Ceradyne, Inc. Reports Third-Quarter and Nine-Month Financial Results

    COSTA MESA, Calif.--Oct. 25, 2001--Ceradyne, Inc. today reported financial results for the third-quarter and nine-month periods ended September 30, 2001.
    Sales for the third quarter were $10.2 million, compared to $11.5 million in the prior-year quarter. Net income was $658,000, or $0.08 per diluted share, compared to $1.4 million, or $0.17 per diluted share, for the year-ago quarter. Pre-tax income was $877,000 versus $1.4 million.
    Sales for the nine-month period were $33.3 million, compared to $34.3 million in the prior-year period. Net income was $3.1 million, or $0.36 per diluted share, compared to $3.9 million, or $0.47 per diluted share, in the prior-year period. Income before provision for taxes for nine months was $4.1 million compared to $4.0 million in the year-ago period.
    Provision for taxes for the first nine months of 2001 was 25% compared to 2% for the same period in 2000.
    New bookings for the third quarter were $11.6 million, compared to $11.8 million in the year-earlier quarter. For the nine months ended September 30, 2001, new bookings were $30.7 million, compared to $34.6 million for the same period in 2000. Total backlog as of September 30, 2001 was $25.6 million (including options of $2.2 million), compared to the year-ago backlog of $24.0 million (including options of $2.6 million).
    Joel P. Moskowitz, Ceradyne's president and chief executive officer, commented: "Third-quarter sales and earnings were short of expectations, primarily due to a government delay in releasing certain ceramic armor options on an existing order which the Company now expects to ship in the fourth quarter 2001 and early 2002.
    "However, due in part to the U.S. response to the terrorist attacks on September 11, the Company is currently in discussions, including various stages of procurement proposals and negotiations, with U.S. government agencies regarding the production of lightweight ceramic armor for our soldiers," Moskowitz continued. "Should Ceradyne be awarded certain of these requirements, it would result in a significant increase in revenues in 2002 and beyond."
    Moskowitz added: "We expect the $4 million expansion of our Advanced Ceramic Operations facility in Costa Mesa, CA, to be completed in the fourth quarter of 2001. This expansion will substantially increase production capacity for lightweight ceramic armor and silicon nitride diesel engine components."
    Ceradyne develops, manufactures and markets advanced technical ceramics for industrial, electronic, defense and consumer applications. Additional information about the Company can be found at www.ceradyne.com.

    This press release contains forward-looking statements regarding future events and the future performance of Ceradyne that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties are described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, as filed with the Securities and Exchange Commission.

    Below is a summary of unaudited comparative results. Amounts in thousands except per share data.

                           Three Months Ended      Nine Months Ended
                                Sept. 30,               Sept. 30,
                            2001       2000        2001        2000

NET SALES                $ 10,178    $ 11,493    $ 33,264    $ 34,340
Cost of product sales       7,377       8,263      23,375      25,061
   GROSS PROFIT             2,801       3,230       9,889       9,279
Operating expenses:
   Selling                    497         444       1,554       1,197
   General and
    administrative          1,200       1,142       3,667       3,371
   Research and
    development               302         330         838         949
                            1,999       1,916       6,059       5,517

INCOME FROM OPERATIONS        802       1,314       3,830       3,762
Other income (expense):
   Other income                81         132         328         247
   Interest (expense)          (6)         (8)        (20)        (26)
                               75         124         308         221
INCOME BEFORE PROVISION
 FOR INCOME TAXES             877       1,438       4,138       3,983
   Provision for
    income taxes              219          29       1,034          80
NET INCOME               $    658    $  1,409    $  3,104    $  3,903

Earnings per
 share, basic            $   0.08    $   0.17    $   0.37    $   0.48
Earnings per
 share, diluted          $   0.08    $   0.17    $   0.36    $   0.47

Avg. shares outstanding     8,722       8,469       8,676       8,376


Condensed Consolidated Balance Sheets (in thousands):

                                          Sept. 30,       December 31,
                                            2001              2000

Cash and Cash Equivalents                   $ 2,012           $ 6,656
Other Current Assets                         24,030            16,996
Net Property, Plant and Equipment            14,758            11,398
Other Assets                                  2,453             3,413
    Total Assets                            $43,253           $38,463
                                                         
Current Liabilities                           4,428             3,216
Long Term Debt                                  183               258
Deferred Revenue                                 67              --
Stockholders' Equity                         38,575            34,989
Total                                                  
    Liabilities and Stockholders' Equity    $43,253           $38,463