California Micro Devices Reports September Quarter Results

MILPITAS, Calif., Oct. 29 /PRNewswire-FirstCall/ -- California Micro Devices (Nasdaq: CAMD) today announced financial results for the second quarter of fiscal 2010, which ended September 30, 2009. Revenue was $11.1 million, compared to $16.3 million a year ago, exceeding guidance. GAAP EPS was a loss of ($0.15) compared to ($0.08) a year ago. Non-GAAP EPS was a loss of ($0.11) compared to a profit of $0.01 a year ago. Both GAAP and non-GAAP EPS were lower than guidance due to higher than expected one-time charges incurred in connection with the recent proxy contest and the shutdown of the company's display controller product line. For purposes of this release, non-GAAP EPS and non-GAAP gross margin exclude employee stock based compensation expenses, acquisition related intangible asset amortization and non-cash restructuring expenses, and use a cash basis tax rate.

"I am pleased to report that demand for our products in Q2 grew more rapidly than originally anticipated, led by our handset protection devices. In addition, we achieved positive operating cash flow a quarter earlier than expected as a result of improving business performance and careful management of working capital," said Robert. V. Dickinson, president and chief executive officer. He summarized other Q2 highlights as follows:

• Handset protection revenue grew 47 percent sequentially to $5.3 million
• Bookings grew to $13.1 million, up 17 percent from Q1
• Q3 beginning backlog was up 22 percent from Q2
• Operating cash flow increased by $1.4 million compared to Q1
• Began shipments for newly introduced Android phones
• Secured initial design wins from second High Brightness LED (HBLED) customer
  

Dickinson also noted that the company introduced several key new products during the quarter:

• Launched microSD filter for mobile handsets with lowest capacitance and 15kV ESD protection
• Introduced low capacitance Praetorian® III filter for advanced multimedia and smart phones
• Added LuxGuard(TM) device for HBLEDs featuring 100V breakdown, industry's highest
• Expanded PicoGuard® family: array with 20kV protection and low capacitance array for high speed interfaces
  

Looking ahead, the company expects Q3 revenue to be between $10.5 and $12.5 million with a GAAP EPS loss of between ($0.04) and breakeven, and non-GAAP EPS between a loss of ($0.03) and a profit of $0.01. The company also expects to significantly increase non-GAAP gross margin to between 34.0 and 35.0 percent, up from 27.3 percent in Q2, and to generate positive operating cash flow between breakeven and $200,000.

Live Webcast and Phone Access
California Micro Devices will hold a conference call today at 2:00 p.m. Pacific Time to discuss its financial results. The live webcast (audio with slides) may be accessed by connecting to: http://tinyurl.com/CMD-Q2-2010. To access the conference live by phone (audio only) within the USA, dial 877-941-6010; outside the USA, dial 480-629-9773. Subsequent replay of the webcast may be accessed by connecting to the company's Investor Relations link at www.cmd.com. The webcast replay will be available at about 4:00 p.m. Pacific Time today and continue for one year.

About California Micro Devices Corporation
California Micro Devices Corporation is a leading supplier of protection devices for the mobile handset, high brightness LED (HBLED), digital consumer electronics and personal computer markets. Detailed corporate and product information may be accessed at www.cmd.com.

All statements contained in this press release that are not historical facts are forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. They are not guarantees of future performance or events. Rather, they are based on current expectations, estimates, beliefs, assumptions, and goals and objectives and are subject to uncertainties that are difficult to predict. As a result, our actual results may differ materially from the statements made. Often such statements can be identified by their use of words such as will, intends, expects, plans, believes, anticipates, and estimates. Forward-looking statements made in this release include our expected revenues, GAAP and non-GAAP earnings per share, non-GAAP gross margin, and operating cash flow for the third quarter of fiscal 2010. These forward-looking statements are based upon our assumptions about and assessment of the future, which may or may not prove true, and involve a number of risks and uncertainties including, but not limited to whether our customers experience the demand we anticipate for their products based in part upon their input and our order backlog, whether there is increasing economic stability in end demand as we have assumed in our demand forecast, whether the designed performance of our devices satisfies our customers' requirements so that they continue to design our devices into their products, whether our devices perform to their design specification, whether competitors introduce devices at lower prices than our devices causing price erosion and/or loss of market share for us, whether we encounter any difficulty in obtaining the requisite supply of quality product from our contract manufacturers, contract assemblers and test houses without interruption or unanticipated price increases, and whether we incur unexpected operating expenses as well as the risk factors detailed in the company's Form 8K, 10K, and 10Q filings with the Securities and Exchange Commission. Due to these and other risks, the company's future actual results could differ materially from those discussed above. These forward-looking statements speak only as to the date of this release, and, except as required by law, we undertake no obligation to publicly release updates or revisions to these statements whether as a result of new information, future events, or otherwise.

In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), the company's earnings release contains non-GAAP financial measures that exclude the effects of employee share-based compensation as required by Accounting Standards Codification Topic Nos. 718 "Compensation - Stock Compensation" (ASC 718) and 260 "Earnings Per Share" (ASC 260). The non-GAAP financial measures used by management and disclosed by the company exclude the income statement effects of all forms of employee share-based compensation and the effects of ASC 260 upon the number of diluted shares used in calculating non-GAAP earnings per share. The non-GAAP financial measures also exclude amortization of acquisition-related intangible assets and non-cash restructuring expenses. In addition, these non-GAAP measures utilize a tax rate that is based upon the income taxes the company expects to actually pay relating to the activities and results for the relevant fiscal time period. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Set forth below are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. For additional information regarding these non-GAAP financial measures, see the Form 8-K dated October 29, 2009 that the company has filed with the Securities and Exchange Commission.

Praetorian®, LuxGuard(TM) and PicoGuard® are trademarks of California Micro Devices.
All other trademarks belong to their respective owners.

                     California Micro Devices Corporation
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                   (amounts in thousands, except share data)
                                 (Unaudited)

                                                     September 30, March 31,
                                                         2009       2009
                                                         ----       ----
    ASSETS
    Current assets:
    Cash and cash equivalents                          $44,262    $45,605
    Accounts receivable, net                             4,425      4,168
    Inventories                                          3,723      5,228
    Prepaid expenses and other current assets              713      1,272
                                                           ---      -----
    Total current assets                                53,123     56,273
    Property, plant and equipment, net                   2,142      3,525
    Other long-term assets                                  99        115
                                                            --        ---
    TOTAL ASSETS                                       $55,364    $59,913
                                                       =======    =======

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
    Accounts payable                                    $5,700     $3,775
    Accrued liabilities                                  1,327      1,585
    Deferred margin on shipments to distributors         1,059        974
                                                         -----        ---
    Total current liabilities                            8,086      6,334
    Other long-term liabilities                            193        221
                                                           ---        ---
    Total liabilities                                    8,279      6,555
                                                         -----      -----
    Commitments and contingencies
    Stockholders' equity:
    Preferred stock - 10,000,000 shares
     authorized; none issued and outstanding as
     of September 30, 2009 and March 31, 2009                -          -
    Common stock and additional paid-in capital
     - $0.001 par value; 50,000,000 shares
     authorized; 23,677,738 shares issued and
     22,842,649 shares outstanding as of
     September 30, 2009 and 23,553,019 shares
     issued and 22,879,696 shares outstanding as
     of March 31, 2009                                 121,497    120,383
    Accumulated deficit                                (72,528)   (65,602)
                                                       -------    -------
                                                        48,969     54,781
    Treasury stock, at cost; 835,089 shares as
     of September 30, 2009 and 673,323 shares as
     of March 31, 2009                                  (1,884)    (1,423)
                                                        ------     ------
    Total stockholders' equity                          47,085     53,358
                                                        ------     ------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $55,364    $59,913
                                                       =======    =======



                     California Micro Devices Corporation
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (amounts in thousands, except per share data)
                                 (Unaudited)

                                        Three Months       Six Months
                                    Ended September 30,  Ended September 30,
                                    -------------------  -------------------
                                        2009     2008     2009     2008
                                        ----     ----     ----     ----

    Net sales                         $11,115  $16,343  $20,463  $30,443
    Cost of sales                       8,184   11,239   15,251   20,595
                                        -----   ------   ------   ------
    Gross Margin                        2,931    5,104    5,212    9,848
    Operating expenses:
    Research and development            1,810    2,887    3,927    5,171
    Selling, general and
     administrative                     3,826    3,832    7,443    7,697
    Amortization of intangible assets       6       22       12       55
    Restructuring and asset
     impairment charges                   717        -      717        -
                                          ---      ---      ---      ---
    Total operating expenses            6,359    6,741   12,099   12,923
                                        -----    -----   ------   ------
    Operating loss                     (3,428)  (1,637)  (6,887)  (3,075)
    Other income (expense), net            (5)   1,193      (16)   1,487
                                           --    -----      ---    -----
    Loss before income taxes           (3,433)    (444)  (6,903)  (1,588)
    Provision for income taxes             41    1,521       23    1,295
                                           --    -----       --    -----
    Net loss                          $(3,474) $(1,965) $(6,926) $(2,883)
                                      =======  =======  =======  =======

    Net loss per share-basic and
     diluted                           $(0.15)  $(0.08)  $(0.30)  $(0.12)
                                       ======   ======   ======   ======
    Weighted average common shares
     outstanding-basic and diluted     22,892   23,392   22,892   23,379
                                       ======   ======   ======   ======



                       California Micro Devices Corporation
                           FINANCIAL SUMMARY (NON-GAAP)
                   (amounts in thousands, except per share data)
                                   (Unaudited)

    GAAP TO NON-GAAP RECONCILIATION:

                                          Three Months Ended  Six Months Ended
                                             September 30,      September 30,
                                             -------------      -------------
                                             2009     2008     2009     2008
                                             ----     ----     ----     ----
    Gross Margin:
    GAAP Gross Margin                       $2,931   $5,104   $5,212   $9,848
    GAAP Gross Margin %                         26%      31%      25%      32%
    Reconciling items:
    Stock-based compensation expense, net
     of tax                                   $107     $120     $167     $200

    NON-GAAP Gross Margin                   $3,038   $5,224   $5,379  $10,048
    NON-GAAP Gross Margin %                     27%      32%      26%      33%

    Net Loss:
    GAAP Net Loss                          $(3,474) $(1,965) $(6,926) $(2,883)
    Reconciling items:
    Amortization/reduction of intangible
     assets                                      6      133       12      166
    Restructuring and asset impairment
     charges                                   452        -      452        -
    Stock-based compensation expense, net
     of tax                                    509      592      905    1,156
    Difference between effective tax rate
     and cash basis tax rate                    42    1,505       21    1,248
                                                --    -----       --    -----
    Total Adjustments                       $1,009   $2,230   $1,390   $2,570

    NON-GAAP Net Income (Loss)             $(2,465)    $265  $(5,536)   $(313)

    Net Loss Per Share - Basic and diluted:
    GAAP Net Loss Per Share - Basic and
     diluted                                $(0.15)  $(0.08)  $(0.30)  $(0.12)
    Reconciling items:
    Amortization/reduction of intangible
     assets                                      -        -        -     0.01
    Restructuring and asset impairment
     charges                                  0.02        -     0.02        -
    Stock-based compensation expense, net
     of tax                                   0.02     0.03     0.04     0.05
    Difference between effective tax rate
     and cash basis tax rate                     -     0.06        -     0.05
                                               ---     ----      ---     ----
    Total Adjustments                        $0.04    $0.09    $0.06    $0.11

    NON-GAAP Net Income (Loss) Per Share -
      Basic and diluted                     $(0.11)   $0.01   $(0.24)  $(0.01)

    Weighted average common shares used
     to calculate GAAP EPS - Basic and
     diluted                                22,892   23,392   22,892   23,379
    Weighted average common shares used
     to calculate NON-GAAP EPS - Basic      22,892   23,392   22,892   23,379
    Weighted average common shares and
     share equivalents outstanding used to
     calculate NON-GAAP EPS - diluted       22,892   23,396   22,892   23,379