Catalytica Combustion Systems Receives First Commercial Contract for XONON System.

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Nov. 7, 1996--Catalytica Combustion Systems, Inc., a wholly-owned subsidiary of Catalytica, Inc. (NASDAQ:CTAL), today announced the receipt of the first commercial contract for its XONON(TM) catalytic combustion system.

The contract, with the City of Glendale (California) for its Grayson Power Plant, calls for the retrofit of a Pratt & Whitney FT-4 turbine with a XONON Combustion System which reduces NOx emissions to 3 ppm--well below the regulatory emission requirements in the Los Angeles area. Glendale also has an option for the retrofit of three similar turbines at the same plant site. Terms of the contract were not disclosed.

"After a thorough review of the alternatives, we believe XONON will provide our turbine fleet with the operating flexibility that will be essential in the world of deregulated electricity," said Bernard V. Palk, P.E., Director of Public Service for the City of Glendale. "As the solution with the lowest NOx emissions, we expect XONON to extend the life of our turbines for producing efficient, clean power."

Dennis A. Orwig, President of Catalytica Combustion Systems, commented, "XONON fits precisely Glendale's forward-looking approach to the dynamic power markets of the future. We welcome the opportunity to supply the essential technology and expertise to help Glendale meet its stringent economic and environmental criteria."

Mr. Orwig continued, "The Glendale order represents a number of notable and exciting firsts for XONON: our first commercial order, our first entry into the turbine retrofit market, and the first installation in an out-of-warranty Pratt & Whitney turbine. It will also serve as the inaugural project for our collaboration with Woodward Governor Company."

Catalytica Combustion Systems and the Woodward Governor Company recently announced the establishment of GENXON Power Systems, a 50/50 joint venture located in Mountain View, California, which will provide an integrated portfolio of product and services, including XONON, for out-of-warranty gas turbines. The turbine retrofit market, a large installed base of potential opportunity for Catalytica, represents a second major strategic thrust for XONON. The first, original equipment manufacturing, recently achieved key milestones towards commercialization.

Catalytica, Inc. develops and produces advanced products that use proprietary catalytic technologies to lower manufacturing costs and reduce hazardous byproducts. In addition to the development of advanced combustion systems for the elimination of toxic emissions generated by natural gas turbines, Catalytica, through its 85 percent-owned subsidiary, Catalytica Fine Chemicals, Inc., develops and manufactures fine chemical building blocks for the pharmaceutical industry.

This news release contains forward-looking statements reflecting Catalytica's current expectations. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation product development delays, changes in demand for Catalytica's products, changes in environmental regulations, future levels of government funding for advanced turbine development, and competition from other combustor technologies. Investors are encouraged to review Catalytica's Form 10-K for the year ended December 31, 1995 (Part II, Item 7) and Form 10-Q for the periods ended March 31, 1996 and June 30, 1996 for a more complete discussion of factors that could affect Catalytica's future performance. -0-

Note to Editors: XONON is a trademark of Catalytica, Inc. Catalytica Web address: http://www.catalytica-inc.com

CONTACT: Catalytica, Inc.

Lawrence W. Briscoe, 415/940-6370

Chief Financial Officer