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                               UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 2054

                                FORM 10-Q


(MARK ONE)
    [ X ]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
               SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended        September 27, 1996    
                               -----------------------------------------------

                                   OR

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

For the transition period from                         to    
                               -----------------------    --------------------

Commission file number        0-25684                       
                      --------------------------------------------------------

                         PREMISYS COMMUNICATIONS, INC.         
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             (Exact name of registrant as specified in its chapter)

                Delaware                              94-3153847
     -------------------------------      ------------------------------------
     (State or other jurisdiction of      (I.R.S. Employer Identification No.)
     incorporation or organization)

                48664  Milmont  Drive,  Fremont,  California  94538 
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                      (Address of principal executive offices)
                                    (Zip Code)

                                  (510) 353-7600                  
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              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding  12 months  (or for  such shorter period  that the  
registrant was required  to  file such  reports),  and  (2) has  been  
subject  to such  filing requirements for the past 90 days.

Yes     X        No        
   ---------        --------

The number of shares outstanding of  the issuer's common stock, par value 
$0.01, as of 10/31/96 was 24,550,355 shares.

                                       1

<PAGE>

                         PREMISYS COMMUNICATIONS, INC.

                                   INDEX

  PART I.  FINANCIAL INFORMATION                                       PAGE NO.

           Item 1.  Financial Statements

                    Condensed Consolidated Balance Sheet - June 30,
                    1996 and September 30, 1996                            3

                    Condensed Consolidated Statement of Operations -
                    Three Month Periods ended September 30, 1995 and
                    1996                                                   4

                    Condensed Consolidated Statement of Cash Flows -
                    Three Month Periods ended September 30, 1995 and
                    1996                                                   5

                    Notes to Condensed Consolidated Financial
                    Statements                                             6

           Item 2.  Management's Discussion and Analysis of
                    Financial Condition and Results of Operations          8

 PART II.  OTHER INFORMATION

           Item 6.  Exhibits and Reports on Form 8-K                      17

           Signatures                                                     18



                                       2

<PAGE>

I.   FINANCIAL INFORMATION

ITEM 1.   Financial Statements

                          PREMISYS COMMUNICATIONS, INC.
                CONDENSED CONSOLIDATED BALANCE SHEET - (UNAUDITED)
                        (IN THOUSANDS EXCEPT SHARE DATA)

                                       June  30,       September 30,
                                         1996              1996
                                       ---------       -------------
                                   ASSETS
Current assets:
  Cash and cash equivalents             $22,058          $23,838
  Short-term investments                 38,803           48,373
  Accounts receivable, net               16,267           16,397
  Inventory                               4,221            4,316
  Deferred tax assets                     2,915            2,915
  Prepaid expenses and other assets         440              376
                                        -------          -------
    Total current assets                 84,704           96,215
Property and equipment, net               2,700            2,833
Other assets                                118              127
                                        -------          -------
                                        $87,522          $99,175
                                        -------          -------
                                        -------          -------

                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                      $ 3,250          $ 6,377
  Accrued liabilities                     5,897            4,465
  Income taxes payable                      580            4,028
  Current portion of long-term debt         124              104
                                        -------          -------
    Total current liabilities             9,851           14,974
                                        -------          -------

Long-term debt                               91               70
                                        -------          -------

Stockholders' equity:
  Preferred Stock, $0.01 par value, 
   2,000,000 shares authorized; no 
   shares issued or outstanding              --               --
  Common Stock, $0.01 par value, 
   100,000,000 shares authorized; 
   24,398,519 and 24,467,482 shares
   issued and outstanding                   244              245
  Additional paid-in capital             66,656           67,483
  Retained earnings                      10,680           16,403
                                        -------          -------
    Total stockholders' equity           77,580           84,131
                                        -------          -------
                                        $87,522          $99,175
                                        -------          -------
                                        -------          -------

See notes to condensed consolidated financial statements

                                       3

<PAGE>

                        PREMISYS COMMUNICATIONS, INC.
          CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                 Three Months Ended    September 30, 
                                                         1995              1996
                                                 ------------------    --------------
 <C>                                                  <C>               <C>
 Revenues                                             $  14,075         $ 24,294
 Cost of revenues                                         5,075            8,531
                                                      ---------         --------
 Gross profit                                             9,000           15,763
                                                      ---------         --------
 Operating expenses:
  Research and development                                1,544            2,328
  Selling, general and administrative                     2,821            4,647
                                                      ---------         --------

    Total operating expenses                              4,365            6,975
                                                      ---------         --------
 Income from operations                                   4,635            8,788
 Interest and other income, net                             374              594
                                                      ---------         --------
 Income before income taxes                               5,009            9,382
 Provision for income taxes                               1,703            3,659
                                                      ---------         --------
 Net income                                           $   3,306         $  5,723
                                                      ---------         --------
                                                      ---------         --------
 Net income per share                                 $    0.13         $   0.22
                                                      ---------         --------
                                                      ---------         --------
 Shares used in computing net income per share           26,292           26,479
                                                      ---------         --------
                                                      ---------         --------
</TABLE>

See notes to condensed consolidated financial statements


                                      4

<PAGE>

                         PREMISYS COMMUNICATIONS, INC.
           CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - (UNAUDITED)
                         (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                  Three Months Ended September 30,
                                                  --------------------------------
                                                        1995             1996
                                                    ----------           -------
 <S>                                                <C>                  <C>
 Cash flows from operating activities: 
  Net income                                        $    3,306           $ 5,723
  Adjustments to reconcile net income to net
   cash provided by operating activities:
     Depreciation                                          193               255
     Changes in assets and liabilities:
      Accounts receivable                                 (808)             (130)
      Inventory                                            (10)              (95)
      Prepaid expenses and other assets                   (275)               55
      Accounts payable                                   1,247             3,127
      Accrued liabilities                                  224            (1,432)
      Income taxes payable                               1,480             3,448
                                                    ----------           -------
 Net cash provided by operating activities               5,357            10,951
                                                    ----------           -------

 Cash flows from investing activities:
  Purchase of property and equipment                      (441)             (388)
  Purchase of short-term investments                    (6,718)           (9,540)
                                                    ----------           -------
 Net cash used in investing activities                  (7,159)           (9,928)
                                                    ----------           -------
 Cash flows from financing activities:
  Proceeds from issuance of Common Stock, net              321               798
  Principal payments on long-term debt                     (16)               --
  Proceeds of capital lease financing                       92                --
  Repayment of capital lease obligations                   (25)              (41)
                                                    ----------           -------
 Net cash provided by financing activities                 372               757
                                                    ----------           -------
 Net increase (decrease) in cash                        (1,430)            1,780
 Cash and cash equivalents at beginning of
  period                                                12,273            22,058
                                                    ----------           -------
 Cash and cash equivalents at end of period          $  10,843           $23,838
                                                    ----------           -------
                                                    ----------           -------

 Supplemental disclosures:
  Cash paid for income taxes                               223               214
  Unrealized gain on investments                            91                30
</TABLE>

See notes to condensed consolidated financial statements

                                       5
<PAGE>

                          PREMISYS COMMUNICATIONS, INC.
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION

    The accompanying  unaudited condensed consolidated financial statements 
have been prepared  in accordance with  generally accepted accounting  
principles for interim financial  information and with the  instructions to 
Form 10-Q  and Rule 10-01 of  Regulation  S-X.    Accordingly,  they  do  not 
contain  all  of  the information and footnotes required  by generally 
accepted accounting  principles for   complete  financial  statements.    In  
the  opinion  of  management,  the accompanying  unaudited  condensed 
consolidated  financial statements  have been prepared on the same  basis as 
the audited consolidated financial statements and include  all adjustments,  
consisting  only  of  normal recurring  adjustments, necessary for the fair  
statement of  the Company's  financial condition as of September 30, 1996, 
the  results of its operations  for the three month  periods ended  September 
30,  1995 and  1996, and  its cash  flows for the three  month periods ended 
September 30, 1995 and 1996.  These financial statements should be read in 
conjunction with Company's audited  financial statements as of June 30, 1995 
and 1996 and for each of the three years in the period ended June 30, 1996, 
including  notes thereto, included in the Company's Annual Report on Form 
10-K. Operating results for the  three month period ended September 30, 1996 
are  not necessarily  indicative of the results that may be expected for the 
year ending June 30, 1997.

    The Company has a  52/53 week fiscal accounting year that ends on the 
Friday closest to June 30.  Accordingly, fiscal periods shown  herein as 
ending on June 30, 1996 and September  30, 1995 and  1996 for financial 
statement  presentation purposes actually reflect amounts for the fiscal 
periods ended on June 28, 1996, September 29, 1995 and September 27, 1996, 
respectively.

NOTE 2 - INVENTORIES (IN THOUSANDS)

                                                  June 30,     September 30,
                                                    1996           1996
                                                  --------     ------------
                                                               (unaudited)
Inventory
  Raw materials                                    $ 1,587      $  1,248
  Work-in-process                                    1,175         2,516
  Finished goods                                     2,236         1,841
                                                   -------      --------
                                                     4,998         5,605
  Less: Reserves                                      (777)       (1,289)
                                                   -------      --------
                                                   $ 4,221      $  4,316
                                                   -------      --------
                                                   -------      --------



NOTE 3 - SIGNIFICANT EVENTS

     In July 1996, the  Company signed an extension  to the operating lease  
for its  original  43,850  square  foot facility  located  at  48664  Milmont 
Drive, Fremont, California.   The  extension begins  on  June 1,  1996 and  
expires  on September 30, 2004. The future minimum rental payments under all 
building leases is as follows:

                                       6

<PAGE>

                                             Amount
                                           ----------
   Nine months ending June 30, 1997        $  685,000
   Fiscal Year Ending June 30:
   1998                                       915,000
   1999                                       935,000
   2000                                     1,018,000
   2001                                     1,048,000
   Thereafter                               3,069,000
                                           ----------
   Total future minimum rental payments    $7,670,000
                                           ----------
                                           ----------

                                       7
<PAGE>

ITEM  2.  MANAGEMENT'S DISCUSSION  AND ANALYSIS OF  FINANCIAL CONDITION  AND
          RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

     This Form 10-Q contains forward-looking  statements within the  meaning 
of Section 21E of the Securities Exchange Act  of 1934, as amended, and 
Section 27A of  the Securities Act  of 1933, as  amended.   These 
forward-looking statements involve a number of risks and uncertainties which 
are described  throughout this Form  10-Q, including  demand  from and  its  
relationships with  its  strategic partners and  major customers, including 
Paradyne  Corporation ("Paradyne"); new product  development  and  
introductions  by the Company and  its competitors; deregulation  of,  and  
legislation  regarding the  domestic  and  international telecommunications 
industry;  rapidly changing  technologies  and the  Company's ability  to 
respond thereto; the growth of demand for telecommunication services such as 
wireless, cellular and the Internet; competition; changes in  the mix of 
product or  customers or in the  level of operating expenses;  and other 
factors described throughout  this Form 10-Q,  including  under "Revenues"   
and  "Other Factors That May Affect Future  Operating Results",  and in the 
Company's Annual Report on Form  10-K for the year ended June 30,  1996.  
The actual results that the Company achieves may differ  materially from any 
forward-looking  statements due to  such risks  and  uncertainties.   The 
Company  has  identified using  an asterisk  ("*") various  sentences  within 
this  Form  10-Q which  contain  such forward-looking  statements,  and  
words  such  as  "believes", "anticipates", "expects", "intends" and 
similar expressions are intended to  identify forward-looking  statements, 
but  are  not  the  exclusive  means  of  identifying  such statements.   In  
addition, the section  labeled "Other Factors That May Affect Future  
Operating  Results", which  does  not  include  asterisks  for  improved 
readability,  consists primarily  of  forward-looking statements.   The  
Company undertakes  no obligation to revise  any forward-looking statements  
in order to reflect events  or circumstances that may  arise after the date  
of this report. Readers  are urged to carefully review and consider the 
various disclosures made by the Company  in this report and in the Company's 
other reports filed with the Securities and Exchange  Commission, including  
its Form 10-K,  that attempt  to advise interested parties of the risks and 
factors that may affect the Company's business.

REVENUES

                                          Three Months Ended September 30,
                                        -------------------------------------
                                            1995       % Change       1996
                                        ----------     --------   -----------
 Revenues                               $14,075,000      73%      $24,294,000

     Revenues consist primarily of gross  sales of products, less discounts  
and sales  returns and  allowances. A  majority  of the  revenue  increase 
from  the quarter ended  September 30, 1995  to the comparable  period in 
fiscal  1997 was attributable  to growth in unit volumes of platforms  and 
modules sold and, to a lesser extent, from the introduction and subsequent 
growth of new products.  The Company's list prices for its products and 
average selling prices for individual products  did not change  significantly 
between the  quarter ended September 30, 1995  and the comparable period  in 
fiscal 1997.   *The Company expects that the rate of growth  in revenues will 
decrease from the  rate experienced between the quarters ended September 30, 
1995 and September 30, 1996.

                                       8
<PAGE>

     The  following table sets  forth, for  the periods indicated,  the 
revenues generated  from the Company's  largest customers, other  domestic 
customers as a group  and international  customers as  a group,  in absolute  
dollars and  as a percentage of total revenues.

SOURCE OF REVENUES

<TABLE>
<CAPTION>
                                      Three months ended September 30,
                              -------------------------------------------------
                                  1995           %           1996            %
                              ----------------------     ----------------------
 <S>                          <C>               <C>      <C>               <C>
 Paradyne                     $  4,635,000       33%     $  7,174,000       30%
 Motorola, Inc.                  2,402,000       17%        3,215,000       13%
 ADC Telecommunications, Inc.     2,306,000      16%        2,559,000       11%
 DSC Communications, Corp.       1,411,000       10%        3,986,000       16%
 Other Domestic Customers        1,798,000       13%        6,392,000       26%
 International Customers         1,523,000       11%          968,000        4%
                              ----------------------     ----------------------
 Total Revenues                $14,075,000      100%      $24,294,000      100%
                              ----------------------     ----------------------
                              ----------------------     ----------------------
</TABLE>


     As shown  in the table above,  the Company sells a  substantial majority 
of its  products to  a  limited number  of  customers, which  generally  
resell the Company's products  to public carriers and end  users.  *The loss  
of any one or more of  the Company's major customers  would have a material  
adverse effect on the  Company's business and  operating results.   *Any of 
the telecommunications equipment  suppliers that market and sell  the Company 
s products could elect to cease  marketing  and selling  the  Company's  
products,  and there  can  be  no assurance  that these  telecommunications 
equipment  suppliers will  continue to place orders with the Company or that  
the Company will be able to obtain orders from   new  telecommunications  
equipment  suppliers   or  end  users.    *These telecommunications equipment 
suppliers could develop products that could be sold for  selected  
applications  for  which  the  Company's products  are  currently provided, 
which could reduce the  level of demand from these  telecommunications 
equipment suppliers for the Company's products.

    The Company typically operates with limited order backlog, and a majority 
of its revenues in each  quarter result from orders booked in  that quarter.  
Also, the Company has from  time-to-time, including the  quarters ended June 
30,  1996 and September  30, 1996, recognized a  substantial portion of  its 
revenues from sales booked and shipped in the last month of a quarter.  *The 
Company expects a similar  shipment  pattern  for  the  next  several  
quarters.    The  Company's agreements with its customers typically allow 
customers to cancel orders without penalty until a  relatively short period  
of time before shipment.  *The Company has experienced  cancellations  of 
orders  from  time-to-time  in the  past  and expects  to continue  to 
receive order  cancellations from  time to  time in the future.

    The  sales cycle for the Company's products  is relatively long and is 
often dependent  on factors  such as  the  size and  timing of  a carrier's  
equipment deployment  project.  *The  Company's  planned product  shipments  
for  a single carrier's  equipment  deployment  project  can be  a  
significant  portion  of a quarter's  revenues, and  delays in  the timing  
of such  a project  (which have occurred in  the past) could  have a  
material adverse effect  on the  Company's business and operating  results.  
*Suppliers  of the Company's products  have in the  past  and  may in  the  
future  build  significant  inventory in  order  to facilitate  more rapid  
deployment of  anticipated major  projects or  for other reasons.   
*Decisions by such suppliers to  sell from their inventory could lead to 
reductions in purchases from the  Company.  *These reductions, in turn, could 
cause fluctuations in the

                                       9
<PAGE>

Company's operating results and have an adverse effect on  the Company's  
business and operating  results in  the periods  in which the inventory is 
utilized.

     The Company has a strategic relationship with  Paradyne, formerly a 
wholly-owned  subsidiary of AT&T,  that involves  the joint development,  
marketing and sale  of  the Company's  products  by  Paradyne  to  AT&T, 
public  carriers  and operators  of  private  networks.    Shipments  to  
Paradyne  have  generated  a substantial portion of the Company's revenues to 
date.  *Paradyne is not subject to  any  minimum  purchase requirements,  and 
there can  be  no  assurance that Paradyne  will continue  to  place orders  
with  the Company.    The Company  is discussing  with Paradyne  the recent  
changes associated  with the  purchase of Paradyne by the Texas Pacific 
Group, and their effect on the Company's strategic relationship with 
Paradyne.  *Reductions  in shipments to Paradyne would have  a material 
adverse effect on the Company's business and operating results.

    During the quarter  ended September 30, 1996,  direct international 
revenues accounted for 4% of the  Company's revenues, compared to 11% for the 
same period in fiscal 1996.  Certain of the Company's domestic customers  
also sell Premisys products  into  international  markets.   *The  Company  
intends  to expand  its operations outside  the United States  and 
anticipates that  international sales will increase  in the  future both in  
absolute dollars  and as a  percentage of revenues.  In order to sell  its 
products internationally, the Company must meet standards   established  by  
international   telecommunications  committees  and authorities  in various 
countries.   *Conducting business outside  of the United States  is subject 
to certain risks, including longer payment cycles, unexpected changes  in  
regulatory requirements  and  tariffs,  currency conversion  risks, 
difficulties in staffing and managing foreign operations, greater difficulty  
in accounts receivable collection and potentially adverse tax consequences.

GROSS PROFIT

                                            Three Months Ended September 30,
                                           ------------------------------------
                                              1995        % Change      1996
                                           ----------     --------  -----------
 Gross Profit                              $9,000,000       75%     $15,763,000
 As a percentage of revenues                  64%                       65%

     Cost  of revenues  consists  of  component  costs, compensation  costs  
and overhead  related  to  the   Company's  manufacturing  operations  and  
warranty expenses.   Gross profit  increased from the  three months ended   
September 30, 1995 to the comparable period in fiscal  1997 primarily as a 
result of increased unit volumes.  The percentage gross  margin increased 
slightly from the  quarter ended September 30, 1995 to  the quarter ended 
September 30, 1996  due primarily to lower product costs, resulting  
primarily from volume increases and  achieved manufacturing efficiencies, 
which were offset in part by higher  discounts and a shift in product mix 
toward  modules with less favorable product margins.  * The Company expects  
its gross margins for  the remainder of fiscal  1997 to decline slightly from 
the 65% realized in the quarter ended September 30, 1996. * However, 
achievement  of the  Company's expectations  is subject  to a  number of  
risks, including  customer  mix,  in  particular the  level  of  revenues  
generated by Paradyne, the mix of products sold and the Company's ability to 
realize expected revenue levels.

                                       10
<PAGE>

RESEARCH AND DEVELOPMENT EXPENSES

                                            Three Months Ended September 30,
                                          ------------------------------------
                                              1995       % Change      1996
                                          ------------   --------   ----------
 Research and development expenses        $  1,544,000      51%     $2,328,000
 As a percentage of revenues                  11%                       10%

     Research and  development expenses consist of  personnel costs, 
consulting, testing, supplies  and depreciation expenses.   All  software 
development  costs have  been expensed  in the period  in which  they were 
incurred.   Research and development  expenses increased $784,000,  or 51%,  
from the three  months ended September 30, 1995 to the  comparable period in 
fiscal 1997.   This increase was primarily due to increased personnel for the 
purposes of expanding the Company's product line and to a  lesser extent to 
increased expenses for materials used in product development.   The expansion 
of the  Company's product line  during the comparison periods included the 
development  of new modules and the  integration and  testing  of  expanded  
system  software.    The  decrease in  research  and development expenses as 
a percentage of the Company's revenues was the result of the growth  in the 
Company's revenues.  *The Company expects that these expenses will increase 
in  absolute dollars and  as a percentage  of revenues during  the remainder  
of fiscal  1997.   *However, the  expected increase  in research  and 
development  expenses as a  percentage of  revenues is  subject to,  among 
other things, the Company's level of revenues.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

                                            Three Months Ended September 30,
                                          ------------------------------------
                                              1995       % Change      1996
                                          ------------   --------   ----------
 Selling, general and administrative      
  expenses                                $2,821,000       65%      $4,647,000
 As a percentage of revenues                  20%                       19%

     Selling  expenses consist principally  of compensation costs  for sales 
and marketing personnel (including sales  commissions and bonuses), travel 
expenses, customer  support  expenses,  trade  show  expenses  and  
advertising  expenses. General and  administrative expenses consist primarily 
of compensation expenses for administration, finance,  and general 
management personnel, as well as legal and  audit  fees.    Selling,  general 
and  administrative  expenses  increased $1,826,000,  or  65%, from  the 
three  months ended  September  30, 1995  to the comparable  period in  
fiscal 1997.   This  increase was  primarily a  result of increased staffing  
and associated expenses for  sales and marketing, and,  to a lesser extent, 
travel and  customer support expenses.  The decrease  in selling, general and 
administrative  expenses as a percentage  of the Company's  revenues was the  
result of the growth in the Company's  revenues.   *The Company expects that  
these expenses will  increase in absolute  dollars and as  a percentage of 
revenues during the remainder of fiscal 1997. *However, the expected increase 
in selling,  general and  administrative expenses  as a  percentage of  
revenues is subject to, among other things, the Company's level of revenues.

INTEREST AND OTHER INCOME, NET

                                            Three Months Ended September 30,
                                          ------------------------------------
                                              1995        % Change      1996
                                          ------------    --------  ----------
 Interest and other income, net           $  374,000       59%      $  594,000
 As a percentage of revenues                   3%                        2%

                                       11
<PAGE>

     Interest and other income, net consists of interest income, net of 
interest expense, and, to  a much lesser extent, foreign currency gains  and 
losses.  The increase in interest and other income, net, for the three months 
ended September 30, 1996 as  compared to the  same period in  fiscal 1996  
was due to  increased interest income from higher  cash balances resulting 
from the positive cash flow from operating activities.

PROVISION FOR INCOME TAXES

                                            Three Months Ended September 30,
                                          ------------------------------------
                                              1995       % Change      1996
                                          ------------   --------   ----------
 Provision for income taxes               $ 1,703,000      115%     $3,659,000
 As a percentage of income before 
  income taxes                                  34%                       39%

     The  Company's provision  for  income taxes  represents estimated  
federal, state and foreign  income taxes.  The  effective tax rate for the  
quarter ended September 30, 1995  was less than the combined federal  and 
state statutory rate primarily  as a result of  the utilization of  net 
operating loss carryforwards. The  effective tax rate for  the quarter ended 
September  30, 1996 was less than the combined  federal and  state statutory  
rate primarily as  a result  of tax-exempt interest income  from its 
municipal securities  portfolio and anticipated utilization of R&D tax 
credits for fiscal year 1997.    The provision for income taxes increased  
from the  three months  ended September 30,  1995 to  the three months ended 
September 30,  1996 due both to  higher pretax income and a  higher effective 
tax rate.

NET INCOME PER SHARE

                                            Three Months Ended September 30,
                                          ------------------------------------
                                              1995        % Change      1996
                                          ------------   --------   ----------
 Net income per share                        $0.13          69%        $0.22
 Shares used in calculating net income     26,292,000        1%     26,479,000
  per share

     Net  income  per share  increased  69%  from  $0.13  in the  quarter  
ended September 30,  1995 to $0.22  in the  quarter ended  September 30,  
1996.   This increase  was due to an  increase of 73%  in net income between  
the three month periods ended September 30, 1995 and 1996.

LIQUIDITY AND CAPITAL RESOURCES


                                         September 30,            September 30,
                                              1995      % Change      1996
                                         ------------   --------  -------------
Net   cash    provided   by   operating
 activities in the period                 $ 5,357,000      104%     $10,951,000
Period end  cash, cash equivalents  and
 short-term investments                   $48,342,000       49%     $72,211,000
Period end working capital                $49,037,000       66%     $81,241,000

    At September 30, 1996,  the Company had approximately $72.2 million of 
cash, cash equivalents and short-term investments.

    Net cash totaling  $11.0 million was provided by operating activities 
during the  three months ended September  30, 1996 primarily due to  net 
income of $5.7 million  and increases in income taxes  payable and accounts 
payable aggregating $6.6 million, which  were partially offset by a 

                                       12
<PAGE>

decrease  in accrued liabilities of $1.4 million.  Neither the Company's  
accounts receivable nor its inventories changed significantly during the 
three months ended September 30, 1996.

    Cash used in  investing activities during the  three months ended  
September 30, 1996 consisted  principally of purchases  of short-term 
securities  totaling $9.5 million  and, to a  lesser extent, investment  of 
$388,000 in  property and equipment for product development and testing.

    Cash flows from financing activities during the three months ended 
September 30, 1996 consisted principally of the issuance of stock under the 
Company's 1995 employee stock purchase plan and the exercise of employee 
stock options.

    As  of September 30, 1996,  the Company's working  capital was 
approximately $81.2  million.   The Company  has no significant  capital 
spending  or purchase commitments  other  than  normal  purchase  commitments 
and  commitments  under facilities and capital  leases.  *The Company 
believes that  its available funds and  anticipated cash flows from 
operations will satisfy the Company's projected working capital  and capital 
expenditure  requirements for at least  the next 12 months.

OTHER FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

    As  referenced  in the  first  paragraph of  Part  1, Item  2,  this 
section consists primarily of forward-looking statements  but does not 
include asterisks for improved readability.

    The  Company's revenues are subject to quarterly and annual fluctuations 
due to a number of factors. Substantially all of the sales of the Company's 
products are  through indirect channels of  distribution. Thus, the  
Company's ability to affect and judge the  timing of individual user orders 
is  more limited than for manufacturers selling directly to  the end users of 
their products. In addition, the Company's  revenues for a given  quarter may 
depend to  a significant degree upon  planned product  shipments  for a  
single  carrier's equipment  deployment project. Revenues derived from such 
projects are often difficult to forecast due to a  relatively long  sales 
cycle and  delays in the  timing of  such projects. Delays  can  be   caused  
by  late  deliveries  by  other  vendors,  changes  in implementation  
priorities, slower  than anticipated  growth in  demand for  the services  
that  the  equipment  supports  and  delays  in  obtaining  regulatory 
approvals for new  tariffs.  Revenues can also be effected  by delays in 
initial shipments of new  products and new software releases.   In developing 
countries, delays and  reductions in the planned  deployment of the  
Company's products can also be caused  by sudden declines in the local  
economy or capital availability and by new import controls. Such delays have 
occurred  in the past and may occur in  the future.  These delays  could 
materially  adversely affect  the Company's business  and  operating results. 
In  addition, the  Company  has  in the  past experienced delays as a result 
of the need to modify its products to comply with unique  customer  
specifications. While  such  delays  have not  to  date had  a material  
adverse effect on the  Company's business or  operating results, there can be 
no assurance  that  any future  delays would  not have  such an  adverse 
effect.

    The  Company's operating  results may fluctuate  due to factors  such as 
the timing of new product  announcements and introductions by the Company, 
its major customers and its competitors, market acceptance  of new or 
enhanced versions of the  Company's products, changes  in the  product or  
customer mix  of revenues, changes in the level  of operating expenses, 
competitive pricing  pressures, the gain or  loss  of  significant  
customers, increased  research  and  development expense  associated  with 
new  product  introductions,  component shortages  and general economic 

                                       13
<PAGE>

conditions.   All of  the above factors  are difficult for  the Company to 
forecast, and these or other  factors can materially adversely affect the 
Company's  business and operating  results for  one quarter or  a series  of 
quarters.   The Company's expense levels  are based in part  on its 
expectations regarding  future revenues and in  the short term  are fixed to  
a large extent. Therefore, the Company may  be unable to adjust  spending in 
a timely  manner to compensate for any unexpected  revenue shortfall.  
Accordingly,  any significant decline in demand relative to  the Company's 
expectations or any material  delay of  customer  orders would  have  a 
material  adverse  effect  on the  Company's business and  operating results. 
The Company's operating  results may also  be affected  by seasonal  trends.  
Such  trends may  include lower  revenues in the summer months during  the 
Company's  first fiscal quarter  when many  businesses experience lower sales.

    The telecommunications equipment market is also effected by rapidly 
changing technologies  and frequent new product introductions, which include 
ATM and high speed  digital subscriber lines (HDSL).  The  Company's success 
will depend to a substantial  degree upon its  ability to  respond to  
changes in  technology and customer  requirements.  This will require the 
timely selection, development and marketing of  new products  and 
enhancements  on  a cost-effective  basis.   The introduction of new  and 
enhanced products also requires that the Company manage transitions from 
older  products in  order to minimize  disruptions in  customer orders, avoid 
excess inventory of old products and ensure that adequate supplies of new 
products can be  delivered to meet customer orders.  Products  as complex as 
those  offered by the  Company may contain, and  have in the  past contained, 
undetected errors,  incompatibilities with  installed products or  failures 
when first introduced or as new versions are released, which could result in 
the loss or delay in market acceptance  of the Company's products.  As  the 
functionality and complexity  of  the Company's  products continue  to grow,  
the Company  may experience an increased  incidence of such errors or 
failures  as well as delays in introducing its products.

    The market for  the Company's products is also characterized  by the need 
to meet  a  significant number  of voice  and  data communications  
regulations and standards,  including those  defined by  the Federal  
Communications Commission, Underwriters  Laboratories,  Bell   Communications 
Research  ("Bellcore")  and, internationally, various countries and  
international standards committees. Some of these new standards  are evolving 
as new technologies, such  as ATM and frame relay, are deployed.  As existing 
and new standards evolve,  the Company will be required  to modify  its 
products  or develop  and support  new versions  of its products. It is also 
important that the Company's products are easily integrated with carriers' 
network management systems. The failure of the Company's products to comply,  
or delays  in compliance,  with the  various  existing and  evolving industry 
standards could  delay introduction  of the  Company's products,  which could 
have a  material adverse effect  on the  Company's business and  operating 
results. In addition, government  regulatory policies are likely to  continue 
to have a major impact  on the pricing  of existing as well  as new public  
network services and therefore  are expected to affect demand for  such 
services and the telecommunications products that support such services.

    The  market for  telecommunications  products is  highly  competitive.   
The Company's principal competition  to date has been  from major 
telecommunications equipment  suppliers,  such as  Newbridge  Networks  
Corporation, Tellabs,  Inc. Nokia, Inc. and NEC Corporation, which  offer a 
broad line of products including access devices  for  business applications.  
The Company  expects  substantial additional competition  from existing  
competitors as  they develop products  to compete with  the functionality and 
flexibility of the Company's  products.  In addition,  Premisys expects to 
compete  with other new  entrants, including both start-ups and existing data 
communications companies, to the telecommunications access  equipment  
marketplace,  including those  targeting

                                       14
<PAGE>

bandwidth-on-demand services and broadband integrated access  products. The 
Company also anticipates that  certain  of the  telecommunications  equipment 
suppliers  that  market and distribute the Company's  products may develop  
products that could be  sold for selected applications for  which the 
Company's products are  currently provided. Successful, timely development of 
such products could reduce the level of demand from these telecommunications 
equipment suppliers for the Company's products.

    The  Company's success  to  date has  been  significantly dependent  on  
the contributions  of   its senior  officers:  Raymond C.  Lin, President  
and Chief Executive  Officer; Boris J. Auerbuch, Senior Vice President and 
Chief Technical Officer; William J. Smith, Senior Vice President, Sales and 
Marketing; and Riley R. Willcox, Senior Vice President and Chief  Financial 
Officer.  The loss of the services of any  one of these officers could  have 
a material adverse  effect on the  Company's business  and  operating 
results.    The Company's  success  also depends to a  significant extent on 
a number  of other key employees as  well as its  ability   to  attract  and  
retain   additional  highly-skilled  technical, managerial, sales and 
marketing personnel, the competition for whom is intense.

    The Company relies upon a combination of patent, trade secret, copyright 
and trademark laws and contractual restrictions to establish and protect 
proprietary rights in its  products.   There can be  no assurance  that these 
statutory  and contractual arrangements will prove sufficient to deter  
misappropriation of the Company's  technologies  or  independent   
third-party  development  of  similar technologies.  The telecommunications 
industry is characterized by the existence of  a large number  of patents and 
frequent litigation based  on allegations of patent infringement.   In the 
event  of litigation to determine  the validity of any third-party claims  
asserting that  the Company's products  infringe or  may infringe  the 
proprietary rights of such third parties, such litigation, whether or  not 
determined in favor of the  Company, could result in significant expense to 
the Company and divert the  efforts of the Company's technical and management 
personnel  from productive  tasks.  In  the event  of an adverse  ruling in 
such litigation, the Company  might be required  to discontinue the  use and 
sale  of infringing  products,  expend  significant resources  to  develop 
non-infringing technology or obtain licenses from third parties.

    Certain components  used in the  Company's products are  currently 
available from  only   one  supplier.    In  addition,  the  Company  relies  
on  contract manufacturers,  primarily  Eltech  Electronics,  Inc., to  
produce  its  printed circuit board assemblies.  Shortages or delays in the 
delivery of the components used  in the Company's  products (which have  
occurred in the  past) or extended delays in deliveries of printed circuit 
board assemblies could result  in delays in  the  shipment of  the Company's  
products  and/or increase  component costs. Certain  components are currently 
in short supply within the Company's industry, and  the Company  must  
therefore  compete  for  these  components  with  larger companies that  
often have long-established relationships  with these suppliers. Failure of 
the Company to order sufficient quantities of  any required component in 
advance could  prevent the Company from increasing  production of products in 
response  to customer  orders in  excess of  amounts  projected by  the 
Company. Although  the Company typically  maintains some reserve  inventory 
of components and  printed  circuit  board  assemblies,  this  inventory  
would  not  cover  a significant delay in the delivery of such items.

    All  of the  above factors are  difficult for  the Company  to forecast, 
and these  or other  factors, such  as changes  in earnings estimates  by 
securities analysts,  can materially affect the Company's operating results 
and stock price for one quarter or  a series of quarters.   Further, in 
recent years,  the stock market  has  experienced  extreme  price   and  
volume  fluctuations  that  have particularly  affected the market prices  of 
securities of  many high technology companies, for reasons frequently  

                                       15
<PAGE>

unrelated to the performance of  the specific companies.    These 
fluctuations,  as well  as  general economic,  political and market  
conditions,  may materially  adversely affect  the  market price  of the 
Company's Common Stock.  The  trading prices of many high technology  
companies stocks,  including  the Common  Stock  of  the Company,  are  at  
or near  their historical  highs   and  reflect  price/earnings   ratios  
substantially   above historical norms.   There  can be no  assurance that  
the trading  price of  the Company's Common Stock will remain at or near its 
current level.

                                       16

<PAGE>

II.  OTHER INFORMATION


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8 K

A.  Exhibits

    Exhibit No. Description of Exhibit
    ----------- ----------------------
    10.33       Second  Amendment to  Lease  Agreement by  and  between Premisys
                Communications, Inc.   and Aetna Life  Insurance Company,  dated
                August 9, 1996.
    10.34       First  Amendment  to  Lease Agreement  by  and  between Premisys
                Communications, Inc. and  Berg & Berg  Enterprises, Inc.,  dated
                September 17,  1996, for the  premises located at 48800  Milmont
                Drive,  Fremont,  California  (formerly  48700  Milmont   Drive,
                Fremont, California).
    11.01       Computation of Net Income per Share.
    27.01       Financial Data Schedule

B.  Reports on Form 8-K

      None

                                      17
<PAGE>

                                  SIGNATURES

Pursuant to  the  requirements  of the  Securities  Exchange Act  of  1934,  the
registrant  has duly  caused this  report to   be  signed on  its behalf  by the
undersigned thereunto duly authorized.


                                         PREMISYS COMMUNICATIONS, INC.


    November 7, 1996                               /S/ Robert W. Dilfer
---------------------------------------  -------------------------------------
        Date                                         Robert W. Dilfer
                                               Vice President and Controller
                                             (Duly Authorized Officer and Chief
                                                    Accounting Officer)

                                           18
<PAGE>

                                   INDEX TO EXHIBITS

  Exhibit No.              Description of Exhibit
  -----------              ----------------------
  10.33                    Second Amendment to Lease Agreement by and between
                           Premisys Communications, Inc. and Aetna Life
                           Insurance Company, dated August 9, 1996 for the
                           premises located at 48664 Milmont Drive, Fremont,
                           California..

 10.34                     First Amendment to Lease Agreement by and between
                           Premisys Communications, Inc. and Berg & Berg
                           Enterprises, Inc., dated September 17, 1996, for the
                           premises located at 48800 Milmont Drive, Fremont,
                           California (formerly 48700 Milmont Drive, Fremont,
                           California).

 11.01                     Computation of Net Income per Share
 27.01                     Financial Data Schedule


                                      19