California Microwave Reports Third Quarter Results

For Immediate Release - April 16, 1997

CALIFORNIA MICROWAVE REPORTS
THIRD QUARTER RESULTS

REDWOOD CITY, CALIFORNIA - CALIFORNIA MICROWAVE, INC. (Nasdaq National Market:CMIC) reported today that as a result of recording the previously announced restructuring charges of $7.8 million and relocation and retention costs of $800,000 related to the restructuring, and a lower-than-anticipated sales volume of $93 million, it incurred a net loss of $6 million, or $.37 per share, for its third quarter ended March 31, 1997. This compares to net income of $1.3 million, or $.08 per share, on sales of $100 million reported for the same period last year. The company indicated that excluding the $7.8 million restructuring charges, it would have reported a net loss of $791,000, or $.05 per share for this year's third quarter. Third-quarter bookings were $115.7 million compared to $90.3 million for last year's third quarter.
Lower Sales; Higher Orders
California Microwave indicated that a majority of the 7% sales decline in this year's third quarter occurred in the satellite communications systems area, and that a majority of the 28% bookings increase in the quarter occurred in the intelligence area.
Refocusing For Profitability
During its second quarter, California Microwave announced that it would be refocusing on core competencies, narrowing product lines and reducing costs in an effort to restore overall profitability. It further announced that it was recording inventory write-downs, warranty and other charges totaling $39 million, before income tax benefits, in its fiscal 1997 second quarter and would be recording restructuring and other relocation and retention costs in subsequent quarters. Third-quarter actual gross margin improved as a percent of sales and expense levels were reduced in line with the restructuring plan.
The company expects to pay no income taxes in fiscal 1997, and expects to receive a tax refund of approximately $9 million in fiscal 1998 due to tax-loss carryback provisions.
California Microwave, Inc. is a leading U.S. supplier of satellite earth station and microwave radio infrastructure products, installed in more than 110 countries.

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

Three Months Ended
March 31 Nine Months Ended
March 31

1997 1996 % Change 1997 1996 % Change

Net Sales $ 92,857 $100,073 -7 $313,638 $332,125 -6

Cost of products sold 65,729 70,377 -7 267,830 233,526 +15

Gross margin 27,128 29,696 -9 45,808 98,599 -54

Expenses: Research & development 7,523 7,707 -2 23,279 22,405 + 4

Marketing & administration 18,713 18,438 + 2 61,189 55,731 + 10

Amortization of intangible assets 645 547 + 18 1,725 1,641 + 5

Restructure expenses 7,780 --- N/M 7,780 -- N/M

Total expenses 34,661 26,692 + 30 93,973 79,777 + 18

Operating income (loss) (7,533) 3,004 N/M (48,165) 18,822 N/M

Interest (expense) net (1,428) (936) + 53 (4,239) (3,073) + 38

Gain on sale of subsidiary --- --- --- 2,744 --- NM

Income (loss) before income taxes (8,961) 2,068 N/M (49,660) 15,749 N/M

Provision for (benefit from) income taxes (2,957) 743 N/M (16,388) 5,669 N/M

Net income (loss) $ (6,004) $ 1,325 N/M $(33,272) $ 10,080 N/M

Net income (loss) per share $( .37) $ .08 N/M $(2.06) $ .62 N/M

Average shares and equivalents (thousands) 16,273 16,148 -- 16,184 16,203 --

Bookings $115,733 $ 90,352 + 28 $326,998 $306,605 + 7

Backlog 181,809 206,026 - 12 181,809 206,026 - 12

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)

March 31
1997
June 30
1996

Current Assets:

Cash and cash equivalents $3,429 $4,560

Receivables 85,797 108,278

Inventories 93,667 103,456

Other current assets 25,279 14,205

Total current assets 208,172 230,499

Property, plant and equipment (net) 45,506 48,762

Intangible and other assets 55,290 59,079

$ 308,968 $338,340

Liabilities and stockholders' equity

Current liabilities $ 94,697 $ 89,247

Long-term liabilities 74,174 79,233

Stockholders' equity 140,097 169,860

$ 308,968 $ 338,340

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

FY97
Q3 FY96
Q3 %
Change % of
FY97

BOOKINGS

Wireless $43.4 $40.1 + 8 38

Satellite Communications 40.4 37.9 + 7 35

Intelligence/Other 31.9 12.4 +157 27

Total $115.7 $ 90.4 + 28 100

International $ 49.4 $ 35.1 + 41 43

US Commercial 31.5 36.5 - 14 27

US Government 34.8 18.8 + 85 30

Total $115.7 $ 90.4 + 28 1 100

SALES

Wireless $ 43.0 $ 40.2 + 7 46

Satellite Communications 27.0 39.8 - 32 29

Intelligence/Other 22.8 20.0 + 14 25

Total $ 92.8 $100.0 - 7 100

International $ 39.0 $ 44.6 - 13 42

US Commercial 28.2 28.9 - 2 30

US Government 25.6 26.5 - 3 28

Total $ 92.8 $100.0 - 7 100

For More Information Contact:

Stephanie M. Day
Vice President
Corporate Communications
(415) 596-6629 Investor Information Line:
(Toll-free) 1-888-225-6789
http://www.calmike.com.
Deborah Passik
William Dunk Partners, Inc.
(919) 929-4100

CONTACT US WHAT'S NEW? ABOUT THE COMPANY INVESTOR RELATIONS NEWS RELEASES
PRODUCTS APPLICATIONS LOCATIONS TRADE SHOWS & EVENTS
©1996, 1997 California Microwave, Inc. All rights reserved webmaster@calmike.com

	Three Months Ended March 31			Nine Months Ended March 31
	1997	1996	% Change	1997	1996	% Change
*Net Sales*	$ 92,857	$100,073	-7	$313,638	$332,125	-6
Cost of products sold	65,729	70,377	-7	267,830	233,526	+15
Gross margin	27,128	29,696	-9	45,808	98,599	-54
Expenses: Research & development	7,523	7,707	-2	23,279	22,405	+ 4
Marketing & administration	18,713	18,438	+ 2	61,189	55,731	+ 10
Amortization of intangible assets	645	547	+ 18	1,725	1,641	+ 5
Restructure expenses	7,780	---	N/M	7,780	--	N/M
Total expenses	34,661	26,692	+ 30	93,973	79,777	+ 18
*Operating income (loss)*	(7,533)	3,004	N/M	(48,165)	18,822	N/M
Interest (expense) net	(1,428)	(936)	+ 53	(4,239)	(3,073)	+ 38
Gain on sale of subsidiary	---	---	---	2,744	---	NM
Income (loss) before income taxes	(8,961)	2,068	N/M	(49,660)	15,749	N/M
Provision for (benefit from) income taxes	(2,957)	743	N/M	(16,388)	5,669	N/M
Net income (loss)	$ (6,004)	$ 1,325	N/M	$(33,272)	$ 10,080	N/M
*Net income (loss) per share*	$( .37)	$ .08	N/M	$(2.06)	$ .62	N/M
*Average shares and equivalents (thousands)*	16,273	16,148	--	16,184	16,203	--
Bookings	$115,733	$ 90,352	+ 28	$326,998	$306,605	+ 7
Backlog	181,809	206,026	- 12	181,809	206,026	- 12

	March 31 1997	June 30 1996
Current Assets:
Cash and cash equivalents	$3,429	$4,560
Receivables	85,797	108,278
Inventories	93,667	103,456
Other current assets	25,279	14,205
Total current assets	208,172	230,499
Property, plant and equipment (net)	45,506	48,762
Intangible and other assets	55,290	59,079
	*$ 308,968*	*$338,340*

Liabilities and stockholders' equity
Current liabilities	$ 94,697	$ 89,247
Long-term liabilities	74,174	79,233
Stockholders' equity	140,097	169,860
	*$ 308,968*	*$ 338,340*

	FY97 Q3	FY96 Q3	% Change	% of FY97
BOOKINGS
Wireless	$43.4	$40.1	+ 8	38
Satellite Communications	40.4	37.9	+ 7	35
Intelligence/Other	31.9	12.4	+157	27
Total	$115.7	$ 90.4	+ 28	100

International	$ 49.4	$ 35.1	+ 41	43
US Commercial	31.5	36.5	- 14	27
US Government	34.8	18.8	+ 85	30
Total	$115.7	$ 90.4	+ 28	1 100


SALES
Wireless	$ 43.0	$ 40.2	+ 7	46
Satellite Communications	27.0	39.8	- 32	29
Intelligence/Other	22.8	20.0	+ 14	25
Total	$ 92.8	$100.0	- 7	100

International	$ 39.0	$ 44.6	- 13	42
US Commercial	28.2	28.9	- 2	30
US Government	25.6	26.5	- 3	28
Total	$ 92.8	$100.0	- 7	100