Second Quarter and Six Months 2000 Report; Continuing Improvment in Backlog

     For the first six months of 2000, sales of $9,861,000 were essentially equal to the prior year’s six-month sales of $9,864,000. A net loss for the first six months of $125,000 was recorded, due to the net effects of a first quarter personnel restructuring charge of $189,000. Net income of $295,000 was reported for the first six months of 1999. Diluted net loss per share was $.06, reflecting the first quarter restructuring charge of $.10 per diluted share. For the first six months of the prior year, diluted net income per share of $.17 was reported.

     The weighted average number of basic and diluted shares outstanding increased for the second quarter and first six months of 2000 resulting from the issuance of 375,000 shares to Ericsson Holding International, B.V. in the second quarter 2000, and higher average common stock prices that increased dilution from stock options.

     The backlog at the end of the second quarter of 2000 was $10.8 million, an increase of $4.7 million or 77 % over year-end 1999, and $1.9 million or 21 % when compared to the backlog of $8.9 million at the end of the second quarter of last year. Orders received during the second quarter of 2000, totaling $6.8 million, exceeded the second quarter 2000 sales level by approximately 38 %, and orders for the first six months of 2000, totaling $14.6 million, exceeded the six months 2000 sales level by approximately 48 %.

     The six month book-to-bill ratio approaching 1.5 to 1 bodes well for second-half revenue growth. Our Filtran Microcircuits subsidiary turned in a solid quarterly operating performance resulting from strong demand for their precision microcircuitry and ability to deliver product to the market in a timely manner.

     Merrimac has just been granted a patent on its unique Multi-Mix® Microtechnology process from the U.S. Patent and Trademark Office entitled "Method of Making Microwave Multifunction Modules Using Fluoropolymer Composite Substrates". One important aspect of this patent is the ability to form cavities for the subsurface attachments of active components such as MMIC devices. The increased level of integration and functionality created by Multi-Mix® provides a significantly higher dollar amount and content per module, thereby demanding a higher selling price when compared to traditional components. This patent is the first of multiple Multi-Mix® process and new-product patents that we anticipate, further establishing Merrimac as the clear leader in multilayer multifunction module technology.

   Thank you for your continued support and confidence.

Mason N. Carter
Chairman and CEO

August 10, 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.

$4,949,424

$5,125,245

2,344,948

2,399,094

1,772,203

1,671,153

492,811

552,058

-     

-     

54,705

119,919

15,000

38,000

SUMMARY  CONSOLIDATED BALANCE SHEETS (Unaudited)

ASSETS

3,568,194

LIABILITIES AND SHAREHOLDERS' EQUITY