Catalytica and McDermott Technology Expand Fuel Processor Development.

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--June 22, 1999--

Catalytica Advanced Technologies, Inc., a subsidiary of Catalytica, Inc. (Nasdaq:CTAL), and McDermott Technology, Inc., an operating unit of McDermott International, Inc. (NYSE:MDR), announced today selection for an award from the U.S. Department of Energy (DOE) to develop a compact catalytic fuel processor for use with fuel cells in transportation applications.

The selected DOE program calls for a compact, fully integrated system capable of processing multiple fuels into a hydrogen-rich gas suitable for powering proton exchange membrane fuel cells. Over the next 30 months, the two firms plan to develop, test, demonstrate, and deliver the system. The total cost of the project is estimated to be $5.8 million, of which the Department of Energy will contribute up to $3.8 million.

"The rapidly growing interest in fuel cell technology among vehicle manufacturers and fuel suppliers has created a need for fuel processor systems able to meet challenging size, weight, cost, and performance specifications," said Rodger McKain, vice president, McDermott Technology. "By combining McDermott's strengths in advanced energy technology and engineering, and Catalytica's expertise in specialty catalysts, those challenges represent an attractive opportunity for the two firms."

"McDermott and Catalytica are both committed to innovative technologies which produce clean energy efficiently and cost-effectively," added Norman R. Smith, president and chief executive officer of Catalytica Advanced Technologies. "By increasing the resources applied to fuel processor technologies for the emerging fuel cell market, the DOE project moves us closer to our goal of developing commercial products."

Beginning last year, Catalytica Advanced Technologies and McDermott Technology have been collaborating on projects to develop and commercialize fuel processing technology for fuel cells, including the reforming of gasoline for transportation applications and natural gas for stationary power applications. In September 1998, the companies were awarded a contract by the California Energy Commission to develop a gasoline desulfurizer used to prepare gasoline for conversion to hydrogen for fuel cell-powered vehicles. Since then, the scope and structure of the collaboration have been broadened.

McDermott Technology Inc. is an operating unit of McDermott International, Inc. (NYSE:MDR), a leading worldwide energy services company. McDermott and its subsidiaries manufacture steam-generating equipment, environmental equipment, and products for the U.S. government. They also provide engineering and construction services to industrial, utility, and hydrocarbon processing facilities, and to the offshore oil and natural gas industries. McDermott Technology, Inc. is located on the World Wide Web at www.mtiresearch.com.

Catalytica, Inc. builds businesses in high growth industries where the Company's technologies optimize manufacturing and solve environmental problems. Catalytica Pharmaceuticals, Inc. provides drug development and product manufacturing to the pharmaceutical industry; Catalytica Combustion Systems, Inc. produces XONON, a catalytic system that permits essentially pollution free combustion for the energy market; and Catalytica Advanced Technologies, Inc. serves as the incubator for new catalytic technologies for industrial applications. Find Catalytica on the World Wide Web at www.catalytica-inc.com.

This news release contains forward-looking statements regarding McDermott's and Catalytica's future development and operation of the research program and products competitive market position. These statements involve risk and uncertainty, including without limitation, the ability to complete the research program, development of a viable product, the ability to perform cost-effectively and in a timely manner, product development delays, and changes in the company's competitive position.