) would not
have any impact on the terms of the LYONs.

  In connection with the Tandy acquisition, the Company issued a $96.7 million
promissory note to Tandy Corporation which is due on July 11, 1996.  Interest
due related to fiscal year 1995 was paid on July 11, 1995 at a rate of 4.94% per
annum.  The interest rate was adjusted to 5.00%, effective July 11, 1995, based
on the lower of either 5% or the "lowest three month rate" within the meaning of
Section 1274(d)(2) of the Internal Revenue Code of 1986 as of July 11, 1995.
Interest is paid once per year on July 11th and there are no sinking fund
requirements.  The note also required the Company to maintain a standby letter
of credit payable to Tandy in the amount of 70% of the face value of the note or
$67.7 million.  Upon maturity of the note, up to 50% of the initial principal
amount of the promissory note was convertible, at the option of the Company,
into common stock of the Company based upon its then fair market value, as
defined in the promissory note.  Under the terms of the Stock Purchase Agreement
(Note 7),  Samsung agreed to provide a letter of credit to support the
promissory note due to Tandy Corporation replacing the Company's letter of
credit and to provide funds to satisfy $75 million of the note obligation upon
maturity of the note.

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                                        
NOTE 6.  LONG-TERM DEBT (CONTINUED)

  On August 23, 1995, the Company and Tandy Corporation amended the terms of the
$96.7 million promissory note.  Pursuant to such amendments, the Company paid
$6.7 million on August 25, 1995, thereby reducing the note balance to $90
million.  Tandy allowed the substitution of a letter of guarantee from both
Samsung Electronics Co., Ltd. and Samsung Electronics America, Inc. for the
letter of credit previously required from the Company.  Additionally, the
maximum principal amount of the note that may be converted, at the option of the
Company, into common stock of the Company upon maturity of the note, based upon
its then fair market value as defined in the note, was reduced to $30 million.
All other terms of the promissory note remained unchanged.

  Principal repayments on long-term debt required in fiscal years 1996, 1997,
1998, 1999 and 2000 are $92,361,000, $307,000, $302,000, $302,000 and $302,000,
respectively.

NOTE 7.  SHAREHOLDERS' EQUITY TRANSACTIONS

  On February 27, 1995, the Company entered into a Stock Purchase Agreement
("Purchase Agreement") with Samsung providing for a significant minority
ownership interest in the Company of approximately 40%.  On June 30, 1995, the
Company's shareholders approved the strategic investment and all regulatory
approval was received as of July 1, 1995.  Under the terms of the Purchase
Agreement, as amended by Amendment No. 1 thereto dated June 1, 1995, and
Amendment No. 2 thereto dated July 29, 1995, Samsung purchased 6.44 million
newly issued shares of common stock from the Company, representing 19.9% of the
then outstanding shares of common stock, at $19.50 per share and commenced a
cash tender offer to purchase 5.82 million shares of common stock from the
Company's shareholders, representing 18% of the then outstanding shares of
common stock, at $22 per share.  Concurrently with the acceptance of the shares
for purchase under the tender offer, Samsung also purchased 5.63 million
additional newly issued shares of common stock from the Company at $22 per share
so that its aggregate ownership interest in the Company, after completion of all
of the purchases, was approximately 40%.  On July 31, 1995, the transaction was
completed and the Company received net proceeds of approximately $240 million.

  On December 21, 1995, the Company signed an Additional Support Agreement with
Samsung that provides additional financial support to the Company, principally
including a guaranty by Samsung of a line of credit of up to $200 million
through December 1997 and a vendor line of credit with Samsung of $100 million
through November 1997 for component purchases.  In exchange for the additional
financial support, the Company issued an option to Samsung to purchase 4.4
million shares of the Company's common stock at an exercise price of $.01 per
share, exercisable between July 1, 1996 and June 30, 2001, and allowed Samsung
to add an additional member to the Company's Board of Directors.  The issuance
of the option increases Samsung's potential ownership in the Company to
approximately 45%.  The benefits received in exchange for the option were
recorded in "Other assets" based on the fair value of the option at the date of
issuance, or $31 million.  In connection with this agreement, the Company
incurred professional fees of approximately $2 million, which were also
capitalized.  This other asset will be amortized on a straight-line basis to
interest expense over the benefit period ending December 1997.  During
transition period 1995, approximately $.5 million was amortized to interest
expense.

NOTE 8.  FINANCIAL INSTRUMENTS

Foreign Currency Contracts
  In the ordinary course of business and as part of the Company's asset and
liability management, the Company enters into various types of transactions that
involve contracts and financial instruments with off-balance sheet risk.  The
Company utilizes foreign exchange contracts and foreign currency borrowings to
hedge its exposure to foreign exchange rate fluctuations impacting its U.S.
dollar consolidated financial statements.  The Company attempts to minimize its
exposure to foreign currency transaction and remeasurement gains and losses due
to the effect of remeasuring the local currency balance sheets of its foreign
subsidiaries on the Company's consolidated financial position and results of
operations by utilizing a limited hedging strategy which includes the use of
foreign currency  borrowings, the netting of foreign currency assets and
liabilities and forward exchange contracts.  The actual gain or loss associated
with forward exchange contracts are limited to the contract amount multiplied by
the value of the exchange rate differential between the time the contract is
entered into and the time it matures.  The Company typically holds all of its
contracts until maturity and enters forward contracts ranging in maturity dates
from one

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                                        
NOTE 8.  FINANCIAL INSTRUMENTS (CONTINUED)

to nine months.  Realized and unrealized gains and losses on the forward
contracts are recognized currently in the consolidated statement of operations,
and any premium or discount is recognized over the life of the contract.  Some
foreign locations, such as the People's Republic of China ("PRC"), do not allow
open market hedging of their currencies and, therefore, the Company is not able
to hedge all of its exposure to foreign currency fluctuations.

  The Company held forward exchange contracts maturing at various dates through
April 1996 with a face value of approximately $162.0 million at December 30,
1995, $162.0 million at July 1, 1995 and $143.0 million at July 2, 1994, which
approximate the Company's hedgeable net monetary asset exposure to foreign
currency fluctuations at those respective dates.  For the transition period
ended December 30, 1995, and for the fiscal years ended July 1, 1995, July 2,
1994 and July 3, 1993, a net foreign currency transaction loss of $2.9 million,
gain of $1.7 million, loss of $2.1 million and gain of $.6 million,
respectively, is included in the caption "Other income (expense), net" in the
accompanying consolidated statements of operations.  Foreign currency borrowings
at December 30, 1995, July 1, 1995 and July 2, 1994, totaled $4.0 million, $4.2
million and $3.8 million, respectively.

Fair Values of Financial Instruments
  The estimated fair values of financial instruments are as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                       December 30, 1995            July 1, 1995              July 2,1994      
                                   ------------------------   -----------------------   ----------------------
                                     Carrying   Estimated      Carrying   Estimated       Carrying   Estimated
(In thousands)                        Amount    Fair Value      Amount    Fair Value       Amount    Fair Value
-------------------------------------------------------------------------------------------------------------------
<S>                                <C>         <C>           <C>         <C>            <C>         <C>      
Cash and cash equivalents           $ 125,387   $ 125,387     $  95,825   $  95,825      $ 153,118   $ 153,118
Short-term borrowings                 (75,000)    (75,000)     (156,000)   (156,000)       (50,000)    (50,000)
Current portion of long-term debt     (92,361)    (92,361)       (2,420)     (2,420)          (398)       (398)
Long-term debt:
  Liquid Yield Option Notes          (123,937)   (107,100)(a)  (120,768)   (103,950)(a)   (114,666)    (91,350)(a)
  Other                                (1,603)     (1,603)      (98,456)    (98,456)      (100,628)   (100,628)
Forward exchange contract liability      (370)       (370)         (611)       (611)        (4,830)     (4,830)
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(a)  Based on quoted market price as required by SFAS No. 107, "Disclosures
     about Fair Value of Financial Instruments."  While the Company's Liquid 
     Yield Option Notes ("LYONs") are publicly traded debt instruments (NASDAQ 
     symbol "ASTAL"), actual trading volume in the LYONs has been very small and
     the Company does not believe that prices quoted by the NASDAQ National 
     Market System accurately reflect the true cost of repurchasing the LYONs.  
     The Company also does not believe that a significant number of LYONs would 
     be available for sale at prices quoted on the NASDAQ System.  There are a 
     total of 315,000 par value LYONs issued and outstanding at December 30, 
     1995.  Additionally, under the terms of the LYONs, the holder of a LYON may
     require the Company to purchase its LYONs on the Purchase Dates, as 
     defined, or 35 business days after the occurrence of any change in control
     of the Company (Note 6), at a price equal to the original issue price plus 
     accrued original issue discount through each such date.  Therefore, while 
     the quoted market price of the LYONs can vary due to changes in the 
     Company's common stock price impacting the value assigned to the conversion
     feature of the LYONs, the Company believes that a better representation of
     the estimated fair value of the debt associated with the LYONs is equal to
     the original issue price of the LYONs plus the accrued original issue 
     discount at the stated rate of 5.25%, compounded semi-annually.  Thus, the 
     Company believes a better estimate of the fair value of the LYONs at 
     December 30, 1995, July 1, 1995 and July 2, 1994 is $123.9 million, $120.8
     million and $114.7 million, respectively.

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 8.  FINANCIAL INSTRUMENTS (CONTINUED)

Concentrations of Credit Risk
  The Company's foreign exchange instruments, along with cash and cash
equivalents and accounts receivable, involve elements of market and credit risk.
The counterparties to financial instruments consist of a number of major
financial institutions.  In addition to limiting the amount of agreements and
contracts it enters into with any one party, the Company monitors the credit
quality of the financial institutions which are counterparties to these
financial instruments.  The Company does not believe that there is significant
risk of nonperformance by the counterparties.

  The Company distributes its products through various distribution channels,
including independent resellers, dealers, national distributors, national
reseller organizations, OEMs, U.S. Government approved dealers and consumer
retailers.  Concentrations of credit risk are generally limited due to the
Company's broad range of distribution channels and the Company's geographically
diverse customer base.  However, sales in certain European countries and into
the PRC are to a more limited customer base comprised  primarily of larger
entities which may be affected by, among other things, the economic conditions
and/or political occurrences within the region.  Sales into the PRC for
transition period 1995, fiscal year 1995, fiscal year 1994 and fiscal year 1993
accounted for approximately 7%, 5%, 6% and 11%, respectively, of the Company's
total revenues.

  The Company's sales are primarily to customers whose activities are related
to the retail, consumer electronics or personal computer industries.  Therefore,
the Company's ability to collect trade receivables may be adversely affected by
changes or conditions impacting these industries.  Credit limits, credit
insurance, ongoing credit evaluations and account monitoring procedures are
utilized to various degrees to attempt to reduce the risk of loss on the
Company's accounts receivable.  No single customer accounted for more than 10%
of the Company's net sales for transition period 1995, or for fiscal years 1995,
1994 or 1993.

NOTE 9.  INCOME TAXES

The income tax provision (benefit) is based on income (loss) before income taxes
as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
                              Six Months                Fiscal Year Ended
                                Ended        --------------------------------------  
                             December 30,       July 1,       July 2,      July 3,
 (In thousands)                  1995            1995          1994         1993
-------------------------------------------------------------------------------------
<S>                         <C>             <C>            <C>         <C>       
 U.S.                        $ (139,438)     $ (103,930)    $ 16,534    $ (63,255)
 Foreign                        (85,568)        (19,435)      29,778       (1,983)
-------------------------------------------------------------------------------------
                             $ (225,006)     $ (123,365)    $ 46,312    $ (65,238)   
=====================================================================================
</TABLE>

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 9.  INCOME TAXES (CONTINUED)

The components of the income tax provision (benefit) are as follows:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
                             Six Months              Fiscal Year Ended
                               Ended       ------------------------------------
                            December 30,      July 1 ,     July 2,     July 3,
 (In thousands)                 1995           1995         1994        1993
---------------------------------------------------------------------------------
<S>                         <C>          <C>            <C>          <C>    
Current:
 Federal                     $  2,033     $    (700)     $ (2,781)    $  36,461
 State                            107          (124)         (201)        1,116
 Foreign                       (4,187)        2,086         9,002         6,361
---------------------------------------------------------------------------------
                               (2,047)        1,262         6,020        43,938
---------------------------------------------------------------------------------
Deferred:                                                               
 Federal                         (249)      (19,971)        8,532       (54,424)
 State                            (50)       (3,722)          105        (3,108)
 Foreign                        2,346        (1,625)          346         2,094
---------------------------------------------------------------------------------
                                2,047       (25,318)        8,983       (55,438)
---------------------------------------------------------------------------------
                             $      -     $ (24,056)     $ 15,003     $ (11,500)
=================================================================================
</TABLE>

  Deferred taxes reflect the impact of future tax consequences associated with
temporary differences between the amount of assets and liabilities recorded for
tax and financial accounting purposes.  These temporary differences are
determined in accordance with SFAS No. 109.  Temporary differences and
carryforwards which give rise to a significant portion of deferred tax assets
and liabilities as of December 30, 1995, July 1, 1995 and July 2, 1994 are as
follows:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                           December 30, 1995            July 1, 1995               July 2,1994
                                        ----------------------    -----------------------    -----------------------
(In thousands)                             Assets   Liabilities     Assets   Liabilities       Assets   Liabilities
-----------------------------------------------------------------------------------------------------------------------
<S>                                   <C>          <C>            <C>         <C>           <C>          <C>       
Inventory reserves                     $   12,726   $       -      $  11,178   $      -      $  16,968    $      -
Accrued liabilities                        14,367           -         14,834          -         14,224           -
Undistributed foreign earnings,                                                                                       
 net of foreign tax credit                      -     (21,976)             -          -              -           -
Restructuring charge                        3,671           -          4,055          -          5,365           -
Warranty reserves                           9,868           -          4,857          -          5,201           -
State income taxes                              -      (1,031)             -     (1,750)             -        (914)
Goodwill and intangibles amortization           -      (1,441)             -     (1,762)             -      (2,524)
Net operating loss carryforwards          147,684           -         72,362          -         27,366           -
Other                                      14,488        (244)        10,488       (422)         9,352        (274)
-----------------------------------------------------------------------------------------------------------------------
Total deferreds                           202,804     (24,692)       117,774     (3,934)        78,476      (3,712)
Valuation allowance                      (114,601)           -       (48,282)         -        (34,524)          -
-----------------------------------------------------------------------------------------------------------------------
                                       $   88,203   $ (24,692)     $  69,492   $ (3,934)     $  43,952    $ (3,712)
=======================================================================================================================
</TABLE>
                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 9.  INCOME TAXES (CONTINUED)

  The Company has established a valuation allowance against its deferred tax
assets at December 30, 1995, July 1, 1995 and July 2, 1994 of $114.6 million,
$48.3 million and $34.5 million, respectively, in accordance with the provisions
of SFAS No. 109.  The $66.3 million increase in this valuation allowance is
primarily the result of management's determination that it is more likely than
not that the increased deferred tax asset resulting from the transition period
operating loss will not be realized.

  In determining the actual amount of the valuation allowance required to be
established, the Company has primarily relied upon its ability to generate
future taxable income using available tax planning strategies involving the
potential sale of certain appreciated assets.  Although the Company has utilized
an outside valuation firm to determine the current estimated fair market value
of such assets, changes in market conditions could result in a reduction of the
estimated fair market value of these assets that would adversely affect the
amount of the valuation allowance and reduce the amount of net deferred tax
assets considered realizable.

  The income tax provision (benefit) differs from the amounts computed by
applying the statutory federal income tax rate as follows:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                          Six Months                 Fiscal Year Ended   
                                                            Ended        --------------------------------------
                                                          December 30,     July 1,       July 2,       July 3,
 (In thousands)                                               1995           1995         1994          1993
---------------------------------------------------------------------------------------------------------------
<S>                                                       <C>           <C>           <C>          <C>        
Statutory federal income tax provision (benefit)           $ (78,752)    $ (43,178)    $ 16,209     $ (22,181)
Increase (decrease) in taxes resulting from:                                                                 
  State income taxes, net of federal benefit                      43        (2,208)        (137)       (1,312)
  Tax on undistributed foreign earnings                       34,631             -            -             -
  Foreign income taxed at different rates                      5,642         5,692      (10,005)       (7,635)
  Losses producing no current tax benefit                     38,870        15,916        8,589         8,307
  Adjustment to deferred assets and liabilities for
   change in tax rate                                              -             -       (1,266)            -
  Restructuring charge producing no current tax benefit            -             -            -        12,748
  Other, net                                                    (434)         (278)       1,613        (1,427)
---------------------------------------------------------------------------------------------------------------
                                                           $       -     $ (24,056)    $ 15,003     $ (11,500)
===============================================================================================================
</TABLE>

  The Company's manufacturing operations in Taiwan and the PRC operate under
complete or partial tax holidays which expire in 1997 and 1999, respectively.
The aggregate dollar amount and per share effect of these tax holidays were
immaterial for transition period 1995 and for fiscal years 1995, 1994 and 1993.

  In determining the provision (benefit) for income taxes for transition period
1995, the Company has utilized approximately $4 million of prior year net
operating loss ("NOL") carryforwards to reduce the amount of taxes otherwise
payable for such year.  The Company has $389 million of remaining NOL
carryforwards which it expects will be available to offset future taxable
income.  Approximately $158 million of such carryforwards relate to foreign
operations in various taxing jurisdictions of which $76 million expire in years
1996 through 2005 and $82 million have no expiration date.  The remaining $231
million of such carryforwards relate to U.S. operations and expire in the years
2010 and 2011.  Utilization of these U.S. NOL carryforwards to offset future
taxable income in any particular year could be limited should the Company
undergo a 50% "ownership change," as defined under Section 382 of the Internal
Revenue Code of 1986, within a three year measurement period.  Any limitation
pursuant to these provisions would be effective for all tax years starting with
the year of ownership change.  As of December 30, 1995, the Company has
experienced an ownership change for purposes of this limitation of approximately
40% as a direct result of the investment by Samsung pursuant to the Stock
Purchase Agreement (Note 7).

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 9.  INCOME TAXES (CONTINUED)

  The Internal Revenue Service ("IRS") is currently examining the Company's
1989, 1990 and 1991 federal income tax returns.  In addition, the IRS has
completed its examination of the Company's 1987 and 1988 federal income tax
returns and has proposed adjustments to the Company's federal tax liabilities
for such years of approximately $8.3 million, excluding interest, relating to
the allocation of income between the Company and its foreign subsidiaries.
Management believes that the Company's position has substantial merit and
intends to vigorously contest these proposed adjustments.  Management further
believes that any liability that may result upon the final resolution of the
proposed adjustments for 1987 and 1988 or current examinations of 1989, 1990 and
1991 will not have a material adverse effect on the Company's consolidated
financial position or results of operations.

NOTE 10.  BENEFIT PLANS

Profit Sharing Plan
  During 1983, the Company established a profit sharing plan for all employees.
The plan is a noncontributory, defined contribution plan that provides for
contributions from the Company based on eligible compensation.  The Company's
contributions are determined at the discretion of the Board of Directors and are
not to exceed income before provision for income taxes and profit sharing
expense.  The Company did not contribute to the plan for transition period 1995
or for the years ended July 1, 1995, July 2, 1994 and July 3, 1993.

  In 1987, the Company approved a modification to the profit sharing plan that
added a 401(k) employee savings program.  Under the 401(k) plan, the Company is
obligated to contribute matching amounts for employee contributions equal to
100% on the first 2% of employee salary contributions and 50% on the next 4% of
employee salary contributions.  Company contributions generally vest over five
years from the date of the employee's eligibility to participate.  The Company
contributed approximately $1,061,000 to the plan for the transition period ended
December 30, 1995.  The Company's contributions for the years ended July 1,
1995, July 2, 1994 and July 3, 1993 amounted to $2,456,000, $2,064,000 and
$1,679,000, respectively.

Employee Bonus Plans
  Pursuant to the Employee Bonus Plan, all employees of the Company are
eligible to receive, on a quarterly basis, a percentage of their base
compensation as a cash bonus.  The percentage paid is at the discretion of
management and is limited to a maximum of 15% of the respective employee's base
quarterly compensation.  For transition period 1995 and fiscal year 1995, no
bonuses were paid.  Bonuses paid for the fiscal years ended July 2, 1994 and
July 3, 1993 were $1,954,000 and $1,568,000, respectively.

  The Company also has a performance based management incentive plan for
officers and key employees.  Bonuses under the plan are distributed to officers
and key employees of the Company based upon performance related criteria
determined at the discretion of the Compensation Committee of the Board of
Directors.  For transition period 1995 and fiscal year 1995, no bonuses were
paid.  Bonuses paid for the fiscal years ended July 2, 1994 and July 3, 1993
were $1,920,000 and $3,928,000, respectively.

Stock Plans
  The Company has four employee stock plans, adopted in 1983, 1985, 1989 and
1995, and two non-employee director stock plans adopted in 1991 and 1994 (the
"Plans").  The Incentive Stock Option, Non-Qualified Stock Option and Restricted
Stock Purchase Plan - 1983 (the "1983 Plan"), as amended in 1984, 1985 and 1987,
provided for the granting of options or rights to purchase up to an aggregate of
3,600,000 shares of the Company's common stock to officers, directors, employees
and others.  The 1983 Plan expired in November 1993, except as to options then
outstanding.  At December 30, 1995, 17,400 options remained outstanding at
exercise prices ranging from $18.75 to $21.50 per share.


                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 10.  BENEFIT PLANS (CONTINUED)

Stock Plans (continued)
  In 1985, the Company adopted the Chief Executives' Plan (the "CE Plan").  The
CE Plan, as amended in 1987, provided for an aggregate of 1,200,000 shares of
the Company's common stock to be available to the chief executive officers,
which include the president and executive vice presidents of the Company, and
such other officers that the Board of Directors might specifically designate as
a "chief executive officer" for purposes of the CE Plan.  In 1995, the CE Plan
was terminated, except as to options then outstanding.  At December 30, 1995,
200,000 options remained outstanding and were exercisable at an exercise price
of $3.50 per share.

  The 1989 Long-Term Incentive Program (the "1989 Program"), as amended in
1992, provides for the granting of stock options, stock appreciation rights,
restricted stock and performance units.  The amendment, as adopted by the Board
and approved by a shareholder vote, annually increases shares authorized to be
issued by 2% of the number of common shares outstanding at each fiscal year-end.
Under the 1989 Program, options granted become exercisable at the discretion of
the Board of Directors or Compensation Committee and expire ten years from the
date of grant.  No stock appreciation rights or performance units have been
granted under the 1989 Program.

  The Company's 1991 Stock Option Plan for Non-Employee Directors (the "Non-
Employee Option Plan"), as amended in 1995, provides for an initial grant of
options to purchase 20,000 shares of the Company's common stock to each newly
appointed non-employee director.  In addition, on January 1 each year, each
participant will receive an option to purchase 12,000 shares of common stock.
The aggregate number of shares that may be issued under the Plan is 500,000.
Options vest equally over four years commencing on the first anniversary of the
date of grant.  Each option is exercisable at 100% of the common stock's fair
market value on the date of grant.

  In 1994, the Company adopted the AST Research, Inc. 1994 One-Time Grant Stock
Option Plan for Non-Employee Directors.  The Plan, as amended in 1995, provided
for the grant of an option to purchase 50,000 shares of common stock to each 
non-employee member of the Company's Board of Directors on July 1, 1994.  At
December 30, 1995, 150,000 options remained outstanding and were exercisable at
an exercise price of $14.25 per share.

  In 1995, the Company adopted the President's Plan.  The President's Plan
provides for an aggregate of 1,000,000 shares of the Company's common stock to
be available to the President of the Company.  At December 30, 1995, non-
statutory options covering 1,000,000 shares have been granted to the President
of the Company at the closing market price on the date of grant.  Of the options
granted, 300,000 vest equally over four years commencing on the first
anniversary of the date of grant.  The remaining 700,000 options vest equally
over eight years commencing on the first anniversary of the date of grant, with
acceleration of vesting possible in the event of certain Company stock price
performance targets are achieved.

The following table summarizes transition period 1995 stock option activity
under all of the stock plans:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
                                                            Number of Options
                                     Price range       --------------------------
                                      of shares         Under      Available for
                                     under option       grant       future grant
------------------------------------------------------------------------------------
<S>                               <C>        <C>         <C>          <C>        
Outstanding at July 1, 1995        $ 3.50  -  $ 31.63      4,481,975    1,652,631
Authorized                                 -                       -    2,143,588
Granted                              8.38  -    15.88      2,579,425   (2,579,425)
Exercised                            3.50  -    11.44       (196,900)           -
Canceled                             5.50  -    28.75     (1,345,625)   1,345,625
Plan shares expired                        -                       -     (794,675)
------------------------------------------------------------------------------------
Outstanding at December 30, 1995   $ 3.50  -  $ 31.63      5,518,875    1,767,744
====================================================================================

Exercisable at December 30, 1995   $ 3.50  -  $ 31.63      2,183,574            -
====================================================================================
</TABLE>
                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 10.  BENEFIT PLANS (CONTINUED)

Stock Plans (continued)
  At December 30, 1995, 7,286,619 shares of the Company's common stock were
reserved for issuance under the stock option plans.

  In December 1990, the Board of Directors authorized the issuance of warrants
to purchase an aggregate of 80,000 shares of the Company's common stock to its
then non-employee directors.  At December 30, 1995, 40,000 of these warrants
remained outstanding and were exercisable at an exercise price of $13.88 per
share.  On July 27, 1992, the Board of Directors authorized the issuance of
warrants to purchase 50,000 shares of the Company's common stock to the
Company's then Chairman of the Board.  At December 30, 1995, 37,500 of these
warrants remained outstanding and were exercisable at an exercise price of
$13.50 per share.

  As a result of completing the transaction with Samsung effective July 31,
1995 (Note 7), unvested options granted to executive officers to purchase
754,500 shares of common stock under the 1989 Program at prices ranging from
$11.44 to $21.50 became immediately exercisable.  In addition, unvested options
granted to non-employee directors to purchase 175,000 shares of common stock
under the 1994 One-Time Grant Stock Option Plan for Non-Employee Directors at
$14.25 per share and warrants issued on July 27, 1992 to purchase 25,000 shares
of common stock at $13.50 per share became immediately exercisable.

  On October 26, 1995, all outstanding stock options held by employees other
than corporate officers or Board members were repriced with a new exercise price
of $9.38 per share, the closing market price on that date, subject to the
condition that the options are not exercised and employment is not terminated
prior to October 26, 1996.  The number of shares and vesting schedule of the new
option grants is the same as that of the old options replaced.  The Company
initiated this repricing arrangement in order to retain and motivate key
employees as part of an effort to successfully implement the Company's
turnaround plan.  In conjunction with the repricing, all affected options
outstanding under the 1983 Plan were made available for cancellation and
reissuance under the 1989 Program.  A total of  2,108,173 options with exercise
prices ranging from $12.75 to $31.63 were repriced.

NOTE 11.  SHAREHOLDER RIGHTS PLAN

  On June 30, 1989, the Board of Directors adopted a Shareholder Rights Plan
which is intended to protect shareholders from unfair takeover practices.  Under
the Plan, each share of common stock carries one right to obtain additional
stock or other property according to terms provided in the Plan.  The rights are
not exercisable or separable from the common stock until another party acquires
at least 15% of the Company's then outstanding common stock or commences a
tender offer for at least 15% of the Company's then outstanding common stock.

  In the event the Company is acquired in a merger or other business
combination transaction in which the Company is not the surviving corporation or
50% or more of its consolidated assets or earning power are sold or
transferred, each right will entitle its holder to receive, at the then current
exercise price, common stock of the acquiring company having a market value
equal to two times the exercise price of the right.  If a person or entity were
to acquire 15% or more of the outstanding shares of the Company's common stock,
or if the Company is the surviving corporation in a merger and its common stock
is not changed or exchanged, each right will entitle the holder to receive, at
the then current exercise price, common stock having a market value equal to two
times the exercise price of the right.  Until a right is exercised, the holder
of a right, as such, will have no rights as a shareholder of the Company,
including, without limitation, the rights to vote as a shareholder or receive
dividends.  The rights, which expire on June 30, 1999, may be redeemed by the
Company at a price of $0.01 per right.  At December 30, 1995, 500,000 of the
1,000,000 authorized but unissued preferred shares of the Company are reserved
for issuance upon exercise of these rights.


                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 11.  SHAREHOLDER RIGHTS PLAN (CONTINUED)

  As a condition to entering into the Purchase Agreement with Samsung, the
Company amended the Shareholder Rights Plan to allow Samsung, in accordance with
the terms and conditions of the Stockholder Agreement between the Company and
Samsung dated July 31, 1995, to acquire, without additional Board or Stockholder
approval and without triggering the Plan, up to 49.9% of the common stock during
the first four years of its investment, and after the standstill period, which
now ends December 15, 1998, up to 66.67% of the common stock except that such
limits shall not apply to any acquisition by Samsung made pursuant to a cash
tender offer for all equity securities not owned by Samsung and/or its
affiliates.

NOTE 12.  COMMITMENTS AND CONTINGENCIES

Lease Commitments
  The Company leases its field offices, certain equipment, automobiles and most
of its operating facilities under operating lease agreements.  The Company also
has capital leases for certain equipment.  Future minimum lease payments under
these leases approximate the following amounts:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                            Lease Obligations
(In thousands)                            -------------------------
Fiscal Year                                Capital       Operating
--------------------------------------------------------------------------------
 <S>                                       <C>          <C>
  1996                                      $   302      $ 14,538
  1997                                          302        10,803
  1998                                          302         8,380
  1999                                          302         4,986
  2000                                          302         2,075
  Thereafter                                    390        18,771
--------------------------------------------------------------------------------
Total minimum lease payments                $ 1,900      $ 59,553
================================================================================
</TABLE>

  At December 30, 1995, the net present value of obligations under capital
leases totaled $1,900,000 and are included in long-term and/or current portion
of long-term debt in the accompanying consolidated balance sheet.  At December
30, 1995, the assets held under capital leases total $3,754,000, net of $134,000
in accumulated depreciation, and are included in land and buildings in the
accompanying consolidated balance sheet.

  Rent expense for transition period 1995, and for the fiscal years ended July
1, 1995, July 2, 1994 and July 3, 1993, was approximately $5,070,000,
$11,125,000, $10,588,000 and $9,215,000, respectively.

Royalty Commitments
  The Company has commitments for minimum guaranteed royalties under various
licensing agreements which are payable over periods ranging from one to five
years.  The Company has been notified that certain of its products may also
require licenses under patents held by others.  The Company evaluates these
licensing proposals on a case-by-case basis to determine whether licenses are
necessary or desirable.  Although these evaluations continue, management is
accruing amounts that, in its judgment, represent the potential royalties and/or
legal costs of resolving these claims.

Employment Contracts
  Effective July 27, 1993, the Company entered into a separate employment
contract (Founder's Agreement) with founder and Chairman of the Board, Safi U.
Qureshey, who was then serving as the Company's Chief Executive Officer.  The
Founder's Agreement provides for five years of salary, health and welfare
benefits, two years of bonus, acceleration of stock options and certain other
benefits if active employment is terminated by the Company or by Mr. Qureshey
under specified conditions.  The maximum contingent liability under this
agreement is approximately $4 million.

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 12.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

Employment Contracts (continued)
  The Company maintains Severance Compensation Agreements with its executive
officers and its non-officer vice presidents.  Such agreements provide for (i)
lump sum payments comprised of up to two years of salary and bonus and certain
other benefits for executive officers, or one year of salary and bonus and
certain other benefits for vice presidents who are not executive officers and
(ii) acceleration of the vesting of stock options upon a "change of control" of
the Company and termination of the covered employee for reasons specified in the
contract. The aggregate commitment under these Severance Compensation Agreements
should all covered employees be terminated is approximately $7.8 million.

  The Company has a severance policy for its executive officers which, in the
event of an involuntary termination other than in connection with a "change in
control," generally requires the Company to pay its President severance equal to
two years of salary and its other executive officers' severance equal to six
months of salary plus an additional month of salary for each year of employment
with the Company, up to a maximum of 12 months.  Benefits are also continued
during this period.

Other Contingencies
  On March 3 and March 14, 1994, complaints were filed by two shareholders
against the Company and certain of its officers and directors requesting
certification of class action, asserting claims under state and federal
securities laws based on allegations that the Company made inadequate and false
disclosures and seeking unspecified compensatory damages and related fees and
costs.  The complaints were filed in the United States District Court for the
Central District of California.  On September 12, 1994, a complaint was filed by
a shareholder against the Company and certain of its officers and directors
requesting certification of class action, asserting claims under state and
federal securities laws based on allegations that the Company made inadequate
and false disclosures and seeking unspecified compensatory damages and related
fees and costs.  The September 12, 1994 complaint was filed in the United States
District Court for the Central District of California under the case name Steven
A. Kornfeld v. James L. Forquer, et al.  On October 6, 1994, a complaint was
filed by a shareholder in the United States District Court for the Central
District of California.  The October 6, 1994 complaint named the Company and
certain of its officers and directors  as  defendants,  asserted claims under
state and  federal  securities  laws  based  on  allegations  that  the Company
made inadequate and false disclosures, and sought unspecified compensatory
damages and related fees and costs.  The cases with complaints filed on March 3,
1994, March 14, 1994 and October 6, 1994 were consolidated under the case name
In re AST Research Securities Litigation.  The In re AST Research Securities
Litigation and Kornfeld cases were treated as related cases by the court.  A
settlement agreement dated August 28, 1995 was signed to end the In re AST
Research Securities Litigation and Kornfeld cases, and was preliminarily
approved by the court.  It required the payment of $12.5 million by the
defendants to the plaintiffs.  Such amounts were paid in November 1995.  Of the
settlement amount of $12.5 million, approximately $10.4 million was funded by
three insurance carriers.  Final approval of the settlement was ordered by the
court, but further proceedings are occurring to determine the portion of the
settlement amount that will be distributed to class members.

  The Company has been named as a defendant or co-defendant, generally with
other personal computer manufacturers, including such companies as IBM, AT&T,
Unisys, Digital Equipment Corporation, NEC, Olivetti, NCR, Panasonic, and
Matsushita, in eighteen similar lawsuits each of which alleges as a factual
basis the occurrence of carpal tunnel syndrome or repetitive stress injuries.
The suits naming the Company are just a few of the many lawsuits of this type
which have been filed, often naming IBM and other major computer companies. The
claims against the Company total in excess of $100 million in compensatory
damages and punitive damages and additional unspecified amounts.  The Company
has denied or is in the process of denying the claims and intends to vigorously
defend the suits. The Company is unable at this time to predict the ultimate
outcome of these suits.  Ultimate resolution of the litigation against the
Company may depend on progress in resolving this type of litigation overall.
Before consideration of any potential insurance recoveries, the Company believes
that the claims in the suits filed against it will not have a material impact on
the Company's consolidated financial position or results of operations; however,
the Company is unable to estimate the amount of any loss that may be realized in
the event of an unfavorable outcome.  The Company has maintained various
liability insurance policies during the periods covering the claims filed above.
While  such  policies  may  limit  coverage under certain circumstances, the
Company believes that it is adequately insured.  Should the Company not be
successful in defending against such lawsuits or not be able to claim
compensation under its liability insurance policies, the Company's profitability
and financial condition may be adversely affected.


                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 12.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

Other Contingencies (continued)

  The Company was named, along with twelve other personal computer companies, as
a defendant in a lawsuit filed on March 27, 1995 in the Superior Court for the
County of Merced, California.  The case name for this March 27, 1995 filing is
People v. Acer, et al., and the complaint alleges that the Company has engaged
in deceptive advertising and unlawful business practices in relation to computer
monitor screen measurements.  The People v. Acer lawsuit was resolved by a
Stipulated Judgment that the Company signed along with representatives of all
other defendants.  The Company was named, along with three other personal
computer or monitor companies, as a defendant in a class action lawsuit filed on
May 2, 1995 in the Superior Court for the County of Marin, California.  The case
name for this May 2, 1995 filing is Kaplan, et al. v. Viewsonic, et al., and
alleges that the defendants have engaged in unfair business practices, false
advertising and breach of implied warranty concerning the advertisement of the
size of computer monitor screens.  The Company was named, along with 37 other
defendants, in a class action lawsuit, Long v. Packard Bell, et al., filed on
August 21, 1995 in the Superior Court for the County of Orange, California,
which alleges certain claims concerning the advertising of the sizes of computer
monitors.  The Company was named, along with nine other defendants, in a class
action lawsuit, Randy Davis, Ph.D., Inc. v. AST Research, et al., filed on
August 23, 1995 in Superior Court for the County of Orange, California, which
alleges certain claims concerning the advertising of the sizes of computer
monitors.  The Company was named, along with 35 other defendants, in a class
action lawsuit, Sutter v. Acer, et al., filed on September 7, 1995 in the
Superior Court for the County of Sacramento, California, which alleges certain
claims concerning the advertising of the sizes of computer monitors.  The
Company was named, along with 41 other defendants, in a class action lawsuit,
Shapiro v. ADI Systems, Inc., et al, filed on August 14, 1995 in Santa Clara
County, California, which alleges certain claims concerning the advertising of
the sizes of computer monitors.  The Company was named, along with 29 other
defendants, in a class action lawsuit, Maizes & Maizes, et al,  v. Apple
Computer Inc., et al, filed on December 15, 1995 in Essex County, New Jersey,
which alleges certain claims concerning the advertising of the sizes of computer
monitors.  Management does not believe that the outcome of these disputes will
have a material adverse impact on the Company's consolidated financial position
or results of operations; however, the Company is unable to estimate the amount
of any loss that may be realized in the event of an unfavorable outcome.

  The Company is also subject to other legal proceedings and claims that arise
in the normal course of business.  While the outcome of these proceedings and
claims cannot be predicted with certainty, management does not believe that the
outcome of any of these matters will have a material adverse effect on the
Company's consolidated financial position or results of operations.

NOTE 13.  SEGMENT AND GEOGRAPHIC INFORMATION

  The Company operates in one industry segment: the manufacture and sale of
personal computers, including desktop, server, and notebook computer systems.
The Company currently markets its products through retail computer dealers,
consumer retailers, international and regional distributors, value added
dealers, and value added resellers.

  At the end of fiscal year 1995, the Company reorganized its worldwide sales
organization and internal reporting structure into three major geographical
groups:  The Americas, which includes the United States and Canada; Europe; and
Asia Pacific, which includes Asia, the Pacific Rim and the Middle East.  Prior
period geographic information has been reclassified in accordance with this new
organization.

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 13.  SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)

A summary of the Company's operations by geographic area is as follows:

<TABLE>
<CAPTION>
Six months ended December 30, 1995
--------------------------------------------------------------------------------------------------
                                                           Asia                                   
(In thousands)                Americas        Europe       Pacific    Eliminated     Consolidated
--------------------------------------------------------------------------------------------------
<S>                        <C>           <C>           <C>           <C>            <C>          
Sales to unaffiliated                                                                                             
  customers                 $   453,054   $   383,304   $   179,925   $          -   $ 1,016,283
Transfers between                                                                                 
  geographic areas              140,797       378,420       419,466       (938,683)            -
--------------------------------------------------------------------------------------------------
Net sales                   $   593,851   $   761,724   $   599,391   $   (938,683)  $ 1,016,283
==================================================================================================
Operating income (loss)     $  (149,180)  $   (47,481)  $   (18,974)  $        439   $  (215,196)
==================================================================================================
Identifiable assets         $   491,243   $   380,769   $   184,030   $          -   $ 1,056,042
==================================================================================================
</TABLE>

<TABLE>
<CAPTION>
Year ended July 1, 1995                                                                     
--------------------------------------------------------------------------------------------------
                                                            Asia                             
(In thousands)                Americas       Europe        Pacific    Eliminated     Consolidated
--------------------------------------------------------------------------------------------------
<S>                        <C>           <C>           <C>           <C>            <C>          
Sales to unaffiliated                                                                        
  customers                 $ 1,387,442   $   743,561   $   336,780   $          -   $ 2,467,783
Transfers between                                                                               
  geographic areas              375,500       628,831       902,319     (1,906,650)            -
--------------------------------------------------------------------------------------------------
Net sales                   $ 1,762,942   $ 1,372,392   $ 1,239,099   $ (1,906,650)  $ 2,467,783
==================================================================================================
Operating income (loss)     $   (91,738)  $    (6,362)  $    (7,619)  $         29   $  (105,690)
==================================================================================================
Identifiable assets         $   508,714   $   287,218   $   225,569   $          -   $ 1,021,501
==================================================================================================
</TABLE>

<TABLE>
<CAPTION>
Year ended July 2, 1994                                                                          
--------------------------------------------------------------------------------------------------
                                                            Asia                                
(In thousands)                Americas       Europe        Pacific    Eliminated     Consolidated
--------------------------------------------------------------------------------------------------
<S>                        <C>           <C>           <C>           <C>            <C>         
Sales to unaffiliated                                                                            
  customers                 $ 1,546,010   $   532,921   $   288,343   $          -   $ 2,367,274
Transfers between                                                                              
  geographic areas              404,582       251,605       904,204     (1,560,391)            - 
--------------------------------------------------------------------------------------------------
Net sales                   $ 1,950,592   $   784,526   $ 1,192,547  $  (1,560,391)  $ 2,367,274
==================================================================================================
Operating income (loss)     $    22,786   $   (20,027)  $    44,025  $       7,205   $    53,989
==================================================================================================
Identifiable assets         $   541,469   $   257,098   $   207,053  $           -   $ 1,005,620
==================================================================================================
</TABLE>
                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 13.  SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
Year ended July 3, 1993                                                                        
--------------------------------------------------------------------------------------------------
                                                           Asia
(In thousands)                 Americas      Europe      Pacific     Eliminated      Consolidated
--------------------------------------------------------------------------------------------------
<S>                         <C>           <C>         <C>           <C>             <C>
Sales to unaffiliated                                                                            
  customers                  $   854,929   $ 297,312   $   259,909   $          -    $ 1,412,150
Transfers between                                                                          
  geographic areas               234,815      55,690       752,408     (1,042,913)             -
--------------------------------------------------------------------------------------------------
Net sales                    $ 1,089,744   $ 353,002   $ 1,012,317   $ (1,042,913)   $ 1,412,150
==================================================================================================
Operating income (loss)      $   (69,677)  $ (45,569)  $    42,458   $      8,210    $   (64,578) 
==================================================================================================
Identifiable assets          $   574,801   $ 173,028   $   138,330   $          -    $   886,159  
==================================================================================================
</TABLE>

  In determining operating income (loss) for each geographic area, sales and
purchases between geographic areas have been accounted for on the basis of
internal transfer prices set by the Company.  Identifiable assets are those
tangible and intangible assets used in operations in each geographic area.  The
fiscal year 1993 restructuring charge of $125 million is included in operating
income (loss) in the geographic areas in which the actual restructuring costs
are expected to be incurred.  This amount is comprised of $93.3 million in the
Americas segment, $25.6 million in the Europe segment and $6.1 million in the
Asia Pacific segment.  The fiscal year 1994 restructure credit of $12.5 million
relates to and is included in the Americas operating income.  The transition
period 1995 restructuring charge of $13 million relates to and is included in
the Asia Pacific operating loss.

NOTE 14.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

  The tables below set forth selected quarterly financial information for
transition period 1995, and for fiscal years 1995 and 1994 (in thousands, except
per share amounts).

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Six months ended December 30, 1995       First Quarter   Second Quarter
---------------------------------------------------------------------------------------------------------
<S>                                      <C>              <C>              
Net sales                                 $ 403,357        $  612,926
Gross loss                                   (6,769)          (10,106)
Net loss                                    (96,382)         (128,624)
Net loss per share                        $   (2.36)       $    (2.88)
---------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Year ended July 1, 1995                  First Quarter   Second Quarter   Third Quarter   Fourth Quarter
---------------------------------------------------------------------------------------------------------
<S>                                      <C>              <C>              <C>             <C>
Net sales                                 $ 495,446        $  640,159       $ 670,176       $ 662,002 
Gross profit                                 37,299            66,318          86,942          55,115 
Net loss                                    (39,406)          (21,724)         (6,548)        (31,631)
Net loss per share                        $   (1.22)       $     (.67)      $    (.20)      $    (.98)  
---------------------------------------------------------------------------------------------------------
</TABLE>

                               AST RESEARCH, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 14.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Year ended July 2, 1994                 First Quarter   Second Quarter   Third Quarter   Fourth Quarter
---------------------------------------------------------------------------------------------------------
<S>                                     <C>              <C>             <C>           
Net sales                                $ 514,409        $ 677,011       $ 591,349        $ 584,505
Gross profit                                85,900          114,566         101,106           46,161
Net income (loss)                            8,232           17,933          13,214           (8,070)
Net income (loss) per share:
  Primary                                $     .26        $     .55       $     .40        $    (.25)
  Fully diluted                          $     .26        $     .54       $     .38        $    (.25)
---------------------------------------------------------------------------------------------------------
</TABLE>

  In transition period 1995 and fiscal year 1995, fully diluted per share
information is anti-dilutive.  In transition period 1995, the quarterly per
share amounts do not sum to the per share amounts for the six-month period due
to differences in the weighted average number of shares outstanding in each
quarterly reporting period versus the weighted average number of shares
outstanding for the six-month reporting period.  In fiscal year 1994, the
quarterly per share amounts do not sum to the per share amounts for the annual
reporting period due to differences in the weighted average number of shares
outstanding determined by applying the treasury stock method to each quarterly
reporting period versus applying the treasury stock method to the annual
reporting period.  In the fourth quarter of fiscal year 1994, the Company
recorded a pretax restructuring credit of $12.5 million.

NOTE 15.  RELATED PARTY TRANSACTIONS

  On July 31, 1995, the Company completed the sale of 12.07 million shares of
the Company's common stock to Samsung, receiving net proceeds of approximately
$240 million (Note 7).

  On November 22, 1995, Samsung provided a $50 million short-term loan to the
Company at an interest rate of 7.3125% per annum.  The Company repaid this loan
on December 28, 1995.

  On December 21, 1995, the Company issued a five year option to Samsung to
purchase 4.4 million shares of the Company's common stock at an exercise price
of $.01 per share and allowed Samsung to add an additional member to the
Company's Board of Directors, in exchange for additional financial support,
principally including a guaranty on a two-year $200 million line of credit and a
two-year vendor line of $100 million for component purchases (Note 7).

  During transition period 1995, the Company purchased $144.7 million of
components and products from Samsung.  Amounts payable to Samsung at December
30, 1995 were $31.6 million.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

  HOON CHOO, 50, was appointed a director in July 1995.  Currently, Mr. Choo is
a consultant to Samsung Semiconductors Inc., a U.S. subsidiary of Samsung.  Most
recently, Mr. Choo founded A-Cube Systems, in Cupertino, California in July 1994
and continues to provide consulting services to such company.  Prior to A-Cube
Systems, Mr. Choo served as an Executive Vice President of Hyundai Electronics
America from September 1986 to April 1994.  In addition, Mr. Choo was Director
of Computer Engineering of the Samsung Electronics Computer Division in Korea
from December 1981 to August 1986.

  IAN W. DIERY, 46, was named President and Chief Executive Officer and was
appointed to the Company's Board of Directors in November 1995.  Prior to
joining the Company, Mr. Diery served at Apple Computer for six years, most
recently as the company's Executive Vice President and General Manager for the
Personal Computer Division.  Mr. Diery also served as Executive Vice President,
Worldwide Sales and Marketing at Apple from July 1992 to July 1993, and Senior
Vice President and President of Apple Pacific Division from October 1989 to July
1992.  Prior to his tenure at Apple, from August 1978 to August 1989, Mr. Diery
served in various executive roles at Wang Laboratories, Inc., including
Executive Vice President, Worldwide Field Operations, Senior Vice President, USA
Sales Operations, and Senior Vice President, Europe.

  RICHARD J. GOEGLEIN, 61, has served as a director since May 1987.  Mr.
Goeglein is founder and principal of Gaming Associates, a casino management
company which develops and operates hotels/casinos at selected locations in the
United States.  Mr. Goeglein served as President and Chief Executive Officer of
Dakin, Inc. from April 1990 through September 1991.  Since January 1988, Mr.
Goeglein has also been the Chairman of ConServ International, a consulting and
real estate development business.  From 1984 to his retirement date of December
31, 1987, Mr. Goeglein was the President and Chief Operating Officer of Holiday
Corporation, the holding company of Holiday Inns, Inc.  Mr. Goeglein also served
on the Board of Directors of Holiday Corporation from 1978 to 1988.  Mr.
Goeglein currently serves as a director of Boomtown Hotels and Casinos and
Platinum Software Corporation.

  KWANG-HO KIM, 56, was appointed a director in July 1995.  Since November
1994, Mr. Kim has served as Vice Chairman, President and Chief Executive Officer
of Samsung.  Mr. Kim first joined Samsung when Tongyang Broadcasting Co. merged
into the Samsung Group in January 1969.  In 1978, Mr. Kim was one of the
founders of the semiconductor business of Samsung, and was named Vice President
in charge of the Research and Development Center for the semiconductor business
at Samsung in March 1987.  Throughout his career at Samsung, Mr. Kim has held a
number of positions in research and development, manufacturing, plant and
division management, where he was named President and Chief Executive Officer of
the semiconductor business in March 1990, and named President and Chief
Executive Officer of Samsung in December 1992.  Mr. Kim is currently Chairman of
the Korea Semiconductor Industry Association (KSIA).

  YOUNG SOO KIM, 61, was appointed a director in July 1995.  Since January
1993, Mr. Kim has served as Corporate Vice President of Samsung.  He joined
Samsung in August 1987 as Vice President of the semiconductor business and in
June 1989 was named President of the Computer and Systems Business.  Before
joining Samsung, Mr. Kim was Vice President of Honeywell in charge of its Solid
State Electronics Division from December 1974 to August 1987.

  JACK W. PELTASON, 72, has served as a director since July 1993.  Mr. Peltason
has served as President of the University of California from 1992 to 1995,
following an eight-year tenure as Chancellor of the University of California,
Irvine, a seven-year term as President of the American Council on Education, and
a ten-year term as Chancellor at the University of Illinois at Urbana-Champaign.
Mr. Peltason is currently on the Board of Directors of Irvine Apartment
Communities and serves as a member of the Board of Trustees for the FHP
Foundation, Irvine Health Foundation, and Teachers Insurance and Annuity
Association.

  SAFI U. QURESHEY, 45, a Company founder, has served as a director since the
Company's inception and served as President from the Company's inception through
July 1994.  In July 1988, Mr. Qureshey was elected Chief Executive Officer and
served as such until November 1995.  He served as Co-Chairman of the Board from
1988 through June 1992, and was elected Chairman of the Board in November 1993.
Mr. Qureshey is currently a member of the President's Export Council (PEC).
This premier national committee advises President Clinton on government policies
and programs that affect U.S. trade performance and promotes export expansion.
In addition, Mr. Qureshey was awarded the 1995 UCI Medal, the University of
California, Irvine's highest honor, for his service and commitment to the
university.

  CARMELO J. SANTORO, PH.D., 54, served as Chairman of the Board from June 1992
until November 1993 and has served as a director since September 1990.  In
November 1993, Dr. Santoro was elected Vice Chairman of the Board and served as
such through December 1995.  Dr. Santoro is Chairman and Chief Executive Officer
of Platinum Software Corporation.  Dr. Santoro was President and Chief Executive
Officer of Silicon Systems, Inc. from 1982 through 1991 and was Chairman from
1984 through 1989, when Silicon Systems, Inc. was acquired by TDK Corporation of
Tokyo, Japan.  From 1980 to 1982, Dr. Santoro was Vice President, Integrated
Circuits at the Solid State Division of RCA.  In addition to Platinum Software
Corporation, Dr. Santoro is currently a director of Dallas Semiconductor
Corporation, S3, Inc. and Smartflex Systems, Inc.

  BO-SOON SONG, 48, was appointed a director in January 1996.  Since January
1995, Mr. Song has served as President and Chief Executive Officer of Samsung
North America, the U.S. headquarters of the Samsung Group.  Mr. Song was Chief
Executive Officer of Samsung Electronics America Holding Company ("SEA").  Prior
to being appointed as Chief Executive Officer in September 1993, Mr. Song had
been Chief Finance Officer of SEA from 1991, and earlier served as Finance
Director of Samsung from 1988.  From 1984 to 1988, Mr. Song was Treasurer of
Samsung Trading Co. in London England.  Mr. Song joined Samsung in 1980 as an
Assistant General Manager for the Samsung Group Chairman Office's International
Finance Division.

  WON SUK YANG, 52, was appointed a director in July 1995.  Since April 1995,
Mr. Yang has served as Senior Executive Managing Director of Samsung.  He joined
the Samsung Group through an affiliated company, Cheil Industries, in 1970.  He
later was named Director of Finance from April 1979 to March 1983 of Samsung
Petrochemical Co., Ltd.  In April 1983, he was named Executive Vice President of
Samsung Semiconductor Inc., a U.S. subsidiary of Samsung.  From June 1991 to
December 1992, Mr. Yang was General Manager of the Planning and Administrative
Office of Samsung and in January 1993 was made General Manager of the Corporate
Administrative Office for an affiliated company, Cheil Synthetics Industries.

  HEE DONG YOO, 50, was appointed a director in July 1995.  Since April 1994,
Mr. Yoo has served as Executive Vice President and General Manager of the
information products business of Samsung.  He joined Samsung as manager of
Samsung Petrochemicals in July 1974 and later became President of Samsung Tokyo
Headquarters in February 1977.  In February 1983, he was made Director of the
Overseas Operations Division of Samsung and later was named Managing Director of
the International Operations Office from March 1987 to January 1991.  From
January 1991 to April 1994, Mr. Yoo was President of Samsung Electronics Europe.



EXECUTIVE OFFICERS

  The following table sets forth the name and age of each executive officer of
the Company at March 1, 1996, his positions and offices with the Company and the
period during which he has served as an executive officer of the Company:

--------------------------------------------------------------------------------
                                                                      EXECUTIVE
                                                                       OFFICER
   NAME          AGE               POSITION(S)                          SINCE
--------------------------------------------------------------------------------
Ian W. Diery        46             President and                        1995
                                   Chief Executive Officer

Gerald T. Devlin    50             Senior Vice President, Americas      1995

Dennis R. Leibel    51             Senior Vice President, Legal,        1986
                                   Administration and Secretary

Gary D. Weaver      53             Senior Vice President, Worldwide     1995
                                   Manufacturing Operations

Michael Willcocks   47             Senior Vice President,               1996
                                   Asia Pacific Region

Mark P. de Raad     36             Vice President, Controller,          1995
                                   and Principal Accounting Officer
--------------------------------------------------------------------------------

  For information on the business background of Mr. Diery see "Directors"
above.

  GERALD T. DEVLIN rejoined the Company in September 1995 as Senior Vice
President, Americas.  Mr. Devlin was Vice President of Worldwide Sales for Xerox
Corporation from July 1994 to September 1995.  Mr. Devlin was first employed
with the Company as Vice President, U.S. Sales from January 1993 and Vice
President, Sales, Americas from August 1993 to July 1994.  Prior to joining the
Company in January 1993, he was employed for twelve years by Apple Computer
where he served most recently as Vice President and General Manager of Sales.

  DENNIS R. LEIBEL joined the Company in December 1985 as Treasurer and in
March 1988 was elected Vice President, Administration and General Counsel.  In
January 1989, Mr. Leibel was elected Vice President, Legal and Treasury
Operations and Secretary and was promoted to Senior Vice President, Legal and
Treasury Operations in January 1995 and Senior Vice President, Legal,
Administration and Secretary in October 1995.  Prior to joining the Company, Mr.
Leibel was employed for over seven years by Smith International, Inc., where he
served as Director of Taxes, Vice President, Tax and Financial Planning and
subsequently as Vice President, Finance.  Mr. Leibel currently serves on the
Executive Committee of the Board of Directors of the World Trade Center
Association of Orange County and the Advisory Board of Directors of Court
Appointed Special Advocates of Orange County (CASA).

  GARY D. WEAVER joined the Company in December 1994 as Vice President,
Americas Manufacturing and in September 1995 was elected Senior Vice President,
Worldwide Manufacturing Operations.  Immediately prior to joining the Company,
he served as Vice President Operations at Ioptex Research from May 1990 to
November 1994 with responsibility for human resources, engineering,
manufacturing, quality and distribution.  Mr. Weaver has also held various other
positions throughout his career including Worldwide Vice President of
Manufacturing at Cipher Data Products, Senior Vice President, Manufacturing at
Irwin Magnetics and Managing Director for Atari Far East, where he was
responsible for high volume operations in the Company's Taipei facility.

  MICHAEL WILLCOCKS joined the Company in March 1996 as Senior Vice President,
Asia Pacific Middle East Region.  Prior to joining the Company, Mr. Willcocks
served at Apple Computer from May 1993 to January 1996 where he held positions
of Vice President, Global Accounts and Vice President, Worldwide Enterprise and
Government Marketing.  Mr. Willcocks also held positions as General Manager,
Northern Europe Operations and Managing Director, United Kingdom for Interleaf,
Inc., a pioneer in the electronic publishing market, from November 1989 to May
1993.  From 1975 to 1989, Mr. Willcocks was employed at Wang Laboratories in
various sales and marketing positions covering Europe, Africa, Middle East and
Asia Pacific.

  MARK P. DE RAAD joined the Company in May 1987 as Manager, Financial
Reporting.  In February 1989, Mr. de Raad was promoted to Assistant Controller
and to Controller in August 1990.  In February 1994, Mr. de Raad was named Vice
President, Worldwide Controller, in August 1994 assumed the title Vice
President, Financial Operations and in July 1995 was elected Vice President,
Controller and Principal Accounting Officer.  Prior to joining the Company in
May 1987, Mr. de Raad was employed by Tandem Computer, Inc. and KPMG Peat
Marwick LLP.

ITEM 11.  EXECUTIVE COMPENSATION

  The following tables present information concerning the cash compensation and
stock options provided to Mr. Diery, the Company's current Chief Executive
Officer, Mr. Qureshey, who served as the Company's Chief Executive Officer until
November 2, 1995, the four other most highly compensated executive officers and
two additional highly compensated former executive officers (collectively, the
"Named Executive Officers") during transition period 1995 ("TP95"), which
consists of the six months ended December 30, 1995 by reason of a change in the
Company's fiscal year-end, and during the fiscal years ended July 1, 1995, July
2, 1994, and July 3, 1993.  The notes to these tables provide more specific
information regarding compensation.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                                                            Long-Term
                                             Annual Compensation                          Compensation
                              ------------------------------------------------------    ---------------
                                                                                            Awards
                                                                                            ------
                              Transition                                                 Securities  
                               Period or                              Other Annual        Underlying            All Other
        Name and                Fiscal       Salary       Bonus       Compensation       Options/SARS         Compensation
    Principal Position           Year         ($)          (S)          ($) (a)               (#)                 ($)
-------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>        <C>          <C>             <C>               <C>                  <C>       
Ian W. Diery (b)                 TP95       101,323            -              -            1,000,000                    -  
President and                    1995             -            -              -                    -                    -
Chief Executive Officer          1994             -            -              -                    -                    -
                                 1993             -            -              -                    -                    -
                                                                                                                          
Safi U. Qureshey (b)             TP95       289,313            -            632               25,000               67,434 (c)
Chairman of the Board            1995       656,172            -         24,448               50,000              145,107
                                 1994       623,076      236,221         36,465              125,000              148,119
                                 1993       543,700      514,298         93,960               60,000              184,580
                                                                                                                      
Gerald T. Devlin (d)             TP95       116,577      116,000 (e)          -              100,000                  462 (f)
Senior Vice President,           1995             -            -              -                    -                    -
Americas                         1994       279,821            -              -                7,500                5,815
                                 1993        97,048       31,315              -               80,000                    -
                                                                                                                             
Dennis R. Leibel                 TP95       115,400            -              -               10,000                4,060 (f)
Senior Vice President, Legal     1995       217,820            -              -               16,000                5,339   
Administration and Secretary     1994       200,414       30,000             32                6,000                6,454   
                                 1993       181,008       79,567          7,320               10,000                5,532   
                                                                                                                            
Gary D. Weaver (d)               TP95       104,100            -         84,308 (g)           50,000                3,123 (f)
Senior Vice President,           1995             -            -              -                    -                    -
Worldwide Manufacturing          1994             -            -              -                    -                    -
Operations                       1993             -            -              -                    -                    -
                                                                                                                  
Mark P. de Raad (d)              TP95        92,877            -              -                4,000                1,278 (f)
Vice President, Controller and   1995             -            -              -                    -                    -
Principal Accounting Officer     1994             -            -              -                    -                    -
                                 1993             -            -              -                    -                    -
                                                                                                                         
James T. Schraith (h)            TP95       149,088            -              -               25,000 (h)        1,478,150 (h)
President and Chief              1995       444,262            -            520              140,000                2,677
Operating Officer                1994       314,009      130,191              -               65,000                9,173
                                 1993       228,256      124,168          1,095               20,000                5,673   
                                                                        
Bruce C. Edwards (i)             TP95       183,258            -              -               15,000 (i)          961,662 (i)
Executive Vice President         1995       310,800            -          2,063               30,000                3,577
and Chief Financial Officer      1994       297,337       80,137          3,496               75,000                7,021
                                 1993       251,873      256,454          4,980               30,000                6,283
_________
</TABLE>

                     SUMMARY COMPENSATION TABLE (CONTINUED)

Notes to Summary Compensation Table

(a) Other Annual Compensation generally includes reimbursement for medical
    expenses and/or tax and estate planning expenses.  Mr. Weaver's Other Annual
    Compensation also includes amounts denoted in (g) below.  The amounts shown
    for transition period 1995 and for fiscal 1995 represent reimbursement for
    tax and estate planning only.
(b) Mr. Qureshey resigned as Chief Executive Officer effective November 2, 1995,
    but remains an employee of the Company and Chairman of the Board.  Mr. Diery
    was named President and Chief Executive Officer on November 2, 1995.  Mr.
    Diery's employment agreement is described under "Employment Contracts and
    Termination of Employment and Change in Control Arrangements."
(c) The Company maintains an aggregate of $24,000,000 of split dollar life
    insurance policies insuring the survivor of Mr. Qureshey and his spouse.  
    The portion of the premium paid for term life insurance coverage in 
    transition period 1995 was $19,004.  The portion of the premium paid for 
    non-term coverage, valued in accordance with requirements of the Securities
    and Exchange Commission as an interest-free loan to Mr. Qureshey, was 
    $61,434.  Also included is the Company's 401(k) Plan matching contribution 
    in the amount of $6,000.
(d) Mr. Devlin, Mr. Weaver, and Mr. de Raad were named as executive officers
    during transition period 1995.  Only compensation for the full transition
    period or fiscal year during which they served as an executive officer is
    included in the above summary compensation table.  Mr. Devlin was also an
    executive officer in fiscal 1994 and 1993, before resigning and re-joining
    the Company in transition period 1995.
(e) Amount represents a signing bonus paid to Mr. Devlin upon rejoining the
    Company in September 1995.
(f) Amount represents the Company's matching contribution to the Company's 
    401(k) Plan.
(g) The Company paid $84,308 for Mr. Weaver's relocation expenses.
(h) Mr. Schraith's employment with the Company terminated on September 11, 1995.
    In connection therewith, the options granted to Mr. Schraith during
    transition period 1995 expired without being exercised on the date of such
    termination.  Pursuant to a Severance Compensation Agreement with the
    Company, Mr. Schraith was paid a lump sum payment of $1,472,500, which is
    included in All Other Compensation.  Also included in All Other Compensation
    is the Company's matching contribution to the Company's 401(k) Plan in the
    amount of $5,650.
(i) Mr. Edwards' employment with the Company terminated on December 28, 1995. 
    In connection therewith, the options granted to Mr. Edwards during 
    transition period 1995 expired without being exercised on the date of such 
    termination.  Pursuant to a Severance Compensation Agreement with the 
    Company, Mr. Edwards was paid a lump sum payment of $958,200, which is 
    included in All Other Compensation.  Also included in All Other Compensation
    is the Company's matching contribution to the Company's 401(k) Plan in the 
    amount of $3,462.

                                        
                                        
                     OPTION/SAR GRANTS IN TRANSITION PERIOD

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                                                    Potential Realizable Value
                                                                                     at Assumed Annual Rates
                                                                                   of Stock Price Appreciation
                                   Individual Grants                                   for Option Term (b)
---------------------------------------------------------------------------------  ----------------------------
                       Number of
                      Securities       % of Total
                      Underlying      Options/SARs
                     Options/SARs      Granted to       Exercise or
                       Granted (a)    Employees in      Base Price    Expiration
Name                     (#)        Transition Period    ($/Share)       Date         5% ($)       10% ($)
---------------------------------------------------------------------------------------------------------------
<S>                   <C>               <C>              <C>          <C>          <C>          <C>
Ian W. Diery           300,000           11.63%            9.375       11/02/05     1,768,766     4,482,401
                       700,000 (c)       27.14%            9.375       11/02/05     4,127,121    10,458,935
                                                                          
Safi U. Qureshey        25,000            0.97%           15.125       08/01/05       237,801       602,634 

Gerald T. Devlin       100,000            3.88%           11.500       09/12/05       723,229     1,832,804

Dennis R. Leibel        10,000            0.39%           15.125       08/01/05        95,120       241,054

Gary D. Weaver          50,000            1.94%           10.750       09/19/05       338,031       856,637

Mark P. de Raad          4,000            0.16%           15.125       08/01/05        38,048        96,421

James T. Schraith (d)   25,000            0.97%           15.125       08/01/05 (d)         -             -

Bruce C. Edwards (d)    15,000            0.58%           15.125       08/01/05 (d)         -             -
_________
</TABLE>

(a) All option grants were new and not granted in connection with an option
    repricing transaction.  Options expire 10 years from date of grant.
(b) The potential gains shown are net of the option exercise price and do not
    include the effect of any taxes associated with exercise.  The amounts shown
    are for the assumed rates of appreciation only, do not constitute 
    projections of future stock price performance, and may not necessarily be 
    realized.  Actual gains, if any, on stock option exercises depend on the 
    future performance of the Company's common stock, continued employment of 
    the optionee through the term of the option, and other factors.
(c) Accelerated vesting of these options is possible in the event that certain
    Company stock price performance targets are achieved.
(d) Mr. Schraith's employment with the Company terminated on September 11, 1995,
    and Mr. Edwards' employment with the Company terminated on December 28, 
    1995. In connection therewith, the options listed above expired without 
    being exercised on the date of termination of their employment.
                                        
                                        
                       AGGREGATED OPTION/SAR EXERCISES IN
                   TRANSITION PERIOD AND TRANSITION PERIOD-END
                                OPTION/SAR VALUES
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                                            Number of Securities              Value of Unexercised
                                                           Underlying Unexercised                 In-the-Money  
                                                              Options/SARs at                   Options/SARs at
                         Shares         Value              Transition Period-End             Transition Period-End  
                      Acquired on     Realized      --------------------------------   --------------------------------
Name                  Exercise (#)       ($)         Exercisable  /  Unexercisable       Exercisable  / Unexercisable
--------------------------------------------------------------------------------------------------------------------------
<S>                    <C>          <C>               <C>            <C>                <C>                     <C>
Ian W. Diery                  -              -               -        1,000,000 (a)              -               -
                                                       
Safi U. Qureshey        150,000      1,781,250         695,000           25,000          1,355,000               -

Gerald T. Devlin              -              -               -          100,000                  -               -

Dennis R. Leibel              -              -          99,000           10,000             88,750               -

Gary D. Weaver                -              -           7,500           72,500                  -               -

Mark P. de Raad               -              -          20,750           23,250              2,000               -

James T. Schraith (b)         -              -               -                -                  -               -
                                                                                                                 
Bruce C. Edwards (b)          -              -          50,000 (b)            -            221,875               -
_________
</TABLE>

(a) Accelerated vesting for 700,000 of these options is possible in the event
    that certain Company stock price performance targets are achieved.
(b) Mr. Schraith's employment with the Company terminated on September 11, 1995
    and Mr. Edwards' employment with the Company terminated on December 28, 
    1995.  In connection therewith,  their outstanding options will generally 
    expire six months from the date of termination of their employment provided,
    however, that certain of such options expired on the date of termination of
    employment.  See note (d) to the table describing "Option/SAR Grants in
    Transition Period."

COMPENSATION OF DIRECTORS

  Mr. Qureshey receives an annual salary of $325,000 in his capacities as an
employee of the Company and as Chairman of the Board.  This represents a
voluntary reduction in salary until the Company returns to profitability and was
effective November 2, 1995.  For purposes of his employment contract, all other
terms of Mr. Qureshey's Founders Agreement (as defined below), including his
annual base salary of $650,000, are deemed to be in effect and unchanged by this
voluntary salary reduction.  See "Employment Contracts and Termination of
Employment and Change in Control Arrangements."

  The directors of the Company serve until their successors are elected and
duly qualified.  Non-employee directors receive annual retainers of $30,000 paid
at the rate of $2,500 per month and additional committee meeting fees of $2,000
per meeting for the Chairman and $1,000 per meeting per committee member.
Beginning November 1993, Dr. Carmelo J. Santoro, who served as Vice Chairman of
the Board through December 1995, received an additional annual retainer of
$95,000 for services in such capacity.  Except as provided above with respect to
Mr. Qureshey, directors who are also employees of the Company do not currently
receive fees for service in their capacity as a director.

  The 1991 Stock Option Plan for Non-Employee Directors, as amended in 1995,
provides for an initial grant of options to purchase 20,000 shares of common
stock to each newly elected or appointed non-employee director.  In addition, on
January 1 of each year, each participant will receive an option to purchase an
additional 12,000 shares of common stock.  The aggregate number of shares that
may be issued under the Plan is 500,000.  Options vest equally over four years
commencing on the first anniversary of the date of grant.  Each option is
exercisable at 100% of the common stock's fair market value on the date of
grant.

  In 1994, the Company adopted the 1994 One-Time Grant Stock Option Plan for
Non-Employee Directors.  The Plan, as amended in 1995, provided for the grant of
an option to purchase 50,000 shares of common stock to each non-employee member
of the Company's Board of Directors on July 1, 1994.  As a result of completing
the initial transactions with Samsung, effective July 31, 1995, unvested options
to purchase 175,000 shares of common stock at $14.25 per share became
immediately exercisable.  At December 30, 1995, 150,000 options remained
outstanding and were exercisable at an exercise price of $14.25 per share.

  In December 1990, the Board of Directors authorized the issuance of warrants
to purchase an aggregate of 80,000 shares of the Company's common stock to its
then non-employee directors.  At December 30, 1995, 40,000 of these warrants
remained outstanding and were exercisable at $13.88 per share.  On July 27,
1992, the Board of Directors authorized the issuance of warrants to purchase
50,000 shares of the Company's common stock to Dr. Santoro, the Company's then
Chairman of the Board.  At December 30, 1995, 37,500 of these warrants remained
outstanding and were exercisable at $13.50 per share.  As a result of completing
the initial transactions with Samsung, effective July 31, 1995, unvested
warrants to purchase 25,000 shares of common stock at $13.50 per share became
immediately exercisable.

  Pursuant to the Stockholder Agreement between the Company and Samsung, those
directors appointed by Samsung who are also officers, employees, or consultants
of Samsung (the "Samsung Employee Director Designees") are entitled to receive,
in their capacities as directors of the Company, only such fees, options and
other awards and expense reimbursements, if any, as may be provided to employee
directors of the Company generally in their capacity as directors.  In Samsung's
discretion, any such amounts payable to the Samsung Employee Director Designees
will be paid to Samsung rather than to the Samsung Employee Director Designees.
Those directors appointed by Samsung who are not officers, employees, or
consultants of Samsung are entitled to receive all benefits to which other non-
employee directors of the Company are entitled, and no such amounts may be paid
or transferred to Samsung.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

  Mr. Goeglein, Mr. Peltason, Mr. Yang and Delbert W. Yocam served on the
Compensation Committee during transition period 1995.  Mr. Yocam resigned as a
member of the Board of Directors on September 21, 1995 and was replaced on the
Compensation Committee by Mr. Yang.  Mr. Goeglein now serves as Chairman of the
Compensation Committee.  None of these persons is or has been an officer of the
Company or any of its subsidiaries.  In addition to serving on the Company's
Board of Directors, Mr. Goeglein and Dr. Santoro serve on the Board of Directors
of Platinum Software Corporation ("Platinum"), which designs, manufactures and
markets accounting software systems.  At Platinum, Dr. Santoro is also an
executive officer and Mr. Goeglein serves on the Compensation Committee.  In
such capacities, each of Dr. Santoro and Mr. Goeglein has influence over the
fees, equity participation and other compensation paid to others by Platinum.
Mr. Goeglein, as a member of the Company's Board of Directors and Compensation
Committee, had direct influence over the equity participation awards and
compensation paid to Mr. Edwards in his capacity as an executive officer of the
Company.  Mr. Edwards resigned as Chief Financial Officer and a Board member on
December 28, 1995.  As continuing Board members, Dr. Santoro and Mr. Goeglein
will continue to have influence over the fees, equity participation and
compensation paid to others by the Company.  Prior to either Dr. Santoro's or
Mr. Goeglein's joining the Platinum Board of Directors, the Company purchased
certain accounting software systems from Platinum.  The Company believes that
the terms and conditions of its purchase relationship with Platinum are as
favorable to the Company as those that could have been obtained from any other
third-party vendor of similar products and services.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

  On November 2, 1995, the Company entered into an employment agreement with
Ian W. Diery, President and Chief Executive Officer.  Under the agreement, Mr.
Diery's annual salary is $700,000.  In addition, Mr. Diery is eligible to
participate in the Company's profit sharing plan, 401(k) plan, management
incentive plan and quarterly bonus plan.  Under this agreement, Mr. Diery
receives annually an automobile allowance of $12,000, a medical allowance of
$20,000, and a financial planning allowance of $10,000.  Mr. Diery also received
a relocation allowance of up to $500,000 and an income tax gross up on such
allowance, for moving expenses and to reimburse him for the amount of any loss
incurred upon disposal of his prior residence.

  Mr. Diery received a grant of an option to purchase 300,000 shares of the
Company's common stock having an exercise price equal to $9.375 per share, the
closing price of the common stock on November 2, 1995.  The option vests at the
rate of 25% per year, commencing November 2, 1996.  Also on November 2, 1995,
Mr. Diery received an additional grant of an option to purchase 700,000 shares
of common stock having an exercise price equal to $9.375 per share, vesting at
the rate of 12.5% per year, with accelerated vesting possible in the event that
certain Company stock price performance targets are achieved.  If the daily
closing price of the common stock averages $21, $30, and $40 over any three-
month period within the option term, respectively, one-third of these options
not otherwise vested will vest at the end of each such three-month period.

  On July 27, 1993, the Company entered into a five-year revolving term
employment agreement with Mr. Qureshey ("Agreement" or "Founder's Agreement"),
which provides in certain circumstances for a possible consulting term and other
post-termination benefits.  All post-termination benefits are conditioned upon
Mr. Qureshey not undertaking competing employment and his not soliciting away
Company employees.  In addition, Mr. Qureshey agreed that he will vote his
shares along with the other shareholders in the election of directors and will
not join or participate against the Board of Directors in any proxy
solicitation, and will offer the Company a right of first refusal on any 100,000
or more share blocks proposed to be sold by him in any private sale.  If Mr.
Qureshey should accept non-competing but substantial employment with any other
company or firm during any period of active employment, consulting, or post-
termination benefits under the Founder's Agreement, the Company may elect that
Mr. Qureshey cease to be an employee or consultant and be entitled to receive an
aggregate lump sum equal to 50% of the salary and/or bonus, if any, which he is
then receiving and which he otherwise would be entitled to receive for the
remaining balance of the employment or post-termination benefit or consulting
period, as described below; however, all other benefits would cease and Mr.
Qureshey would continue to be bound by the restrictions concerning competing
employment, non-solicitation of employees, the voting of shares and the right of
first refusal.  At any time following one year from a date of employment
termination, Mr. Qureshey may elect to terminate the foregoing restrictions upon
90 days' written notice, in which event all Company obligations and benefits
payable under the Founder's Agreement would cease, all stock option acceleration
would be rescinded and any outstanding loans to Mr. Qureshey would have to be
repaid to the Company within 90 days.  Nevertheless, Mr. Qureshey would continue
to be bound by the provisions of the Founder's Agreement pertaining to the
Company's confidential and proprietary information.

  If Mr. Qureshey's employment is terminated for "cause," the Company will be
obligated to pay him only such severance compensation as shall have vested and
as the Board otherwise deems appropriate, or none at all, and the Company's
obligations under the Founder's Agreement will be null and void.  If Mr.
Qureshey becomes disabled, upon the expiration of six consecutive months of
disability, Mr. Qureshey's employment may be terminated by the Company.  In such
event or in the event of Mr. Qureshey's death, in addition to amounts paid from
insurance policies, Mr. Qureshey or his estate will be entitled to receive his
base salary and bonus for at least one year, the restriction period on all
restricted stock granted to him under Company plans shall lapse and all stock
options or other such rights which otherwise would have vested within two years
of such event will accelerate and become fully vested and remain exercisable in
accordance with their respective terms.

  During employment, Mr. Qureshey will receive his salary, bonus and all other
benefits, including a $25,000 financial planning allowance and a gross-up for
income tax on such allowance, consistent with past practices.  If Mr. Qureshey's
active employment is terminated by him for "good reason" or by the Company
without "cause," Mr. Qureshey shall continue to receive his base salary for a
benefit period of five years following termination.  In either event, (a) Mr.
Qureshey shall be entitled to receive his annual bonus for the year in which
termination occurs, pro rated to the date of termination, as well as bonuses for
the two fiscal years following termination, such bonus amounts being determined
by taking the average of the bonuses paid to Mr. Qureshey in the preceding two
years; (b) all stock options shall accelerate and become exercisable and all
restrictions on restricted stock awards shall lapse; (c) the benefits allowance
for death or disability shall continue for a period of five years from the date
of termination; and (d) all of his benefits payable under the Company's tax-
qualified employee benefit plans or other programs pertaining to deferred
compensation, retirement, profit sharing, 401(k), or employee stock ownership
(if any) will be paid.  In addition, if Mr. Qureshey enters into loan agreements
for the purpose of exercising options or other rights to acquire securities, the
Company will guarantee such loans (up to $3,000,000) and pay the interest on
them for a period ending 13 months after the date of the event causing tax
liability to be incurred by reason of such exercise.

  In the event of Mr. Qureshey's disability or of his termination by the
Company without "cause" or termination of employment by Mr. Qureshey for "good
reason," Mr. Qureshey will also be entitled to receive additional benefits
during the first five-year post-termination benefit period including an office,
health and welfare benefits, continued use of a Company automobile followed by
transfer of title of such automobile to Mr. Qureshey at the end of the five-year
period, and up to $25,000 per year (grossed up for income taxes) for estate, tax
and financial planning services.

  Following such five-year post-termination benefits period, provided Mr.
Qureshey has not and does not undertake substantial or competing employment, the
Company indefinitely will provide continued health and welfare benefits, with
Mr. Qureshey paying or reimbursing the Company the average cost of such
coverage, and Mr. Qureshey will have the title Vice Chairman.  For a period of
up to five years following the first five-year post-termination benefits period,
Mr. Qureshey may elect to become a consultant and receive 60% of his former base
salary and be entitled to receive the additional benefits described in the
foregoing paragraph.  If prior to any termination Mr. Qureshey undertakes an
"early retirement" from active employment and otherwise is not receiving the
post-termination benefits enumerated above, he may at his election become a
consultant to the Company and become subject to the restrictions under the
Founder's Agreement and also become entitled to receive 80% of his then base
salary for a period of five years, as well as the additional benefits listed
above.  Bonus amounts will not be required during any consulting period.

  Mr. Qureshey resigned as President and Chief Executive Officer effective
November 2, 1995, but remains an employee and Chairman of the Board.  Effective
November 2, 1995, Mr. Qureshey agreed to a voluntary reduction in salary to
$325,000 per year until the Company returns to profitability, and agreed not to
currently enforce the terms of the existing agreement with respect to
termination for "good reason."  However, all other terms, including his annual
base salary of $650,000, of the Founder's Agreement are  deemed to be in effect
and all rights are reserved thereunder by Mr. Qureshey.

  Mr. Qureshey's benefits under the Founder's Agreement are in addition to and
not in lieu of the benefits payable to him under his Severance Compensation
Agreement (see below).  Following a change in control of the Company, Mr.
Qureshey is generally entitled to all of the benefits specified in the Severance
Compensation Agreement, whether or not his active employment is terminated,
provided, however, that Samsung's stock purchase will not constitute a change in
control for purposes of Mr. Qureshey's Severance Compensation Agreement unless
Samsung's interest in the Company becomes in excess of 49.9%.  Mr. Qureshey will
not otherwise participate in the officer involuntary termination policy
described below.

  At the Annual Meeting of Stockholders held in May 1987, the shareholders
authorized and approved an indemnification program for corporate officers and
directors under which the Company and each corporate officer and director
entered into an Indemnification Agreement, substantially in the form approved by
the shareholders.

  The Company has entered into Severance Compensation Agreements with each of
its executive officers.  Under the agreements, following a "change in control"
of the Company, which included the Samsung transaction for then existing
officers, if either the Company terminates the officer's employment without
cause or the officer terminates his employment for good reason, each as defined
in the agreements, then (a) the Company will pay the officer severance
compensation equal to two years' salary and bonuses; (b) all stock options held
by the officer, to the extent that they would become exercisable within two
years of the change in control, will immediately become exercisable for a period
of six months following termination; and (c) the officer will receive continued
welfare benefits for a period of two years.  Under the agreements, the Company
will indemnify the officer with respect to payment of excise taxes on excess
"parachute payments" imposed under Section 4999 of the Internal Revenue Code.
Such an agreement was entered into with  Mr. Diery on November 2, 1995, provided
that a change in control will be deemed to occur with respect to the Samsung
transaction only if Samsung's percentage ownership of the Company should exceed
49.9 percent.  Similarly, all agreements entered into after the original Samsung
investment have a 49.9% trigger.  Similar agreements have also been entered into
with thirteen vice presidents, except that the vice presidents' severance
benefits include only one year of salary, bonus and welfare benefits
continuation, and only options otherwise vesting within one year of the change
in control will accelerate.

  The Company has a severance policy for its executive officers which, in the
event of an involuntary termination other than in connection with a "change in
control," as defined in the Severance Policy, requires the Company to pay its
President severance equal to two years salary and its other executive officers
severance equal to six months salary plus an additional month of salary for each
year of employment with the Company, up to a maximum of twelve months.  Welfare
benefits are also continued during this period.

  Mr. Schraith's employment with the Company terminated on September 11, 1995.
Pursuant to a Severance Compensation Agreement with the Company, Mr. Schraith
was paid a lump sum payment of $1,472,500.

  Scott A. Smith's employment as Vice President and General Manager, Desktop
Products was terminated on September 11, 1995.  Pursuant to a Severance
Compensation Agreement with the Company, Mr. Smith was paid a lump sum payment
of $477,500.

  James D. Wittry's employment as Senior Vice President, Americas was
terminated on September 11, 1995.  Pursuant to a Severance Compensation
Agreement with the Company, Mr. Wittry was paid a lump sum payment of $461,600.

  Richard P. Ottaviano's employment as Senior Vice President, Administration
terminated on October 20, 1995.  Pursuant to a Severance Compensation Agreement
with the Company, Mr. Ottaviano was paid a lump sum payment of $720,100.

  Mr. Edwards' employment with the Company terminated on December 28, 1995.
Pursuant to a Severance Compensation Agreement with the Company, Mr. Edwards was
paid a lump sum payment of $958,200 on January 3, 1996.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  The following table sets forth certain information, as of March 1, 1996, with
respect to all those known by the Company to be the beneficial owners of more
than 5% of its outstanding common stock, each director, the Chief Executive
Officer and the other Named Executive Officers, and all directors and executive
officers of the Company as a group.  Unless otherwise noted, each of the
shareholders listed owns less than 1% of the outstanding common stock and has
sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by him, subject to community property laws where
applicable, and the information contained in the footnotes to this table.  The
Company had 44,685,900 shares outstanding at March 1, 1996.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                           NUMBER OF SHARES       
                                      ----------------------------          PERCENTAGE OF  
NAME OF BENEFICIAL OWNER               OPTIONS (A)       TOTAL           SHARES OUTSTANDING
---------------------------------------------------------------------------------------------
<S>                                    <C>            <C>                     <C>          
Samsung Electronics Co., Ltd. (b)               -      17,890,000              40.03%
                                                                            
Richard J. Goeglein                       120,000         137,000                  -
Carmelo J. Santoro, Ph.D.                 111,500         111,500                  -
Jack W. Peltason                           69,000          69,300                  -
                                                                            
Safi U. Qureshey (c)                      695,000       2,869,870               6.32%
Dennis Leibel                              99,000         104,026                  -
Gary D. Weaver                              7,500           7,500                  -
Mark P. de Raad                            20,750          20,850                  -
James T. Schraith (d)                           -           5,213                  -
Bruce C. Edwards (e)                       50,000          91,288                  -
                                                                            
All directors and executive             1,122,750       3,320,046               7.25%
officers as a group (f)
____________________
</TABLE>
(a)  Includes shares which executive officers and directors have the right to
     acquire within 60 days of March 1, 1996, under stock option and warrant
     agreements.
(b)  These shares are beneficially owned by Samsung and its wholly owned
     subsidiary, Samsung Electronics America, Inc. c/o 105 Challenger Road,
     Ridgefield Park, New Jersey 07660.
(c)  Includes 104,812 shares held by Nancy Marshall as custodian for minor
     children of Mr. Qureshey and 3,289 shares held by Nancy Marshall, Ishrat
     Qureshey and Iubna Bokhari, co-trustees of Irrevocable Trusts established 
     for the benefit of Mr. Qureshey's minor children, to which Mr. Qureshey 
     claims no beneficial interest.
(d)  Mr. Schraith's employment with the Company terminated on September 11,
     1995.
(e)  Mr. Edward's employment with the Company terminated on December 28, 1995.
     Amount includes 803 shares held by Mary Pat DeMayo Buskard as trustee for
     minor children of Mr. Edwards to which Mr. Edwards disclaims any beneficial
     interest.
(f)  None of the following directors and executive officers beneficially own
     any shares of the Company's common stock or any shares that they have the
     right to exercise within 60 days:  Hoon Choo, Gerald T. Devlin, Ian W. 
     Diery, Kwang-Ho Kim, Young Soo Kim, Bo-Soon Song, Won Suk Yang, and Hee 
     Dong Yoo.  Amounts shown for "All directors and executive officers as a 
     group" exclude Messrs. Schraith and Edwards due to their termination prior
     to March 1, 1996.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   In July 1995, the Company loaned Mr. Qureshey $1,156,453 to exercise options
to purchase 150,000 shares of the Company's common stock granted under the Chief
Executives' Plan, evidenced by a promissory note secured by a stock certificate.
The loan was issued interest free and is payable in full on or before April 30,
1996.  At December 30, 1995, the entire amount remained outstanding.

  In September 1993, the Company loaned Vice President and General Manager,
Desktop Products, Scott A. Smith $100,000 for the purchase of a primary
residence, evidenced by a promissory note secured by a deed of trust.  The loan
was issued interest free and is payable in full in September 1996.  At December
30, 1995, the entire amount remained outstanding.

  See "Compensation Committee Interlocks and Insider Participation" above.


                                     PART IV

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

(a)  (1)  Financial Statements

       See Index to Consolidated Financial Statements at Item 8 on Page 30 of
       this report.

     (2)  Financial Statement Schedule

          II - Consolidated Valuation and Qualifying Accounts and Reserves

       Financial statement schedules other than the schedule listed above have
       been omitted since they are either not required, not applicable, or the 
       information is otherwise included.

     (3)  Exhibits

Exhibit
Number                          Description 

2.1     Agreement for Purchase and Sale of Assets dated June 30, 1993 between
        AST Research, Inc. and Tandy Corporation, TE Electronics, Inc. and GRiD
        Systems Corporation.  The Schedules have been omitted and are as
        described in the Agreement (incorporated by reference to referenced
        exhibit number of the Company's Current Report on Form 8-K as filed with
        the Securities and Exchange Commission on July  28, 1993, Commission
        File No. 0-13941).
2.1.1   Sales Agreement dated July 13, 1993 between AST Research, Inc. and Tandy
        Corporation pursuant to the Agreement for the Purchase and Sale of
        Assets dated June 30, 1993 (incorporated by reference to referenced
        exhibit number of the Company's Annual Report on Form 10-K for the
        fiscal year ended July 3, 1993, Commission File No. 0-13941).
2.1.2   Circuit Board Purchase Agreement dated July 13, 1993 between AST
        Research, Inc. and TE Electronics Inc. pursuant to the Agreement for the
        Purchase and Sale of Assets dated June 30, 1993 (incorporated by
        reference to referenced exhibit number of the Company's Annual Report on
        Form 10-K for the fiscal year ended July 3, 1993, Commission File No. 
        0-13941).
2.1.3   Agreement of Sale of Going Business (English translation) between AST
        Research France and Tandy GRiD France, effective September 1, 1993
        (incorporated by reference to referenced exhibit number of the Company's
        Current Report on Form 8-K as filed with the Securities and Exchange
        Commission on October 29, 1993, Commission File No. 0-13941).
2.2     Agreement of Stock Purchase dated as of February 27, 1995 between AST
        Research, Inc. and Samsung Electronics Company Ltd. (incorporated by
        reference to referenced exhibit number of the Company's Current Report
        on Form 8-K as filed with the Securities and Exchange Commission on
        March 3, 1995, Commission File No. 0-13941).
2.2.1   Amendment No. 1 to Stock Purchase Agreement dated as of June 1, 1995
        between AST Research, Inc. and Samsung Electronics Co., Ltd.
        (incorporated by reference to referenced exhibit number of the Company's
        Solicitation/Recommendation Statement on Amendment No. 1 to Schedule 
        14D-9 as filed with the Securities and Exchange Commission on June 8, 
        1995, SEC File No. 005-44159).
2.2.2   Amendment No. 2 to Stock Purchase Agreement dated as of July 29, 1995
        between AST Research, Inc. and Samsung Electronics Co., Ltd.
        (incorporated by reference to referenced exhibit number of the Company's
        Current Report on Form 8-K as filed with the Securities and Exchange
        Commission on August 7, 1995, Commission File No. 0-13941).
3.1     Certificate of Incorporation of AST Research, Inc., a Delaware
        Corporation, as amended (incorporated by reference to referenced exhibit
        number of the Company's Current Report on Form 8-K as filed with the
        Securities and Exchange Commission on August 7, 1995 , Commission File
        No. 0-13941).
3.2     Bylaws of AST Research, Inc., a Delaware corporation, as amended
        (incorporated by reference to referenced exhibit number of the Company's
        Current Report on Form 8-K as filed with the Securities and Exchange
        Commission on December 22, 1995, Commission File No. 0-13941).



Exhibit
Number           Description 

4.1     Form of Amended and Restated Rights Agreement dated as of January 28,
        1994 between the Company and American Stock Transfer & Trust Co., as
        Successor Rights Agent (incorporated by reference to referenced exhibit
        number of the Company's Quarterly Report on Form 10-Q for the fiscal
        quarter ended January 1, 1994), and Certificate of Designation of
        Preferred Stock and Rights Certificate and Summary of Terms of the
        Company's Shareholder Rights Plan which were included as exhibits to the
        original Rights Agreement dated as of August 15, 1989 (incorporated by
        reference to Exhibit 1 of the Company's Registration Statement on Form 
        8-A as filed with the Securities and Exchange Commission on August 14,
        1989, Commission File No. 0-13941).
4.1.1   Amendment to Rights Plan dated as of March 1, 1995 between AST Research,
        Inc. and American Stock Transfer & Trust Co. (incorporated by reference
        to referenced exhibit number of the Company's Current Report on Form 8-K
        as filed with the Securities and Exchange Commission on March 3, 1995,
        Commission File No. 0-13941).
10.1    Lease Agreement dated November 1, 1985 pertaining to AST Europe Limited
        premises at Goat Wharf, Brentford in the London Borough of Hounslow
        (incorporated by reference to referenced exhibit number of the Company's
        Annual Report on Form 10-K for the fiscal year ended June 30, 1986,
        Commission File No. 0-13941).
10.2    Lease commencing September 29, 1986 pertaining to AST Europe Limited's
        premises in Brentford, Middlesex (incorporated by reference to
        referenced exhibit number of the Company's Registration Statement on
        Form S-1, Registration No. 33-14131).
10.3    Agreement dated September 5, 1987 for the purchase of AST Research (Far
        East) Limited's premises in Hong Kong and Mortgage of such premises to
        Bank of China, Hong Kong Branch, dated September 11, 1987 (incorporated
        by reference to referenced exhibit number of the Company's Registration
        Statement on Form S-2, Registration No. 33-21729).
10.4    Lease dated August 11, 1989, pertaining to premises located in Fountain
        Valley, California (incorporated by reference to referenced exhibit
        number of the Company's Annual Report on Form 10-K for the fiscal year
        ended June 30, 1989, Commission File No. 0-13941).
10.5    License Agreement with Tomcat Computer Corporation, dated October 16,
        1989 (incorporated by reference to referenced exhibit number of the
        Company's Annual Report on Form 10-K for the fiscal year ended June 30,
        1990, Commission File No. 0-13941).
10.6    Cross-License Agreement with International Business Machines (IBM)
        Corp., dated January 1, 1990 (incorporated by reference to referenced
        exhibit number of the Company's Annual Report on Form
        10-K for the fiscal year ended June 30, 1990, Commission File No. 
        0-13941).
10.7    Promissory Note dated as of July 12, 1993 between AST Research, Inc. and
        Tandy Corporation (incorporated by reference to referenced exhibit
        number of the Company's Current Report on Form 8-K as filed with the
        Securities and Exchange Commission on July 28, 1993, Commission File No.
        0-13941).
10.8    First Amendment dated September 22, 1993 to Promissory Note dated July
        12, 1993 between AST Research, Inc. and Tandy Corporation (incorporated
        by reference to referenced exhibit number of the Company's Annual Report
        on Form 10-K for the fiscal year ended July 3, 1993, Commission File No.
        0-13941).
10.9    Second Amendment dated October 14, 1993 to Promissory Note dated July
        12, 1993 between AST Research, Inc. and Tandy Corporation (incorporated
        by reference to referenced exhibit number of the Company's Current
        Report on Form 8-K as filed with the Securities and Exchange Commission
        on October 29, 1993, Commission File No. 0-13941).
10.10   Third Amendment dated December 30, 1993 to Promissory Note dated July
        12, 1993 between AST Research, Inc. and Tandy Corporation (incorporated
        by reference to referenced exhibit number of the Company's Current
        Report on Form 8-K/A as filed with the Securities and Exchange
        Commission on January 10, 1994, Commission File No. 0-13941).
10.11   Joint Venture Contract dated September 7, 1993 between Tianjin Economic
        - Technological Development Area Business Development Co. and AST
        Research (Far East) Limited (incorporated by reference to referenced
        exhibit number of the Company's Quarterly Report on Form 10-Q for the
        fiscal quarter ended April 2, 1994, Commission File No. 0-13941).
10.12   Employment Grant Agreement dated November 9, 1993 between the Industrial
        Development Authority, AST Ireland Limited and AST Research, Inc.
        (confidential treatment is requested with respect to portions of this
        exhibit) (incorporated by reference to referenced exhibit number of the
        Company's Annual Report on Form 10-K for the fiscal year ended July 2,
        1994, Commission File No. 0-13941).



Exhibit
Number           Description
 
10.13   Capital Grant Agreement dated November 9, 1993 between the Industrial
        Development Authority, AST Ireland Limited and AST Research, Inc.
        (confidential treatment is requested with respect to portions of this
        exhibit) (incorporated by reference to referenced exhibit number of the
        Company's Annual Report on Form 10-K for the fiscal year ended July 2,
        1994, Commission File No. 0-13941).
10.14   Settlement Agreement and Release dated January 1, 1995, between AST
        Research, Inc. and Texas Instruments Incorporated (confidential
        treatment is requested with respect to portions of this exhibit)
        (incorporated by reference to referenced exhibit number of the Company's
        Quarterly Report on Form    10-Q for the fiscal quarter ended April 1,
        1995, Commission File No. 0-13941).
10.15   Strategic Alliance Agreement dated February 27, 1995 between AST
        Research, Inc., and Samsung Electronics Company, Ltd. (incorporated by
        reference to referenced exhibit number of  the Company's Current Report
        on Form 8-K as filed with the Securities and Exchange Commission on
        March 3, 1995, Commission File No. 0-13941).
10.16   Confidentiality Agreement dated December 21, 1994 between AST Research,
        Inc. and Samsung Electronics Co., Ltd. (incorporated by reference to
        referenced exhibit number of the Company's Solicitation/Recommendation
        Statement on Schedule 14D-9 as filed with the Securities and Exchange
        Commission on March 6, 1995, SEC File No. 005-44159).
10.17   Letter of Credit Agreement dated July 31, 1995 between AST Research,
        Inc., and Samsung Electronics Company, Ltd. (incorporated by reference
        to referenced exhibit number of the Company's Current Report on Form 8-K
        as filed with the Securities and Exchange Commission on August 7, 1995,
        Commission File No. 0-13941).
10.18   Registration Rights Agreement dated July 31, 1995 between AST Research,
        Inc. and Samsung Electronics Company, Ltd. (incorporated by reference to
        referenced exhibit number of the Company's Current Report on Form 8-K as
        filed with the Securities and Exchange Commission on August 7, 1995,
        Commission File No. 0-13941).
10.19   Stockholder Agreement dated July 31, 1995 between AST Research, Inc. and
        Samsung Electronics Company, Ltd. (incorporated by reference to
        referenced exhibit number of the Company's Current Report on Form 8-K as
        filed with the Securities and Exchange Commission on August 7, 1995,
        Commission File No. 0-13941).
10.20   Amendment to Stockholder Agreement dated December 21, 1995 to
        Stockholder Agreement dated July 31, 1995 between AST Research, Inc. and
        Samsung Electronics Company Co., Ltd. (incorporated by reference to
        referenced exhibit number of the Company's Current Report on Form 8-K as
        filed with the Securities and Exchange Commission on December 22, 1995,
        Commission File No. 0-13941).
10.21   Component Sales Agreement dated July 31, 1995 between AST Research, Inc.
        and Samsung Electronics Co., Ltd. (incorporated by reference to
        referenced exhibit number of the Company's Current Report on Form 8-K as
        filed with the Securities and Exchange Commission on August 7, 1995,
        Commission File No. 0-13941).
10.22   Cooperative Procurement Agreement dated July 31, 1995 between AST
        Research, Inc. and Samsung Electronics Co., Ltd. (incorporated by
        reference to referenced exhibit number of the Company's Current Report
        on Form 8-K as filed with the Securities and Exchange Commission on
        August 7, 1995, Commission File No. 0-13941).
10.23   Marketing Cooperation Agreement dated July 31, 1995 between AST
        Research, Inc. and Samsung Electronics Co., Ltd. (incorporated by
        reference to referenced exhibit number of the Company's Current Report
        on Form 8-K as filed with the Securities and Exchange Commission on
        August 7, 1995, Commission File No. 0-13941).
10.24   AST OEM Supply to SEC Agreement dated July 31, 1995 between AST
        Research, Inc. and Samsung Electronics Co., Ltd. (incorporated by
        reference to referenced exhibit number of the Company's Current Report
        on Form 8-K as filed with the Securities and Exchange Commission on
        August 7, 1995, Commission File No. 0-13941).
10.25   SEC OEM Supply to AST Agreement dated July 31, 1995 between AST
        Research, Inc. and Samsung Electronics Co., Ltd. (incorporated by
        reference to referenced exhibit number of the Company's Current Report
        on Form 8-K as filed with the Securities and Exchange Commission on
        August 7, 1995, Commission File No. 0-13941).
10.26   Joint Development and Technical Cooperation Agreement dated July 31,
        1995 between AST Research, Inc. and Samsung Electronics Co., Ltd.
        (incorporated by reference to referenced exhibit number of the Company's
        Current Report on Form 8-K as filed with the Securities and Exchange
        Commission on August 7, 1995, Commission File No. 0-13941).
10.27   Patent Cross License Agreement dated July 31, 1995 between AST Research,
        Inc. and Samsung Electronics Co., Ltd. (incorporated by reference to
        referenced exhibit number of the Company's Current Report on Form 8-K as
        filed with the Securities and Exchange Commission on August 7, 1995,
        Commission File No. 0-13941).
10.28   Employee Exchange Agreement dated July 31, 1995 between AST Research,
        Inc. and Samsung Electronics Co., Ltd. (incorporated by reference to
        referenced exhibit number of the Company's Current Report on Form 8-K as
        filed with the Securities and Exchange Commission on August 7, 1995,
        Commission File No. 0-13941).

Exhibit
Number           Description 

10.29   General Terms Agreement dated July 31, 1995 between AST Research, Inc.
        and Samsung Electronics  Co., Ltd. (incorporated by reference to
        referenced exhibit number of the Company's Current Report on Form 8-K as
        filed with the Securities and Exchange Commission on August 7, 1995,
        Commission File No. 0-13941).
10.30   Letter Agreement dated July 31, 1995 between AST Research, Inc. and
        Samsung Electronics Co., Ltd. (incorporated by reference to referenced
        exhibit number of the Company's Current Report on Form 8-K as filed with
        the Securities and Exchange Commission on August 7, 1995, Commission
        File No. 0-13941).
10.31   Stipulation of Settlement Agreement dated August 16, 1995 between AST
        Research, Inc. and class actions (incorporated by reference to
        referenced exhibit number of the Company's Current Report on Form 8-K as
        filed with the Securities and Exchange Commission on September 6, 1995,
        Commission File No.            0-13941).
10.32   Additional Support Agreement dated December 21, 1995 between AST
        Research, Inc. and Samsung Electronics Co., Ltd. (incorporated by
        reference to referenced exhibit number of the Company's Current Report
        on Form 8-K as filed with the Securities and Exchange Commission on
        December 22, 1995, Commission File No. 0-13941).
10.33 # Loan Agreement and Promissory Note dated November 20, 1995 between AST
        Research, Inc. and Samsung Electronics America, Inc.
10.34 # Credit Agreement dated December 27, 1995 among AST Research, Inc., Bank
        of America NT & SA as agent and the other financial institutions party
        hereto.
10.35 # First Amendment to Credit Agreement dated February 29, 1996 among AST
        Research, Inc., Bank of America NT & SA as agent and the other financial
        institutions party hereto.

Executive Compensation Plans and Arrangements
 
10.36*  1987 Employee Bonus Plan (incorporated by reference to referenced
        exhibit number of the Company's Annual Report on Form 10-K for the
        fiscal year ended June 30, 1986, Commission File No. 0-13941).
10.37*  Form of Indemnification Agreement, as amended to date.
10.38*  Form of Indemnification Trust Agreement (incorporated by reference to
        referenced exhibit number of the Company's Registration of Securities of
        Certain Successor Issuers on Form 8-B, Commission File No. 0-13941).
10.39*  1989 Long-Term Incentive Program (incorporated by reference to exhibit
        number S 4.1, 4.2, 4.3 and 4.4 of the Company's Registration Statement
        on Form S-8, Registration No. 33-29345).
10.40*  Amendment to 1989 Long-Term Incentive Program related to increase in
        number of shares (incorporated by reference to referenced exhibit number
        of the Company's Annual Report on Form 10-K for the fiscal year ended
        June 27, 1992, Commission File No. 0-13941).
10.41*  Nonqualified Common Stock Option Agreement for officers under the 1989
        Long-Term Incentive Program, approved by Compensation Committee January
        23, 1992 pursuant to administrative authority under such plan
        (incorporated by reference to referenced exhibit number in the Company's
        Annual Report on Form 10-K for the fiscal year ended June 27, 1992,
        Commission File No. 0-13941).
10.42*  Amendment to Officers Nonqualified Common Stock Option Agreement,
        approved by Compensation Committee January 23, 1992 pursuant to
        administrative authority under such plan (incorporated by reference to
        referenced exhibit number in the Company's Annual Report on Form 10-K
        for the fiscal year ended June 27, 1992, Commission File No. 0-13941).
10.43*  Amendment to AST Research, Inc. 1989 Long-Term Incentive Program
        (incorporated by reference to referenced exhibit number of the Company's
        Quarterly Report on Form 10-Q for the fiscal quarter ended January 1,
        1994, Commission File No. 0-13941).
10.44*  Supplemental Medical Plan for Executives of AST Research, Inc.
        (incorporated by reference to referenced exhibit number of the Company's
        Annual Report on Form 10-K for the fiscal year ended June 30, 1989,
        Commission File No. 0-13941).
10.45*  Form of Warrant Certificate issued to Non-Employee Directors in December
        1990 (incorporated by reference to referenced exhibit number of the
        Company's Annual Report on Form 10-K for the fiscal year ended June 28,
        1991, Commission File No. 0-13941).
10.46*  Form of Warrant Certificate issued to Non-Employee Director in July 1992
        (incorporated by reference to referenced exhibit number of the Company's
        Annual Report on Form 10-K for the fiscal year ended June 27, 1992,
        Commission File No. 0-13941).
10.47*  Form of Amendment to Warrant Certificate dated as of February 27, 1995
        (incorporated by reference to referenced exhibit number of  the
        Company's Solicitation/Recommendation Statement on Schedule 14D-9 as
        filed with the Securities and Exchange Commission on March 6, 1995, SEC
        File No. 005-44159).
Exhibit
Number           Description 

10.48*  1991 Stock Option Plan for Non-Employee Directors (incorporated by
        reference to referenced exhibit number of the Company's Annual Report on
        Form 10-K for the fiscal year ended June 28, 1991, Commission File No.
        0-13941).
10.49*  Form of Nonqualified Stock Option agreement under 1991 Stock Option Plan
        for Non-Employee Directors (incorporated by reference to referenced
        exhibit number of the Company's Annual Report on Form 10-K for the
        fiscal year ended June 28, 1991, Commission File No. 0-13941).
10.50*  Amendment to AST Research, Inc. 1991 Stock Option Plan for Non-Employee
        Directors (incorporated by reference to referenced exhibit number of the
        Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
        January 1, 1994, Commission File No. 0-13941).
10.51*  Amendment to the AST Research, Inc. 1991 Stock Option Plan for Non-
        Employee Directors dated February 27, 1995 (incorporated by reference to
        referenced exhibit number of the Company's Solicitation and
        Recommendation Statement on Schedule 14D-9 as filed with the Securities
        and Exchange Commission on March 6, 1995, SEC File No. 005-44159).
10.52*  Amendment to AST Research, Inc. 1991 Stock Option Plan for Non-Employee
        Directors (comprised of resolutions adopted by the Board of Directors on
        July 27, 1995) (incorporated by  reference to Exhibit 4.1 of the
        Company's Registration Statement on Form S-8 as filed with the
        Securities and Exchange Commission on January 26, 1996, Registration
        No. 333-00489).
10.53*  Employment Agreement dated as of July 27, 1993 between Safi U. Qureshey
        and AST Research, Inc. (incorporated by reference to referenced exhibit
        number of the Company's Annual Report on Form
        10-K for the fiscal year ended July 3, 1993, Commission File No. 
        0-13941).
10.54*  Amendment to and Clarification of Employment Agreement dated as of
        February 27, 1995 between AST Research Inc. and Safi U. Qureshey
        (incorporated by reference to referenced exhibit number of the Company's
        Current Report on Form 8-K as filed with the Securities and Exchange
        Commission on March 3, 1995, Commission File No. 0-13941).
10.55*  Form of  Severance Compensation Agreement (incorporated by reference to
        referenced exhibit number of the Company's Annual Report on Form 10-K
        for the fiscal year ended July 3, 1993, Commission File No. 0-13941).
10.56*  Form of Amendment to Executive Officer Severance Compensation Agreement
        (incorporated by reference to referenced exhibit number of the Company's
        Solicitation/Recommendation Statement on Schedule 14D-9 as filed with
        the Securities and Exchange Commission on March 6, 1995, SEC File No.
        005-44159).
10.57*  Form of Amendment to Vice President Severance Compensation Agreement
        (incorporated by reference to referenced exhibit number of the Company's
        Solicitation/Recommendation Statement on Schedule 14D-9 as filed with
        the Securities and Exchange Commission on March 6, 1995, SEC File No.
        005-44159).
10.58*  Amendment to Severance Compensation Agreement dated February 27, 1995
        between AST Research, Inc. and Safi U. Qureshey (incorporated by
        reference to referenced exhibit number of the Company's
        Solicitation/Recommendation Statement on Schedule 14D-9 as filed with
        the Securities and Exchange Commission on March 6, 1995, SEC File No.
        005-44159).
10.59*  Involuntary Termination Policy dated September 2, 1994 (incorporated by
        reference to referenced exhibit number of the Company's Annual Report on
        Form 10-K for the fiscal year ended July 2, 1994, Commission File No. 0-
        13941).
10.60*  AST Research, Inc. 1994 One-Time Grant Stock Option Plan for Non-
        Employee Directors (incorporated by reference to referenced exhibit
        number of the Company's Quarterly Report on Form 10-Q for the fiscal
        quarter ended January 1, 1994, Commission File No. 0-13941).
10.61*  Option Agreement Under AST Research, Inc. 1994 One-Time Grant Stock
        Option Plan for Non-Employee Directors  (incorporated by reference to
        referenced exhibit number of the Company's Quarterly Report on Form 10-Q
        for the fiscal quarter ended January 1, 1994, Commission File No. 
        0-13941).
10.62*  Amendment to the AST Research, Inc. 1994 One-Time Grant Stock Option
        Plan for Non-Employee Directors dated February 27, 1995 (incorporated by
        reference to referenced exhibit number of the Company's
        Solicitation/Recommendation Statement on Schedule 14D-9 as filed with
        the Securities and Exchange Commission on March 6, 1995, SEC File No.
        005-44159).
10.63*  Form of Acknowledgment/Consent to Waiver of Rights under the 1991 Stock
        Option Plan for Non-Employee Directors and/or AST Research Inc. 1994 
        One-Time Grant Stock Option Plan for Non-Employee Directors 
        (incorporated by reference to referenced exhibit number of the Company's
        Solicitation/Recommendation Statement on Schedule 14D-9 as filed with
        the Securities and Exchange Commission on March 6, 1995, SEC File No.
        005-44159).
Exhibit
Number         Description 

10.64*  Performance Based Annual Management Incentive Plan (incorporated by
        reference to referenced exhibit number of the Company's Annual Report on
        Form 10-K for the fiscal year ended July 2, 1994, Commission File No.
        13941).
10.65*  President's Plan (comprised of resolutions adopted by the Board of
        Directors on November 2, 1995)  (incorporated by reference to Exhibit
        4.1 of the Company's Registration Statement on Form S-8 as filed with
        the Securities and Exchange Commission on January 26, 1996, Registration
        No. 333-00487).
10.66*  Form of Nonqualified Stock Option Agreement pertaining to the
        President's Plan (incorporated by reference to Exhibit 4.2 of the
        Company's Registration Statement on Form S-8 as filed with the
        Securities and Exchange Commission on January 26, 1996, Registration No.
        333-00487).
10.67*# AST Research, Inc. Profit Sharing Plus Plan, amended and restated as of
        July 1, 1993.
10.68*# First Amendment to the AST Research, Inc. Profit Sharing Plus Plan
        effective January 1, 1996.
10.69*# Employment Agreement dated as of November 2, 1995 between Ian Diery and
        AST Research, Inc.
11. #   Statement re computation of per share earnings.
21. #   Subsidiaries of the registrant.
23. #   Consent of Independent Auditors.
24. #   Power of Attorney (included on the signature pages of this Annual Report
        on Form 10-K).
27. #   Financial Data Schedule.

 #      Filed herewith
 *      Indicates a management contract or compensatory plan or arrangement 
        required to be filed as an exhibit to this Annual Report on Form 10-K
        pursuant to Item 14(c).

(b)  Reports on Form 8-K

       On November 6, 1995, the Company filed a report on Form 8-K reporting,
     under Item 8 thereof, the change of the Company's fiscal year-end to the
     Saturday closest to December 31 from the Saturday closest to June 30.  The
     Company also announced its intention to file a Form 10-K for the transition
     period covering July 2, 1995 to December 30, 1995.

       On November 8, 1995, the Company filed a report on Form 8-K reporting,
     under Item 5 thereof, that it signed a letter of intent with Samsung
     Electronics Co., Ltd. ("Samsung") pursuant to which Samsung will provide
     certain additional financial support to the Company as consideration for
     such number of shares of common stock as would increase its ownership to
     49.9 percent, subject to definitive documentation and approvals.  The
     Company also announced the appointment of Ian Diery as President and Chief
     Executive Officer and as a member of the Board of Directors.  In addition,
     the Company announced the results of operations for the quarter ended
     September 30, 1995.

       On November 22, 1995, the Company filed a report on Form 8-K reporting,
     under Item 5 thereof, the resignation of Bruce C. Edwards, executive vice
     president, chief financial officer and a board member, effective at the
     conclusion of the quarter ended December 30, 1995.

       On December 22, 1995, the Company filed a report on Form 8-K reporting,
     under Item 5 thereof, that it signed an agreement with Samsung that will
     provide additional financial support to the Company as consideration for an
     option to purchase 4.4 million shares of the Company's common stock at an
     exercise price of $.01 per share, exercisable after June 30, 1996 and
     expiring June 30, 2001.

AST Advantage!, AST Premium, AST Research, GRiDPAD, GRiD, Victor and PalmPad are
registered trademarks of AST Research, Inc.  AST Computer, the AST Computer
logo, AST Works, Ascentia, ASTVision, Pronto!, Pronto! Pro, Percepta, Bravo,
Convertible, ExeCare, Manhattan, PowerExec, and Premmia are trademarks of AST
Research, Inc.  OverDrive and Pentium are registered trademarks of Intel
Corporation.  Pentium Pro is a trademark of Intel Corporation.  OS/2 is a
registered trademark of International Business Machines Corporation.  NetWare is
a registered trademark of Novell, Inc.  MS-DOS is a registered trademark and
Encarta is a trademark of Microsoft Corporation.  Radio Shack is a registered
service mark of Tandy Corporation.  Prodigy is a registered trademark of the
Prodigy Services Corporation.  America Online is a registered service mark of
America Online, Inc.  CompuServe is a registered service mark of CompuServe,
Inc.  Liquid Yield Option and LYON are trademarks of Merrill Lynch & Co.  All
other product or service names mentioned herein may be trademarks or registered
trademarks of their respective owners.  Reference to the "Energy Star" program
does not represent EPA endorsement of any product or service.  Copyright (C)1996
AST Research, Inc.  All Rights Reserved.

SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Irvine,
State of California, on March 27, 1996.

                                        AST RESEARCH, INC.


Date:  March 27, 1996                 By:  \s\Ian W. Diery
                                           Ian W. Diery
                                           President and
                                           Chief Executive Officer



POWER OF ATTORNEY

   We, the undersigned directors and officers of AST Research, Inc., do hereby
constitute and appoint Safi U. Qureshey our true and lawful attorney-in-fact and
agent, with full power of substitution to do any and all acts and things in our
name and behalf in our capacities as directors and officers and to execute any
and all instruments for us and in our names in the capacities indicated below,
which said attorney-in-fact and agent may deem necessary or advisable to enable
said corporation to comply with the Securities Exchange Act of 1934, as amended,
and any rules, regulations and requirements of the Securities and Exchange
Commission, in connection with this Annual Report on Form 10-K, including
specifically but without limitation, power and authority to sign for us or any
of us in our names in the capacities indicated below, any and all amendments
(including post-effective amendments) hereto; and we do hereby ratify and
confirm all that said attorney-in-fact and agent shall do or cause to be done by
virtue hereof.

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.

Signature                  Title                             Date

\s\Ian W. Diery            President, Chief Executive        March 27, 1996
Ian W. Diery               Officer and Director
                           (Principal Executive Officer)
                           (Acting Principal Financial 
                           Officer)
                                                         
\s\Mark P. de Raad         Vice President, Controller and    March 27, 1996
Mark P. de Raad            Principal Accounting Officer
                                                          
\s\Safi U. Qureshey        Chairman of the Board and         March 27, 1996
Safi U. Qureshey           Director                          

\s\Hoon Choo               Director                          March 27, 1996
Hoon Choo                                                

\s\Richard J. Goeglein     Director                          March 27,1996
Richard J. Goeglein

\s\Kwang-Ho Kim            Director                          March 27, 1996
Kwang-Ho Kim

\s\Young Soo Kim           Director                          March 27, 1996
Young Soo Kim
                                                         
\s\Jack W. Peltason        Director                          March 27, 1996
Jack W. Peltason                                        
                                                         
\s\Carmelo J. Santoro      Director                          March 27, 1996
Carmelo J. Santoro, Ph.D.                                
                                                         
\s\Won Suk Yang            Director                          March 27, 1996
Won Suk Yang         
                                                         
\s\Hee Dong Yoo            Director                          March 27, 1996
Hee Dong Yoo             

\s\Bo-Soon Song            Director                          March 27, 1996    
Bo-Soon Song                                             
                                                         

                                                       SCHEDULE II
                                        
                                        
                               AST RESEARCH, INC.
           CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
      AT AND FOR THE SIX MONTHS ENDED DECEMBER 30, 1995, AND AT AND FOR THE
             YEARS ENDED JULY 1, 1995, JULY 2, 1994 AND JULY 3, 1993
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>                        
----------------------------------------------------------------------------------------
                                   Six Months               Fiscal Year Ended
                                      Ended       -----------------------------------
                                   December 30,    July 1,       July 2,      July 3,
                                       1995         1995          1994         1993
----------------------------------------------------------------------------------------
<S>                                <C>          <C>           <C>          <C>          
ALLOWANCE FOR DOUBTFUL ACCOUNTS

Balance, beginning of period        $ 17,452      $ 17,564     $ 11,671     $  9,831
Additions charged to expense           2,321         6,091       13,219        6,089
Reductions                            (1,144)       (6,203)      (7,326)      (4,249)
----------------------------------------------------------------------------------------
Balance, end of period              $ 18,629      $ 17,452     $ 17,564     $ 11,671
========================================================================================

ALLOWANCE FOR SALES RETURNS


Balance, beginning of period        $ 19,514      $ 15,137     $  9,120     $ 10,109
Net additions (reductions) 
charged to sales                       6,719         4,377        6,017         (989)
----------------------------------------------------------------------------------------
Balance, end of period              $ 26,233      $ 19,514     $ 15,137     $  9,120
========================================================================================

RESERVE FOR EXCESS OR OBSOLETE INVENTORY

Balance, beginning of period        $ 45,536      $ 65,268     $ 35,595     $ 14,529
Inventory acquired in the 
Tandy acquisition                          -             -            -       20,535
Allocation of restructure 
  reserves to identified 
  inventory exposure                       -             -          693            -
Net additions (reductions) 
  charged to expense                   3,815       (19,732)      28,980          531
----------------------------------------------------------------------------------------
Balance, end of period              $ 49,351      $ 45,536     $ 65,268     $ 35,595
========================================================================================
</TABLE>