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To: lady luck who wrote (1218)	7/1/1998 9:41:00 PM
From: ackbh	Read Replies (1) \| Respond to of 3043

To support the investment requirements and opportunities inherent in its satellite and terrestrial markets, California Microwave intends to harvest the value of several of its other divisions. This will be done once the required acquisitions and internal investments have been identified and made for these high-growth commercial markets. The principal expected divestiture, which would support the growth of the commercial side, is of the government businesses. These consist of the Government Electronics Division (GED) in Woodland Hills, CA, and the Airborne Systems Integration Division (ASID) in Belcamp, MD. These are profitable, extremely well managed operations with a long history of providing innovative products and services to US government and military agencies. The operations generated $97 million in revenue over the last 12 months. Their products include airborne and ground-based reconnaissance systems, communications processing equipment, and satellite communications systems. While strong current profit contributors, the government operations do not support either the commercial market focus that California Microwave has chosen or the growth objectives of the new strategy. Furthermore, significant value has been built up in these divisions, and management believes that the greatest shareholder wealth can be created by redeploying this intrinsic value. The company believes that consolidating the two government divisions will make them even stronger and a good candidate for future sale. The company anticipates divesting these units during fiscal year 1999, but not before significant actions have been taken to build up the high-growth commercial businesses, both through acquisition and licensing arrangements.