Catalytica Energy Systems Reports Fourth Quarter and Year-End 2001 Financial Results.Business Editors MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Feb. 11, 2002 Catalytica Energy Systems, Inc. (Nasdaq:CESI CESI Centro Elettrotecnico Sperimentale Italiano (Italy) CESI Chauffe-Eau Solaire Individuel CESI Centre d'Etudes Superieures Industrielles (French) CESI Canadian Educational Standards Institute ) today reported financial results for the fourth quarter and year ended December December: see month. 31, 2001. The results reflect the Company's continued investment in advancing the development and commercialization of its Xonon(R) Cool Combustion combustion, rapid chemical reaction of two or more substances with a characteristic liberation of heat and light; it is commonly called burning. The burning of a fuel (e.g., wood, coal, oil, or natural gas) in air is a familiar example of combustion. system and the development of innovative technologies for more effective energy production. Net loss for the fourth quarter was $7,133,000 on revenues of $688,000, compared with a net loss of $7,384,000 on revenues of $1,598,000 in the same period of the prior year. The decline in quarter over quarter net loss was primarily the result of non-recurring transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). that had been recorded in the fourth quarter 2000 in connection with Catalytica Energy Systems' spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. from Catalytica, Inc. These transaction costs were partially offset by a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $2,145,000 taken in the fourth quarter of 2001 related to the Company's equity investment in NovoDynamics NovoDynamics is a software development company specializing in image analysis, pattern recognition and data mining. Though NovoDynamics is perhaps best known for developing Arabic Optical Character Recognition (Arabic OCR) and image enhancement applications for Middle . Revenues during the quarter included an increase in funding by government agencies for continued development of Xonon, which partially offset a decrease in funding by OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and partners associated with program timing. Selling, general and administrative expenses increased to $2,925,000, compared with $1,204,000 in the fourth quarter of 2000, as the result of expanded operations in the Company's new Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). facility and related restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , while research and development expenses decreased to $3,210,000, compared with $3,973,000 reported in the fourth quarter of 2000. For the year ended December 31, 2001, revenues increased slightly to $5,523,000, compared with 2000 revenues of $5,487,000. Net loss for fiscal 2001 was $19,589,000 or a loss of $1.33 per share, compared with a net loss of $15,910,000, or a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma loss of $1.25 per share reported in the previous fiscal year. The increase in year over year net loss reflected additional costs as the result of conducting a full year of operations as a stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context. "We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." business and the non-cash charge against an equity investment due to uncertain economic conditions. The Company also continued to invest in its commercialization efforts for Xonon during the year. Accordingly, spending on research and development increased to $14,622,000, compared with $11,277,000 in the prior year. An increase in selling, general and administrative expenses in 2001 to $7,267,000, compared with $5,356,000 in 2000, included expanded sales and marketing efforts and various costs associated with the opening of a new facility in Arizona to house the Company's dedicated commercial manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. . "We made good progress in 2001 toward advancing our commercial programs, expanding our strategic relationships, and strengthening our financial position," stated Craig Craig , Edward Gordon 1872-1966. British theatrical producer, director, and designer whose innovative productions and simplified stage designs influenced modern theater. Kitchen, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Catalytica Energy Systems. "We laid out a series of milestones at the beginning of 2001 aimed at further expansion of our commercialization efforts for Xonon as well as exploring future growth opportunities through development of other energy-related technologies. We are pleased with our accomplishments during the year, which included shipment of our first production units, the initiation initiation, the transition and attendant ceremonies, such as ordeals and rites, involved in passing from one state or status to another, often from childhood to adulthood. It was among the most important social institutions of early humans. of a new development effort with Solar Turbines, the opening of a new facility in Arizona to build out our manufacturing operations, and the launch of development initiatives in fuel processing for automotive fuel cell applications and emissions reduction for diesel applications." 2001 Highlights: -- Received third party confirmation of Xonon's ultra-low emissions capabilities from the EPA's Environmental Technology Verification (ETV) Program -- Shipped Xonon test modules for GE 7FA rig test -- Shipped full-size development units for GE10 testing -- Shipped pre-production modules for Kawasaki M1A-13X engine testing -- Achieved 8,000 hours of operation by the Xonon-equipped gas turbine at Silicon Valley Power -- Initiated fuel cell processor program following $11.7 million cost-share contract awarded to Catalytica Energy Systems by the U.S. Department of Energy -- Commercialized Xonon on the Kawasaki M1A-13X gas turbine through shipment of first three commercial units -- Completed public offering - Raised net proceeds of $47.6 million through sale of 4,250,000 shares -- Received notification of $3 million California Energy Commission award for application of Xonon to a small, multi-can gas turbine -- Finalized agreement with Solar Turbines to develop Xonon-equipped Taurus 60 gas turbines -- Opened new facility in Arizona to house commercial manufacturing operations "In addition to achieving our business milestones, we also strengthened our financial position during the year," Kitchen added. "Through the completion of a public stock offering in the third quarter and successful management of our cash burn, we ended the year with a strong balance sheet including $87.4 million in cash and cash equivalents, positioning us to further move our technology into the marketplace." Kitchen continued, "The coming year provides an opportunity to build upon the strong foundation we laid in 2001 toward expanding Xonon's availability in the market. Despite economic conditions and other events that have impacted the energy industry over the past several months and caused a temporary slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in power projects, we are confident in the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. outlook for sustained growth in capacity additions to satisfy the ongoing, increasing demand for electricity and to replace older, less efficient power sources that will come off-line. In fact, the DOE's 20-year forecast for gas turbines is very favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. , with 88% of the projected 355 gigawatts of capacity additions to come from gas-fired gas-fired adj → de gas gas-fired adj → au gaz gas-fired adj (heater etc) → Gas- generation. Further, environmental requirements for ultra-low NOx emissions continue to expand across the country, resulting in the need for more and more gas turbine turbine, rotary engine that uses a continuous stream of fluid (gas or liquid) to turn a shaft that can drive machinery. A water, or hydraulic, turbine is used to drive electric generators in hydroelectric power stations. projects to be clean burning, and providing for a solid market opportunity for Xonon." "We believe that our ongoing efforts in 2002 to broaden Xonon's commercial application will position us to respond to this growing demand. This year, we expect to secure additional Xonon orders for the Kawasaki Kawasaki (käwä`säkē), city (1990 pop. 1,173,603), Kanagawa prefecture, central Honshu, Japan, on Tokyo Bay. Located in the Tokyo-Yokohama industrial area, it has steel mills, shipyards, oil refineries, engineering works, and M1A-13X and realize the commercial launch of Xonon-equipped GE10s. To support our commercial activities and position us for growth, we plan to bring on-line a new 22,000 square foot manufacturing facility in Arizona by year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. , which we anticipate will provide sufficient capacity to satisfy production requirements well into the future. We will also continue to invest in our new technology efforts and in programs that expand Xonon's application to additional turbine models, by seeking to both advance our development efforts with current OEM partners and secure new strategic relationships." The Company will host a conference call on Tuesday Tuesday: see week. , February February: see month. 12, 2002, at 4:45 PM Eastern Time (1:45 PM Pacific Time) to discuss its financial results along with its outlook for 2002. The call will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and can be accessed via the Company's website at www.CatalyticaEnergy.com. To hear a replay of the conference call, an archived version of the webcast will be available on the Company's website beginning approximately two hours following the conclusion of the live call, and continuing for a period of one week following the call. Catalytica Energy Systems designs and develops advanced products for more effective energy production. Its proprietary technologies include the use of catalysts to create solutions to ease the environmental impact of power generation. The Company's first product, Xonon Cool Combustion, is a breakthrough combustion technology that achieves ultra-low emissions levels for gas turbine power production. Xonon prevents the formation of pollution, particularly nitrogen oxides Noun 1. nitrogen oxide - any of several oxides of nitrogen formed by the action of nitric acid on oxidizable materials; present in car exhausts pollutant - waste matter that contaminates the water or air or soil (NOx), a primary contributor to smog, through a proprietary catalytic cat·a·lyt·ic adj. Of, involving, or acting as a catalyst: "Deregulation's catalytic power . . . is still reshaping the banking, communications, and transportation industries" Ellyn E. combustion process. Additional technology development efforts include work on fuel processing for fuel cells, as well as the adaptation of Xonon technology to micro-turbines, hybrid gas turbine fuel cells, and diesel applications. Find Catalytica Energy Systems on the Worldwide Web at www.CatalyticaEnergy.com. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding Xonon's commercial availability, the securing of additional orders for the Xonon-equipped Kawasaki M1A-13X gas turbines, the commercial launch of Xonon-equipped GE10s, the incorporation of Catalytica Energy Systems' Xonon Cool Combustion system into the GE10 and other gas turbines, Catalytica Energy Systems' growth prospects and its plans for a commercial manufacturing facility to come on-line by year-end, the anticipated capacity of Catalytica Energy Systems' manufacturing facility, the market demand for clean burning gas-fired generation, and Catalytica Energy Systems' ability to expand Xonon's application to additional turbine models by securing new OEM partners and strategic relationships. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those expressed in the forward-looking statements. These risks and uncertainties include, among others: possible fluctuations in economic conditions affecting the markets for Catalytica Energy Systems' products; the risk that a market may not develop or be maintained for Catalytica Energy Systems' products; changes in the environmental requirements for ultra-low NOx emissions; that marketing, project development and installation timelines This article or section contains self-references. For other uses of "Timeline", see Timeline (disambiguation). The following is an index of timelines found on Wikipedia. and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. review outcomes are uncertain; that there may be unanticipated technical, commercial or other setbacks related to the incorporation of Xonon into the GE10, the Taurus Taurus, in astronomy Taurus [Lat.,= the bull], in astronomy, constellation NW of Orion and lying on the ecliptic (the sun's apparent path through the heavens) between Gemini and Aries; it is one of the constellations of the zodiac. 60, or other gas turbines; that changes may occur in the arrangements between Kawasaki and Catalytica Energy Systems for the supply of M1A-13X gas turbines; that changes may occur in the arrangements between GE Power Systems and Catalytica Energy Systems for the supply of GE10 gas turbines; that the construction of Catalytica Energy Systems' Arizona manufacturing facility may be delayed by financial, labor or other factors; that as a result of market conditions and other factors the manufacturing facility may have insufficient capacity in the future; that Catalytica Energy Systems may be unable to maintain current or develop future strategic relationships, including with OEM partners; and the other risks set forth in the Catalytica Energy Form 10-Q Form 10-Q See 10-Q. filed with the Securities and Exchange Commission on November November: see month. 14, 2001. Catalytica Energy Systems undertakes no obligation to update any forward-looking statements to reflect new information, events, or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or occurring after the date of this release. Editor's Note Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat. Trained by D. : Xonon and Xonon Cool Combustion are registered trademarks of Catalytica Energy Systems, Inc. Mountain View, CA, USA
Catalytica Energy Systems, Inc.
Condensed Consolidated Statements of Operations(1)
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
Revenues:
Research and
development contracts $ 688 $ 1,598 $ 5,523 $ 5,487
Costs and expenses:
Research and development 3,210 3,973 14,622 11,277
Selling, general and
administrative 2,925 1,204 7,267 5,356
Spin-off and related
transaction costs -- 4,090 -- 5,304
Legal settlement -- -- 3,000 --
-------- -------- -------- --------
Total costs and expenses 6,135 9,267 24,889 21,937
Operating loss (5,447) (7,669) (19,366) (16,450)
Interest income 598 289 2,672 886
Interest expense (9) (4) (43) (110)
Loss on joint ventures (130) -- (707) (236)
Impairment charge to
implied goodwill of
an equity investment (2,145) -- (2,145) --
-------- -------- -------- --------
Net loss $(7,133) $(7,384) $(19,589) $(15,910)
======== ======== ======== ========
Basic and diluted
net loss per share $ (0.41) $ (2.99) $ (1.33) $(15.90)
======== ======== ======== ========
Weighted average
shares used for
above calculation 17,421 2,466 14,747 1,000
======== ======== ======== ========
Pro forma:(2)
Net loss per share $ (0.58) $ (1.25)
======== ========
Number of shares at
12/31/00 12,698 12,698
Note (1.) In December 2000, Catalytica Advanced Technologies, Inc. was
merged into Catalytica Energy Systems, Inc. The results for all
periods presented in these financial statements represent the combined
balance sheets and combined statements of operations of Catalytica
Advanced Technologies, Inc. and Catalytica Energy Systems, Inc.
Note (2.) Pro forma net loss per share gives effect to the spin-off of
Catalytica Energy Systems from Catalytica, Inc., as if it occurred at
the beginning of 2000, and presumes that same number of shares have
been outstanding for the entire year. No adjustments to net loss have
been made in calculating the pro forma net loss per share.
Catalytica Energy Systems, Inc.
Condensed Consolidated Balance Sheet(a)
(in thousands)
(unaudited)
December 31, 2001 December 31, 2000
ASSETS:
Cash and short-term
investments $ 87,395 $ 58,713
Accounts and notes
receivable, net 1,324 2,348
Inventory 178 180
Other current assets 536 524
--------- ---------
Total current assets 89,433 61,765
Property and equipment 14,682 13,592
Less accumulated depreciation
and amortization (9,905) (8,062)
--------- ---------
4,777 5,530
Other assets 678 477
--------- ---------
$ 94,888 $ 67,772
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities $ 8,043 $ 10,058
Current portion of long-term debt 60 155
--------- ---------
Total current liabilities 8,103 10,213
Long-term debt 63 89
Stockholders' equity 86,722 57,470
--------- ---------
$ 94,888 $ 67,772
========= =========
(a) Note: In December 2000, Catalytica Advanced Technologies, Inc. was
merged into Catalytica Energy Systems, Inc. The results for all
periods presented in these financial statements represent the combined
balance sheets and combined statements of operations of Catalytica
Advanced Technologies, Inc. and Catalytica Energy Systems, Inc.
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