For Immediate Release - January 14, 1998

SUNNYVALE, CALIFORNIA - CALIFORNIA MICROWAVE, INC. (Nasdaq National Market: CMIC) today reported results from continuing operations for its fiscal 1998 second quarter ended December 31, 1997. Continuing operations for all periods presented exclude the operating results of Microwave Networks (MN) and Satellite Transmission Systems (STS), which are being divested. Second-quarter income from continuing operations, after giving effect to the costs of approximately $.07 per share to settle the shareholder class action lawsuit, was $1.9 million, or $.11 per share, on sales of $66.6 million. This compares to a loss of $2.8 million, or $(.18) per share, on sales of $62.8 million reported for last year's second quarter. New orders booked in the second quarter increased 21% to $86.6 million compared to $71.7 million for the comparable period last year. International orders increased by 31% to $25.2 million, accounting for 29% of total orders booked. The increase was broad-based across Asia Pacific, Latin America, Europe, Canada and Middle East-Africa. Asia Pacific and Latin America remained at their historical levels of approximately 10% each of total new orders booked. The company's Information Collection and Communications and Radio Products business areas each recorded increases of about 35%, while orders for satellite communications equipment decreased by 3%*. Backlog at December 31, 1997, stood at $101.9 million, compared to $103.1 million recorded at December 31, 1996. *See footnote under Bookings and Sales table. Making Progress on Operational Issues "We are pleased with our consistent progress. Exclusive of the litigation costs, we would have reported $.18 per share from our continuing operations," stated Fred Lawrence, California Microwave's chairman and chief executive officer. During the quarter, California Microwave made significant progress in three key operational areas with the appointment of a new chief financial officer, an agreement to sell the STS division and the settlement of a shareholder class action lawsuit. Donna S. Birks was appointed executive vice president and chief financial officer, succeeding George L. Spillane, who remains vice president and corporate secretary. Birks has 15 years experience in the telecommunications industry, working in the wireless products, systems and services segments. She has held senior executive financial and general management positions at ComStream, Macrovision and GTE Spacenet, with responsibilities for financial management, strategic planning, human resources, contracts, licensing, international business development, sales and marketing management, acquisitions, divestitures and business analysis. California Microwave entered into an agreement with L-3 Communications Corporation to sell its STS division to L-3 for $27 million in cash. It is expected that no gain or loss will be reported on the divestiture. The auction process continues for the divestiture of the MN division. The company announced that in order to avoid the expense and distraction of protracted litigation, it had reached agreement, without admitting any wrongdoing, to settle a shareholder class action lawsuit that had been filed in November 1995 against it and certain of its former officers. The net expense of the settlement (including defense costs) to the company recorded in this quarter amounted to approximately $1.9 million, or approximately $.07 per share. Final settlement of the lawsuit is subject to notice to the members of the class of the proposed settlement and approval of the settlement by the court. California Microwave, Inc. is a leading U.S. supplier of satellite earth station and microwave radio infrastructure products and information and collection systems.

CALIFORNIA MICROWAVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)

	Three Months Ended December 31				Six Months Ended December 31
	1997	1996	% Change		1997	1996	% Change
Net Sales	$ 66,554	$ 62,754	+6		$130,981	$124,531	+5
Cost of products sold	43,088	50,383	-14		87,012	93,883	- 7
Gross margin	23,466	12,371	+90		43,969	30,648	+44
Expenses: Research & development	5,132	4,586	+12		9,762	9,272	+5
Marketing & administration	12,271	12,954	-5		23,075	23,521	-2
Amortization of intangible assets	344	345			688	690
Total expenses	17,747	17,885	-1		33,525	33,483
Operating income (loss)	5,719	(5,514)	NM		10,444	(2,835)	NM
Interest expense net	(893)	(1,322)	-32		(2,006)	(2,654)	-24
Litigation settlement	(1,900)	-	NM		(1,900)	-	NM
Gain on sale of subsidiary	-	2,744	NM		-	2,744	NM
Income(loss) from continuing operations before income taxes	2,926	(4,092)	NM		6,538	(2,745)	NM
Provision for (benefit of) income taxes	1,054	(1,264)	NM		2,354	(907)	NM
Income(loss) from continuing operations	1,872	(2,828)	NM		4,184	(1,838)	NM
Loss from discontinued operations	-	(22,567)	NM		-	(25,430)	NM
Net income (loss)	$ 1,872	$(25,395)	NM		$ 4,184	$(27,268)	NM
Per share (basic and diluted) Income(loss) from continuing operations	$0.11	$(0.18)	NM		$0.25	$(0.11)	NM
Loss from discontinued operations	-	(1.40)	NM		-	(1.58)	NM
Net income (loss)	$ 0.11	$(1.57)	NM		$ 0.25	$(1.69)	NM
Average shares	16,526	16,145	+2		16,511	16,139	+ 2
Average shares and equivalents (Thousands)	16,825	16,145	+4		16,739	16,139	+4
Bookings	$86,557	$71,734	+21		$141,828	$130,546	+9
Backlog	101,929	103,123	-1		101,929	103,123	- 1

NM = Not Meaningful

CONDENSED BALANCE SHEET
(Dollars in Thousands)

	December 31, 1997	June 30, 1997
Assets:
Cash and cash equivalents	$ 3,408	$ 4,974
Receivables	47,505	35,701
Inventories	44,390	50,353
Income tax refunds and deferred tax assets	23,352	35,855
Net assets of discontinued businesses	77,591	79,656
Property, plant and equipment (net)	24,070	22,812
Intangible assets	28,575	29,488
Other assets	8,451	7,534
	$ 257,342	$ 266,373
Liabilities and stockholders' equity
Current liabilities	$ 66,905	$ 72,058
Long-term liabilities	66,885	76,291
Stockholders' equity	123,552	118,024
	$ 257,342	$ 266,373

CALIFORNIA MICROWAVE INC.
Fiscal 1997 Bookings and Sales by Product and Market Areas
(in millions)

	FY98 Q2	FY97 Q2	% Change	% of FY98
BOOKINGS
Satellite Communications	$ 26.6	$ 27.5	-3	31
Information Collection and Communications	35.5	26.1	+36	41
Radio Products	24.5	18.1	+35	28
Total	$ 86.6	$ 71.7	+21	100
US Government	$ 38.4	$32.2	+19	44
US Commercial	23.0	20.3	+13	27
International	25.2	19.2	+31	29
Total	$ 86.6	$ 71.7	+21	100
SALES
Satellite Communications	$ 25.0	$ 22.5	+11	38
Information Collection and Communications	18.9	21.5	-12	28
Radio Products	22.7	18.8	+21	34
Total	$ 66.6	$ 62.8	+6	100
US Government	$ 22.0	$ 25.4	-13	33
US Commercial	21.7	19.4	+12	33
International	22.9	18.0	+27	34
Total	$ 66.6	$62.8	+6	100

*Subsequent to this press release, bookings and sales of Satellite Communications for Q2 FY1997 were reduced by $3.3 million and $1.7 million, respectively, and bookings and sales of Information Collection and Communications were increased by the same amounts. This resulted in Q2 FY1998 increases of 10% in bookings and 20% in sales for Satellite Communications, and an increase of 20% in bookings and a decrease of 18% in sales for Information Collection and Communications. There was no effect on the Company's total bookings and sales.

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