SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
February 12, 1997
Date of Report (Date of earliest event reported)
CALIFORNIA MICROWAVE, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-7428 94-1668412
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
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
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Item 5. Other Events.
On February 12, 1997, California Microwave, Inc.
(the "Company") issued the press release attached as Exhibit
99.1 hereto announcing that it expects to record inventory
write-downs, warranty and other charges totaling $39 million
in its second quarter and expects to record restructuring
charges of $8 million in its third quarter ending March 31,
1997. The press release also announced certain actions taken
to refocus the operations of its Microwave Network Systems
and Satellite Transmission Systems divisions.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press Release of California Microwave, Inc.
dated February 12, 1997.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
CALIFORNIA MICROWAVE, INC.
(Registrant)
By: /s/ Gilbert F. Johnson
_______________________________
Name: Gilbert F. Johnson
Title: President,
Chief Operating Officer
Dated: February 14, 1997
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
99.1 Press Release of California
Microwave, Inc. dated February 12,
1997
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[LOGO] California Microwave, Inc.
555 Win Dolphin Drive
Redwood City, CA 94065 USA
(415) 596-9000 Fax: (415) 596-6600
____________________________
PRESS RELEASE
FOR IMMEDIATE RELEASE
Wednesday, February 12, 1997
CALIFORNIA MICROWAVE SECOND QUARTER:
BUSINESS REVIEW LEAD TO RESTRUCTURING;
WRITE-DOWNS RESULT IN LOSS
Redwood City, California - California Microwave, Inc. (CMIC-
Nasdaq) announced that the comprehensive business review
discussed in its January 14 press release has led to a
refocusing of the company's Microwave Network Systems (MNS)
and Satellite Transmission Systems (STS) operations. As a
result, the company is recording inventory write-downs,
warranty and other charges totaling $39 million, before
income tax benefits, in its fiscal 1997 second quarter and
expects to record restructuring charges of $8 million, before
income tax benefits, in its third quarter ending March 31.
California Microwave also expects that relocation and
retention costs of $2 million to $3 million resulting from
the restructuring will be charged as ordinary operating
expenses in the coming three quarters. 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.
Second Quarter Results
California Microwave reported that, including the effect of
the write-downs, it had incurred a net loss of $25 million,
or ($1.57) per share, on sales of $117 million for its second
quarter ended December 31, 1996. This compares to net income
of $3.6 million, of $.23 per share, on sales of $116 million
reported for the same period last year. Without the
inventory, warranty and other charges, California Microwave's
fiscal 1997 second quarter net income would have been
$971,000, or $.06 per share. New orders booked in the second
quarter of fiscal 1997 decreased 8% to $106 million compared
to $115 million booked last year.
Actions Taken
Most of California Microwave's units are already consistently
profitable. In response to operating disappointments at the
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remaining units, California Microwave made several
significant management changes, initiated a search for a new
CEO, established a new board executive committee, initiated a
comprehensive business review, retained J.P. Morgan to aid in
the review, and is strengthening its operational management
and controls.
The actions being taken are intended to restore overall
profitability to the MNS and STS operations by refocusing on
core competencies, narrowing product lines and reducing
costs. California Microwave believes that these actions to
cut expenses and to focus the development and production
capacity of its business units on sharply defined objectives
will result in a competitive cost structure and improved
gross margins.
Microwave Network Systems, Satellite Transmission Systems
Tightly Refocused
MNS will focus on the two markets offering the best
opportunities for its products and capabilities, the PCS
relocation market in the U.S. and cellular providers in
developing countries. These markets will be addressed by two
separate operations under experienced MNS managers. STS will
focus on its historically successful strengths in systems
integration and network configuration. STS' satellite earth
station products will be transferred to California
Microwave's EFData operation.
The largest portion of the inventory write-down relates to
the decisions at MNS and STS to more sharply define their
markets and to focus on the products appropriate for those
markets. The largest element of the remaining write-down is
a product warranty reserve at MNS. The restructuring in the
third quarter includes closing MNS facilities in California
and Illinois and a reduction of over 20% in the MNS work
force.
Cautionary Statement: Statements made in this press release
that are not historical facts, including any statements about
expectations for the balance of fiscal year 1997, 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 implementing the
company's restructuring plan, delays in transitioning from
older to newer products, and the other factors described in
the company's Form 10-K annual report for its fiscal year
ended June 30, 1996.
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California Microwave, Inc. is a leading U.S. supplier of
satellite earth station and microwave radio infrastructure
products, installed in more than 110 countries.
-more-
(results of operations, balance sheet,
sales/bookings by product class and market sector)
###
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CALIFORNIA MICROWAVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
Three Months Ended Six Months Ended
December 31 December 31
& &
1996 1995 Change 1996 1995 Change
Net Sales $117,089 $116,289 + 1 $220,781 $232,052 - 5
Cost of 124,992 82,159 + 52 202,101 163,149 + 24
products sold ________ ________ ________ ________
Gross Margin (7,903) 34,130 NM 18,680 68,903 - 73
________ ________ ________ ________
Expenses:
Research & 7,891 7,532 + 5 15,756 14,698 + 7
development
Marketing & 22,723 19,255 + 18 42,476 37,293 + 14
administration
Amortization
of intangible 540 547 - 1 1,080 1,094 - 1
assets ______ ______ ______ ______
Total expenses 31,154 27,334 + 14 59,312 53,085 + 12
______ ______ ______ ______
Operating (39,057) 6,796 NM (40,632) 15,818 NM
Income (loss)
Interest (1,459) (1,094) + 33 (2,811) (2,137) + 32
expense net
Gain on sale 2,744 -- NM 2,744 -- NM
of subsidiary _______ _____ _______ ______
Income (loss)
before income (37,772) 5,702 NM (40,699) 13,681 NM
taxes
Provision for NM
(benefit from) (12,377) 2,054 NM (13,431) 4,926
income taxes ________ _____ ________ _____
Net income $(25,395) $ 3,648 NM $(27,268) $ 8,755 NM
(loss) ========= ======== ========= ========
Net income
(loss) per $(1.57) $0.23 NM $(1.69) $0.54 NM
share ======= ===== ======= =====
Average shares
and
equivalents 16,145 16,129 -- 16,139 16,230 --
(thousands) ====== ====== ====== ======
Bookings $106,199 $114,861 - 8 $211,265 $216,253 - 2
Backlog 158,933 215,747 - 26 158,933 215,747 - 26
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December 31 June 30
1996 1996
Assets
Current assets:
Cash and cash equivalents $ 5,695 $ 4,560
Receivables 96,095 108,278
Inventories 76,590 103,456
Other current assets 27,725 14,205
______ ______
Total current assets 206,105 230,499
Property, plant and equipment (net) 47,708 48,762
Intangible and other assets 56,244 59,079
______ ______
$ 310,057 $338,340
========= ========
Liabilities and stockholders' equity
Current liabilities $ 97,324 $ 89,247
Long-term liabilities 68,503 79,233
Stockholders' equity 144,230 169,860
_______ _______
$ 310,057 $ 338,340
========= =========
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CALIFORNIA MICROWAVE, INC.
Fiscal 1997 Second Quarter Bookings and
Sales by Product and Market Areas
(in millions)
FY97 FY96 % % of
Q2 Q2 Change FY97
____ ____ ______ ____
BOOKINGS
Wireless 39.6 48.4 (18) 37
Satellite 35.7 49.4 (28) 34
Communications
Intelligence/Other 30.9 17.1 81 29
____ ____ ___ ___
Total 106.2 114.9 (8) 100
_____ _____ ___ ___
International 41.7 63.6 (34) 39
US Commercial 31.8 29.5 8 30
US Government 32.7 21.8 50 31
____ ____ ___ ___
Total 106.2 114.9 (8) 100
_____ _____ ___ ___
SALES
Wireless 50.3 42.1 19 43
Satellite 43.6 56.6 (23) 37
Communications
Intelligence/Other 23.2 17.6 32 20
____ ____ ___ ___
Total 117.1 116.3 1 100
_____ _____ ___ ___
International 57.8 61.0 (5) 49
US Commercial 32.4 30.9 5 28
US Government 26.9 24.4 10 23
_____ _____ ___ ___
Total 117.1 116.3 1 100
===== ===== === ===
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For Further Information Contact:
Stephanie M. Day Investor Information Deborah Passik
Vice President- Line William Dunk
Corporate (Toll-free) Partners
Communications 1-888-225-6789 (919) 929-4100
(415) 596-6629 http://www.calmike.com
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