News Release

FOR IMMEDIATE RELEASE

Contact: Mason N. Carter, Chairman & CEO
973-575-1300, ext. 1202
mnc@merrimacind.com

Merrimac Reports Fourth Quarter and Fiscal Year 2006 Results

WEST CALDWELL, N.J., April 16, 2007: Merrimac Industries, Inc. (AMEX: MRM), a leader in the design and manufacture of RF Microwave components, subsystem assemblies and micro-multifunction modules (MMFM®), today announced results for the fourth quarter and fiscal year 2006.

Due to unanticipated delays in reviewing compliance with certain contracts, Merrimac was unable to file its Annual Report on Form 10-K within the prescribed time period without unreasonable effort and expense. We have completed our review of the contracts and we will be filing our Annual Report on Form 10-K today.

Sales for the fourth quarter of 2006 were $6,192,000, a decrease of $810,000 or 11.6 percent compared to the fourth quarter of 2005 sales of $7,002,000. The sales decrease was due to the loss of certain anticipated orders as well as from delays in space and defense program orders for both of the Company’s operating segments. Gross profit for the fourth quarter of 2006 was $1,524,000, a decrease of $1,138,000 or 42.7 percent, and was 24.6 percent of sales as compared to gross profit of $2,662,000 or 38.0 percent of sales for the fourth quarter of 2005. Gross profit percent in the fourth quarter of 2006 decreased from the fourth quarter of 2005 due to the impact of the lower level of sales having to absorb fixed manufacturing costs, lower margin on approximately $900,000 sales of products to key account customers accepted at very competitive prices, and higher warranty costs.

Operating loss for the fourth quarter of 2006 was $(1,526,000), compared to an operating loss of $(147,000) for the fourth quarter of 2005. Operating loss for the fourth quarter of 2006 was due to the lower gross profit from the decrease in sales and higher research and development costs related to the Company’s Multi-Mix® products and included a non-cash charge of $50,000 for share-based compensation expense resulting from the adoption of SFAS No. 123R in the first quarter of 2006. As a result of the declining level of orders and sales, the Company reduced its headcount by 15 employees and recorded a restructuring charge of $286,000 in the fourth quarter of 2006

Net loss for the fourth quarter of 2006 was $(1,716,000) or $(.55) per share compared to net income of $117,000 or $.04 per share for the fourth quarter of 2005. Net loss for the fourth quarter of 2006 included the write-off of approximately $167,000 or $.05 per share of unamortized loan costs related to the Company’s prior financing agreement. Net income for the fourth quarter of 2005 included a tax benefit of $250,000 or $.08 per share related to certain Canadian tax credits.

For fiscal year 2006 sales of $27,421,000 decreased $2,298,000 or 7.7 percent compared to sales of $29,719,000 for fiscal year 2005. Sales for fiscal year 2006 were lower than fiscal year 2005 primarily due to our key account customers loss of significant orders that were to include our products as well as from delays in expected satellite and defense programs for all product lines which resulted in lower shippable booking levels received during fiscal year 2006 compared to fiscal year 2005. Fiscal year 2006 sales included $1,200,000 of revenue recognized in connection with the early close out of a fixed price customer contract during the second quarter and a year-to-date sales reduction in the microwave micro-circuitry segment of $2,327,000 due to declines in the segment’s defense orders. Gross profit for fiscal year 2006 was $10,134,000, a decrease of $2,080,000 or 17.0 percent and was 37.0 percent of sales as compared to gross profit of $12,214,000 or 41.1 percent of sales for fiscal year 2005. Gross profit percentage for fiscal year 2006 decreased 4.1 percentage points compared to fiscal year 2005 due to the impact of the lower level of sales having to absorb fixed manufacturing costs partially offset by the effects from the early contract close out of the customer contract mentioned above.

Operating loss for fiscal year 2006 was $(2,037,000) compared to operating income of $742,000 for fiscal year 2005. The reduction in operating income for fiscal year 2006 as compared to fiscal year 2005 was due to the lower gross profit from the decrease in sales, the fourth quarter 2006 restructuring charge of $286,000, and higher selling, general and administrative expenses compared to fiscal year 2005. Operating loss for fiscal year 2006 included a non-cash charge of $189,000 for share-based compensation expense resulting from the adoption of SFAS No. 123R.

Net loss for fiscal year 2006 was $(2,225,000) or $(.71) per share compared to net income of $761,000 or $.24 per share for fiscal year 2005. Net loss for fiscal year 2006 included the write-off of approximately $167,000 or $.05 per share of unamortized loan costs related to the Company’s prior financing agreement and a tax benefit of $69,000 or $.02 per share representing refundable Canadian provincial technology tax credits for which the Company has qualified. Net income for fiscal year 2005 included a tax benefit of $250,000 or $.08 per share related to similar Canadian tax credits.

Orders of $7,587,000 were received during the fourth quarter of 2006, a decrease of $814,000 or 9.7 percent compared to $8,401,000 in orders received during the fourth quarter of 2005. Orders of $26,668,000 were received for fiscal year 2006, a decrease of $3,245,000 or 10.9 percent compared to $29,913,000 in orders received for fiscal year 2005. The decrease in orders for fiscal year 2006 as compared to fiscal year 2005 was due to our key account customers loss of significant orders that were to include Merrimac products as well as from delays in expected satellite and defense programs for all product lines, including our Multi-Mix® products. Backlog decreased by $753,000 or 5.7 percent to $12,385,000 at the end of fiscal year 2006 compared to $13,138,000 at year-end 2005. The book-to-bill ratio for the fourth quarter of 2006 was 1.23 to 1 and for the fourth quarter of 2005 was 1.20 to 1. The book-to-bill ratio for fiscal year 2006 was 0.97 to 1 and for fiscal year 2005 was 1.01 to 1.

Recently, the Company became aware of a problem with purchased material that was utilized in certain products. The Company has evaluated the material and found the problem with the material does not affect the functionality and reliability of the products. This problem did cause shipment delays of approximately $1,000,000 of products that were expected to be sold in the first quarter of 2007. The delay in shipments will have a significant negative impact on the results of operations for the first quarter of 2007.

Chairman and CEO Mason N. Carter commented, “We still are experiencing unforeseen delays in Defense and Space programs but feel comfortable with our alignment and teaming with our key customers in co-designing the next-generation Military and Space solutions. Their adoption of our Multi-Mix technology as an enabling technology is encouraging. We believe that our customers will be successful in achieving their mission.

“These delays in orders caused us to reduce our headcount by 15 persons, principally involved in production, manufacturing support, sales and administration. We did not reduce our commercial, military or satellite development capabilities.”

Mr. Carter continued, “Our financial information includes:

• Orders booked of $7.6 million for the fourth quarter.
• Cash of $6.0 million exceeds the total of current and long-term debt of $5.2 million. In March 2007, we repurchased 238,700 shares of Merrimac Common Stock for approximately $2.2 million.
• Developed a new commercial banking relationship with North Fork Bank and completed refinancing of our loans in October 2006.
• Working capital of $13.3 million increased $3.5 million and the current ratio improved to 4.9 to 1.
• Research and development costs increased $89,000 for 2006 to support new Multi-Mix® products to be available in 2007.”

Investors are invited to participate in the financial results conference call on Monday, April 16, 2007 at 4:15 p.m. (Eastern) by dialing 1-800-500-3792 (for International callers: 1-719-457-2734) ten minutes prior to the scheduled start time, and reference the Merrimac Industries fourth quarter 2006 conference call. For those unable to participate, a replay will be available for seven days by dialing 1-888-203-1112, or 1-719-457-0820 for international callers, passcode number 2535411.

This conference call will also be broadcast live over the Internet by logging on to the web at this address:

http://www.videonewswire.com/event.asp?id=39158

If you are unable to participate during the live webcast, a link to the archived webcast will be listed on the Merrimac Industries, Inc. website.

http://www.merrimacind.com

About Merrimac

Merrimac Industries, Inc. is a leader in the design and manufacture of RF Microwave signal processing components, subsystem assemblies, and Multi-Mix® micro-multifunction modules (MMFM®), for the worldwide Defense, Satellite Communications (Satcom), Commercial Wireless and Homeland Security market segments. Merrimac is focused on providing Total Integrated Packaging Solutions® with Multi-Mix® Microtechnology, a leading edge competency providing value to our customers through miniaturization and integration. Multi-Mix® MMFM® provides a patented and novel packaging technology that employs a platform modular architecture strategy that incorporates embedded semiconductor devices, MMICs, etched resistors, passive circuit elements and plated-through via holes to form a three-dimensional integrated module applicable to High Power, High Frequency and High Performance mission-critical applications. Merrimac Industries facilities are registered under ISO 9001:2000, an internationally developed set of quality criteria for manufacturing operations.

Merrimac Industries, Inc. has facilities located in West Caldwell, NJ, San Jose, Costa Rica and Ottawa, Ontario, Canada, and has approximately 210 co-workers dedicated to the design and manufacture of signal processing components, gold plating of high-frequency microstrip, bonded stripline and thick metal-backed Teflon (PTFE) micro-circuitry and subsystems providing Total Integrated Packaging Solutions® for wireless applications. Merrimac (MRM) is listed on the American Stock Exchange. Multi-Mix®, Multi-Mix PICO®, MMFM® and Total Integrated Packaging Solutions® are trademarks of Merrimac Industries, Inc. For more information about Merrimac Industries, Inc. and its Canadian subsidiary Filtran Microcircuits Inc., please visit http://www.merrimacind.com and http://www.filtranmicro.com.

This press release contains statements relating to future results of the Company (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to: risks associated with demand for and market acceptance of existing and newly developed products as to which the Company has made significant investments, particularly its Multi-Mix® products; the possibilities of impairment charges to the carrying value of our Multi-Mix® assets, thereby resulting in charges to our earnings; risks associated with adequate capacity to obtain raw materials and reduced control over delivery schedules and costs due to reliance on sole source or limited suppliers; slower than anticipated penetration into the satellite communications, defense and wireless markets; failure of our Original Equipment Manufacturer or OEM customers to successfully incorporate our products into their systems; changes in product mix resulting in unexpected engineering and research and development costs; delays and increased costs in product development, engineering and production; reliance on a small number of significant customers; the emergence of new or stronger competitors as a result of consolidation movements in the market; the timing and market acceptance of our or our OEM customers’ new or enhanced products; general economic and industry conditions; the risk that the benefits expected from the Company’s acquisition of Filtran Microcircuits Inc. are not realized; the ability to protect proprietary information and technology; competitive products and pricing pressures; our ability and the ability of our OEM customers to keep pace with the rapid technological changes and short product life cycles in our industry and gain market acceptance for new products and technologies; foreign currency fluctuations between the U.S. and Canadian dollars; risks relating to governmental regulatory actions in communications and defense programs; and inventory risks due to technological innovation and product obsolescence, as well as other risks and uncertainties as are detailed from time to time in the Company’s Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Merrimac Industries, Inc.
Summary of Consolidated Statements of Operations

			Quarter Ended (Unaudited)
			December 30, 2006	December 31, 2005
Net sales			$6,192,000	$7,002,000
Gross profit			1,524,000	2,662,000
Selling, general & administrative expenses			2,239,000	2,415,000
Research and development			525,000	394,000
Restructuring charge			286,000	-
Operating (loss)			(1,526,000)	(147,000)
Interest and other expense, net			(198,000)	(41,000)
(Loss) before income taxes	(1,724,000)			(188,000)
Benefit for income taxes			(8,000)	(305,000)
Net income (loss)		(1,716,000)		117,000
Net income (loss) per common share - basic and diluted			$(.55)	$.04
Weighted average number of shares outstanding - basic			3,138,000	3,146,000
Weighted average number of shares outstanding - diluted			3,138,000	3,180,000

Merrimac Industries, Inc.
Condensed Consolidated Balance Sheets

			December 30, 2006	December 31, 2005
ASSETS
Current assets:
Cash and cash equivalents			$  5,961,000	$ 4,081,000
Accounts receivable, net			5,852,000	5,310,000
Income tax refunds receivable			99,000	418,000
Inventories			3,917,000	3,710,000
Other current assets			882,000	693,000
Deferred tax assets			10,000	140,000
Total current assets	16,721,000			14,352,000
Property, plant and equipment, net			12,985,000	13,973,000
Restricted cash		-		1,500,000
Other assets		493,000		614,000
Deferred tax assets			552,000	482,000
Goodwill			3,503,000	3,501,000
Total Assets			$34,254,000	$34,422,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current portion of long-term debt			$  649,000	$  908,000
Deferred tax liabilities			100,000	20,000
Other current liabilities			2,618,000	3,570,000
Total current liabilities			3,367,000	4,498,000
Long-term debt, net of current  portion			4,564,000	2,071,000
Deferred liabilities			38,000	23,000
Deferred tax liabilities	-			140,000
Total liabilities			7,969,000	6,732,000
Stockholders' equity		26,285,000		27,690,000
Total Liabilities and Stockholders' Equity			$34,254,000	$34,422,000

Merrimac Industries, Inc.
Condensed Consolidated Statements of Cash Flows