Merrimac Reports Third Quarter and Nine Months 2001 Results

WEST CALDWELL, N.J., November 6, 2001: Merrimac Industries, Inc. (AMEX: MRM), a leader in the design and manufacture of RF Microwave components, assemblies and micro-multifunction modules (MMFM®), today announced results for the third quarter and first nine months of 2001.

Third quarter 2001 sales of $5,812,000 decreased 9.7 percent compared to third quarter sales of $6,437,000 for the prior year. Net loss for the third quarter of 2001 was $209,000 compared to net income of $219,000 for the third quarter 2000. Net loss per share was $.08 compared to net income per diluted share of $.09 reported for the third quarter of 2000.

For the first nine months of 2001, sales of $18,669,000 increased 14.5 percent compared to sales of $16,298,000 for the first nine months of 2000. Operating income for the first nine months of 2001 was $47,000, before the effect of the charges associated with the reincorporation in Delaware of $330,000 in the first quarter 2001, compared to $554,000 of operating income for the first nine months of 2000, before the first quarter 2000 personnel restructuring charge of $315,000.

Net loss for the first nine months of 2001 was $104,000, after the net effects of the first quarter 2001 reincorporation charge of $198,000. For the first nine months of 2000, net income of $94,000 was reported, after the net effects of the first quarter 2000 restructuring charge of $189,000.

Net loss per share of $.04 was recorded for the first nine months of 2001, after the net effects of the $.08 per share reincorporation charge reported in the first quarter of 2001. For the first nine months of 2000, net income of $.04 per diluted share was reported, after the net effects of the $.09 per share restructuring charge reported in the first quarter of 2000.

The weighted average number of diluted shares outstanding increased by approximately 244,000 shares or 10 percent for the third quarter 2001 and 445,000 shares or 20 percent for the first nine months of 2001 compared to the same periods of the prior year, resulting from the issuance in private placements of 375,000 shares in the second quarter 2000 and 360,000 shares in the fourth quarter 2000, as well as stock option exercises during the prior year.

The backlog at the end of the third quarter of 2001 was $12.7 million, an increase of $2.1 million or 20 percent over year-end 2000, and an increase of $1.0 million or 8 percent when compared to the backlog of $11.7 million at the end of the third quarter of last year. Orders received during the third quarter of 2001, totaling $6.3 million, exceeded the third quarter 2001 sales level by approximately 8 percent, and orders for the first nine months of 2001, totaling $20.8 million, exceeded the nine months 2001 sales level by approximately 11 percent.

Chairman and CEO Mason N. Carter commented, "The unspeakable terrorism of September 11th has profoundly affected all of us. We are still attempting and may never be able to comprehend those horrific attacks on our country that extinguished so many productive, innocent lives and destroyed billions of dollars of property. These tragic events have impacted the way we live and in so doing, changed our world forever. We shall prevail."

Mr. Carter continued, "Resulting from the aforementioned events, air transportation required for product freight between our Costa Rica manufacturing facility and Company headquarters in New Jersey, customer source-inspection personnel delays, and temporary value of shipment restrictions placed by a common carrier on overseas shipments impacted third quarter and nine months sales by $450,000 and after-tax operating income by approximately $150,000, which will be recovered in the fourth quarter and annual results of operations. In addition, an after-tax employment termination cost for senior level personnel of approximately $70,000 was recorded in the third quarter.

"The current economic downturn in conjunction with reduced spending by wireless service providers has caused many wireless companies to delay their purchases. At the same time, we are experiencing more activity from major defense contractors.

"The RF Microwave Group continues its success in securing orders as previously announced with major defense and space programs such as the Space Based Infrared System (SBIRS) High constellation program of Lockheed Martin and Boeing's GPS Block II program. The RF Microwave Group and our subsidiary Filtran Microcircuits Inc. are working together on a board fabrication and assembly for a long-term major phased array radar program.

"Filtran has also started delivery on a major production order of circuit boards for use as 2G and 2.5G basestation transceivers by a major wireless infrastructure provider. Initial discussions have already started about redesigning the next generation transceiver board.

"In the third quarter, we launched PICO quadrature hybrids, directional couplers, in-line multicouplers, power dividers and hybrid junctions. Market reaction to our PICO product launch has been very favorable and we are continuing our design efforts to introduce phase shifters, vector modulators and micro-multifunction modules in the near future. A feature article has already been written about our Multi-Mix PICO^TM products and can be accessed on our website. http://www.merrimacind.com/news/MCWV_RF_Oct_01.pdf

"The benefits of Multi-Mix®, size, power, weight and cost savings for commercial and wireless markets are also recognized for use in defense applications. We have received design wins to provide solutions on several new missile and radar defense systems. These solutions range from integration of low noise amplifiers into front-end modules to the design of multiplexed and GPS filters.

"We are continuing to provide value added Total Integrated Packaging Solutions^TM to our basestation and broadband Internet system suppliers of outdoor satellite dishes and indoor set-top boxes. In utilizing Multi-Mix our customers are providing a value contribution into new system designs for their end-users. We are confident that our customers will be successful with their product offerings.

"Even in such difficult times, we are excited and encouraged by the number and variety of applications from major wireless, space and defense companies who realize the value of Multi-Mix as an enabling technology and continue to come to us to provide viable solutions which meet or exceed their expectations. We see this activity increasing as these companies adjust to the marketplace and look outside their organizations for Total Integrated Packaging Solutions."

About Merrimac

Merrimac Industries, Inc. is a leader in the design and manufacture of Multi-Mix PICO RF Microwave components, assemblies and micro-multifunction modules (MMFM), serving the wireless telecommunications industry worldwide with enabling technologies for commercial applications. Merrimac is focused on providing Total Integrated Packaging Solutions^TM with Multi-Mix® Microtechnology, a leading edge competency providing value to our customers through miniaturization and integration. The Multi-Mix process for microwave, multilayer integrated MMFM circuitry is a patented method developed by Merrimac Industries based on fluoropolymer composite substrates. The fusion bonding of multilayer structures provides a homogeneous dielectric medium for superior electrical performance at microwave frequencies. The bonded layers may incorporate embedded semiconductor devices, MMICs, etched resistors, passive circuit elements and plated-through via holes to form a three-dimensional subsystem enclosure that requires no further packaging. Merrimac Industries facilities are registered under ISO 9000, an internationally developed set of quality criteria for manufacturing operations.

Merrimac Industries, Inc. and its subsidiary Filtran Microcircuits Inc., with locations in West Caldwell, NJ, San Jose, Costa Rica and Ottawa, Ontario, Canada, have approximately 240 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 Filtran Microcircuits Inc., please visit www.merrimacind.com and 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: general economic and industry conditions; slower than anticipated penetration into the satellite communications, defense and wireless markets; the risk that the benefits expected from the acquisition of Filtran Microcircuits Inc. are not realized; the ability to protect proprietary information and technology; competitive products and pricing pressures; the risk that the Company will not be able to continue to raise sufficient capital to expand its operations as currently contemplated by its business strategy; risks relating to governmental regulatory actions in communications and defense programs; risks associated with demand for and market acceptance of existing and newly developed products; and inventory risks due to technological innovation and product obsolescence, as well as other risks and uncertainties, including but not limited to those 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.

Note: These news releases are also available on the Internet at: http://www.prnewswire.com

Contact:

Mason N. Carter, Chairman & CEO
973.575.1300, ext. 1202
E-mail: mnc@merrimacind.com

Merrimac Industries, Inc.
Summary of Consolidated Statements of Operations
(Unaudited)

	Quarter Ended
	September 29, 2001	September 30, 2000
Net sales	$5,812,000	$6,437,000
Gross profit	2,923,000	3,135,000
Selling, general and administrative expenses	2,318,000	2,273,000
Research and development	954,000	484,000
Interest and other (income) expense, net	(20,000)	9,000
Income (loss) before income taxes	(329,000)	369,000
Provision (benefit) for income taxes	(120,000)	150,000
Net income (loss)	(209,000)	219,000

Net income (loss) per common share - basic	$(.08)	$.10
Net income (loss) per common share - diluted	$(.08)	$.09

Weighted average number of shares outstanding - basic	2,623,000	2,186,000
Weighted average number of shares outstanding - diluted	2,623,000	2,379,000

	Nine Months Ended
	September 29, 2001	September 30, 2000
Net sales	$18,669,000	$16,298,000
Gross profit	9,674,000	7,955,000
Selling, general and administrative expenses	7,125,000	6,068,000
Research and development	2,502,000	1,333,000
Interest and other (income) expense, net	(69,000)	115,000
Income (loss) before income taxes	(a) (214,000)	(b) 124,000
Provision (benefit) for income taxes	(a) (110,000)	(b) 30,000
Net income (loss)	(a) (104,000)	(b) 94,000

Net income (loss) per common share - basic	(a) ($.04)	(b) $.05
Net income (loss) per common share - diluted	(a) ($.04)	(b) $.04

Weighted average number of shares outstanding - basic	2,616,000	2,021,000
Weighted average number of shares outstanding - diluted	2,616,000	2,171,000

(a) Reflects the effects of the reincorporation charge of $330,000 which reduced the after-tax results of operations by $198,000 or $.08 per share for the first nine months of 2001.
(b) Reflects the effects of a restructuring charge of $315,000 which reduced the after-tax results of operations by $189,000 or $.09 per share for the first nine months of 2000.