Lena got it right in one: when using analog cables (on all inputs except the 6-channel analog), the 950 will convert the analog input to digital for processing (bass management, surround processing) and then convert back to analog. The bypass mode skips the analog-to-digital-to-analog process, which would be undesirable if you have a better DAC in the CD player than in the 950. If you have a digital connection, there is no bypass option -- the digital signal is received by the 950, processed as required (bass management, any surround modes that may be selected), converted to analog with the 950's DAC, and sent to the preamp outputs.

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