California Micro Devices Completes Turn-Around Year with Record Q4 Revenue; Cautious About Q1.

MILPITAS, Calif.--(BUSINESS WIRE)--May 8, 1996--California Micro Devices Corp. (NASDAQ/NMS:CAMD) (CMD), headquartered here, today reported net income of $1.1 million, or $0.10 per share, on record revenues of $11.0 million, for the fourth fiscal quarter ended March 31, 1996.

This compares with a loss of $18.9 million, or ($2.21) per share, on revenues of $7.7 million for the three months ended March 31, 1995. Average share and share equivalents outstanding increased to 10,909,000 from 8,554,000 at March 31, 1995, including 1,500,000 shares held in trust for the anticipated settlement of shareholder class action shareholder lawsuits.

For the twelve months ended March 31, 1996, the company reported net income of $5.1 million, or $0.48 per share, on revenues of $39.9 million. In 1995, the company changed its fiscal year to March 31 from June 30. The resulting nine-month stub year ended March 31, 1995 had a loss of $23.5 million, or ($2.75) per share, on revenues of $23.7 million.

Included in the fiscal 1996 results is a one-time gain of $1.6 million, or $0.15 per share, from the sale of the company's interest in Cell Access. Fiscal 1996 results also included $1.1 million of litigation costs related to shareholder class action lawsuits and other unusual legal items. Fiscal 1995 results include the costs associated with the anticipated settlement of shareholder class action lawsuits and related matters, totaling $16.3 million, as well as unusual legal and other administrative costs totaling $3.6 million and one-time charges of $2.0 million.

According to Jeffrey Kalb, CMD's president and chief executive officer, "Revenues reached the expected levels for the quarter, but margins dropped a few percentage points due to a significant shift in the mix of product sales. In total, expenses were well controlled, with SG&A being slightly lower than prior quarters and R&D investments increasing."

"The improvement over the last year is dramatic," said Kalb. "Product sales increased to an all time high for the fourth quarter, 46% higher than a year ago; and margins improved to 40% of product sales from 30%. Average quarterly product sales for the year increased 30% and gross product margins increased to 42% from 21%." The company noted that expenses had decreased for both the March 31 quarter and on an average quarterly basis compared to the year earlier periods, primarily due to lower legal and bad debt expenses.

The company also offered some forward looking guidance with regard to the course of its business. Forward looking statements involve a number of risks and uncertainties including, but not limited to, product demand, pricing, market acceptance, risk of dependence on third party suppliers, intellectual property rights and litigation, risks in product and technology development and other risk factors detailed in CMD's Securities and Exchange Commission filings.

CMD pointed out that, as noted in its January 23, 1996 press release, there was a significant softening in the marketplace, particularly in PCs as manufacturers adjusted their inventory levels. In the September 30, 1995, quarter, almost half of the company's revenue was in the PC business. Since that time, the company has been particularly successful in gaining market share in the networking and personal communications markets, but the drop for CMD in the PC market segment has been more rapid than can be continually offset by gains in other markets in such a short period of time. According to Kalb, "A number of our major customers are going through inventory adjustments because of slower than anticipated business growth, as well as model changes as they position themselves for future growth."

The company noted that its book to bill ratio for the March quarter was 0.98. While this is well above the semiconductor industry in general, such levels, plus very slow bookings in April, indicate that there will not be any sequential quarterly growth in revenues, and that it is possible that there will be a decline in revenue in the first quarter. However, the industry generally expects a strengthening in the second half of the calendar year, and should that occur, CMD's year over year comparisons should be good.

According to Kalb, "CMD is reacting to the changing environment as appropriate, but this slow to moderate growth will keep pressure on margins and profits, as the company is continuing to make investments for the future. New design activity around CMD's thin film passive products, and particularly around our new P/Active(TM) family of products is accelerating. This should lead to improved growth opportunities when the company emerges from this transition period. In the meantime, we want to keep our investors apprised of the rapidly changing dynamics of our company, and the markets we serve."

California Micro Devices is a designer, manufacturer and marketer of integrated passive and active electronic components. 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.

Statements contained herein which are not historical facts are forward looking statements. The forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Due to the risk factors discussed herein, the company's future actual results could differ materially from those discussed above. -0-

                  California Micro Devices Corp.
                    Statement of Operations

                                 Three Months     12 Months  Nine Months
                                    Ended                Ended
(Amounts in thousands              March 31,            March 31,
 except per share data)         1996      1995      1996       1995

Revenues:
 Net product sales            $10,724   $ 7,337    $38,642    $22,335
 Technology related revenues      250       400      1,240      1,368
Total revenues                 10,974     7,737     39,882     23,703

Costs and expenses:
 Cost of sales                  6,451     5,116     22,430     17,673
 Research and development         934       972      3,417      2,685
 Selling, marketing and
  administrative                2,534     4,682     10,573      9,763
Total costs and expenses        9,919    10,770     36,420     30,121

Operating income (loss)         1,055    (3,033)     3,462     (6,418)

Settlement of shareholder
 dispute and related matters      --     16,336       --       16,336
Other (income) expense, net       (32)     (448)    (1,657)      (137)
Income (loss) before income
 taxes                          1,087   (18,921)     5,119    (22,617)

Income taxes (benefit)             --        --         --         50
Income (loss) before change
 in accounting principle        1,087   (18,921)     5,119    (22,667)
Cumulative effect of change in
 accounting principle              --        --         --        835
Net income (loss)             $ 1,087  $(18,921)   $ 5,119   ($23,502)

Earnings per share:
Income (loss) before
 cumulative effect of change
 in accounting                  $0.10  $  (2.21)     $0.48   $  (2.65)
Cumulative effect of change
 in accounting principle           --        --         --      (0.10)
Net income (loss) per share     $0.10  $  (2.21)     $0.48    $ (2.75)

Weighted average common shares
 and share equivalents
 outstanding                   10,909     8,570     10,645      8,554

NOTE: Earnings for the 12 months ended March 31, 1996, include a
one-time gain of $1,576,000, or $0.15 per share, related to the
company's sale of its interest in Cell Access in the quarter ended
Dec.  31, 1995.

                   California Micro Devices Corp.
                          Balance Sheets

                                         March 31,   March 31,
                                            1996       1995
(Amounts in thousands)

ASSETS:
Current assets:
 Cash and securities                      $22,150    $18,960
 Accounts receivable                        4,500      3,203
 Inventories                                6,940      4,747
 Refundable income taxes and other            585      5,445
Total current assets                       34,175     32,355

Property, plant and equipment, net          9,314      6,665
Restricted cash                               905        989
Other long term assets                        534        679
Total assets                              $44,928    $40,688

LIABILITIES & SHAREHOLDERS' EQUITY:
Current liabilities:
 Accounts payable                         $ 2,832    $ 2,725
 Accrued salaries and benefits              1,250        560
 Other accrued liabilities                  4,279      3,748
 Deferred margin on shipments to
  distributors                              1,039      1,157
 Current portion of long-term debt and
  capital leases                            1,282      2,516
Total current liabilities                  10,682     10,706

Long-term debt, less current maturities     7,490      7,923
Capital lease obligations, less current
 maturities                                   299      1,278
Deferred income                               107        136
Total liabilities                          18,578     20,043

Shareholders' equity                       26,350     20,645

Total liabilities and shareholders'
 equity                                   $44,928    $40,688

CONTACT: California Micro Devices

Jeffrey Kalb, 408/934-3106 (president and CEO)

John Trewin, 408/934-3103 (vice president and CFO)

Roberta Silverstein, 408/934-3141 (press and media)