UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

AMENDMENT NO. 1 to

For the Period Ended September 30, 2002

OR

For The Transition Period From              To             

Commission File Number 0-15449

CALIFORNIA MICRO DEVICES CORPORATION

(Exact name of registrant as specified in its charter)

(408) 263-3214

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address, and former fiscal year if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Applicable Only to Corporate Issuers

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

The number of shares of the registrant’s Common Stock outstanding as of November 8, 2002 was 14,275,189.

EXPLANATORY NOTE

The purpose of this Amendment No. 1 on Form 10-Q/A (the “Amendment”) is to revise the condensed financial statements for California Micro Devices Corporation (the “Company”) for the fiscal 2003 second quarter ended September 30, 2002, contained in Part I, Item 1, and correspondingly to revise the Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations. The Company filed a Form 8-K on May 8, 2003, containing as Exhibit 99.1 a press release issued on May 8, 2003. This press release explained the reasons for and effect of these financial statement revisions, which reasons are repeated in the next paragraph below.

During the first three fiscal quarters of fiscal 2003, the Company expensed certain manufacturing variances in the period incurred, which the Company subsequently determined should have been capitalized to inventory under generally accepted accounting principles (GAAP). This resulted in the need to change the previously reported quarterly results for the first three-quarters of fiscal year 2003. The effect of the change was that on a cumulative basis at the end of each quarter previously reported during fiscal 2003, the Company had overstated its net loss and understated its inventories. Accordingly, the Company has adjusted its financial statements for the first three quarters of fiscal 2003, including its financial statements for the quarter covered by this Amendment, to reflect this change.

The changes made to the financial statements contained in Part I, Item 1 directly affect cost of sales on the statement of operations, the inventories amount on the balance sheet and the net loss and change in inventories on the statement of cash flows. As a result, these changes indirectly affect amounts such as gross margin, net loss, net loss per share, current assets, accumulated deficit, and shareholders’ equity. The explanation of these items in Part I, Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations has been revised accordingly. No other matters are being amended by this Amendment, except to provide officer certifications, which are now required by the Sarbanes-Oxley Act.

The table below shows the adjustments made to effect the changes on these various accounts.

2

It should be noted that these revisions to the fiscal 2003 financial statements for the first three quarters do not affect the audited financial statements for the fiscal years ended March 31, 2002 and March 31, 2003, as the ending inventories for such fiscal years were properly valued under generally accepted accounting principles (GAAP).

3

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CALIFORNIA MICRO DEVICES CORPORATION

CONDENSED BALANCE SHEETS

(amounts in thousands)

4

CALIFORNIA MICRO DEVICES CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(Unaudited)

5

CALIFORNIA MICRO DEVICES CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(Unaudited)

6

CALIFORNIA MICRO DEVICES CORPORATION

Notes to Condensed Financial Statements

(unaudited)

1. Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position of California Micro Devices Corporation (the “Company”, “we”, “us” or “our”) as of September 30, 2002, results of operations for the three and six-month periods ended September 30, 2002 and 2001, and cash flows for the six months ended September 30, 2002 and 2001. Results for the three and six-month periods are not necessarily indicative of fiscal year results. The condensed financial statements should be read in conjunction with the financial statements included with our annual report on Form 10-K for the fiscal year ended March 31, 2002.

2. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our estimates are based on historical experience, input from sources outside of the company, and other relevant facts and circumstances. Actual results could differ from those estimates.

3. Inventories

The components of inventory consist of the following (amounts in thousands):

Finished goods as of September 30, 2002 was adjusted by $1.1 million related to certain manufacturing variances that were previously expensed in the period incurred. We subsequently determined that these manufacturing variances should have been capitalized and inventory has been adjusted to reflect this change.

4. Litigation

We are a party to lawsuits, claims, investigations, and proceedings, including commercial and employment matters, which are being handled and defended in the ordinary course of business. We review the current status of any pending or threatened proceedings with our outside counsel on a regular basis and, considering all the other known relevant facts and circumstances, recognize any loss that we consider probable and estimable as of the balance sheet date. As of September 30, 2002 and March 31, 2002, we had not recorded any liability on our balance sheet for any pending or threatened litigation, claims, or proceedings.

We have two cases pending in the Santa Clara County, State of California Superior Court in which the amount sought by the plaintiffs is several millions of dollars, and therefore a verdict in their favor would be materially adverse to our business. Although several years old, both cases have been stayed by courts until fairly recently; as a result, both cases are early in the discovery phase, making it difficult to assess the probability of the opposing parties or ourselves prevailing with a significant degree of confidence. As a result, we have not made any accrual for these cases.

7

The first case involves counterclaims brought by our former CEO, Chan Desaigoudar, after we sued him for fraud and breach of fiduciary duty. The counterclaims are for, among other items, wrongful termination and improper termination of his stock option. The second case involves a former employee, Tarsaim L. Batra, who has sued the company and three of our former officers, Mr. Desaigoudar, Steve Henke and Surendra Gupta, likewise for wrongful termination of his employment and for deprivation of his stock options. The U.S. government in the past has prosecuted Messrs. Desaigoudar, Henke, and Gupta for criminal securities law violations. Mr. Gupta plead guilty before trial while Messrs. Desaigoudar and Henke were convicted; however, their convictions were overturned and a retrial was imminent when in May 2002, they each entered a guilty plea as to one or more of the counts.

We believe that we have meritorious defenses to the claims of the opposing parties in both of these cases. Currently, we intend to vigorously pursue our defenses and/or our claims against the opposing parties in these matters. Should we unexpectedly learn facts during discovery which lead us to reasonably estimate a negative outcome to these cases, or should one or both of these cases result in a verdict for the other parties, then we will provide for such liability, as appropriate.

5. Net Loss Per Share

The following table sets forth the computation of basic and diluted loss per share:

Net loss includes an adjustment of a $625,000 charge for the three months ended September 30, 2002 and a $1.1 million benefit for the six months ended September 30, 2002, for certain manufacturing variances that were previously expensed in the period incurred. We subsequently determined that these manufacturing variances should have been capitalized and the net loss and basic and diluted net loss per share have been adjusted to reflect this change.

Options to purchase 2,963,222 and 1,672,716 shares of common stock were outstanding during the three and six-month periods ended September 30, 2002 and 2001, respectively, but were not included in the computation of diluted earnings per share because the Company incurred a loss. Warrants to purchase 59,250 shares of common stock outstanding at September 30, 2002 were not included in the diluted earnings per share computation, as the effect of including such shares would be antidilutive.

6. Comprehensive Income/(Loss)

Comprehensive loss for the three and six-month periods ended September 30, 2002 was $(1,966,000) and $(2,787,000), respectively, and the comprehensive loss for the three and six month periods ended September 30, 2001 was $(8,267,000) and $(12,563,000), respectively.

Comprehensive loss includes an adjustment of a $625,000 charge for the three months ended September 30, 2002 and a $1.1 million benefit for the six months ended September 30, 2002, for certain manufacturing variances that were previously expensed in the period incurred. We subsequently determined that these manufacturing variances should have been capitalized and the comprehensive loss has been adjusted to reflect this change.

7. Income Taxes

8

For the three and six-month periods ended September 30, 2002 and 2001, there was no provision for income taxes, due to the net loss for the periods.

8. Restructuring & Impairment Charges

In the second quarter of fiscal 2002, our Board of Directors approved and we began to implement a program to streamline our manufacturing operations and focus our business on product and markets in which we have, or believe we can achieve, a leadership position while leveraging our core technology strengths. Key parts of this strategy include the plan to outsource a significant portion of our wafer manufacturing to an independent foundry and to discontinue certain older products.

In connection with outsourcing a significant portion of our wafer manufacturing, we are completing the consolidation of all of our internal wafer fabrication activities into our Tempe, AZ facility with selected high-value back-end manufacturing activities continuing at our Milpitas, CA headquarters. In connection with these actions we recorded restructuring and asset impairment charges of $4.2 million in the year ended March 31, 2002, of which $4.1 million had been recorded in the second quarter of fiscal 2002. The restructuring charges included $438,000 related to workforce reduction, $322,000 related to facility and other costs, and $3.4 million of asset impairment charges.

The following table summarizes the activity related to the restructuring liability during the six months ended September 30, 2002:

Workforce reduction

In connection with the restructuring program, we reduced our headcount by 61 employees, primarily in the manufacturing functions and primarily at our Milpitas, CA facility. Essentially all of the workforce reductions were accomplished by September 30, 2002; however, the related employee severance, benefits and resulting employer taxes will be paid in our third fiscal quarter.

Facilities and other

The restructuring plan calls for us to vacate our Milpitas facility once all internal wafer fabrication activities have been consolidated into our Tempe, AZ facility. As required by the lease for the Milpitas facility, we are obligated to restore the Milpitas facility to its pre-lease condition. Accordingly, we recorded $251,000 in estimated renovation costs related to the Milpitas facility. Fabrication operations at the Milpitas facility ceased as of the end of September 2002 with renovation to be completed by the end of December 2002. We expect that the remaining cash expenditures relating to the facilities and other will be paid in the third quarter of fiscal 2003. The restructuring liability is included in accrued liabilities in the balance sheet.

9. Short and Long-Term Debt

In June 2002, we entered into a Loan and Security Agreement (“Agreement”) that allows us to borrow up to a total of $5.0 million under an equipment line of credit and a revolving line of credit. The amount available under the Agreement is based on the amount of eligible equipment and accounts receivable. Under the Agreement, which includes a subjective

9

acceleration clause, we are subject to certain financial covenants and restrictions and must maintain a compensating balance of $2.75 million in order to maintain the Agreement. Borrowings under the equipment line and the revolving line bear interest at an annual rate of prime plus 3.0% and prime plus 0.75%, respectively. Principal, in equal installments, and interest are due monthly for the term of 36 months for all borrowings made under the equipment line. Borrowings under the revolving credit line have a term of 12 months, with principal due at maturity and interest due in monthly installments. Borrowings under both lines are collateralized by substantially all of our assets. During the six months ending September 30, 2002, we have borrowed $4.6 million under the equipment line and revolving line of credit, of which $1.5 million was used to pay off other capital equipment financing facilities in full. Additionally, as of September 30, 2002, $406,000 was available under the revolving line of credit. As of September 30, 2002, we were not in compliance with a tangible net worth financial covenant under our Agreement and were therefore in default. A waiver of this default was granted by the lending institution. We believe we will be in compliance within the period allowed and therefore, we have continued to classify the long-term debt as long-term debt rather than short-term debt.

As of March 31, 2002 and continuing through September 30, 2002, we were not in compliance with the financial covenants related to our industrial revenue bonds. In accordance with the terms of the bonds, our non-compliance would need to continue through June 30, 2004 in order for the industrial revenue bonds to become callable and accordingly, there is no impact on our short-term liquidity due to our present non-compliance. We believe we will be in compliance within the period allowed and therefore, we have continued to classify the bonds as long-term debt rather than short-term debt.

10. Lease Commitments

In May 2002, we signed an operating sublease for approximately 26,000 square feet of office and light manufacturing space in Milpitas, CA to be used as our headquarters and for selected back-end manufacturing. The sublease term is 38 months. Future non-cancelable minimum lease payments under this sublease at September 30, 2002 are $151,000 in the remainder of fiscal 2003, $409,000 in fiscal 2004, $472,000 in fiscal 2005 and $214,000 in fiscal 2006. No major lease commitments were entered into between July 2002 and September 2002.

11. Recent Accounting Pronouncements

In June 2002, the FASB issued Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”). SFAS 146 nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” (“EITF 94-3”). The principal difference between SFAS 146 and EITF 94-3 relates to its requirement for recognition of a liability for a cost associated with an exit or disposal activity. This statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost as defined in EITF 94-3 was recognized at the date of an entity’s commitment to an exit plan. This statement also establishes that fair value is the objective for initial measurement of the liability. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002. We do not expect adoption of SFAS 146 will have a material impact on our financial statements.

12. Major Customers

Due to our business focus on key customers in select markets, four end-customers (Motorola, Hewlett-Packard, Guidant and Lumileds) each comprise approximately 10% or more of our revenues during the three and six-month periods ended September 30, 2002, and collectively comprise approximately 50% of such revenues. During the comparable time periods last year, these customers represented approximately 25% of our revenues in aggregate.

10

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements are not historical facts and are based on current expectations, estimates, and projections about our industry; our beliefs and assumptions; and our goals and objectives. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, and “estimates”, and variations of these words and similar expressions are intended to identify forward-looking statements. Examples of the kinds of forward-looking statements in this report include statements regarding the following (1) our expectation that our production of chip scale products will ramp throughout this year, (2) our schedule for closing down our Milpitas plant and the timing of the balance of our remaining manufacturing transition charges, (3) plan for revenue growth and profit improvement due to focused sales and marketing effort and manufacturing outsourcing, (4) our expectation that we have meritous defenses to pending litigation claims,(5) our belief that we will be in compliance with the financial covenants related to our industrial revenue bonds within the one-year period allowed, (6) our expectation that our expenses will decrease and our gross margin will increase as we continue to outsource our wafer fabrication, and the corresponding expectation that cost of sales will decrease, (7) our plan to outsource a significant portion of our wafer manufacturing and to consolidate all of our internal wafer fabrication activities into our Tempe, AZ facility, with selected high-value backend manufacturing operations continuing at our Milpitas, CA headquarters, and (8) our requirements and plans for future equity financing. These statements are only predictions, are not guarantees of future performance, and are subject to risks, uncertainties, and other factors, some of which are beyond our control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. These risks and uncertainties include those set forth in this report and in our other SEC filings, in particular our annual report on Form 10-K for fiscal 2002 ended March 31, 2002. These risks and uncertainties also include whether our marketing and sales focus will enable us to penetrate our selected markets; whether those markets continue to exhibit demand for our products; whether our market focus, which has lead to Motorola, Hewlett Packard, Guidant Corporation and Lumileds each comprising more than 10% of our sales, will increase our customer concentration and leave us vulnerable to problems involving or sourcing decisions of our larger customers; our ability to forecast our cash requirements and cash availability and our ability to stay in compliance with our bank credit line and bond covenants; and the ability of our third party wafer fab vendor to meet in a timely manner our demand for high yield, high quality wafers. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

Overview

California Micro Devices Corporation is a leading supplier of application specific analog semiconductor products for the mobile, computing, and LED lighting, medical, and other markets. Our key products include application specific integrated passive (ASIP^TM) devices, including silicon submounts for high brightness LEDs, and power management IC’s. Our products provide critical signal integrity, electromagnetic interference (EMI) filtering, electrostatic discharge (ESD) protection, and power management solutions that enable high growth applications including PCs, wireless communication devices and consumer electronic products. Through proprietary manufacturing processes, we integrate multiple passive components onto single chips and often enhance their functionality with the integration of discrete semiconductor functions to provide single chip solutions for densely populated, high performance electronic systems. Our ASIPs are significantly smaller and provide more functionality than competitive solutions using discrete products. ASIPs replace functional clusters of discrete passive components that are used for signal filtering and termination at buses and I/O ports, wave shaping, clock signal filtering, biasing, and other traditional discrete component functions.

In the second quarter of fiscal 2002, our board of directors approved and we began to implement a program to streamline our manufacturing operations and focus our business on high volume products and in markets where we have, or believe we can achieve, a leadership position while leveraging our core technology strengths. Key parts of this strategy include the plan to outsource a significant portion of our wafer manufacturing to independent foundries and to discontinue certain older products.

11

Results of Operations

Net sales. Net sales for the three and six-month periods ended September 30, 2002 were $10.8 million and $20.1 million, respectively, indicating an increase of $2.2 million or 26% and $5.4 million or 37% from the three and six-month periods ended September 30, 2001. Net sales in the mobile, computing, medical and lighting markets increased in the three and six-month periods ended September 30, 2002 as compared to the same periods in 2001, while net sales in the communication infrastructure, legacy and other markets decreased. The table below shows relevant data (in millions of dollars):

Units shipped during the three and six-month periods ended September 30, 2002 compared to the same periods in 2001, increased 133% to 47 million units, and 98% to 79 million units respectively. Average selling prices for our products based on units shipped decreased approximately 33% and 29%, respectively, for the three and six-month periods ended September 30, 2002 from the same periods in 2001, primarily as a result of a change in product mix, especially the increase of mobile product sales with an average selling price of $0.12. Due to our business focus on key customers in select markets, four customers (Motorola, Hewlett-Packard, Guidant and Lumileds) each comprise approximately 10% or more of our revenues during the three and six-month periods ended September 30, 2002, and collectively comprise approximately 50% of such revenues. During the comparable time periods last year, these customers represented approximately 25% of our revenues in aggregate.

Gross Margin. Gross margin is composed of net sales less cost of sales. Gross margin, as a percentage of net sales, increased to a positive 16% and 23% in the three and six-month periods ended September 30, 2002, respectively from a negative 4% and a negative 6% in the three and six-month periods ended September 30, 2001, respectively. Gross margin for the three and six-month periods ended September 30, 2002, includes a benefit of $533,000 and $1.0 million related to the sale of inventory that was fully reserved in prior periods. For the six-month period ended September 30, 2001, gross margin included a charge of $511,000 for restructuring charges related to discontinued products, and for the six-month period ended September 30, 2002 gross margin included a charge of $440,000 for the manufacturing transition. Idle capacity charges for the three and six-month periods ended September 30, 2002, which were expensed as incurred, were approximately $1.7 million and $3.3 million, respectively, and during the comparable periods last year, the idle capacity charges were $1.8 million and $3.2 million, respectively. The gross margin percentage improvement is primarily the result of the sale of previously reserved inventory and approximately the same dollar charge for idle capacity on a higher revenue level which reduced the relative negative impact on gross margin.

Research and Development. Research and development expenses consist primarily of compensation and related costs for employees, prototypes, masks, and other expenses for the development of process technology, new packages and products. Research and development expenses for the three and six-month periods ended September 30, 2002 were $894,000 and $1.8 million, respectively, and for the same periods ended September 30, 2001, research and development expenses were $1.0 million and $1.9 million, respectively. These reduced expense levels are due to a reduction in

12

internal manufacturing support required for the development of new products partially offset by increased foundry support.

Selling, General and Administrative. Selling, general and administrative expenses consist primarily of compensation and related costs for employees, sales commissions, marketing and promotional expenses, and legal and other professional fees. Selling, general, and administrative expenses remained flat at $2.5 million and $5.2 million for the three and six-month periods ended September 30, 2002 and 2001, respectively. Lower compensation and related costs for employees resulting from lower headcount in the three and six-month periods ended September 30, 2002 were offset by higher legal costs.

Special Charges. During fiscal 2002, we recorded restructuring and asset impairment charges of $4.2 million related to our decision to outsource a significant portion of our wafer manufacturing. In connection with this decision, we are completing the consolidation of all of our internal wafer fabrication activities into our Tempe, AZ facility, with selected high-value back-end manufacturing activities continuing at our Milpitas, CA headquarters. The $4.2 million of restructuring and impairment charges consisted of expenses related to a workforce reduction of $438,000, write-down of certain manufacturing equipment $3.4 million and lease termination costs $322,000.

The following table summarizes the activity related to the restructuring liability during the six months ended September 30, 2002:

Workforce reduction

In connection with the restructuring program, we reduced our headcount by 61 employees, primarily in the manufacturing functions and primarily at our Milpitas, CA facility. Essentially all of the workforce reductions were accomplished by September 30, 2002; however, the related employee severance, benefits and resulting employer taxes will be paid in our third fiscal quarter.

Facilities and other

The restructuring plan calls for us to relocate from our Milpitas facility once all internal wafer fabrication activities have been consolidated into our Tempe, AZ facility. As required by the lease for the Milpitas facility, we are obligated to restore the Milpitas facility to its pre-lease condition. Accordingly, we recorded $251,000 in estimated renovation costs related to the Milpitas facility. Fabrication operations at the Milpitas facility ceased as of the end of September 2002 with renovation to be completed by the end of December 2002. The restructuring liability is included in accrued liabilities in the balance sheet.

Other Expense, Net. Other expense, net, for the three and six-month periods ending September 30, 2002, were $265,000 and $506,000, respectively, and for the three and six-month periods ended September 30, 2001, $313,000 and $439,000, respectively. For the three month period ended September 30, lower interest income stemming from lower interest rates on lower average investment balances was partially offset by reduced losses in the market value of investments related to our executive deferred compensation plan. For the six month period ended September 30, lower interest income on lower average investment balances was more than offset by reduced losses in the market value of investments related to our executive deferred compensation plan.

13

Income Taxes. For the three and six-month periods ended September 30, 2002 and 2001, there was no provision for income taxes due to the net losses for the periods.

Recent Accounting Pronouncements

In June 2002, the FASB issued Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”). SFAS 146 nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” (“EITF 94-3”). The principle difference between SFAS 146 and EITF 94-3 relates to its requirement for recognition of a liability for a cost associated with an exit or disposal activity. This statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost as defined in EITF 94-3 was recognized at the date of an entity’s commitment to an exit plan. This statement also establishes that fair value is the objective for initial measurement of the liability. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002. We do not expect adoption of SFAS 146 will have a material impact on our financial statements.

Critical Accounting Policies and Estimates

We described our critical accounting policies and estimates in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the year ended March 31, 2002.

Our critical accounting policies and estimates are those that relate to financial line items that are key indicators of our financial performance and/or that require significant management judgment. Our critical accounting policies include those regarding (1) revenue recognition, (2) inventory and related reserves, (3) impairment of long-lived assets, and (4) litigation. We believe that we have consistently applied judgments and estimates and such consistent application fairly depicts our financial condition and results of operations for all periods presented. During the six months ended September 30, 2002, there were no significant changes in the assumptions underlying the judgments and estimates made by management.

Liquidity and Capital Resources

We have historically financed our operations through a combination of debt and equity financing and cash generated from operations. Total cash, cash equivalents and short-term investments as of September 30, 2002, was $4.1 million compared to $7.2 million at March 31, 2002. Short-term debt increased to $1.1 million at September 30, 2002 compared to zero short-term debt as of March 31, 2002. Receivables increased $1.0 million to $5.6 million at September 30, 2002 compared to $4.6 million at March 31, 2002, primarily as a result of increased sales. Receivables days sales outstanding were 48 and 55 days as of September 30, 2002 and March 31, 2002, respectively. Inventories increased $2.7 million from March 31, 2002 to $5.5 million at September 30, 2002, as a result of increased levels of production in response to both expected and actual customer demand and to bridge the transition of our production from our Milpitas facility to our Tempe facility. Capital expenditures for the six months ended September 30, 2002, totaled $1.9 million, reflecting primarily our investment in new equipment to support our production of chip scale products, which are expected to ramp up throughout this fiscal year. Accounts payable and other accrued liabilities decreased by $482,000, along with the transfer of equipment of $298,000 to a vendor, to $8.6 million in the six-month period ending September 30, 2002, compared to $9.4 million at March 31, 2002.

Operating activities used $5.1 million of cash in the six-month period ended September 30, 2002. The most significant usage of our cash was our net loss of $2.8 million. Increases in accounts receivable, inventories, prepaids and other current assets and decreases in accounts payable and other current liabilities, and other long-term liabilities used an additional $4.7 million of cash. These uses of cash were partially offset by depreciation and other non-cash charges of $1.6 million and a decrease in other long-term assets and an increase in deferred margin on shipments to distributors of $765,000.

We used $1.7 million of cash in investing activities during the six months ended September 30, 2002, which was the result of capital expenditures of $1.9 million and an increase in restricted cash related to our long-term debt. The sale of short-term investments for $300,000 partially offset this cash usage.

14

Net cash provided by financing activities of $4.0 million for the six months ended September 30, 2002 is the result of short and long-term borrowings in excess of debt repayment of $2.5 million and proceeds from the issuance of common stock related to employee stock compensation plans of $1.5 million.

In June 2002, we entered into a Loan and Security Agreement that allows us to borrow up to a total of $5.0 million under an equipment line of credit and a revolving line of credit, each of which cannot individually exceed $3.5 million. The amount available under the agreement is based on the amount of eligible equipment and accounts receivable. Under this agreement, which includes a subjective acceleration clause, we are subject to certain financial covenants and restrictions and must maintain a compensating balance of $2.75 million. Borrowings under the equipment line and the revolving line bear interest at an annual rate of prime plus 3.0% and prime plus 0.75%, respectively. Principal, in equal installments, and interest are due monthly for a term of 36 months for all borrowings made under the equipment line. Borrowings under the revolving credit line have a term of 12 months, with principal due at maturity and interest due in monthly installments. Borrowings under both lines are collateralized by substantially all of our assets. In the six–month period ending September 30, 2002, we borrowed $3.5 million under the equipment line, of which $1.5 million was used to pay off in full borrowings outstanding under our four existing capital equipment financing agreements described below. Future maturities of this debt at September 30, 2002 are $583,000 in the remainder of fiscal 2003, $1.2 million in fiscal 2004, $1.2 million in fiscal 2005 and $442,000 in fiscal 2006. Additionally, we have borrowed $1.1 million on the revolving line of credit. This balance can be repaid at any time, but is due by June 17, 2004. As of September 30, 2002, we were not in compliance with the tangible net worth financial covenant under our Loan and Security Agreement and were therefore in default. A waiver of this default was granted by the lending institution.

During fiscal 2000 through fiscal 2002, we entered into four capital equipment financing facilities for a total of $4.0 million. During fiscal 2000 through fiscal 2002, we borrowed $3.0 million under these facilities. Borrowings under three of these facilities bore interest at an annual rate of prime plus 0.75% and borrowings under the remaining facility bore interest at an annual rate of prime plus 0.5%. Principal, in equal installments, and interest were due in monthly installments through February 2004. In June 2002, we terminated these facilities and paid off the related debt in full with the proceeds received from the Loan and Security Agreement described above.

As of March 31, 2002 and continuing through September 30, 2002, we were not in compliance with the financial covenants related to our industrial revenue bonds. In accordance with the terms of the bonds, our non-compliance would need to continue through June 30, 2004 in order for the industrial revenue bonds to become callable and accordingly, there is no impact on our short-term liquidity due to our present non-compliance. We believe we will be in compliance within the period allowed and therefore, we have continued to classify the bonds as long-term debt rather than short-term debt.

Future maturities of long-term debt and sinking fund payments associated with the industrial revenue bonds, as of September 30, 2002 are $185,000 in the remainder of fiscal 2003, $205,000 in fiscal 2004, $225,000 in fiscal 2005, $250,000 in fiscal 2006, and $5.9 million thereafter.

In May 2002, we signed an operating sublease for approximately 26,000 square feet of office and light manufacturing space in Milpitas, CA to be used as our headquarters and for selected back-end manufacturing. The sublease term is 38 months. As of September 30, 2002, future non-cancelable minimum lease payments under this sublease are $151,000 in fiscal 2003, $409,000 in fiscal 2004, $472,000 in fiscal 2005 and $214,000 in fiscal 2006. In July 2002, we entered into a lease amendment for our wafer fabrication facility in Milpitas, CA, extending the term of the lease to October 31, 2002. As of September 30, 2002, the total amount due under the wafer fabrication facility lease extension has been paid in full and there are no lease amounts due.

Operating and capital requirements depend on many factors, including the levels at which we maintain manufacturing capacity, revenue, margins, inventory, accounts receivable, accounts payable and operating expenses. Our operating plan for fiscal 2003 forecasts revenue growth and profit improvement, due in part to our focused marketing and sales efforts and in part to gross margin improvement resulting from outsourcing most of our wafer production while reducing fixed internal manufacturing costs. The increase in inventory and receivables associated with our revenue growth during the past several quarters has been financed from cash on hand, short term debt of $1.1 million under our $1.5 million working capital credit line, option exercises, and attention to management of accounts receivable and accounts payable.

15

Consistent with our operating plan we have built substantial inventory in advance of firm orders and may continue to do so. If these orders do not materialize or are delayed, if we are not able to begin to operate profitably, if we cannot collect our receivables on a timely basis, or if our vendors demand shorter payment terms, we may need to further adjust our operations or else secure additional debt or equity financing to ensure adequate working capital, although such funds may not be available on favorable terms, if at all. Furthermore, unless we are able to increase our tangible net worth by at least $148,000 during the third fiscal quarter through a combination of profit, stock option exercises and stock purchases under our employee benefit plans, and equity investment, we will be in default under our Loan and Security Agreement and would require another waiver from the lending institution, which we may not be able to obtain. Should we not obtain such a waiver, the lending institution would be able to call our borrowings under the Loan and Security Agreement which would require us to locate another lender, which we may not be able to do, or otherwise face severe consequences. In the event that demand growth is more rapid than anticipated, in order to take advantage of that growth and increase our revenues, we would need to secure additional equipment and working capital financing or equity which may not be available on favorable terms, if at all. In the event we are unable to do so we would be forced to constrain our revenue growth, adversely affecting profitability improvement.

PART II. OTHER INFORMATION

ITEM 4. Exhibits and Reports on Form 8-K

16

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this Amendment No.1 to Quarterly Report to be signed on its behalf by the undersigned thereunto duly authorized.

CALIFORNIA MICRO DEVICES CORPORATION

(Registrant)

17