Catalytica Reports First Quarter Results.

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--April 23, 1996-- Catalytica, Inc. (NASDAQ: CTAL), today reported financial results for the first fiscal quarter ended March 31, 1996.

Announcing the results, Ricardo B. Levy, chief executive officer, said, "Our two major operating subsidiaries, Catalytica Fine Chemicals, Inc. and Catalytica Combustion Systems, Inc., were on track operationally and continued to make significant progress towards strategic goals. Fine Chemicals continued to expand its production of pharmaceutical intermediates and build customer relationships. Combustion Systems moved forward with the development and testing of XONON Flameless Combustion products and pursued potential market opportunities."

Total revenues rose 32 percent to $3,340,000, from $2,535,000 for the year-ago quarter. The growth was led by a 49 percent increase in product sales primarily reflecting higher volume of pharmaceutical intermediates. The net loss was $2,370,000, or $0.12 per share, which included manufacturing start-up costs for several products. Other operating costs were held to single-digit increases. The corresponding net loss for the 1995 first quarter was $2,518,000, or $0.17 per share. Weighted average shares outstanding for the first quarter rose to 19,196,000, from 15,073,000 a year ago, as a result of a public offering in the fourth quarter of 1995.

A highlight of the quarter for Fine Chemicals was the initial production of two intermediates for a major new drug. The customer's New Drug Applications (NDA) has been put on accelerated review by the U.S. Food and Drug Administration (FDA). These products required Fine Chemicals to file its first Drug Master File with the FDA, which is expected to trigger its first FDA inspection. Successful completion of the inspection will enable Fine Chemicals to offer manufacturing for more highly regulated pharmaceutical products.

In Combustion Systems, progress was made on a number of major programs:

-- Fabrication is well underway for a demonstration of the XONON system in a 1.5 megawatt Kawasaki gas turbine in collaboration with Affiliated Group of Companies.

-- Explorations continued of the potential retrofit market, in which the benefits of XONON are offered to the currently installed base of turbines.

-- Testing of the XONON System was extended to General Electric's latest FA technology engines with outstanding results.

-- As announced shortly after the end of the quarter, Combustion Systems received a $3.5 million contract to develop catalytic combustion for the next generation of turbines under development at Allison Engine Company, a subsidiary of Rolls Royce, under the U.S. Department of Energy's Advanced Turbine System Program.

Levy concluded, "Building on the accomplishments of the first quarter, we remain focused on our goal of expanding and developing commercial opportunities and improving our financial performance."

Catalytica is developing catalytic processes and is manufacturing products that are designed to provide economic and environmental benefits by lowering manufacturing costs and reducing hazardous by-products.

This News Release contains forward-looking statements reflecting the Company's current expectations. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation changes in demand for the Company's products, changes in environmental regulations, effects of FDA regulations and competition.

Investors are encouraged to review the Company's Form 10-K for the year-ended Dec. 31, 1995 (Part II, Item 7) for a more complete discussion of factors that could affect the Company's future performance. -0-

                        Catalytica, Inc.
               Condensed Statements of Operations
       (in thousands, except per share amounts; unaudited)

                                           Three Months Ended
                                   March 31, 1996      March 31, 1995
Revenues:
  Product sales                        $2,017              $1,353
  Research revenues                     1,323               1,182
                                      --------            --------
                                        3,340               2,535

Costs and expenses                      5,827               5,155
Operating loss                         (2,487)             (2,620)
Interest, net                             117                 102
Net loss                              $(2,370)            $(2,518)

Shares used in computing net loss
 per share                             19,196              15,073
Net loss per share                     $(0.12)             $(0.17)

                        Catalytica, Inc.
             Condensed Consolidated Balance Sheets
                  (in thousands; unaudited)

                                     March 31, 1996  Dec. 31, 1995
Assets:
Current assets                          $21,123          $25,756
Property and equipment, net               5,491            5,383
Other long-term assets                      100              100
                                        -------          -------
                                        $26,714          $31,239

Liabilities and Stockholders' Equity:
Current liabilities                      $5,602           $7,654
Other long term liabilities               1,480            1,556
Stockholders' equity                     19,632           22,029
                                        -------          -------
                                        $26,714          $31,239

-0-

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

CONTACT: Catalytica, Inc.

Larry Briscoe, 415/940-6370