News Release

Merrimac Reports Third Quarter and Nine Months 1998 Sales and Earnings; Plans Restructuring Charge and Reaffirms Stock Repurchase Program

WEST CALDWELL, NJ (November 13, 1998) - Merrimac Industries, Inc. (Amex: MRM) results for the third quarter and nine months of 1998 reflect increases in sales volume and nine months earnings.

Third quarter 1998 sales of $5,121,000 increased 2.7% over sales in the third quarter of the prior year of $4,984,000. Net income decreased $102,000 or 29.1% to $248,000 for the third quarter of 1998 compared to 1997. Diluted net income per share was $.14, a decrease of $.05 or 26.3%, compared to the diluted per share amount of $.19 reported for the third quarter of the prior year on a similar number of weighted average diluted common shares outstanding in both years.

For the first nine months of 1998 sales of $16,487,000 increased 15.7% over prior year nine-month sales of $14,245,000. Net income increased 7.8% to $1,084,000 compared to $1,006,000 reported in the first nine months of 1997, and diluted net income per share increased to $.59, up 3.5% compared to diluted net income per share of $.57 reported in the first nine months of the prior year.

The diluted weighted average number of common shares outstanding increased by 63,000 shares or 3.6% for the first nine months compared to the first nine months of the prior year. The increase resulted from common stock issued during the second half of 1997 and first half of 1998 from the exercise of stock options and the sale of common stock from its treasury.

Chairman and CEO Mason N. Carter commented: "Technology reinvestment exceeding $700,000 continues at a record pace more than doubling from last year. Multi-Mix(TM) Microtechnology, a proprietary 3-dimensional microwave packaging technology, has recently appeared in important electronics industry trade publication articles and is featured on the cover of the November issue of Microwave Journal, a leading RF Microwave industry publication. Customer response to our new products has been extremely positive.

"Multi-Mix(TM) is a unique packaging technology that provides for the integration of a variety of different types of functionality by combining several components, creating an MMFM(TM) (Micro Multi-Function Module), that provides customers with what they want, which is a 'total integrated packaging solution'. It is based on a platform strategy that provides predesigned modules that combine the benefits of standard and custom design. During this development process, we have emphasized the need for technology innovation, process excellence and market focus. This successful effort provides us with an enabling technology that meets and exceeds customer requirements.

"Multi-Mix(TM) adds tremendous capability and dimension for our key account customers. Beyond our traditional components business we are successfully involved with subassembly and subsystem applications. This allows us to provide per unit value many times our historic average. Multi-Mix(TM) is creating a new business model establishing diversification into high growth commercial market segments.

"Within our core product technology, we have been notified by the US Patent Office that our patent application for a 15GHz bi-phase modulator has been allowed and that we will be receiving a patent for that design. This proprietary design, nicknamed the 'flatliner' for its outstanding performance, has application in space and Ku band frequency applications."

The Company entered the fourth quarter of 1998 with a backlog of $6.4 million, a decrease of $3.7 million or 37% from the same time last year. Major satellite and defense customers continued to defer purchases as a result of delays in certain programs. Management of the Company believes that many of the satellite constellation programs that have been delayed may resume and translate into orders during the remainder of 1998 and continue positively into 1999. Customer requests for design work are on the increase and are currently under development utilizing the Company's proprietary Multi-Mix(TM) Microtechnology. This technology provides greater per unit content and enables the Company's entry into new markets for increased order opportunities.

Because of the current weakness in orders, the Company is preparing to layoff approximately 15% of its workforce and to offer early retirement packages to certain employees during the fourth quarter of 1998. The Company plans to report a restructuring charge in the fourth quarter of 1998 of approximately $200,000 before taxes for the reduction in workforce and voluntary early retirements. The saving in costs for future fiscal years from this restructuring should approximate at least $800,000 annually, depending upon the number of employees accepting early retirement. The Company further estimates that sales will decline for the fourth quarter 1998, as a result of the decline in backlog for the previous quarters, and it expects to report an operating loss before the restructuring charge. Mr. Carter commented: "This restructuring will allow for greater focus and emphasis on the growth segments of our business. Management is taking appropriate action to right-size the business given current market conditions."

The Board of Directors of Merrimac Industries, Inc. reaffirms the stock repurchase program, whereby the Company has been authorized to repurchase up to 100,000 shares, from time to time, depending on market conditions.

About Merrimac

Merrimac Industries, Inc. is a leader in the design and manufacture of RF Microwave components, assemblies and Micro-Multifunction (MMFM®) Modules 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® circuits is a patented method developed at 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, Inc. is ISO 9001 certified.

Merrimac Industries, Inc. located in West Caldwell, NJ employs 160 in the design and manufacture of high-performance components for communications, defense and aerospace markets. Merrimac (MRM) is listed on the American Stock Exchange. For more information about Merrimac Industries, visit its home page at www.merrimacind.com.

This press release contains statements relating to future results of Merrimac (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; risks relating to governmental regulatory actions in communications and defense programs; and inventory risks due to technological innovation, as well as other risks and uncertainties, including but not limited to those detailed from time to time in Merrimac's Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof, and Merrimac undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

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Contacts

Mason N. Carter, Chairman and CEO,
Tel: 973.575.1300, Ext. 1202; Fax: 973.882.5989
E-mail: mnc@merrimacind.com

Note: The basic and diluted weighted average number of shares outstanding and net income per share information for all prior reporting periods have been restated to reflect the effects of the 10% stock dividend which became effective June 5, 1998.