Ceradyne, Inc. CEO Expects Strong Growth in 2002, Sees Increasing Strength in Primary Markets

    COSTA MESA, Calif.--Feb. 19, 2002--Ceradyne, Inc. (Company) CEO Joel Moskowitz in a presentation today at the 14th Annual Roth Capital Partners Growth Stock Conference, stated that he expects Ceradyne's shipments to increase in 2002 by as much as 30%-40% over 2001 levels. He attributed the projected growth to increasing strength in Ceradyne's three primary markets: lightweight ceramic armor for military applications, particularly body armor for protecting individual soldiers; ceramic orthodontic brackets; and ceramic valve train components for diesel engines.
    Speaking to institutional investors attending the Conference at the Ritz-Carlton Hotel in Laguna Niguel, CA, Moskowitz began with a review of the Company's early focus on defense-related applications of ceramics technology and, in subsequent years, diversification into other defense applications and new sectors, such as automotive and consumer products.
    According to Moskowitz, over the past few years the government's decision to equip U.S. soldiers with lightweight ceramic body armor has resulted in Ceradyne being awarded a series of previously announced indefinite quantity contracts. Moskowitz stated that firm delivery orders already in hand and anticipated under these contracts are expected to materially increase the Company's shipment levels in 2002 and possibly many years thereafter. The terrorist attacks of September 11 only added impetus to the government's already-existing strategy to protect our nation's military personnel with ceramic body armor.
    To meet this demand, in 2001 Ceradyne invested over $6 million in capital equipment and expanded facilities in its Advanced Ceramic Operations located in Costa Mesa, CA. Moskowitz expects approximately the same level of capital expenditures in 2002. Related to this expansion, the Company has leased an additional 40,000 square feet of manufacturing space in nearby Irvine, CA, increasing its total Advanced Ceramic Operations' space by approximately 50%.
    Moskowitz said the second driver of growth, its ceramic orthodontic brackets marketed under the Clarity(TM) brand by its exclusive partner, the Unitek Division of 3M Company, showed growth throughout 2001 and is projected to continue that rate of growth in 2002.
    Ceradyne's third growth driver, continued Moskowitz, is expected to be sintered reaction bonded silicon nitride (SRBSN) diesel engine components for a number of major diesel engine manufacturers. The Company geared up for increased production throughout 2001 and is now seeing significant increases in demand for those components. Ceradyne SRBSN cam followers allow diesel engine manufacturers to offer longer engine warranties because of the long life of SRBSN parts despite a diesel engine's high-compression, high-friction environment.
    The Company has also increased its workforce and engineering and management staff in order to meet these increasing levels of demand. The Company's ceramics R&D efforts, partially funded through Small Business Innovation Research (SBIR) grants from U.S. government agencies, are expected to continue in the areas of lightweight armor, components for microwave communications and manufacturing, and automotive projects with emphasis on the use of robotics and continuous furnacing operations to increase productivity and increase throughput.
    Moskowitz closed by stating that it will be a challenge to grow operating profits at the same rate as the anticipated increase in revenues. In order to achieve expected shipment levels, the Company will need to substantially increase its production of ceramic armor plates over historic levels. Particular challenges facing the Company include being able to quickly ramp up production, maintain consistent quality, and deliver products on time; all within projected cost constraints. These challenges must be met by all Ceradyne employees as it progresses through 2002.
    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.