California Microwave Completes Sale of Government Business: Retiring Short-Term Debt and Resuming Share Buyback.

SUNNYVALE, Calif.--(BUSINESS WIRE)--April 26, 1999--

Market/Product, Manufacturing Strategy Completed; Restructuring,

Revenue Shortfall to Result in Q3 Loss

California Microwave, Inc. (Nasdaq National Market: CMIC) announced today that it had completed the sale of its Government business to Northrop Grumman for $93 million in cash, for an approximate net gain of $38 million. The company will use the cash to retire its short-term debt, resume its share buyback program and continue to invest in the development and marketing of its new wireless broadband products. The company also announced that due to a revenue shortfall primarily in its international satellite communications business, California Microwave expects to record a loss from continuing operations of $5.4 million, or $.36 per share when it reports results April 29 for its third quarter ended March 31, 1999.

The operating loss includes $1.9 million, after-tax, in excess manufacturing costs related directly to factory floor reductions, inventory reductions and manufacturing process changes primarily at the company's Tempe, AZ, operations. In addition, a $2.1 million net-of-tax charge for restructuring and other items will be recorded, bringing the total loss to approximately $7.5 million, or $.51 per share. The company indicated in its January 21 second-quarter release that it would be taking a restructuring charge related to severance and factory space reductions in the third quarter.

Executing Against Long-term Strategic Plan; Restructuring in Final Phase

The divestiture of the Government business is another substantial step in executing against the long-term strategic plan California Microwave developed in April 1998 to focus on high-growth, wireless broadband markets. The company has completed the transition from a holding company to a fully focused, integrated organization. During the third quarter, it consolidated all company manufacturing operations under new leadership and installed a new management team in its Tempe, AZ, satellite communications operation. The new team has begun outsourcing the manufacturing of certain new products, has reduced the Tempe factory floor space by 20% and consolidated its manufacturing operations into one building, and has reduced by 32% the manufacturing operations headcount in Tempe. By transitioning to build-to-order, inventory in Tempe has been reduced by 14%, and through improvements in bills of materials, inventory in the company's Chelmsford, MA, operation has been reduced by 17%. The actions resulted in a total of $6.3 million, pre-tax, in restructuring and excess manufacturing costs in the quarter. An additional $1 million, pre-tax, in excess manufacturing costs will be recognized in the company's fourth quarter as the transition is completed in the April timeframe.

California Microwave's Infrastructure Now in Place

"Our focus now is on winning," commented California Microwave's chairman and chief executive officer, Fred Lawrence. "We have completed our restructuring phase, sharpened our product and market focus, made our technology acquisitions, and put in place our channel distribution and manufacturing strategies. We are aggressively pursuing the enormous wireless broadband opportunities available to us and fully expect to be a leader in providing Internet data and multimedia products and solutions to the explosive information market."

Book-to-Bill Positive, Domestic Orders Increasing

California Microwave indicated that new orders booked are shifting to more domestic business, and while orders remain soft in two of California Microwave's main international markets, Brazil and Eastern Europe, China continues to produce expected results. "Revenue in the $38 million range is very disappointing, but the weaknesses were in the areas we had anticipated. Certain key orders we had identified at risk for slipping into the fourth quarter have now been booked, and despite the slip, our third-quarter book-to-bill ratio was 108%. We have managed our cash well and aggressively attacked the cost structure in our Tempe operations, where the bulk of our satellite products are built. This should help to improve our fourth-quarter results, as we complete our factory optimization activities this quarter," stated California Microwave's chief financial officer, Donna S. Birks.

Investment Continues in New Products for High-Growth Markets

California Microwave continues its pace of investment in both developing and distributing new products for wireless broadband solutions.

Multipoint Multichannel Distribution Service (MMDS) For Wireless Internet Access

As an example, during the quarter the company announced that it would extend its AB-Access(TM) point-to-multipoint broadband access platform to support the MMDS frequency band centered around 2.6 GHz. The company selected the MMDS band for near-term product development because of its ability to provide the wide coverage and building penetration characteristics sought by Internet and other telecommunications service providers. The MMDS product, which supports data rates up to 30Mbps, in a 6-MHz channel in a line-of-sight mode, also supports in-building, non-line-of-sight applications. The core, patent-pending AB-Access technology was engineered to work at any frequency from 2-42 GHz. The first release of AB-Access is for applications that use the 5 GHz "Unlicensed National Information Infrastructure" (U-NII) frequency band.

On-Line Transaction Processing 

California Microwave entered into an agreement with KB/TEL TELECOMUNICACIONES, S.A. DE C.V. ("Kb/TEL") that gives California Microwave an exclusive, long-term license to manufacture and distribute the Kb/NET family of wireless network connectivity solutions for applications such as Automated Teller Machines, Point-of-Sale terminals and Lottery terminals. Using the Kb/TEL technology, California Microwave is building point-to-multipoint radio solutions under its Microwave Data Systems (MDS) brand name that address the growing needs of urban business centers as they expand commerce by supporting real-time transaction processing and Internet access.

Internet Protocol Traffic Over Satellite

At the National Association of Broadcasters show April 19-22, 1999, in Las Vegas, the company highlighted a family of products that will simplify and reduce the cost and complexity of distributing Internet protocol (IP) traffic over satellite. The SpectraCast(R) product line is the result of California Microwave's acquisition of Crown Satellite. The product family includes data transport multiplexers, IP gateways, Ethernet-enabled receivers, and accompanying network management software tools. SpectraCast is ideally suited for Virtual Private Networks (VPNs), broadband Internet distribution and broadband Internet backbones.

Statements made in this press release that are not historical facts, including any statements about expectations for fiscal year 1999 and beyond, are forward-looking statements, involving certain risks and uncertainties. Factors that could cause the company's actual results to differ materially from management's projections, estimates and expectations include, but are not limited to, delays in the receipt of orders or in the shipment of products, the company's success in implementing its strategic plan, and other factors referred to in the company's Securities and Exchange Commission filings.

California Microwave, Inc. (http://www.calmike.com) is a leading supplier of terrestrial wireless and satellite-based systems to support ultra-high speed Internet access, broadcast digital TV transport and worldwide Internet backbones. California Microwave also provides industry-leading solutions for satellite-based data communications and terrestrial wireless telemetry networks.

Product Showcase April 29 in Sunnyvale

With its emergence as a leading architect of the wireless broadband evolution, California Microwave will change its name to better express this new identity. Effective April 29, 1999, it will become Adaptive Broadband Corporation (Nasdaq National Market:ADAP). The company is hosting a product demonstration of its new wireless broadband solutions in conjunction with its name change. Members of the media, customer and financial communities are invited to attend between 10:00 a.m. and 1:00 p.m. on April 29. Please RSVP to telephone: [phone], fax: [phone] or e-mail: [e-mail].