Merrimac Reports First Quarter Results and Previously Reported Restructuring Charge;
Significant Increase in Backlog

   First quarter 2000 sales of $4,911,000 increased 3.6% compared to first quarter sales of the prior fiscal year of $4,739,000. A first quarter 2000 net loss of $164,000 was recorded, due to the net effects of a personnel restructuring charge of $189,000. Net income of $213,000 was reported for the first quarter of 1999. Diluted net loss per share was $.09, resulting from the net effects of the $.10 diluted per share restructuring charge. For the first quarter of the prior year, diluted net income per share of $.12 was reported.

   The backlog at the end of the first quarter of 2000 was $8.9 million, an increase of $2.8 million or 46% over year-end 1999, and $1.3 million or 17% when compared to the backlog of $7.6 million at the end of the first quarter of last year. Orders received during the first quarter of 2000 totaling $7.7 million exceeded the first quarter 2000 sales level by 58%.

   We have been accelerating the transfer of greater levels of production to our Costa Rica operation. This action has permitted a reduction in the West Caldwell workforce, and has therefore necessitated a first quarter restructuring, as previously reported. Our core business, the RF Microwave Group, continues to benefit from the increasing volume of production from our Costa Rica operation. Under the leadership of General Manager Mr. Alberto Oreamuno, we are increasing the competencies and opportunities that the Costa Rica Team can deliver.

   Consolidated gross profit margin for our three operating units in New Jersey, Costa Rica and Canada was over 50%. We continue to fund the advancement of market, product, and process development of Multi-Mix® Microtechnology for the wireless telecommunications industry, while promoting Filtran Microcircuits as an innovative resource to the wireless microwave radio market. Filtran’s orders from wireless infrastructure customers have been rising and include higher production volume contracts.

   On April 10, 2000, we announced that Ericsson had purchased 375,000 newly issued shares of Merrimac Common Stock, representing approximately 17.5% of our outstanding common stock. In connection with its investment, we agreed to provide Ericsson Microelectronics with priority access to our patent-pending Multi-Mix® Microtechnology. This alliance is progressing well, with positive interaction between our Company and our new business partner and investor.

   Thank you for your continued support and confidence.

Mason N. Carter
Chairman and CEO

May 11, 2000

Note: Certain statements in this report are "forward-looking statements" based on current management expectations and are subject to risks and uncertainties. Factors that could cause future results to differ from these expectations include general economic and industry conditions, competitive products and pricing pressures, risks relating to governmental regulatory actions in communications and defense programs, and inventory risks due to technological innovation. Additional factors to which the Company’s performance is subject are described in the Company’s reports filed from time to time with the Securities and Exchange Commission.

SUMMARY QUARTERLY CONSOLIDATED STATEMENTS OF INCOME(Unaudited)

$4,911,373

$4,738,531

2,475,026

2,311,791

2,022,952

1,560,990

355,970

394,260

315,000

-     

80,491

23,575

(299,387)

332,966

(135,000)

120,000

SUMMARY  CONSOLIDATED BALANCE SHEETS (Unaudited)

2000

ASSETS

3,161,780

LIABILITIES AND SHAREHOLDERS' EQUITY