Accelerating product sales drive Q2 earnings at CMD.

MILPITAS, Calif.--(BUSINESS WIRE)--Oct. 26, 1995--California Micro Devices Corp., headquartered here, Thursday said it reported net income of $836,000, or 8 cents per share, on revenues of $9.6 million, for the second fiscal quarter ended Sept. 30, 1995.

This compares with a loss of $1,621,000 or (19 cents) per share, on revenues of $7.8 million for the three month period ended Sept. 30, 1994. Average shares and share equivalents outstanding increased to 10,964,000 from 8,537,000 at Sept. 30, 1994, including 1.5 million shares held in trust for the tentative settlement of class action shareholder lawsuits.

For the six months ended Sept. 30, 1995, the company reported net income of $1,353,000, or 13 cents per share, on revenues of $18.3 million. This compares with a loss of $9 million, or ($1.06) per share, on revenues of $19.9 million for the six months ended Sept. 30, 1994.

According to Jeffrey Kalb, CMD president and chief executive officer: "We are pleased with the results for the second quarter and look forward to ongoing improvement in our operations. Our results for the past two quarters are a clear indication that we have turned the company around.

"We continue to gain new customers and increase business with existing ones, and are especially pleased with the rapid increase in revenues from our thin film product line and its acceptance into new designs.

"Our business has been focused on areas that provide the greatest possibilities for growth and profit, and our strong balance sheet provides us with the the resources and the staying power to grow the company into a significant market power."

Net product sales totaled $9.3 million for the fiscal 1996 second quarter, ended Sept. 30, 1995, as compared with $7.6 million during the quarter ended Sept. 30, 1994. Technology related revenues were $307,000 compared with $255,000 in the year earlier quarter.

For the three months ended Sept. 30, 1995, gross margins on product sales increased to 43% of product sales compared to 19% in the year earlier period due to improved operating efficiencies and increased sales of higher margin thin film products. Operating expenses remain high primarily due to over $300,000 of legal costs associated with shareholder litigation and related matters.

For the six months ended Sept. 30, 1995, product sales were $17.7 million compared with $13.9 million in the year earlier period. Technology related revenue was $610,000 compared with $6 million during the six months ended Sept. 30, 1994, due to a one-time sale of technology to Hitachi Metals Ltd. during the quarter ended June 30, 1994.

For the six months ended Sept. 30, 1995, gross margins on product sales were 43% of sales. Gross margins for the year earlier six-month period were negative due to inventory write-downs and warranty reserves booked in the quarter ended June 30, 1994 (as restated). Operating expenses during the six months ended Sept. 30, 1995, were negatively impacted by over $500,000 of legal costs associated with shareholder litigation and other matters.

Both the three months and the six months ended Sept. 30, 1994, include a $835,000 charge, or (10 cents) per share, reflecting the cumulative effect of change in accounting principle related to a change in the method of recognizing revenue on sales to distributors.

California Micro Devices is a designer, manufacturer and marketer of integrated passive electronic components, which it calls IPEC. CMD's silicon-based, thin film products are smaller, faster and integrate well into the major electronic industry trends toward smaller, portable equipment, higher frequencies and greater functionality. -0-

                  California Micro Devices Corp.
                    Statements of Operations
                         (Unaudited)

                                 Three Months        Six Months
                                    Ended              Ended
(Amounts in thousands              Sept. 30,          Sept. 30,
 except per share data)         1995      1994      1995      1994
                                                          (restated)

Revenues:
 Net product sales            $ 9,322   $ 7,558    $17,666   $13,936
 Technology related revenues      307       255        610     5,975
Total revenues                  9,629     7,813     18,276    19,911

Costs and expenses:
 Cost of sales                  5,314     6,096     10,067    22,511
 Research and development         795       872      1,661     1,765
 Selling, marketing and
  administrative                2,729     1,619      5,203     4,179
Total costs and expenses        8,838     8,587     16,931    28,455

Operating income (loss)           791      (774)     1,345    (8,544)
Other expense, net                (45)      (38)        (8)      208
Income (loss) before income
 taxes                            836      (736)     1,353    (8,752)
Income taxes (benefit)             --        50         --      (578)
Income (loss) before change
 in accounting principle          836      (786)     1,353    (8,174)
Cumulative effect of change in
 accounting principle              --       835         --       835
Net income (loss)             $   836   $(1,621)   $ 1,353   $(9,009)

Earnings per share:
Income (loss) before
 cumulative effect of change
 in accounting                  $0.08    ($0.09)     $0.13    ($0.96)
Cumulative effect of change
 in accounting principle           --     (0.10)        --     (0.10)
Net income (loss) per share     $0.08    ($0.19)     $0.13    ($1.06)
Weighted average common shares
 and share equivalents
 outstanding                   10,964     8,537     10,373     8,500

                   California Micro Devices Corp.
                          Balance Sheets
                           (unaudited)

                                         Sept. 30,   March 31,
                                            1995       1995
(Amounts in thousands)

ASSETS:
Current assets:
 Cash and securities                      $21,826    $18,960
 Accounts receivable                        4,557      3,203
 Inventories                                5,408      4,747
 Refundable income taxes and other            442      5,445
                                          -------    -------
Total current assets                       32,233     32,355

Property, plant and equipment, net          8,337      6,665
Restricted cash                             1,068        989
Other long term assets                        649        679
                                         --------   --------
Total assets                              $42,287    $40,688
                                          =======    =======

LIABILITIES & SHAREHOLDERS' EQUITY:
Current liabilities:
 Accounts payable                         $ 2,935    $ 2,725
 Accrued salaries and benefits                855        560
 Other accrued liabilities                  4,825      3,748
 Deferred margin on shipments to
  distributors                              1,059      1,157
 Current portion of long-term debt and
  capital leases                            2,006      2,516
                                          -------    -------
Total current liabilities                  11,680     10,706

Long-term debt, less current maturities     7,724      7,923
Capital lease obligations, less current
 maturities                                   644      1,278
Deferred income                               106        136
                                          -------    -------
Total liabilities                          20,154     20,043

Shareholders' equity                       22,133     20,645

Total liabilities and shareholders'
 equity                                   $42,287    $40,688
                                          =======    =======

CONTACT: California Micro Devices Corp.

Jeffrey C. Kalb, 408/263-3214

or

Equity Communications

Ira Weingarten, 805/897-1880