UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

------------------------------------------------------------------------------
                                    FORM 10-Q
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(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, 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: 0-26902

                          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 offices)

                         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,  1997 there were  20,869,575  shares of the  Registrant's
Common Stock outstanding.

<PAGE>

                          NIMBUS CD INTERNATIONAL, INC.
                                      INDEX


                          PART 1. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements:

        Condensed Consolidated Balance Sheet
        December 31, 1996 and March 31, 1996.....................3

        Condensed Consolidated  Statements of Income Three and
        nine months ended December 31, 1996 and 1995.............4

        Condensed Consolidated Statements of Cash Flows
        Nine months ended December 31, 1996 and 1995.............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.......................................11

Item 6. Exhibits and Reports on Form 8-K........................11

        Signatures..............................................12

<PAGE>

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

                NIMBUS CD INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                  (Dollars in thousands, except share data)
<TABLE>
<CAPTION>
                                            December 31,       March 31,
                                                1996              1996
                                             (Unaudited)
<S>                                                  <C>             <C>
                  ASSETS
Current Assets:
   Cash and cash equivalents ..................$   3,743       $   3,593

   Accounts and notes receivable, less
      allowances for doubtful accounts of .....   34,423          26,121
      $2,153 and $2,014
   Inventories ................................    2,939           2,177
   Prepaid expenses ...........................      782             729
   Deferred income taxes ......................    1,750           1,766
                                                   -----           -----
      Total current assets ....................   43,637          34,386
                                                  ------          ------
   Property, plant, and equipment, net ........   63,006          50,809
   Other assets and intangibles ...............    6,622           5,558
                                                   -----           -----
                                               $ 113,265       $  90,753
                                               =========       =========

   LIABILITIES AND STOCKHOLDERS' EQUITY 
   Current liabilities:
   Accounts payable ...........................$   7,819       $   6,437
   Current portion of long-term debt ..........    4,811           1,463
   Accrued expenses ...........................   10,628           7,297
   Income taxes payable .......................    5,912           3,427
                                                   -----           -----
      Total current liabilities ...............   29,170          18,624
                                                  ------          ------

Long-term debt ................................   25,113          24,668

Deferred income taxes .........................    4,417           4,395

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
      39,011,782 and 38,973,173 shares
      issued; 20,869,575 and 20,829,962
      shares outstanding.......................      390             390
   Paid-in capital ............................   66,775          66,734
   Retained earnings ..........................   33,861          22,794
   Cumulative foreign currency translation
   adjustments.................................      629             241
                                                     ---             ---
                                                 101,655          90,159

   Treasury stock, at cost, 18,142,207 and
   18,143,211 shares...........................  (47,090)        (47,093)
   ----------                                    -------         ------- 
   
   Total stockholders' equity .................   54,565          43,066
                                                  ------          ------
                                               $ 113,265      $   90,753
                                               =========      ==========
</TABLE>
                       See accompanying notes to condensed
                       consolidated financial statements.

<PAGE>
                          NIMBUS CD INTERNATIONAL, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                (Dollars in thousands, except per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                    Three months ended   Nine months ended
                                         December 31,       December 31,
                                         1996     1995       1996   1995
<S>                                       <C>      <C>        <C>      <C>

Net sales                             $40,352  $36,645   $100,942  $88,497
Cost of goods sold                     27,467   26,765     70,704   62,424
                                       ------   ------     ------   ------
   Gross profit                        12,885    9,880     30,238   26,073

Selling, general and administrative     3,802    2,667     11,381    9,258
expenses                                -----    -----     ------    ----- 
   Operating income                     9,083    7,213     18,857   16,815

Interest expense                          701    1,103      1,972    4,609
Other (income) expense, net             (103)     (99)      (293)      (8)
                                         ----      ---       ----       -- 
   Income before income taxes and
   extraordinary item                   8,485    6,209     17,178   12,214

Provision for income taxes              2,975    2,229      6,112    4,431
                                        -----    -----      -----    -----
   Income before extraordinary item     5,510    3,980     11,066    7,783

Extraordinary item-extinguishment                2,951               2,951
   of debt (less income tax benefit of                                                                                        
   $1,213)
   Net income                          $5,510   $1,029    $11,066   $4,832
                                       ======   ======    =======   ======

Net income (1995 is pro forma for
the Offering)                          $5,510   $4,257    $11,066   $9,366
                                       ======   ======    =======   ======

Earnings per share (1995 is pro
   forma for the Offering)              $0.24    $0.19      $0.48    $0.41
                                        =====    =====      =====    =====

Weighted average shares outstanding    23,011   22,958     22,886   22,790
                                       ======   ======     ======   ======
</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>
<CAPTION>
                                                         Nine months ended
                                                             December 31,
<S>                                                          <C>      <C> 
                                                            1996     1995
Cash flows from operating activities:
   Net income                                            $11,066   $4,832
   Adjustments to reconcile net income to net cash
      provided by operating activities:
      Extraordinary write-off of financing costs,
         excluding costs of terminating interest rate
         swap agreements                                            2,047
      Depreciation and amortization                        6,893    5,797
      Deferred income taxes                                         1,919
      Gain on settlement of royalty obligations                   (1,744)
      Other, net                                              15
   Change in operating assets and liabilities
   (1995 is net of acquisition):
      Accounts receivable-trade                          (7,453) (11,692)
      Inventories                                          (610)  (1,311)
      Prepaid expenses                                       (7)      632
      Accounts payable                                     1,422    (781)
      Accrued expenses                                     3,124      118
      Income taxes payable                                 1,984    2,059
                                                           -----    -----
         Net cash provided by operating activities        16,434    1,876
                                                          ------    -----
 
Cash flows from investing activities:
   Purchase of property, plant and equipment            (16,670)  (8,201)
   Acquisition of business, net of cash acquired                  (2,275)
   Other investing activities                              (112)    (975)
   Expenditures for computer software                    (1,054)    (526)
                                                         ------     ---- 
         Net cash used in investing activities          (17,836) (11,977)
                                                        -------  ------- 

Cash flows from financing activities:
   Proceeds from sale of common stock                              44,886
   Proceeds from exercise of stock options                    41
   Revolving credit borrowings, net                        2,250      334
   Proceeds of debt                                                 2,357
   Repayment of debt                                       (748) (37,000)
   Payment of costs related to initial public offering            (1,230)
   Payment of financing fees                               (119)  (1,140)
                                                           ----   ------ 
         Net cash provided by financing activities         1,424    8,207
                                                           -----    -----
Effect of exchange rate changes on cash                      128     (36)
                                                             ---     --- 
   Net increase (decrease) in cash                           150  (1,930)
                                                             ---  ------ 
Cash and cash equivalents, beginning of period             3,593    2,318
                                                           -----    -----
         Cash and equivalents, end of period              $3,743     $388
                                                          ======     ====
</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 31,1996.
   The results of operations for the three and nine month periods ended December
   31, 1996 are not necessarily  indicative of the results for the entire fiscal
   year ending March 31, 1997.

2. Inventories
   Inventories consisted of the following:
<TABLE>
<CAPTION>
                                       December 31,    March 31,
                                           1996           1996
<S>                                          <C>            <C>
       Raw materials                      $2,162         $1,849
       Work-in-process                       437            263
       Finished goods                        340             65
                                             ---             --
                                          $2,939         $2,177
                                      ==========      =========
</TABLE>

3. Property, Plant and Equipment
   Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
                                       December 31,    March 31,
                                           1996           1996
<S>                                          <C>            <C>
       Land, buildings and               $19,171        $18,652
       improvements
       Machinery and equipment            53,003         46,986
       Construction in progress           14,508          1,549
                                          ------          -----
                                          86,682         67,187
       Less accumulated depreciation    (23,676)       (16,378)
                                        -------        ------- 
          Net property, plant and        $63,006        $50,809
          equipment                    =========      =========
</TABLE>

4. Commitments and Other Matters:

      a) Capital Expenditures:  At December 31, 1996 commitments for capital
         expenditures amounted to approximately $4,831.
<PAGE>
      b) Royalties:  The Company is party to various  licensing  agreements  for
         technology  associated  with its product and the related  manufacturing
         process under which the Company is obligated to pay  royalties  ranging
         from $.012 to $.05 per disc  manufactured.  In June 1995,  the  Company
         reached a settlement with one licensing company and reduced its accrued
         liability  for this and certain other prior  royalties by $1,744.  This
         royalty fee adjustment is reflected in cost of goods sold.

      c) Litigation and related matters: On March 18, 1996, the Company received
         notification  from the United States  Environmental  Protection  Agency
         ("EPA")  alleging that the Company is 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  process.  Subsequently,  the U.S.  Department of Justice
         notified  the  Company  that  it  intends  to  seek   recovery  of  the
         approximately  $6,400  environmental  cleanup cost incurred at the site
         from the Company and other PRP's,  each of which is considered  jointly
         and severally  liable.  The EPA has  preliminarily  determined that the
         Company's  share of the cleanup costs,  based on the volume of material
         contributed by the Company to the Site, will be approximately 5% of the
         overall  cost.  The  Company  intends to  challenge  the EPA's basis of
         allocation,  but has recorded a $300  provision  for  settlement  costs
         associated  with the  cleanup of the Site.  Management  of the  Company
         believes  that the ultimate  settlement  of this matter will not have a
         material adverse effect on the Company's  financial position or results
         of operations.

5. Subsequent Events - EuroNimbus, S.A.

   On January 29, 1997, the Company completed the formation of EuroNimbus, S.A.
   ("EuroNimbus")  and announced plans to build a new, full service compact disc
   replication plant in Luxembourg. EuroNimbus is owned 70% by Nimbus and 30% by
   Saarbrucker Zeitung Verlag und Druckerei, Gmbh, and will invest approximately
   $17 million for the new plant and associated  equipment.  The capital project
   is  anticipated  to be financed by a  combination  of  government  grants and
   loans, new borrowing, and shareholder contributions.  It is expected that the
   Nimbus contribution will be approximately $4 million.

6. Earnings Per Share

   Earnings per share is based on the weighted  average  number of  outstanding
   common shares and dilutive  options and warrants,  determined by the treasury
   stock method using the average  trading price of the  Company's  common stock
   during the three and nine month periods ending December 31, 1996.

7. Pro Forma Earnings per Share

   The pro forma  net  income  per share  data  presented  in the  accompanying
   condensed  consolidated  statements  of income  for the three and nine  month
   periods ended December 31, 1995 has been computed based upon the total number
   of shares issued and  outstanding,  net of treasury  shares,  at December 31,
   1995,  as adjusted for the following  assumptions  as if they had occurred on
   April 1, 1995:  (i) the assumed  exercise of then  outstanding  warrants  and
   stock  options,  determined  by the  treasury  stock  method using the public
   offering price of $7.00 per share for options and warrants granted within one
   year prior to the October 31, 1995 Offering and the average  market price for
   options and warrants  outstanding  in periods  after the  Offering;  (ii) the
   issuance by the Company of  6,350,000  shares of common stock in the Offering
   and  500,000  shares in a private  placement;  (iii) the  application  by the
   Company  of the net  proceeds  of the  Offerings  to repay  $41.7  million of
   outstanding  debt;  and (iv) an  assumed  average  outstanding  borrowing  of
   $28,300 at an average  interest  rate of 9.2%,  resulting  in a reduction  of
   interest expense of $445 ($276 net of tax) and $2,551 ($1,582 net of tax) for
   the fiscal quarter and nine month period ended December 31, 1995.

   Historical net income per share data for the fiscal 1995 periods has been
   omitted as the historical capitalization of the Company prior to the Offering
   and Private  Placement is not indicative of its capital  structure  following
   such events.
<PAGE>
ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
            RESULTS OF OPERATIONS

Results of Operations

Three Months Ended December 31, 1996 and 1995

Net Sales.  Total discs sold increased  33.3% to 50.0 million discs in the three
months ended  December  31, 1996 from 37.5  million  discs in the same period of
1995. The increase was primarily due to a 51.9% increase in CD-ROM unit sales to
31.3 million discs in the three months ended December 31, 1996 from 20.6 million
discs in the same period of 1995.  CD-Audio unit sales  increased  10.0% to 18.7
million  units in the three  months  ended  December  31, 1996 from 17.0 million
units in the same  period  of 1995.  In the  United  States,  total  discs  sold
increased  42.3% to 31.6 million  units in the three  months ended  December 31,
1996 from  22.2  million  units in the same  period of 1995.  The  increase  was
primarily  due to an additional  5.1 million discs from the Company's  Sunnyvale
facility  which  commenced CD production in August,  1996.  United States CD-ROM
volume increased 57.2% to 22.8 million discs in the third fiscal quarter of 1997
from 14.5  million  discs in the same  period of fiscal  1996.  CD-Audio  volume
increased in the United States by 15.6% to 8.9 million discs in the three months
ended  December 31, 1996 from 7.7 million  discs in the third  quarter of fiscal
1996.  United Kingdom total unit sales  increased 18.8% to 18.3 million discs in
the three  months ended  December  31, 1996 from 15.4 million  discs in the same
period of 1995.  CD-ROM  volume  increased  39.3% to 8.5 million  discs from 6.1
million discs while  CD-Audio  sales units  increased  5.4% to 9.8 million discs
during  the third  quarter  of fiscal  1997 from 9.3  million  units in the same
period of fiscal 1996. Net sales  increased  10.1% to $40.4 million in the three
months ended December 31, 1996 from $36.7 million in the same period of 1995. CD
revenues increased 18.0% to $38.7 million in the three months ended December 31,
1996 from $32.8 million in the third  quarter of fiscal 1996,  while turnkey and
other related services of Nimbus Software  Services,  Inc.  ("NSS")  contributed
$1.3  million and $4.9  million of revenues  for the three month  periods  ended
December  31, 1996 and 1995,  respectively.  The increase in net sales is due to
the increase in disc volumes described above, offset by a decline in the average
disc  selling  price  from  $0.84 to $0.77 for the  three  month  periods  ended
December 31, 1995 and 1996, respectively, or 8.3%. The price decline reflects an
industry  increase in production  capacity in both North  America and Europe,  a
change  in  sales  mix  from  audio,  which  has a  higher  per  unit  packaging
configuration,  to ROM, as well as a general  decline in packaging  pricing.  In
addition,  the Company has  realized  lower disc  prices  under a vendor  supply
agreement,  under which cost  efficiencies  resulting from increased  production
volumes are reflected in the disc sales price.

Gross Profit.  Gross profit increased 30.3% to $12.9 million in the three months
ended  December 31, 1996 from $9.9 million in the same period of 1995. The gross
profit for the three month period ended  December 31, 1995 included the reversal
of $0.3 million of accrued  royalty  expense  resulting  from  settlements  with
licensors of CD technology.  Gross profit as a percent of net sales increased to
31.9% in the three months ended  December 31, 1996 from 27.0% in the same period
of 1995.  The  increase  in gross  profit was  primarily  due to the higher unit
volume mentioned  above,  improved labor and production  efficiencies  resulting
from the higher unit volumes,  and reduced raw material costs. In addition,  the
Company's  gross  profit  margin  during the third  quarter  of fiscal  1997 was
favorably  impacted by the change in production  mix at the  Sunnyvale  facility
from turnkey and collateral related services to CD replication, which sales have
a higher  gross  margin.  In future  periods,  the Company  expects that cost of
revenues as a percentage of net revenues will continue to be impacted by the mix
of product sales.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses  increased  40.7% to $3.8  million in the three  months
ended  December  31,  1996 from $2.7  million in the same  period of 1995.  As a
percentage of net sales, selling,  general and administrative expenses increased
to 9.4% in the three months ended December 31, 1996 from 7.3% in the same period
of the prior year.  The prior year period  includes a $0.2  million  reversal of
accrued pension reserves in the United Kingdom. The increase in selling, general
and  administrative  expenses is attributable  to higher legal and  professional
fees,  travel and  consulting  fees incurred in  association  with the Company's
management information system upgrade, and increased personnel,  marketing,  and
bad debt expenses  incurred due to the expanded  sales and marketing  efforts in
the United States, and the increased level of sales noted above.

<PAGE>

Operating Income.  Operating income increased 26.4% to $9.1 million in the three
months ended December 31, 1996 from $7.2 million in the same period of 1995. The
increase in operating income primarily reflects the higher unit volume mentioned
above.  Operating  income as a percentage of net sales increased to 22.5% in the
three months ended December 31, 1996 from 19.7% in the same period of 1995.

Interest  Expense.  Interest  expense  decreased  to $ 0.7  million in the three
months ended December 31, 1996 from $1.1 million in the same period of 1995. The
decrease in interest  expense  reflects the  application  of the proceeds of the
Company's  initial public offering in October 1995 to repay outstanding debt, as
well as lower  worldwide  interest rates when compared to the same period in the
prior fiscal year.

Income Taxes.  Income tax expense  increased to $3.0 million in the three months
ended  December  31,  1996 from $2.2  million  in the same  period of 1995.  The
increase in income tax expense is  attributable to the increase in income before
taxes.  The effective tax rate was 35.0% for the three months ended December 31,
1996 as compared with 35.9% for the three month period ended December 31, 1995.

Nine Months Ended December 31, 1996 and 1995
--------------------------------------------

Net Sales.  Total discs sold increased  29.8% to 119.9 million discs in the nine
months ended  December  31, 1996 from 92.4  million  discs in the same period of
1995. The increase resulted  primarily from a 59.0% increase in CD-ROM volume to
70.6  million  discs from 44.4  million  discs for the nine month  period  ended
December 31, 1996 and 1995, respectively.  The increase in CD-ROM unit sales was
experienced  both in the United States,  which  increased  62.7% to 53.7 million
discs in fiscal 1997 from 33.0 million  discs in fiscal 1996,  and in the United
Kingdom, which increased 47.4% to 16.8 million discs from 11.4 million discs for
the nine  months  ended  December  31,  1996 and  1995,  respectively.  Overall,
CD-Audio  unit volume  increased  2.7% to 49.3 million units for the nine months
ended  December 31, 1995 from 48.0 million discs in the same period of the prior
fiscal year. The CD-Audio  volume increase was 3.1% to 23.4 million units in the
United States and 2.2% to 25.9 million units in the United Kingdom for the first
nine months of fiscal 1997. Net sales  increased 14.0% to $100.9 million for the
nine months ended  December  31, 1996 from $88.5  million for the same period of
1995.  Approximately  $13.6 million of the sales increase is due to the increase
in disc  volume,  offset by a decrease in the average  disc  selling  price from
$0.88 to $0.80,  or 9.1%,  while  turnkey  and other  related  services  revenue
declined 32.3% from $6.2 million to $4.2 million.

Gross Profit.  Gross profit  increased 15.7% to $30.2 million for the nine month
period ended  December  31, 1996 from $26.1  million in the same period of 1995.
The gross profit for the period ended December 31, 1995 included the reversal of
accrued royalties of $2.0 million to reflect  settlements reached with licensors
of technology  regarding  prior royalty  obligations.  See Note 4(b) of Notes to
Condensed  Consolidated  Financial  Statements.  This  adjustment  was partially
offset by a $0.4  million  writedown  of obsolete  production  equipment.  Gross
margin  increased to 29.9% in the nine month period ended December 31, 1996 from
29.5% in the same period of 1995. Exclusive of the two non-recurring adjustments
noted  above,  gross  profit as a percent of net sales for the nine month period
ended December 31, 1995 was 27.7%. The improved gross margin was attributable to
reduced  raw  material   costs  and   increased  per  unit  labor  and  overhead
efficiencies  resulting  from higher unit  volumes,  partially  offset by higher
leasing  costs  related to expanded  production  capacity and the  absorption of
factory  overhead  charges  related  to the  start  up of CD  production  at the
Sunnyvale facility.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses  increased  22.6% to $11.4  million  in the nine  month
period ended December 31, 1996 from $9.3 million in the same period of 1995. The
increase in the current year includes a $0.3 million  reserve for  environmental
clean-up costs, as well as higher  administrative,  personnel,  professional and
consulting  fees,  and  expanded  sales and  marketing  costs due to the greater
number of production  facilities  and increased  level of sales.  The prior year
included an increase of $0.5  million in the  allowance  for  doubtful  accounts
resulting,  in part,  from the filing  for  bankruptcy  by one of the  Company's
customers.  As a percentage of net sales,  selling,  general and  administrative
expenses increased to11.3% in the nine months ended December 31, 1996 from 10.5%
in the same period of 1995.

<PAGE>

Operating Income.  Operating income increased 12.5% to $18.9 million in the nine
month  period ended  December 31, 1996 from $16.8  million in the same period of
1995. The increase in operating income primarily reflects the higher unit volume
mentioned above. Operating income as a percent of net sales declined to 18.7% in
the nine months ended December 31, 1996 from 19.0% in the same period of 1995.

Interest Expense.  Interest expense decreased to $2.0 million in the nine months
ended  December  31,  1996 from $4.6  million  in the same  period of 1995.  The
decrease in interest  expense  reflects the  application  of the proceeds of the
Company's initial public offering in October 1995 to repay outstanding debt.

Income  Taxes.  Income tax expense  increased to $6.1 million in the nine months
ended  December  31,  1996 from $4.4  million  in the same  period of 1995.  The
effective  tax rate was 35.6% for the nine  months  ended  December  31, 1996 as
compared  with 36.3% for the same period of 1995.  The decrease in the effective
tax rate reflects the higher percentage of income attributable to United Kingdom
operations, which has a lower statutory rate than the United States.

Liquidity and Capital Resources
-------------------------------

Working capital was $14.5 million at December 31, 1996 compared to $15.8 million
at March 31, 1996. Accounts receivable increased $8.3 million for the nine month
period  ended  December  31, 1996 due to higher  sales  volumes and  inventories
increased  $0.8  million to  support  the  increased  level of  seasonal  sales.
Accounts payable and accrued expenses  increased $4.7 million for the nine month
period ended December 31, 1996,  largely reflecting the timing of income tax and
royalty payments, and the remaining amounts due for equipment purchases.

Capital  expenditures  were  $17.7  million  for the nine  months  period  ended
December  31,  1996.  Capital  expenditures  in fiscal  1997 are  related to the
installation  of CD  manufacturing  capacity  at  the  Sunnyvale  facility,  the
expansion of mastering capacity at the Provo facility,  the addition of full DVD
manufacturing capacity at the Charlottesville  facility, and equipment purchases
to increase manufacturing process efficiencies.  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.

On January 29, 1997 the Company  completed  the  formation of  EuroNimbus,  S.A.
("EuroNimbus")  and announced plans for the joint venture to build a new, 40,000
square foot CD replication plant in Luxembourg. See Note 5 of Notes to Condensed
Consolidated  Financial  Statements.  EuroNimbus will invest  approximately  $17
million for the new plant and accompanying mastering, replication, printing, and
packaging  equipment.  The capital  project is  anticipated  to be financed by a
combination of  governmental  grants and loans,  new borrowing,  and shareholder
contributions.  It is expected that the Nimbus  contribution will approximate $4
million.

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.

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  is  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 intends 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 is  considered  jointly  and  severally  liable.  At a
meeting held June 27, 1996,  the EPA  indicated  that it intends to allocate the
cleanup costs among the PRPs based on the volume of product disposed at the Site
by each PRP. The EPA has  preliminarily  determined  that the Company's share of
the  cleanup  costs,  based on the EPA's  estimate  of the  volume  of  material
contributed by the Company to the Site, will be  approximately 5% of the overall
cost. The Company has joined a group of major PRPs which has formed the Cherokee
Sites Interim Group ("The Interim Group"),  which is currently seeking to reduce
the  aggregate  settlement  costs to the major PRPs.  The Company has recorded a
$300,000 provision for settlement costs associated with the cleanup of the Site.
Management of the Company  believes that the ultimate  settlement of this matter
will not have a material adverse effect on the Company's  financial  position or
results of operations.

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, 1996.

<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, 1997
                                       NIMBUS CD INTERNATIONAL, INC.
                                       (Registrant)

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

                                       /S/ Gary E. Krutul
                                       ------------------
                                       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>
<CAPTION>
                                           Three months ended  Nine months ended
                                                 December 31,      December 31,
                                                 1996    1995     1996     1995
<S>                                               <C>    <C>        <C>    <C>
Primary and Fully Diluted (A):

   Weighted average common shares outstanding  20,869  13,933   20,859   13,847
   Net additional common shares issuable upon 
      exercise of dilutive warrants and stock 
      options, determined by the treasury stock 
      method using the estimated initial public 
      offering price for options and warrants  
      granted within one year prior to the 
      Offering and Private Placement and the 
      average market price for options and 
      warrants outstanding in periods after 
      the Offering and Private Placement        2,089   2,103    2,152    2,093

   Issuance of common shares by the Company
      in the Offerings and Private Placement            6,850             6,850
                                                        -----             -----
      Common shares and equivalents - 1995 is
         pro forma for the Offering and Private
         Placement                             22,958  22,886   23,011   22,790
                                               ======  ======   ======   ======
   Net income - 1995 is pro forma for the
      Offering and Private Placement           $5,510  $4,257  $11,066   $9,366
                                               ======  ======  =======   ======
Earnings per share - 1995 is pro forma
   for the Offering and Private Placement       $0.24   $0.19    $0.48    $0.41
                                                =====   =====    =====    =====
</TABLE>


(A) See Note 6 and 7 of Notes to Condensed Consolidated Financial Statements.