Ceradyne Receives $7.0 Million PAC-3 Missile Ceramic Radome Initial Funding.

Business Editors

COSTA MESA, Calif.--(BUSINESS WIRE)--May 12, 2003

Ceradyne, Inc. (Company) (Nasdaq: CRDN) today announced that it has been selected by Lockheed Martin Missiles and Fire Control to supply the radomes on the PAC-3 (Patriot Advanced Capability) missile system. This tactical defensive missile system is designed to intercept incoming missiles with its "hit to kill" technology and was recently employed by the U.S. in the Iraq war. Ceradyne has been working with Lockheed for a number of years supplying the precision diamond grinding on prototypes and low rate initial production parts.

Lockheed Martin has determined that Ceradyne, after production qualification, will manufacture the technical ceramic radome blank, diamond machine the radome blank to precise tolerances and assemble the radome components for incorporation on the missile.

This initial $7.0 million in funding is designated for certain "long lead" equipment and tooling to be incorporated in a new 25,000 sq. ft. facility to be leased adjoining the Ceradyne Thermo Materials plant in Scottdale, Georgia.

Actual production quantities are subject to government funding and eventual incorporation of the PAC-3 system by U.S. Allies as well as the United States. Assuming that the U.S. and its allies incorporate the PAC-3 as its defensive tactical missile system, total revenues to Ceradyne could exceed $150 million over the life of the program, which is expected to exceed ten years. We believe that production quantities will begin in 2004 at approximately a $4-$6 million annual rate.

Mr. Earl Conabee, Ceradyne Vice President responsible for missile radomes, commented, "This is a major win for Ceradyne. We are particularly pleased with Lockheed's decision to award Ceradyne the front-end funding to the anticipated `full-up' ceramic radome contract, including ceramic blank fabrication, final finishing, and assembly. Combined with the recently announced award related to the Arrow Missile System, the Company expects to make good use of its new radome production facility here in Scottdale, Georgia."

Ceradyne develops, manufactures and markets advanced technical ceramics for defense, industrial, consumer, automotive and microwave tube applications. Additional information about the Company can be found at www.ceradyne.com.

Except for the historical information contained herein, certain matters discussed in this news release constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. The Company may use words such as "anticipates," "believes," "plans," "expects," "intends," "future," and similar expressions to identify forward-looking statements. These risks and uncertainties are described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002 as filed with the Securities and Exchange Commission.