UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
--------------------------------------------------------------------------------
                                    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 December 31, 1997

                                       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: 0-26902

                          NIMBUS CD INTERNATIONAL, INC.
             (exact name of registrant as specified in its charter)

                       Delaware                  54-1651183
           (State or other jurisdiction of    (I.R.S. Employer
            incorporation or organization)   Identification No.)

                               623 Welsh Run Road
                          Ruckersville, Virginia 22968
                    (Address of principal executive officers)

                         Telephone Number (804) 985-1100
              (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    _______
                        ---------

      As of February 11, 1998 there were 39,012,786  shares of the  Registrant's
Common Stock outstanding.

<PAGE>

                          NIMBUS CD INTERNATIONAL, INC.
                                      INDEX
                          PART I. FINANCIAL INFORMATION

Item 1.     Condensed Consolidated Financial Statements:

            Condensed Consolidated Balance Sheets
            December 31, 1997 and March 31, 1997........................3

            Condensed Consolidated Statements of Income
            Three and nine months ended December 31, 1997 and 1996......4

            Condensed Consolidated Statements of Cash Flows Nine 
            months ended December 31, 1997 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 1.     Legal Proceedings..........................................12

Item 6.     Exhibits and Reports on Form 8-K...........................12

            Signatures.................................................13

<PAGE>

PART I.     FINANCIAL INFORMATION
ITEM 1.     CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                 NIMBUS CD INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                   (Dollars in thousands, except share data)
<TABLE>
<S>                                                 <C>             <C>
                                                    December 31,
                                                       1997           March 31,
                      ASSETS                        (Unaudited)         1997
Current Assets:
  Cash and cash equivalents                           $    5,072      $    7,790
  Accounts and notes receivable, less allowances
   for doubtful accounts of $2,386 and $2,014             36,951          26,393
  Inventories                                              2,559           2,217
  Prepaid expenses                                         2,776           1,329
  Deferred income taxes                                    3,415           3,415
                                                     ------------   ------------
   Total current assets                                   50,773          41,144
                                                     ------------   ------------
Property, plant, and equipment, net                       77,271          63,431
Other assets and intangibles                               3,821           3,697
                                                     ============   ============
                                                        $131,865        $108,272
                                                     ============   ============

       LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:

  Accounts payable                                    $    8,200      $    5,617
  Current portion of long-term debt                        7,307           5,159
  Accrued expenses and other liabilities                  17,426          13,533
  Income taxes payable                                     8,480           6,665
                                                     ------------   ------------
   Total current liabilities                              41,413          30,974
                                                     ------------   ------------

Long-term debt                                            21,307          20,840
Deferred income taxes                                      3,563           3,561
Minority interest and other liabilities                    2,114             475
Stockholders' equity:
  Preferred stock, $0.01 par value; authorized
   2,000,000 shares, no shares issued or
   outstanding
  Common stock, $0.01 par value, 60,000,000
   shares authorized, 39,012,786 shares issued;
   21,388,581 and 20,870,579 shares outstanding              390             390
  Paid-in capital                                         65,431          66,775
  Retained earnings                                       43,223          31,969
  Cumulative foreign currency translation adjustments        169             378
                                                     ------------   ------------
                                                         109,213          99,512
  Treasury stock, at cost, 17,624,205 and               (45,745)        (47,090)
   18,142,207 shares
                                                     ------------   ------------
   Total stockholders' equity                             63,468          52,422
                                                     ------------   ------------
                                                        $131,865        $108,272
                                                     ============   ============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.
<PAGE>

                          NIMBUS CD INTERNATIONAL, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                  (Amounts in thousands, except per share data)
                                   (Unaudited)

<TABLE>
<S>                                  <C>        <C>          <C>        <C>
                                       Three months ended      Nine months ended
                                          December 31,            December 31,
                                     ---------------------   -------------------
                                        1997       1996         1997       1996
                                     ---------  ----------   ---------  --------
Net sales                             $41,525     $40,352    $102,243   $100,942
Cost of goods sold                     28,243      27,467      71,882     70,704
                                     ---------  ----------   ---------  --------
  Gross profit                         13,282      12,885      30,361     30,238

Selling, general and administrative     3,666       3,802      12,891     11,381
expenses
                                     ---------  ----------   ---------  --------
  Operating income                      9,616       9,083      17,470     18,857

Interest expense                          773         701       2,162      1,972
Other (income) expense, net            (1,590)       (103)     (2,077)     (293)
                                     ---------  ----------   ---------  --------
  Income before income taxes           10,433       8,485      17,385     17,178

Provision for income taxes              3,555       2,975       6,128      6,112
                                     ---------  ----------   ---------  --------

  Net income                         $  6,878    $  5,510    $ 11,257   $ 11,066
                                     =========  ==========   =========  ========
Earnings per share:
  Basic                              $   0.32    $   0.26    $   0.53   $   0.53
                                     =========  ==========   =========  ========
  Diluted                            $   0.30    $   0.24    $   0.49   $   0.48
                                     =========  ==========   =========  ========
Weighted average shares outstanding:
  Basic                                21,388      20,869      21,101     20,859
                                     =========  ==========   =========  ========
  Diluted                              22,937      22,958      22,957     23,011
                                     =========  ==========   =========  ========
</TABLE>
     See accompanying notes to condensed consolidated financial statements.
<PAGE>

                 NIMBUS CD INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)
<TABLE>
<S>                                                        <C>         <C>
                                                             Nine months ended
                                                                December 31,
                                                           ---------------------
                                                             1997        1996
                                                           ----------  ---------
Cash flows from operating activities:
  Net income                                                $11,257     $11,066
  Adjustments to reconcile net income to net cash provided
   by operating activities:
   Depreciation and amortization                              8,377       6,893
   Minority interest                                          (434)
   Net (gain) on sale of equipment                             (36)
   Other, net                                                     3          15
   Change in operating assets and liabilities:
     Accounts receivable-trade                             (10,388)     (7,453)
     Inventories                                              (333)       (610)
     Prepaid expenses                                       (1,432)         (7)
     Accounts payable                                         2,461       1,422
     Accrued expenses                                         3,893       3,124
     Income taxes payable                                     1,790       1,984
                                                           ----------  --------
      Net cash provided by operating activities              15,158      16,424
                                                           ----------  --------
Cash flows from investing activities:
  Purchase of property, plant and equipment                (21,559)    (16,670)
  Expenditures for computer software                          (519)     (1,054)
  Proceeds from sale of equipment                               415
  Other investing activities                                     78       (112)
                                                           ----------  --------
   Net cash used in investing activities                   (21,585)    (17,836)
                                                           ----------  --------
Cash flows from financing activities:
  Proceeds from exercise of stock options                                    41
  Revolving credit borrowings, net                            4,563       2,250
  Proceeds of debt                                            1,873
  Repayment of debt                                         (3,977)       (748)
  Capital contribution by minority interest                   1,649
                                                           ----------  --------
   Net cash provided by financing activities                  4,108       1,424
                                                           ----------  --------

Effect of exchange rate changes on cash                       (401)         128
  Net increase (decrease) in cash                           (2,720)         150
                                                           ----------  --------
Cash and cash equivalents, beginning of period                7,790       3,593
                                                           ----------  --------
   Cash and cash equivalents, end of period                $  5,072     $ 3,743
                                                           ==========  ========
</TABLE>
     See accompanying notes to condensed consolidated financial statements.
<PAGE>

                          NIMBUS CD INTERNATIONAL, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             (Dollars in thousands)
                                   (Unaudited)

1.    Preparation of Interim Financial Statements:

      The   condensed   consolidated   financial   statements   of   Nimbus   CD
      International,  Inc.  (referred to as "Nimbus" or the "Company") have been
      prepared in accordance  with the rules and  regulations  of the Securities
      and  Exchange  Commission  ("SEC").  In the opinion of  management,  these
      statements  include all adjustments  necessary for a fair  presentation of
      the financial  position,  operating  results and cash flows of all interim
      reporting  periods reported  herein.  All such adjustments are of a normal
      recurring nature. Certain information and footnote disclosures prepared in
      accordance with generally accepted accounting  principles have been either
      condensed  or  omitted  pursuant  to SEC rules and  regulations.  However,
      management  believes  that the  disclosures  made are  adequate for a fair
      presentation  of results  of  operations  and  financial  position.  It is
      suggested that these financial  statements be read in conjunction with the
      Company's  audited financial  statements and notes thereto,  together with
      management's discussion and analysis of financial condition and results of
      operations,  contained  in the  Company's  Annual  Report to  Stockholders
      incorporated by reference in the Company's  Annual Report on Form 10-K for
      the fiscal year ended March  31,1997.  The results of  operations  for the
      three and nine month periods ended  December 31, 1997 are not  necessarily
      indicative  of the  results for the entire  fiscal  year ending  March 31,
      1998.

2.    Inventories:
      Inventories consist of the following:
<TABLE>
<S>                                             <C>          <C>
                                                December 31,  March 31,
                                                   1997          1997
                                                 ----------  -----------
       Raw materials                                $2,207       $1,518
       Work-in-process                                 225          236
       Finished goods                                  127          463
                                                 ==========  ===========
                                                    $2,559       $2,217
                                                 ==========  ===========
</TABLE>

3.    Property, Plant and Equipment:
      Property, plant and equipment consist of the following:
<TABLE>
<S>                                             <C>          <C>
                                                December 31,   March 31,
                                                    1997          1997
                                                 ----------  -----------
       Land, buildings and improvements             $25,603      $20,865
       Machinery and equipment                       74,404       62,925
       Construction in progress                      10,037        5,976
                                                 ----------  -----------
                                                    110,044       89,766
       Less accumulated depreciation               (32,773)     (26,335)
                                                 ----------  -----------
       Net property, plant and equipment            $77,271      $63,431
                                                 ==========  ===========
</TABLE>
<PAGE>

                          NIMBUS CD INTERNATIONAL, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  (Dollars in thousands except per share data)
                                   (Unaudited)
 4.   Commitments and Contingencies:

      (a)   Capital Expenditures:  At December 31, 1997 commitments for capital
            expenditures amounted to approximately $6,979.

      (b)   Royalties: The Company is party to various licensing agreements in
            both the United States and the United Kingdom for technology
            associated with its product and the related manufacturing processes,
            under which the Company is obligated to pay royalties ranging from
            $.015 to $.045 per disc manufactured.  In the United States, one
            such licensor's patents were found invalid in a third party civil
            action in July 1996, and accordingly, the Company suspended payment
            of royalties as provided in the license agreement. The licensor has
            appealed the verdict and a decision is not anticipated until
            mid-1998. In the United Kingdom, the Company has suspended payment
            of royalties to a licensor due to a dispute regarding breach of the
            license agreement. Pending their ultimate disposition, the Company
            continues to accrue royalty expense under these agreements, for
            which the balance aggregates $8.6 million at December 31, 1997. The
            Company believes that the outcome of these cases will not result in
            a material adverse impact on the results of operations or the
            consolidated financial position of the Company.

5.    Earnings Per Share

      The Company has adopted  Financial  Accounting  Standards  Board  ("FASB")
      Statement of Financial  Accounting  Standards No. 128 "Earnings Per Share"
      (SFAS 128),  resulting  in the  restatement  of earnings per share for all
      prior  periods.  SFAS 128  requires  that  "basic  earnings  per share" be
      computed  by  dividing  income  available  to common  stockholders  by the
      weighted  average  number of common  shares  outstanding  for the  period.
      "Diluted  earnings  per share"  reflects the  potential  dilution if stock
      options or other  securities  would  result in the issuance or exercise of
      additional shares of common stock.

6.    Accounting Standard Changes

      In June 1997, the FASB issued  Statement No. 130 "Reporting  Comprehensive
      Income" ("SFAS 130") which is effective for fiscal years  beginning  after
      December  15,  1997,  including  interim  periods.  SFAS  130  establishes
      standards  of  reporting  and  display  of  comprehensive  income  and its
      components in a full set of general-purpose  financial statements,  either
      in the statement of operations or in a separate  statement.  Additionally,
      SFAS  130  requires  the  display  of the  accumulated  balance  of  other
      comprehensive  income as a separate  caption in the equity  section of the
      balance  sheet  as  well  as the  disclosure  of  material  components  of
      accumulated other  comprehensive  income either on the face of the balance
      sheet,  in a statement  of changes in equity or in notes to the  financial
      statements.  The Company does not believe  that  adoption of SFAS 130 will
      have a material effect on the Company's financial statements.

      The FASB also issued Statement No. 131  "Disclosures  about Segments of an
      Enterprise  and Related  Information"  ("SFAS  131") in June 1997 which is
      effective for fiscal years  beginning  after December 15, 1997,  including
      interim periods after the year of initial  adoption.  SFAS 131 established
      standards  for the way that  public  companies  report  information  about
      operating  segments  in both  interim  and  annual  financial  statements,
      including  related  disclosures  about  products and services,  geographic
      areas, and major  customers.  The Company has not determined what, if any,
      impact SFAS 131 will have on the operating segments reported or the impact
      SFAS 131 will have on its financial statements and related disclosures.

<PAGE>

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

Results of Operations

Three Months Ended December 31, 1997 and 1996

Net Sales.  Total discs sold increased  19.8% to 59.9 million discs in the three
months ended  December  31, 1997 from 50.0  million  discs in the same period of
1996.  The increase  was the result of a 29.7%  increase in CD-ROM unit sales to
40.6 million discs in the three months ended December 31, 1997 from 31.3 million
discs in the same period of 1996.  CD-Audio  unit sales  decreased  1.1% to 18.5
million  units in the three  months  ended  December  31, 1997 from 18.7 million
units in the same  period  of 1996.  In the  United  States,  total  discs  sold
increased  20.9% to 38.2 million  units in the three  months ended  December 31,
1997 from 31.6 million  units in the same period of 1996.  United  States CD-ROM
volume increased 22.5% to 27.8 million discs in the third fiscal quarter of 1998
from 22.7  million  discs in the same  period of fiscal  1997.  CD Audio  volume
increased in the United  States by 9.0% to 9.7 million discs in the three months
ended  December  31,  1997 from 8.9  million  discs in the same  period of 1996.
European  total unit sales  increased  18.6% to 21.7 million  discs in the three
months ended  December  31, 1997 from 18.3  million  discs in the same period of
1996. CD-ROM volume increased 50.6% to 12.8 million discs from 8.5 million discs
while CD-Audio sales units decreased 10.2% to 8.8 million discs during the third
quarter of fiscal 1998 from 9.8 million units in the same period of fiscal 1997.

Net sales increased 2.7% to $41.5 million in the three months ended December 31,
1997 from $40.4  million in the same  period of 1996.  Compact  disc and related
revenues,  excluding  DVD,  increased  1.6% to $39.3 million in the three months
ended  December 31, 1997 from $38.7 million in the third quarter of fiscal 1997.
DVD revenues  were $2.2  million in the three  months  ended  December 31, 1997,
while turnkey and other related service  revenues of Nimbus  Software  Services,
Inc. ("NSS"), which closed its Sunnyvale facility in the first quarter of fiscal
1998,  contributed  $1.3  million of revenues  for the three month  period ended
December  31,  1996.  The  increase in net sales is due to the  increase in disc
volumes  described  above,  offset by a 13% decline in the average  disc selling
price from $0.77 to $0.67 for the three month  periods  ended  December 31, 1996
and 1997,  respectively.  The price decline reflects an oversupply of production
capacity  in Europe as well as the  continued  shift in sales mix to CD-ROM from
CD-Audio,  which  typically has a higher per unit  packaging  configuration.  In
addition,  the  Company  realized  lower  disc  prices  under  a  vendor  supply
agreement.  The price declines noted above were partially  mitigated by exchange
rate changes  between the United States and the United  Kingdom during the three
month periods ended December 31, 1997 and 1996, respectively.

Gross Profit.  Gross profit  increased 3.1% to $13.3 million in the three months
ended  December  31, 1997 from $12.9  million in the same period of 1996.  Gross
profit as a percentage of net sales increased to 32.0% in the three months ended
December  31, 1997 from 31.9% in the same period of 1996.  The increase in gross
profit was  attributable  to reduced  raw  material  costs and a decrease in the
overall level of factory  overhead  expenses due to the closure of the Company's
Sunnyvale  facility,  partially offset by a decline in the average selling price
noted above.  The Company's gross profit margin was  unfavorably  impacted by an
increase  in  depreciation   expense   resulting  from  capital   expansion  and
acquisition  projects in fiscal 1997 and 1998,  increased packaging material and
labor due to higher sales levels of non-automated  packing  configurations,  and
increased factory overhead charges for additional warehousing facilities at both
the  Charlottesville  and Provo locations.  Finally,  the Company's gross profit
margin included the absorption of depreciation  and factory  overhead charges at
the Luxembourg  facility as the plant commenced disc production in December.  If
the results of the Luxembourg facility were excluded, the Company's gross profit
margin would have been 32.9%.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative expenses decreased 2.6% to $3.7 million in the three months ended
December 31, 1997 from $3.8 million in the same period of 1996.  As a percentage
of net sales, selling,  general and administrative expenses decreased to 8.9% in
the three  months  ended  December  31, 1997 from 9.4% in the same period of the
prior year.  The  decrease in selling,  general and  administrative  expenses is
attributable to lower administrative  personnel and travel expense in the United
States and bad debt expense in the United Kingdom, partially offset by increased
sales and marketing  costs  associated with efforts to penetrate the OEM and DVD
markets.   The  third  fiscal  quarter  also  includes  $0.8  million  of  costs
attributable  to  the  EuroNimbus  operations  in  Luxembourg,  which  commenced
operations during the quarter.

Operating  Income.  Operating income increased 5.5% to $9.6 million in the three
months ended December 31, 1997 from $9.1 million in the same period of 1996. The
increase in operating income  primarily  reflects the higher unit volume and net
sales mentioned  above.  Operating income as a percentage of net sales increased
to 23.1% in the three  months  ended  December  31,  1997 from 22.5% in the same
period of 1996.

Interest Expense. Interest expense increased to $0.8 million in the three months
ended  December  31,  1997 from $0.7  million  in the same  period of 1996.  The
increase in interest  expense  reflects an increase in the  Company's  effective
interest rate for the third quarter of fiscal 1998.

Other Income.  Other income  increased to $1.6 million in the three months ended
December 31, 1997 from $0.1 million in the same period of 1996.  The increase in
other income  resulted from the  recognition of income earned by a joint venture
of the  Company as a result of an  exclusive  licensing  agreement  for  certain
applications of holographic technology.

Income Taxes.  Income tax expense  increased to $3.6 million in the three months
ended  December  31,  1997 from $3.0  million  in the same  period of 1996.  The
increase in income tax expense is  attributable to the increase in income before
taxes.  The effective tax rate was 34.1% for the three months ended December 31,
1997 as compared with 35.1% for the three month period ended  December 31, 1996.
The decrease in the effective  tax rate reflects a change in the statutory  rate
in the United Kingdom, which has been lowered from 33% to 31%.

Nine Months Ended December 31, 1997 and 1996

Net Sales.  Total discs sold increased  18.6% to 142.2 million discs in the nine
months ended  December 31, 1997 from 119.9  million  discs in the same period of
1996. The increase resulted  primarily from a 23.8% increase in CD-ROM volume to
87.4 million  discs from 70.6  million  discs for the nine month  periods  ended
December 31, 1997 and 1996, respectively.  The increase in CD-ROM unit sales was
experienced  both in the United States,  which  increased  12.3% to 60.3 million
discs in fiscal  1998 from 53.7  million  discs in fiscal  1997,  and in Europe,
which increased 60.4% to 27.1 million discs from 16.9 million discs for the nine
months ended December 31, 1997 and 1996,  respectively.  Overall,  CD-Audio unit
volume  increased  8.7% to 53.6 million units for the nine months ended December
31, 1997 from 49.3  million  discs in the same period of the prior  fiscal year.
The CD-Audio  volume  increase was 7.7% to 25.2 million  units from 23.4 million
units in the United  States  and 9.7% to 28.4  million  units from 25.9  million
units in Europe for the first nine months of fiscal 1998.

Net sales  increased  1.3% to $102.2  million for the nine months ended December
31, 1997 from  $100.9  million  for the same  period of 1996.  Compact  disc and
related  revenues,  excluding  DVD,  increased 2.1% to $98.2 million in the nine
months ended  December 31, 1997 from $96.2 million in fiscal 1997.  DVD revenues
were $3.6 million in the nine months ended December 31, 1997,  while turnkey and
other related service  revenues of NSS contributed  $4.2 million of revenues for
the nine month period ended  December 31, 1996.  Approximately  $14.6 million of
the sales  increase  is due to the  increase in disc  volume,  offset by a 12.5%
decrease  in the  average  disc  selling  price  from  $0.80 to $0.70,  or $14.1
million.

Gross Profit.  Gross profit  increased  0.7% to $30.4 million for the nine month
period ended  December  31, 1997 from $30.2  million in the same period of 1996.
Gross margin decreased to 29.7% in the nine month period ended December 31, 1997
from 29.9% in the same period of 1996.  The decrease in gross profit  margin was
attributable  to the decline in the average  selling  price noted above,  a $1.7
million  increase in depreciation  expense  associated with fiscal 1997 and 1998
capital  acquisitions,  and a $0.9  million  increase  in  freight  expense.  In
addition,  the Company incurred  additional  factory overhead charges associated
with the transferring of the CD  manufacturing  equipment and inventory from the
Sunnyvale facility to the Provo plant and for additional  warehousing facilities
at both the  Charlottesville  and Provo  locations.  These costs were  partially
offset by reduced raw  material  costs and a decrease  in the  overall  level of
factory  overhead  expenses  due  to the  closure  of  the  Company's  Sunnyvale
facility. If the results of the Luxembourg facility were excluded, the Company's
gross profit margin would have been 30.2%.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses  increased  13.2% to $12.9  million  in the nine  month
period ended  December  31, 1997 from $11.4  million in the same period of 1996.
The increase in the current year includes $1.4 million of costs  incurred in the
process of establishing  the EuroNimbus  operations in Luxembourg.  In addition,
the Company incurred higher sales and marketing costs due to the increased level
of sales  noted  above and by the  Company's  efforts  to  penetrate  additional
product markets.  The prior year selling,  general and  administrative  expenses
includes a $0.3 million reserve for environmental clean-up costs.

Operating  Income.  Operating income decreased 7.4% to $17.5 million in the nine
month  period ended  December 31, 1997 from $18.9  million in the same period of
1996.  The  decrease in operating  income  reflects the higher level of selling,
general and  administrative  expenses  mentioned  above.  Operating  income as a
percentage of net sales  declined to 17.1% in the nine months ended December 31,
1997 from 18.7% in the same period of 1996.

Interest Expense.  Interest expense increased to $2.2 million in the nine months
ended  December  31,  1997 from $2.0  million  in the same  period of 1996.  The
increase in interest  expense  reflects an increase in the  Company's  effective
interest rate during fiscal 1998.

Other  Income.  Other income  increased to $2.1 million in the nine months ended
December 31, 1997 from $0.3 million in the same period of 1996.  The increase in
other income  resulted from the  recognition of income earned by a joint venture
of the  Company as a result of an  exclusive  licensing  agreement  for  certain
applications of holographic technology, and $0.3 million of interest income.

Income  Taxes.  Income tax expense  remained at $6.1  million in the nine months
ended  December  31,  1997 from $6.1  million  in the same  period of 1996.  The
effective  tax rate was 35.2% for the nine  months  ended  December  31, 1997 as
compared  with 35.6% for the same period of 1996.  The decrease in the effective
tax rate reflects a change in the statutory  rate in the United  Kingdom,  which
has been lowered from 33% to 31%.

Liquidity and Capital Resources

Working  capital was $9.4 million at December 31, 1997 compared to $10.2 million
at March 31, 1997.  Accounts  receivable  increased  $10.4  million for the nine
month  period ended  December  31, 1997 due to the higher  sales  volumes of the
third quarter of fiscal 1998, and inventories  increased $0.3 million to support
the increased level of seasonal  sales.  Accounts  payable and accrued  expenses
increased  $6.4  million for the nine month  period  ended  December  31,  1997,
primarily  due to an increase in accrued  royalties  and  reflecting  the higher
level of raw material  purchases and  operational  expenses  associated with the
higher sales volumes of the third  quarter of fiscal 1998.  Income taxes payable
increased $1.8 million reflecting the timing of estimated tax payments.

Capital expenditures were $21.6 million for the nine month period ended December
31,  1997.  Fiscal  1998  capital  expenditures  include  $10.6  million for the
establishment of a disc manufacturing  facility in Luxembourg,  the expansion of
disc manufacturing  capacity in the United States, the replacement and expansion
of ancillary  production  equipment,  additional DVD bonding equipment,  and the
continued  upgrading of the Company's worldwide  management  information system.
The  Company  believes  that these  capital  expenditures  and  working  capital
requirements  will be  financed  through  a  combination  of funds  provided  by
operating activities and availability under its borrowing arrangements.

The Company is party to various  licensing  agreements in both the United States
and the United  Kingdom  for  technology  associated  with its  product  and the
related  manufacturing  processes,  under which the Company is  obligated to pay
royalties  ranging  from  $.015 to $.045 per disc  manufactured.  In the  United
States,  one such  licensor's  patents  were found  invalid in a separate  civil
action in July 1996, and accordingly, the Company suspended payment of royalties
as provided in the license agreement.  The licensor has appealed the verdict and
a decision is not anticipated until mid 1998. In the United Kingdom, the Company
has  suspended  payment of royalties  to a licensor  due to a dispute  regarding
breach of the license agreement. Pending their ultimate disposition, the Company
continues to accrue  royalty  expense under these  agreements,  whose  liability
balance has increased to $8.6 million at December 31, 1997. The Company believes
that the outcome of these cases will not result in a material  adverse impact on
the liquidity,  results of operations, or the consolidated financial position of
the Company.

Accounting Standards Changes

In June 1997, the FASB issued Statement No. 130 "Reporting Comprehensive Income"
(SFAS 130) which is effective  for fiscal  years  beginning  after  December 15,
1997, including interim periods. SFAS 130 establishes standards of reporting and
display  of   comprehensive   income  and  its  components  in  a  full  set  of
general-purpose  financial statements,  either in the statement of operations or
in a separate  statement.  Additionally,  SFAS 130  requires  the display of the
accumulated balance of other  comprehensive  income as a separate caption in the
equity  section  of the  balance  sheet as well as the  disclosure  of  material
components of accumulated other  comprehensive  income either on the face of the
balance sheet,  in a statement of changes in equity or in notes to the financial
statements.  The Company does not believe that  adoption of SFAS 130 will have a
material effect on the Company's financial position.

The FASB also  issued  Statement  No.  131  "Disclosures  about  Segments  of an
Enterprise and Related Information" ("SFAS 131") in June 1997 which is effective
for fiscal years  beginning after December 15, 1997,  including  interim periods
after the year of initial adoption.  SFAS 131 established standards for the way 
that public companies report information about operating segments in both 
interim and annual financial statements, including related disclosures about 
products and services, geographic  areas, and major customers.  The Company has 
not determined what, if any, impact SFAS 131 will have on the operating segments
reported nor the impact SFAS 131 will have on financial statements and related 
disclosures.

Year 2000

As part of the  upgrade of its  worldwide  information  systems,  the Company is
updating all of its systems to ensure that they will continue to function beyond
the turn of the century.  The Company  believes that its enterprise wide systems
will be year 2000 compliant by March 31, 1999.

Seasonality and Quarterly Information

The Company's sales are seasonal, with peak sales activity normally occurring in
the third fiscal quarter as retail chains increase  inventory before the holiday
season.  As a result,  operating  income is typically higher in the third fiscal
quarter as fixed operating costs are spread over generally  higher sales volume.
In addition, in order to provide for capacity demands, long lead time production
equipment is typically ordered for delivery during the first fiscal quarter and,
to a lesser extent, the second fiscal quarter. Equipment installations generally
result in some level of production inefficiency which may have a negative impact
on margins.  The effect on margins may be amplified  when equipment is installed
in the lower sales volume first and second quarters.  Further,  pricing and unit
volumes can impact comparative  quarterly financial results either positively or
negatively in a manner that may not  necessarily  be indicative of a full year's
results.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995

The  statements  included  or  incorporated  by  reference  into  the  Company's
Securities and Exchange Commission filings and shareholder  communications which
are not historical facts are forward -looking  statements that involve risks and
uncertainties,  including,  but not  limited  to,  the  effect  of  changing  CD
technology and the possibility  that, over time, CD technology could be replaced
by another form of information storage and retrieval technology,  the dependence
of the Company's growth  prospects on the development of new  technologies  that
achieve market acceptance and create new demand for CDs and related services and
the  highly  competitive  nature  of the CD  manufacturing  industry  which  may
adversely affect prices for CDs and other aspects of the Company's business.

<PAGE>

PART II.  OTHER INFORMATION

Item 1.     Legal Proceedings

On March 18, 1996,  the Company  received  notification  from the United  States
Environmental  Protection  Agency  ("EPA")  alleging  that  the  Company  was  a
Potentially   Responsible  Party  ("PRP")  for  the  cleanup  of  surface  water
contamination at the Cherokee Oil Company Site (the "Site") in Charlotte,  North
Carolina which was used by the Company for the disposal of certain byproducts of
its  manufacturing  processes.  Subsequently,  the U.S.  Department  of  Justice
notified the Company that it intended to seek recovery of the approximately $6.4
million environmental cleanup cost incurred at the site from the Company and the
other PRPs, each of which was considered jointly and severally liable. In April,
1997,  the Company and numerous  other PRPs  reached a settlement  with the EPA.
Under the terms of the  settlement,  58 PRPs and the Site owner have  reimbursed
the EPA $4.0 million for the cleanup costs. The Company's share of the aggregate
settlement,  paid June 25, 1997, was $277, which was fully provided for at March
31, 1997.

From time to time, the Company is involved in litigation that it considers to be
in the normal course of business.

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

A.    Exhibit 11 - Computation of Net Income Per Share of Common Stock.

B.    Reports on Form 8-K
      No reports on form 8-K were filed  during the quarter  ended  December 31,
      1997.

<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.

Dated:      February 12, 1998
                                    NIMBUS CD INTERNATIONAL, INC.
                                    (Registrant)

                                    --------------------------------
                                    L. Steven Minkel
                                    Executive Vice President and
                                    Chief Financial Officer

                                    --------------------------------
                                    Gary E. Krutul
                                    Corporate Controller
                                    (Principal Accounting Officer)

<PAGE>
                                                                      Exhibit 11

                          NIMBUS CD INTERNATIONAL, INC.
               COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
                      (In thousands, except per share data)
                                   (Unaudited)

<TABLE>
<S>                                     <C>       <C>       <C>       <C>
                                          Three months        Nine months
                                              ended              ended
                                          December 31,        December 31,
                                        ------------------  -----------------
                                         1997      1996      1997      1996
                                        --------  --------  --------  -------
Net income used in calculating basic 
and diluted earnings per common share:

  Net income                             $6,878    $5,510   $11,257   $11,066
                                        ========  ========  ========  =======
  Basic earnings per common share:
  Weighted average shares outstanding    21,388    20,869    21,101   20,859
  Basic earnings per common share       $  0.32   $  0.26   $  0.53   $ 0.53
                                        ========  ========  ========  =======

  Diluted earnings per common share:

  Weighted average common shares         21,388    20,869    21,101   20,859
  outstanding

  Net additional common shares
   issuable upon exercise of dilutive
   warrants and stock options,
   determined by the treasury stock
   method using the average market        1,549     2,089     1,856    2,152
   price for options and warrants
   outstanding during the periods       --------  --------  --------  -------

     Weighted average number of shares
      used in calculating diluted        22,937    22,958    22,957   23,011
      earnings per common share

Diluted earnings per common share       $  0.30   $  0.24   $  0.49   $ 0.48
                                        ========  ========  ========  =======
</TABLE>