Ceradyne, Inc. Receives New Five-Year $611.7 Million ID/IQ Contract;
For Ceramic Side Plate Body Armor, $59.8 Million Initial Delivery Order

    COSTA MESA, Calif.--July 3, 2006--Ceradyne, Inc. (Company)
(Nasdaq:CRDN) received a new 60-month Indefinite Delivery/Indefinite
Quantity (ID/IQ) government contract for Enhanced Side Ballistic
Inserts (ESBI) with a maximum value of $611.7 million. Simultaneously,
the Company received an initial delivery order for $59.8 million
scheduled to be shipped from July 2006 to November 2006. The contract
was awarded to Ceradyne by the U.S. Army, Aberdeen Proving Ground,
Maryland.
    David Reed, Ceradyne president of North American operations,
commented, "We are very pleased that the government's high level of
confidence in Ceradyne has resulted in this major win for us. Over the
past few years, we have expanded our capacity for state-of-the-art
lightweight ceramic body armor here in Costa Mesa, California, and our
new Lexington, Kentucky, facility. We are confident we will meet the
Army's quality and delivery requirements.
    "In addition, this new multi-year contract provides visibility for
potential future revenue," Reed continued. "Furthermore, we believe we
will receive our next delivery order under this contract late in
2006."
    Reed noted, "Under an ID/IQ government-type contract, the
government is obligated to purchase only certain minimum quantities.
Each delivery order, such as this initial delivery order for $59.8
million, is issued as a release against a maximum amount, which for
this ID/IQ contract is $611.7 million. Therefore, our projections of
follow-on business under this contract depend upon anticipated receipt
of additional releases or delivery orders.
    "We have been manufacturing these ESBI side plates since January
2006 and continue to believe that our extensive research into the
Ceradyne optimum design was a key factor in the decision to award
Ceradyne this contract," Reed stated. "And from a capacity
perspective, the August 2004 acquisition of ESK Ceramics assures us a
supply of the finest boron carbide powders, which are the starting
materials for Ceradyne's armor system technology. The combination of
having these starting materials, in conjunction with our Kentucky and
California hot pressing plants, and our recently announced Irvine,
California, assembly operation expansion, results in a vertically
integrated manufacturing operation."
    Reed added, "Ceradyne is proud to have been awarded this contract
and is confident that its armor systems, which will be fielded in
large quantities, will save American lives."

    Ceradyne develops, manufactures and markets advanced technical
ceramic products and components for defense, industrial,
automotive/diesel, 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 from those projected. Words such as "anticipates,"
"believes," "plans," "expects," "intends," "future," and similar
expressions are intended 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, 2005, and its
Quarterly Reports on Form 10-Q, as filed with the U.S. Securities and
Exchange Commission.

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    CONTACT: Ceradyne, Inc.
             David Reed, 714-549-0421, x8245
             or
             Silverman Heller Associates
             Dan Matsui/Gene Heller, 310-208-2550