8-K

UNITED STATES

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

Date of Report: July 27, 2006

(Date of earliest event reported)

California Micro Devices Corporation

(Exact name of registrant as specified in its charter)

California	0-15449	94-2672609
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

490 N. McCarthy Blvd., No. 100, Milpitas, CA 95035-5112

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (408) 263-3214

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

TABLE OF CONTENTS

Item 2.02 Results of Operations and Financial Condition.

Item 9.01 Financial Statements and Exhibits.

Item 2.02. Results of Operations and Financial Condition.

On July 27, 2006, Registrant (the “Company” or we) announced via news release its results for its fiscal 2007 first quarter ended June 30, 2006. The full text of the news release issued in connection with that announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Use of Non-GAAP Financial Information

In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), the Company’s press release contains non-GAAP financial measures that exclude the effects of share-based compensation and the requirements of SFAS No. 123R, “Share-based Payment” (“123R”). In particular, the non-GAAP financial measures used by management and disclosed by the Company exclude the income statement effects of all forms of share-based compensation and the effects of 123R upon the number of diluted shares used in calculating non-GAAP earnings per share. The non-GAAP financial measures also exclude Arques Technology acquisition-related costs, including amortization of acquisition-related intangibles and one-time charges for acquired in-process research and development, and in the future will exclude any acquisition-related contingent payments. One of the two non-GAAP financial measures excludes the Arques Technology product line, including revenue and cost of sales from the product line and allocations for research and development (“R&D”) and selling, general & administrative (“SG&A”) expenses relating to the product line. In addition, these non-GAAP measures utilize a tax rate that is based upon the income taxes we expect to actually pay relating to this quarter’s activities and results.

The Company develops an annual budget that includes all components of the income statement, exclusive of share-based compensation and Arques Technology acquisition costs. The accounting expense impact of share-based compensation or Arques Technology acquisition costs is not discussed or considered when assessing and determining the appropriate level of budgeted expenses for cost of sales, R&D, and SG&A or when determining profitability for purposes of profit sharing and bonuses.

The Company uses share-based compensation programs to align employees’ actions and behaviors with shareholders’ interest and to be able to attract, motivate and retain the best employees in a competitive marketplace. Share-based compensation is but one element in employee compensation and is evaluated separately from the cost of other compensation programs. Specifically, the Company evaluates its share-based compensation programs from the perspective of the resulting dilution and other metrics, and not from the resulting expense to be recorded.

For this quarter only, the Company broke out the Arques Technology product line, in terms of revenue and cost of sales from the product line and allocations for R&D and SG&A expenses relating to the product line. In this manner, we were able to measure our core business separately for comparative purposes on a sequential basis. However, in the future, this will become impractical, as we will have completed the integration of the Arques Technology personnel into our business, and unnecessary, as we will be able to make sequential comparisons of our business including the Arques Technology product line. Therefore, this is the only quarter we will be preparing this break-out for purposes of communicating with investors.

When we develop our annual budget, for taxes we consider only the taxes we expect to pay rather than taxes determined in accordance with GAAP which may fluctuate substantially over the next several years as we assess whether and when to make further releases of or accruals to the valuation allowance against our deferred tax asset. When we consider our profitability for purposes of profit sharing and bonuses, we do not consider taxes.

Management has determined that inclusion of these non-GAAP financial measures provides investors a meaningful presentation of the Company’s operating results in addition to the GAAP disclosure. As management uses these

non-GAAP measures internally for strategic decision making, forecasting future results and evaluating the Company’s current performance, management believes these measures assist investors’ understanding of how management views the Company’s operating results. These measures enhance overall understanding of the Company’s current financial performance and better enable comparability to prior results, especially as this is the first year the Company has applied 123R and incurred acquisition-related costs. Management believes cost of sales excluding share-based compensation, R&D expense excluding share-based compensation, and SG&A expense excluding share-based compensation are useful information for investors because the GAAP measure when compared in isolation with last year would indicate a level of increase in those expenses inconsistent with actual performance while GAAP income compared in isolation with last year would indicate a decrease inconsistent with actual performance due to the 123R impact and the impact of the Arques Technology acquisition.

The Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures in its press release. 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.

The information contained in this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1, Registrant’s News Release dated July 27, 2006, is furnished pursuant to Item 2.02 of Form 8-K.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report on Form 8-K to be signed on its behalf by the undersigned, thereunto duly authorized on the 27^th day of July, 2006.

CALIFORNIA MICRO DEVICES CORPORATION (Registrant)
By:	/s/ ROBERT V. DICKINSON
	Robert V. Dickinson
	President and Chief Executive Officer

Exhibit Index

Exhibit	Description
99.1	Registrant’s news release dated July 27, 2006, is furnished pursuant to Item 2.02 of Form 8-K.

EX-99.1

Exhibit 99.1

NEWS RELEASE

For More Information Contact:

Kevin Berry, Chief Financial Officer

(408) 934-3144

kevinb@cmd.com

California Micro Devices Reports June Quarter Financial Results

Revenue and EPS exceed high end of revised guidance

MILPITAS, Calif. — July 27, 2006 — California Micro Devices (Nasdaq: CAMD) today announced financial results for the first quarter of fiscal 2007, which ended June 30, 2006. Revenue was $16.1 million compared to $14.7 million a year ago. On a GAAP basis, the company posted a net loss per share of $0.09, which included a $2.2 million write off of in-process R&D related to the Arques Technology acquisition. This compares to diluted EPS of $0.02 a year ago. On a non-GAAP basis, excluding the Arques Technology product line and acquisition costs as well as employee stock-based compensation expenses, and using a cash basis tax rate, revenue was $16.0 million and diluted EPS was $0.07. On a non-GAAP basis, including the Arques Technology product line but excluding acquisition costs and employee stock-based compensation expenses, and using a cash basis tax rate, diluted EPS was $0.05.

“As the result of stronger than expected demand at the end of the quarter for our products for personal computers and mobile handsets, revenue in fiscal Q1 exceeded the high end of our revised guidance,” said Robert V. Dickinson, president and CEO. “We are also pleased that we were solidly profitable on a non-GAAP basis, including the Arques Technology product line, and had positive cash flow from operations in the quarter.” He noted that bookings for the quarter were weak as expected, while the number of design wins reached 402, the second highest ever achieved, surpassed only by the prior quarter’s record level.

Dickinson reported that mobile handset product revenue increased 3% year on year with 22% year-on-year sales growth to top five OEMs largely offset by substantial year-on-year declines in sales to second tier and Chinese OEMs reflecting their collective loss of market share over the past year as well as competition from low end ceramic filters. He also noted that personal computer and digital consumer electronics product revenue increased by 28% year-on-year with low capacitance ESD revenue growing by 73% year-on-year.

The company’s outlook for the September quarter is for revenue between $16.0 and $17.5 million compared to $18.5 million in the same quarter a year ago. On a GAAP basis, a net loss per share of between $0.01 and $0.03 is expected compared to a profit of $0.09 per share a year ago. On a non-GAAP basis, excluding acquisition costs and employee stock-based compensation expenses, and using a cash basis tax rate, diluted EPS is expected to be between $0.02 and $0.04. The company also indicated that it expects positive cash flow from operations in the quarter.

Conference Call and Webcast Today

California Micro Devices will hold a conference call today at 2:00 p.m. Pacific Time to discuss its June quarter results. Within the USA, interested parties can access the conference call by dialing 800-257-1836. International parties may gain access by dialing 303-205-0066. No password is necessary.

A replay of the conference call will be available on the company’s web site at www.cmd.com (Investor Relations Link) beginning at approximately 4:00 p.m. Pacific Time today and continuing about a year.

California Micro Devices Corporation • 490 N. McCarthy Blvd. #100, Milpitas, CA 95035-5112

www.calmicro.com • Tel: 408.263-3214 • Fax: 408.263-7846

About California Micro Devices Corporation

California Micro Devices Corporation is a leading supplier of application specific analog semiconductor products for the mobile handset, personal computer and digital consumer electronics markets. Key products include Application Specific Integrated Passive™ (ASIP™) devices and selected high value analog and mixed signal ICs. Detailed corporate and product information may be accessed at www.cmd.com.

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 and the requirements of SFAS No. 123R, “Share-based Payment” (“123R”). 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 123R upon the number of diluted shares used in calculating non-GAAP earnings per share. The non-GAAP financial measures also exclude Arques Technology acquisition related costs, including amortization of acquisition-related intangibles and one-time charges for acquired in-process research and development, and in the future will exclude any acquisition-related contingent payments. One of the two non-GAAP financial measures excludes the Arques Technology product line, including revenue and cost of sales from the product line and allocations for research and development and selling, general & administrative expenses relating to the product line. In addition, these non-GAAP measures utilize a tax rate that is based upon the income taxes we expect to actually pay relating to this quarter’s activities and results. 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 July 27, 2006 that the company has filed with the Securities and Exchange Commission.

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 in this press release include our outlook for revenue, earnings per share (both GAAP and non-GAAP), and cash flow during the second quarter of fiscal 2007. 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 whether our customers experience the demand we anticipate for their products based in part upon their input and our order backlog, 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, 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.

# # #

California Micro Devices Corporation • 490 N. McCarthy Blvd. #100, Milpitas, CA 95035-5112

www.calmicro.com • Tel: 408.263-3214 • Fax: 408.263-7846

The CMD™ logo, ASIP™, Application Specific Integrated Passive™, PicoGuard™, MediaGuard™, PhotonIC™ and FlexBoost™ are trademarks of California Micro Devices. All other trademarks are property of their respective owners

California Micro Devices Corporation • 490 N. McCarthy Blvd. #100, Milpitas, CA 95035-5112

www.calmicro.com • Tel: 408.263-3214 • Fax: 408.263-7846

California Micro Devices Corporation

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

(Unaudited)

	June 30, 2006			March 31, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	8,733		$	9,788
Short-term investments		37,214			39,958
Accounts receivable, net		8,917			10,667
Inventories		5,509			5,508
Deferred tax assets		2,719			2,711
Prepaid expenses and other current assets		807			1,078
Total current assets		63,899			69,710
Property, plant and equipment, net		4,201			3,961
Goodwill and purchased intangible assets, net		5,871			—
Other long-term assets		83			61
TOTAL ASSETS	$	74,054		$	73,732
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,841		$	5,901
Accrued liabilities		3,927			3,185
Deferred margin on shipments to distributors		2,837			2,684
Current maturities of long-term debt and capital lease obligations		82			82
Total current liabilities		12,687			11,852
Other long-term liabilities		148			8
Total liabilities		12,835			11,860
Commitments and contingencies
Shareholders’ equity:
Common stock - no par value; 50,000,000 shares authorized; shares issued and outstanding: 22,991,231 and 22,855,223 as of June 30, 2006 and March 31, 2006, respectively		112,088			110,673
Accumulated other comprehensive gain (loss)		2			(5	)
Accumulated deficit		(50,871	)		(48,796	)
Total shareholders’ equity		61,219			61,872
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	74,054		$	73,732

California Micro Devices Corporation

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(Unaudited)

(On a GAAP basis)

	Three Months Ended June 30,
	2006			2005
Net sales	$	16,072		$	14,687
Cost and expenses:
Cost of sales		9,989			9,620
Research and development		2,055			1,434
Selling, general and administrative		4,194			3,342
In-process research and development		2,210			—
Amortization of purchased intangible assets		34			—
Restructuring expense		—			57
Total costs and expenses		18,482			14,453
Operating income (loss)		(2,410	)		234
Other income, net		539			248
Income (loss) before income taxes		(1,871	)		482
Income taxes		204			14
Net income (loss)	$	(2,075	)	$	468
Net income (loss) per share–basic	$	(0.09	)	$	0.02
Weighted average common shares outstanding–basic		22,899			21,645
Net income (loss) per share–diluted	$	(0.09	)	$	0.02
Weighted average common shares and share equivalents outstanding–diluted		22,899			22,020
Reconciliation of net income (loss) to non-GAAP net income:
Net income (loss)	$	(2,075	)	$	468
Reconciling items:
Non GAAP loss from Arques Technology product line before taxes		515			—
Amortization of purchased intangible assets		34			—
In-process research and development		2,210			—
Stock-based compensation expense under SFAS 123(R), net of tax		844			—
Difference between effective tax rate and cash basis tax rate		154			—
Non-GAAP net income	$	1,682		$	468
Add back: Non GAAP loss from Arques Technology product line after taxes		(517	)		—
Non-GAAP net income including Arques Technology product line	$	1,165		$	468
Non-GAAP:
Net income per share–basic	$	0.07		$	0.02
Net income per share–diluted	$	0.07		$	0.02
Non-GAAP including Arques Technology product line:
Net income per share–basic	$	0.05		$	0.02
Net income per share–diluted	$	0.05		$	0.02
Shares used in calculation of non-GAAP:
Weighted average common shares outstanding–basic		22,899			21,645
Weighted average common shares and share equivalents outstanding–diluted		23,083			22,020

California Micro Devices Corporation

CONDENSED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(Unaudited)

(On a non-GAAP basis)

	Three Months Ended June 30,
	2006		2005
Net sales	$	16,029	$	14,687
Cost and expenses:
Cost of sales		9,760		9,620
Research and development		1,729		1,434
Selling, general and administrative		3,317		3,342
Restructuring		—		57
Total costs and expenses		14,806		14,453
Operating income		1,223		234
Other income, net		509		248
Income before income taxes		1,732		482
Income taxes		50		14
Net income	$	1,682	$	468
Net income per share–basic	$	0.07	$	0.02
Weighted average common shares outstanding–basic		22,899		21,645
Net income per share–diluted	$	0.07	$	0.02
Weighted average common shares and share equivalents outstanding–diluted		23,083		22,020

See accompanying reconciliation of GAAP measures to non-GAAP measures.

California Micro Devices Corporation

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(Unaudited)

(On a non-GAAP basis and including Arques Technology product line results)

	Three Months Ended June 30,
	2006		2005
Net sales	$	16,072	$	14,687
Cost and expenses:
Cost of sales		9,859		9,620
Research and development		1,867		1,434
Selling, general and administrative		3,668		3,342
Restructuring		—		57
Total costs and expenses		15,394		14,453
Operating income		678		234
Other income, net		539		248
Income before income taxes		1,217		482
Income taxes		52		14
Net income	$	1,165	$	468
Net income per share–basic	$	0.05	$	0.02
Weighted average common shares outstanding–basic		22,899		21,645
Net income per share–diluted	$	0.05	$	0.02
Weighted average common shares and share equivalents outstanding–diluted		23,083		22,020

See accompanying reconciliation of GAAP measures to non-GAAP measures.

California Micro Devices Corporation

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(Unaudited)

	Three Months Ended June 30,
	2006			2005
Net income (loss) per share:
Basic:
GAAP net income (loss) per share	$	(0.09	)	$	0.02
Reconciling items:
Arques Technology product line		0.02			—
Amortization of purchased intangible assets		0.00			—
In-process research and development		0.10			—
Stock-based compensation expense under SFAS 123(R), net of tax		0.03			—
Difference between effective tax rate and cash basis tax rate		0.01			—
Non-GAAP net income per share	$	0.07		$	0.02
Add back: Arques Technology product line		(0.02	)		—
Non-GAAP net income per share including Arques Technology product line	$	0.05		$	0.02
Diluted:
GAAP net income (loss) per share	$	(0.09	)	$	0.02
Reconciling items:
Arques Technology product line		0.02			—
Amortization of purchased intangible assets		0.00			—
In-process research and development		0.10			—
Stock-based compensation expense under SFAS 123(R), net of tax		0.03			—
Difference between effective tax rate and cash basis tax rate		0.01			—
Non-GAAP net income per share	$	0.07		$	0.02
Add back: Arques Technology product line		(0.02	)		—
Non-GAAP net income per share including Arques Technology product line	$	0.05		$	0.02