<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
----------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------------------- -------------------
Commission File Number 0-7428
------
CALIFORNIA MICROWAVE, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 94-1668412
- -------- ----------
(State or other jurisdiction of Incorporation) (I.R.S. Employer Identification Number)
</TABLE>
555 TWIN DOLPHIN DRIVE, REDWOOD CITY, CALIFORNIA 94065
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 596-9000
--------------
- --------------------------------------------------------------------------------
Former name, former address, and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES /X/ NO / /
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Classes Outstanding at October 31, 1996
- ----------------------------------------- -------------------------------
Common Stock $.10 Par Value 16,142,749
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<PAGE> 2
Part I. Financial Information
Item 1. Financial Statements
CALIFORNIA MICROWAVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30
--------------------------------
1996 1995
---- ----
<S> <C> <C>
Net Sales $ 103,692 $ 115,763
Cost of products sold 77,109 80,990
---------- ----------
Gross margin 26,583 34,773
---------- ----------
Expenses:
Research and development 7,865 7,166
Marketing and administration 19,753 18,038
Amortization of intangible assets 540 547
---------- ----------
Total expenses 28,158 25,751
---------- ----------
Operating income (loss) (1,575) 9,022
Interest expense (1,404) (1,044)
Interest income 52 1
---------- ----------
Income (loss) before income taxes (2,927) 7,979
Provision for (benefit from)income taxes (1,054) 2,872
---------- ----------
Net income (loss) $ (1,873) $ 5,107
========== =========
Net income (loss) per share $ (0.12) $ .31
========== ==========
Average shares and equivalents 16,133 16,331
</TABLE>
See accompanying notes.
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<PAGE> 3
CALIFORNIA MICROWAVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited, See Note A)
<TABLE>
<CAPTION>
September 30 June 30
1996 1996
------------ -------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 4,224 $ 4,560
Short-term investments 1,853 1,504
Accounts receivable 94,382 108,278
Inventories 106,737 103,456
Deferred tax assets 10,387 10,387
Prepaid expenses 2,595 2,314
------------- -------------
Total current assets 220,178 230,499
------------- -------------
Net property, plant and equipment 48,626 48,762
Deferred tax assets 1,973 1,973
Intangible and other assets 56,200 57,106
------------- -------------
$ 326,977 $ 338,340
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 14,000 $ --
Current portion of long-term debt 525 525
Accounts payable 37,449 46,566
Accrued income taxes 1,474 3,406
Other accrued liabilities 35,499 38,750
------------- -------------
Total current liabilities 88,947 89,247
------------- -------------
Long-term liabilities 68,612 79,233
Commitments and contingencies
Stockholders' equity:
Common stock 1,614 1,603
Capital in excess of par value 90,107 88,788
Retained earnings 78,470 80,343
Unamortized restricted stock plan expense (646) (722)
Cumulative translation adjustment (127) (152)
------------- -------------
Total stockholders' equity 169,418 169,860
------------- -------------
$ 326,977 $ 338,340
============= =============
</TABLE>
A - The balance sheet at June 30, 1996 has been derived from the audited
financial statements at that date, but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. See accompanying notes.
-3-
<PAGE> 4
CALIFORNIA MICROWAVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30
------------------------
1996 1995
---- ----
<S> <C> <C>
Operating activities:
Net income (loss) $(1,873) $ 5,107
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 3,778 3,381
Amortization of intangible assets 540 547
Debt issuance costs paid 53 51
Net effect of changes in:
Accounts receivable 13,896 1,958
Inventories (3,281) 6,698
Prepaid expenses (281) 128
Accounts payable (9,117) (9,394)
Accrued income taxes (1,932) 2,124
Other accrued liabilities (3,251) (9,792)
-------- --------
Net cash provided by (used in) operating activities (1,468) 808
-------- --------
Investing activities:
Capital expenditures (3,642) (4,300)
Other (22) (2,350)
------- ---------
Net cash provided by (used in) investing activities (3,664) (6,650)
------- ---------
Financing activities:
Proceeds from (payments on) long-term debt (34) (5)
Proceeds from issuance of common stock 1,330 1,753
Proceeds from bank credit facilities 3,500 3,750
------- ---------
Net cash provided by (used in) financing activities 4,796 5,498
------- ---------
Net increase (decrease) in cash and cash equivalents (336) (344)
Cash and cash equivalents at beginning of year 4,560 1,983
------- ---------
Cash and cash equivalents at end of period $ 4,224 $ 1,639
======= =========
Cash paid during the period for:
Interest $ 371 $ 376
Income taxes 864 1,201
</TABLE>
See accompanying notes.
-4-
<PAGE> 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Note 1 - Basis of Presentation
---------------------
The information at September 30, 1996, and for the three-month
periods ended September 30, 1996 and 1995, is unaudited, but
includes all adjustments (consisting only of normal recurring
adjustments) which the management of California Microwave,
Inc. believes are necessary for a fair presentation of the
results for the periods presented. Interim results are not
necessarily indicative of results for a full year. The
condensed consolidated interim financial statements should be
read in conjunction with the audited consolidated financial
statements for the year ended June 30, 1996 included in the
California Microwave, Inc. 1996 Annual Report to Stockholders.
Note 2 - Fiscal Periods
--------------
During the first quarter of fiscal 1997, the Company changed
its fiscal periods to end on the last day of each calendar
quarter. Previously, each quarter ended on the Saturday
closest to the calendar month-end. The impact of this change
is not material to the condensed consolidated financial
statements.
Note 3 - Reclassifications
-----------------
Certain fiscal year 1996 amounts have been reclassified to
conform to the fiscal year 1997 presentation.
<TABLE>
<CAPTION>
Note 4 - Inventories
----------- (in thousands)
September 30 June 30
1996 1996
------------ --------
<S> <C> <C>
Projects in process $ 22,649 $ 23,948
Less progress billings 6,890 11,750
-------- --------
15,759 12,198
Work-in-process and finished goods 38,389 43,161
Raw materials and parts 52,589 48,097
-------- --------
$106,737 $103,456
======== ========
</TABLE>
Note 5 - Unbilled Accounts Receivable
----------------------------
Included in accounts receivable at June 30, 1996, and
September 30, 1996, was approximately $7.5 million of unbilled
receivables resulting from provisions contained in certain
export contracts.
The unbilled receivables at September 30, 1996, are expected
to be billed and collected within one year.
Note 6 - Stockholders' Equity
--------------------
The change in capital in excess of par value for the three
months ended September 30, 1996, consists principally of
common stock issuances and tax benefit of options exercised.
Note 7- Contingent Liabilities
----------------------
On November 9, 1995, and December 12, 1995, two putative class
action lawsuits were filed in the United States District Court
for the Northern District of California. The plaintiffs in
these two cases, which have been consolidated
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<PAGE> 6
purport to represent a class of all persons who
purchased common stock of the Company between September 6,
1994 and June 29, 1995 ( the class period). Named as
defendants are the Company and certain of its present and
former executive officers. The complaints allege that
defendants violated various federal securities laws through
material misrepresentations and omissions during the class
period. Defendants filed motions to dismiss the complaints,
which the court granted on April 19, 1996, with leave to
amend. Plaintiffs filed an amended consolidated complaint and
in August 1996 defendants filed a motion to dismiss that
complaint. On November 1, 1996, the motion to dismiss was
denied. Although the ultimate outcome of these proceedings can
not be determined, the Company believes that it has
meritorious defenses to the claims alleged in these lawsuits
and intends to defend the actions vigorously.
The Company is subject to other legal proceedings and claims
that arise in the normal course of its business. The Company
believes these proceedings will not have a material adverse
effect on the financial position or results of operations of
the Company.
-6-
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Statements made below and elsewhere in this Form 10-Q that are not historical
facts, including any statements about expectations for fiscal year 1997 and
beyond, involve 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, delays in the integration of
operations of the Company's wireless businesses and other factors referred to
under "Information Regarding Forward Looking Statements" in the Company's Form
10-K Annual Report for its fiscal year ended June 30, 1996, and in the Company's
Consolidated Financial Statements and Notes to Financial Statements contained in
its 1996 Annual Report. The Condensed Consolidated Financial Statements and
Notes to Condensed Consolidated Financial Statements should be read in
conjunction with this Managements' Discussion and Analysis of Financial
Conditions and Results of Operations.
The following table sets forth for the periods indicated (i) certain income and
expense items expressed as a percentage of the Company's total sales and (ii)
the percentage change of such items for the three months ended September 30,
1996, compared to the three months ended September 30, 1995. See Condensed
Consolidated Statements of Operations.
<TABLE>
<CAPTION>
Period to Period
Percent of Sales Increase (Decrease)
---------------- ------------------
Three Months Three Months
Ended Ended
September 30 September 30
------------ ------------
1996 1995 1996 vs 1995
---- ---- ------------
<S> <C> <C>
Sales 100.0% 100.0% (10.4)%
Gross margin 25.6 30.0 (23.6)
Research and development expenses 7.6 6.2 9.8
Marketing and administration expenses 19.0 15.6 9.5
Amortization of intangible assets 0.5 0.5 (1.3)
Operating income (1.5) 7.8 NM
Interest (expense) net (1.3) (0.9) 29.6
Income before income taxes (2.8) 6.9 NM
Net income (1.8) 4.4 NM
</TABLE>
-7-
<PAGE> 8
The following table sets forth sales by product class and by market sector for
the three months ended September 30, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
Sales
-----
Three Months
Ended
September 30
-=----------
1996 1995
---- ----
<S> <C> <C>
Satellite Communications $ 33,473 $ 55,932
Wireless 44,623 41,541
Intelligence 25,596 18,290
-------- ---------
$ 103,692 $ 115,763
========= =========
International $ 42,905 $ 61,636
U.S. Commercial 32,479 30,929
U.S. Government 28,308 23,198
--------- ---------
$ 103,692 $ 115,763
========= =========
</TABLE>
RESULTS OF OPERATIONS
Sales. Sales were $103.7 million and $115.8 million for the three months
ended September 30, 1996 and 1995, respectively, representing a decrease of 10%.
Wireless products and intelligence systems sales increased 7% and 40%,
respectively, offsetting, in part, a 40% decrease in satellite communications
sales. The increase in intelligence systems sales reflects the continued growth
in the intelligence programs in which the Company participates. The rate of
growth of intelligence systems sales for the remainder of the year on a
comparative quarter basis is expected to be significantly lower than the 40%
experienced in the first quarter of 1997. The decrease in total sales was due
principally to orders being received too late to be shipped in the quarter,
continued delays by customers in completing the financing of certain large
satellite earth station projects, and the factors affecting international sales
discussed below.
U.S. commercial sales and sales to the U.S. government increased 5% and
22%, respectively, while international sales decreased 30% in the first quarter.
The increase in sales to the U.S. Government is consistent with the increase in
intelligence systems sales. The decrease in international sales reflects the
decrease in sales to AT&T for its telecommunications project in Saudi Arabia and
other large projects as these projects were substantially completed in fiscal
1996 and the delays by customers in completing the financing of certain
satellite earth station projects discussed above. Products represented 62% of
total sales in the first quarter of 1997 compared to 65% in the first quarter of
1996, with the balance represented by system sales.
Gross Margin. Gross margin was $26.6 million and $34.8 million for the
three months ended September 30, 1996 and 1995, respectively, representing a
decrease of 24%. Gross margin as a percentage of total sales was 25.6% and 30.0%
for such periods, respectively. The decrease in gross margin in dollars and as a
percentage of sales was due primarily to lower sales as noted above which
resulted in lower overhead absorption, to competitive pricing pressures on
certain wireless and satellite product lines, and to the change in mix of
products to lower margin satellite and wireless products in the first quarter of
1997 as compared to the first quarter of 1996. Gross margin as a percentage of
sales is expected to be lower at least through the third quarter of fiscal 1997
compared to the
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<PAGE> 9
comparable quarters of fiscal 1996 principally due to underabsorbed overhead at
Microwave Network Systems (MNS) and product mix and competitive pricing
pressures for satellite and wireless products.
Research and Development. Research and development expenses were $7.9
million and $7.2 million for the three months ended September 30, 1996 and 1995,
respectively, representing an increase of 10%. Research and development expenses
as a percentage of total sales were 7.6% and 6.2% for such periods,
respectively. The Company continues to focus its research and development
efforts primarily on the development of new satellite networking products and
software and wireless products.
Marketing and Administration. Marketing and administration expenses were
$19.8 million and $18.0 million for the three months ended September 30, 1996
and 1995, respectively, representing an increase of 10%. Marketing and
administration expenses as a percentage of total sales were 19.0% and 15.6% for
such periods, respectively. In general, the dollar increases in marketing and
administration expenses relate to increased expenses associated with the
Company's efforts to penetrate the domestic Personal Communications Services
(PCS) and certain international markets.
Amortization of Intangible Assets. Amortization expenses associated with
intangible assets remained constant at $.5 million for the three months ended
September 30, 1996, and 1995.
Interest Expense, Net. Net interest expense was $1.4 million and $1.0
million for the three months ended September 30, 1996 and 1995, respectively,
representing an increase of 30%. The increase in net interest expense reflects
the need for the Company to borrow against its credit lines to fund operations
and capital expenditures.
Provision for Income Taxes. For the three months ended September 30, 1996,
the Company recognized a $1.1 million benefit from income taxes compared to a
$2.9 million provision for income taxes for the three months ended September 30,
1995. The effective tax rate was 36% for each of these periods.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had working capital of $131.2 million,
including $4.2 million of cash and cash equivalents, compared with working
capital of $141.3 million, including cash and cash equivalents of $4.6 million,
at June 30, 1996.
During the first three months of fiscal 1997 cash and cash equivalents were
provided by operations (after adjusting the operating loss for depreciation and
amortization) and decreases in accounts receivable, and were used to fund an
increase in inventories and reductions of accounts payable and accrued income
taxes, and to pay year-end accrued liabilities, including payments under
incentive agreements and employee benefit plans and certain restructuring
payments. The net result was cash and cash equivalents used by operations of
$1.5 million. During the first three months of fiscal 1996, cash and cash
equivalents were provided by operating income (including depreciation and
amortization) and decreases in accounts receivable and inventories, and were
used for the reductions of accounts payable and payment of year-end accrued
liabilities. The net result was cash and cash equivalents provided by operating
activities of $ 0.8 million.
-9-
<PAGE> 10
The Company's investing activities during the first three months of fiscal
1997 included capital expenditures of $3.6 million. Total cash used for
investing activities was $3.7 million. Net cash used for investing activities
during the first three months of fiscal 1996 was $6.7 million, which included
$4.3 million of capital expenditures.
During the first three months of fiscal 1997, cash and cash equivalents of
$4.8 million were provided by financing activities, including borrowings of $3.5
million under the Company's credit lines and sales of $1.3 million of common
stock to employees under on-going stock option and purchase plans. During the
first three months of fiscal 1996, the Company borrowed $3.8 million under its
credit lines and sold $1.8 million of common stock to its employees.
The above activity resulted in a net decrease in cash and cash equivalents
of $.3 million for each of the first three months of fiscal 1997 and 1996.
The Company has an unsecured $60.0 million committed bank credit facility,
which expires in September 1998. As of September 30, 1996, there were $14.0
million of borrowings and $5.8 million of standby letters of credit outstanding
under this credit facility. At September 30, 1996, the Company was not in
compliance with certain covenants required by its debt agreements. The lenders
have waived such non-compliance. The waiver pertaining to the bank credit
facility is operative only until November 29, 1996, and the Company has agreed
to limit its utilization of the credit facility to $30.0 million prior to that
date. The Company is in negotiation with the bank to determine its credit
arrangement beyond November 29, 1996, and believes a satisfactory arrangement
will be made. However, since the arrangement has not been finalized, the
outstanding balance under the credit facility at September 30, 1996, of $14.0
million has been classified as a current facility.
The Company believes that its current cash position, funds generated from
operations and funds it believes will be available from credit facilities will
be adequate to meet the Company's requirements for working capital, capital
expenditures, debt service and external investments for the next 12 months.
RESTRUCTURING AND OTHER CHARGES
In June 1995, the Company recorded restructuring charges of approximately
$20.9 million and other charges of approximately $15.5 million , for a total of
approximately $36.4 million in connection with a program to reduce costs and
improve operating efficiencies. Substantially all of the other charges were
reflected in costs of products sold. The program included, among other things:
the integration of certain of the Company's wireless operations and the exit by
California Microwave-TeleCom Transmission Systems, Inc. (TTS) from the
short-haul radio market, which included certain short-haul radio contracts and
the shifting of short-haul radio sales to California Microwave-Microwave Radio
Corporation (MRC); the recording of certain contract costs at California
Microwave-Satellite Transmission Systems (STS) Division; the elimination of
excess facilities; the reduction of employees at STS; the write-off of excess
inventory and capital equipment; and the write down of intangible assets. During
fiscal 1996, the program was expanded, without a net charge to operations, to
include merging the operations of TTS and Microwave Networks Incorporated (MNI)
with certain operations of MRC into a new unit, MNS, resulting in the write-off
of additional excess inventories and other assets and reducing the number of
employees at MNS.
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<PAGE> 11
The following table summarizes these charges:
<TABLE>
<CAPTION>
1995 Less: asset write-
Provision, offs and payments Future
as adjusted through September 30, 1996 Cash Outlays
----------- -------------------------- ------------
<S> <C> <C> <C>
Restructuring:
Excess facilities $ 3,930 $ 1,439 $ 2,491
Severance costs 4,026 4,026
Capital equipment write-offs 1,063 1,063 --
Intangible asset write-down 10,000 10,000
Other 1,927 1,235 692
-------- ---------- --------
20,946 17,763 3,183
-------- ---------- --------
Other charges:
Contract termination
and related costs and
inventory 13,450 12,092 1,358
Other 2,000 1,000 1,000
-------- --------- ---------
15,450 13,092 2,358
-------- ------ ---------
$ 36,396 $ 30,855 $ 5,541
========= ========= =========
</TABLE>
During fiscal 1996, STS terminated approximately 75 employees in connection
with the restructuring and MNS terminated approximately 200 employees in
connection with the merging of operations of TTS and MNI with certain operations
of MRC. The cost of MNS's terminations of approximately $2.8 million was offset
by reduced amounts originally provided for excess facilities as these amounts
were determined not to be needed. Accordingly, there was no additional
restructuring charge in fiscal 1996, and the 1995 provision, as adjusted,
reflects this $2.8 million adjustments.
Through September 30, 1996, assets written down and payments made totaled
approximately $30.9 million, leaving a reserve balance of $5.5 million which is
necessary for actions contemplated in fiscal 1997. The majority of remaining
future cash outlays are associated with payments for excess or unused facilities
which are expected to total approximately $2.5 million, substantially all of
which will be made during fiscal 1997.
OTHER FINANCIAL INFORMATION
Bookings. Orders booked were $105.1 million and $101.4 million for the
three months ended September 30, 1996 and 1995, respectively, representing an
increase of 4%. Bookings for wireless products increased 24% to $49.9 million,
or 48% of total bookings. Satellite communications and intelligence systems
bookings decreased 5% and 18%, respectively.
Backlog. Backlog was $169.8 million and $217.2 million at September 30,
1996 and 1995, respectively, representing a decrease of 22%. Substantially all
of the September 30, 1996 backlog is expected to be delivered within twelve
months.
-11-
<PAGE> 12
Part II - Other Information
Item 1. Legal Proceedings
On November 9, 1995, and December 12, 1995, putative class action
lawsuits entitled Rick Fairchild v. California Microwave, Inc. et
al. and Mark E. McKinney v. California Microwave, Inc. et al. were
filed in the United States District Court for the Northern
District of California. The plaintiffs in these two cases, which
have been consolidated, purport to represent a class of all
persons who purchased common stock of California Microwave, Inc.
(the "Company") between September 6, 1994 and June 29, 1995 (the
"Class Period"). Named as defendants are the Company and certain
of its present and former executive officers. The complaints
allege that defendants violated various federal securities laws
through material misrepresentations and omissions during the Class
Period. Defendants filed motions to dismiss the complaints, which
the court granted on April 19, 1996 with leave to amend.
Plaintiffs filed an amended consolidated complaint and in August
1996, defendants filed a motion to dismiss that complaint. On
November 1, 1996, the motion to dismiss was denied. Although the
ultimate outcome of these proceedings cannot be determined, the
Company believes that it has meritorious defenses to the claims
alleged in these lawsuits and intends to defend the actions
vigorously.
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders of registrant held on
October 25, 1996, the shareholders:
1. Elected Directors for the ensuing year as follows:
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C> <C>
Philip F. Otto 12,716,190 165,952
David B. Leeson 12,716,190 165,952
Arthur H. Hausman 12,716,190 165,952
Edward E. David, Jr. 12,716,190 165,952
Alfred M. Gray 12,716,190 165,952
J.J. Adorjan 12,716,190 165,952
William B. Marx, Jr. 12,716,190 165,952
Terry W. Ward 13,776,224 --
Frederick W. Whitridge, Jr. 13,776,223 --
</TABLE>
2. Approved an amendment to increase by 400,000 the shares
available under the Employee Stock Purchase Plan, with the
number of shares voted in favor of ratification being
12,927,371; the number of shares voted against such
ratification being 1,152,484; and the number of abstentions
being 88,060.
3. Ratified the selection of Ernst & Young LLP as independent
certified public accountants for the Company, with the number
of shares voted in favor of the ratification being 14,072,022;
the number of shares voted against such ratification being
53,701; and the number of abstentions being 42,192.
-12-
<PAGE> 13
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Statement re computation of per share earnings.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K.
None.
-13-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CALIFORNIA MICROWAVE, INC.
November 14, 1996 BY /s/ Philip F. Otto
- ------------------------------------ --------------------
Date Philip F. Otto
Chief Executive Officer
Chairman of the Board
November 14, 1996 BY /s/ Dennis R. Raney
- ------------------------------------ ---------------------
Date Dennis R. Raney
Senior Vice President
Chief Financial Officer
-14-
<PAGE> 1
California Microwave, Inc.
Computation of Per Share Earnings
Exhibit 11
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
September 30
--------------------------
1996 1995
---- ----
<S> <C> <C>
PRIMARY - EPS:
Net income (loss), as reported $(1,873) $ 5,107
======= =======
Average shares outstanding 16,133 15,807
Add - Common stock equivalents of Company's
stock options using the treasury stock method -- 524
------- -------
Average shares and equivalents - Primary 16,133 16,331
======= =======
Net income per share - Primary $ (0.12) $ .31
======= =======
FULLY DILUTED - EPS:
Net income, as reported $(1,873) $ 5,107
Add back interest, net of taxes 562 562
-------- -------
Net income for fully diluted $ (1,311) $ 5,669
======== =======
Average shares and equivalents - primary 16,133 16,331
Add- additional common stock equivalents of
the Company's stock options -- --
Add - Shares to be issued at conversion of
Convertible Debentures 2,222 2,221
-------- -------
Average shares and equivalents - Fully Diluted 18,355 18,552
======== =======
Net income per share - Fully Diluted $ (0.12) $ .31
======== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 4,224
<SECURITIES> 1,853
<RECEIVABLES> 94,382
<ALLOWANCES> 2,387
<INVENTORY> 106,737
<CURRENT-ASSETS> 220,178
<PP&E> 110,085
<DEPRECIATION> 61,459
<TOTAL-ASSETS> 326,977
<CURRENT-LIABILITIES> 88,947
<BONDS> 68,612
0
0
<COMMON> 1,614
<OTHER-SE> 167,804
<TOTAL-LIABILITY-AND-EQUITY> 326,977
<SALES> 103,692
<TOTAL-REVENUES> 103,692
<CGS> 77,109
<TOTAL-COSTS> 77,109
<OTHER-EXPENSES> 28,158
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,404
<INCOME-PRETAX> (2,927)
<INCOME-TAX> (1,054)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
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