Urges Stockholders to Elect New, Highly Qualified Director Nominees Whose Interests are Aligned with Stockholders

NEW YORK, Aug. 4 /PRNewswire/ -- Dialectic Capital Management, LLC ("Dialectic") announced today that it has filed with the Securities and Exchange Commission definitive proxy materials in connection with the 2009 annual meeting of stockholders of California Micro Devices Corporation ("CMD" or the "Company") (NasdaqGM: CAMD) to be held on September 17, 2009. Dialectic also has sent a letter to the Company's stockholders urging them to elect three highly qualified and experienced director nominees, John Fichthorn, J. Michael Gullard and Kenneth Potashner, by signing, dating and returning the GOLD proxy card. The Dialectic group is the second largest stockholder of the Company and beneficially owns 2,025,011 shares, representing approximately 8.8% of the Company's outstanding common stock.

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The full text of the letter follows:

August 4, 2009

SUPPORT DIALECTIC NOMINEES FOR CALIFORNIA MICRO DEVICES BOARD

CURRENT BOARD'S INTERESTS ARE NOT ALIGNED WITH STOCKHOLDERS

Dear Fellow Stockholders:

We are seeking your support to elect our three highly qualified and experienced nominees to the Board of Directors of California Micro Devices Corporation ("CMD" or the "Company") at the Company's September 17, 2009 annual meeting. The Dialectic Group owns 2,025,011 shares, representing 8.8% of the Company's outstanding common stock, and is the Company's second largest stockholder. We have made repeated attempts to work cooperatively and constructively with the Company to achieve our objective of creating a Board that would truly represent the best interests of all stockholders. Unfortunately, the Board has failed to seriously address our concerns, and we are engaging in this election contest as a last resort.

We believe:

• the incumbent Board's minimal equity ownership (only 88,200 shares) has created a large gap between Board and stockholder interests, which needs to be addressed by stockholder representation on the Board
• the Board has overseen a stagnant business strategy and dramatic deterioration of stockholder value, requiring immediate change
• the Dialectic Group's nominees will bring a sense of urgency and fresh perspective to the boardroom
• our nominees have the operational and financial expertise currently lacking from the Board
• 
  

We firmly believe a reconstituted Board is vital to the Company's future success and are therefore seeking to elect three independent and experienced directors to represent the interests of all CMD stockholders. We are not seeking control of the Company. Rather, we want to ensure accountability at the Board level by electing directors who can evaluate the opportunities and challenges at CMD with an ownership mentality and an open mind. Our interests are clearly aligned with yours.

THE CURRENT BOARD HAS FAILED TO TAKE DECISIVE ACTION

IN THE FACE OF MANAGEMENT'S INABILITY TO CREATE

A SUSTAINABLE BUSINESS MODEL

In the eight years since Robert Dickinson was named CEO, the Company's enterprise value has fallen from $82.7 million to less than $10 million and its accumulated deficit has more than doubled from $31.3 million to $65.6 million. We believe this decline in value is a direct consequence of the inability of management, under the direction of the current Board, to capitalize on the Company's early success with Chip-Scale-Packaging technology, respond to competitive dynamics within the protection industry and implement a sustainable business model. In our view, under the current Board, CMD has been a rudderless ship whose hopes are precariously pinned to the uncertain business of a few large, top-tier customers. We have already seen the failure of that business strategy with the decline of CMD's Motorola business back in 2006, which precipitated a string of losses in eight of the Company's 12 most recent fiscal quarters.

While CMD stockholders have suffered through deteriorating revenues and continued losses, the Company's most direct competitors have fared significantly better. Semtech Corporation (SMTC) and ON Semiconductor Corporation (ONNN), which we believe are the Company's closest comparables in the Electrostatic Discharge space, have built durable businesses and meaningfully outperformed the Company. Revenues at SMTC and ONNN have expanded at five-year compound annual growth rates (CAGRs) of 10.1% and 10.9%, respectively, while CMD has grown at just 0.29% annually. Since CMD's Motorola business began to decline, the Company's stock price has also lagged far behind these competitors:

In the face of this underperformance, the Board has shown complacency and has been unwilling to hold management accountable for the Company's dismal results. We believe the Board's inaction is in large part due to the directors' minimal equity ownership in the Company and a lack of fresh ideas at the Board level. We believe the election of the Dialectic Group's nominees to the Board is the best option to bring a sense of urgency and accountability.

WE BELIEVE THAT BOARD AND MANAGEMENT INTERESTS ARE NOT PROPERLY ALIGNED WITH THOSE OF STOCKHOLDERS

We believe the evident misalignment of interests between stockholders, on the one hand, and the Board and management, on the other, is at the heart of the Company's problems and demands immediate change at the Board level. Together, the Board and senior management directly own only 88,200 shares, or 0.38% of CMD's outstanding shares. This number is particularly striking when viewed in light of disclosure in the Company's proxy statement that, under the Company's employee stock purchase plan, during fiscal 2009 alone, other Company employees purchased over 250,000 shares. Why is it that the Board and management do not display the same degree of confidence and support of the Company as its other employees?

While the Board members have chosen not to invest alongside their employees and other stockholders, they have chosen to engage in a number of poor corporate governance practices that have served to entrench and isolate them from stockholders. These tactics include implementing a poison pill without stockholder approval, depriving stockholders of the ability to call special meetings and funneling stockholder concerns through Mr.