Exhibit 99.1
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 | | PRESS |
| | RELEASE |
SYNTROLEUM ANNOUNCES
2004 FINANCIAL RESULTS
For Immediate Release
Tuesday, February 1, 2005
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Contact: | | Mel Scott |
| | | Syntroleum Corporation |
| | | (918) 592-7900 |
| | | www.syntroleum.com |
Tulsa, OK — Syntroleum Corporation (NASDAQ: SYNM) today announced unaudited financial results for the year ended December 31, 2004. The Company reported a net loss for the year end of $41.9 million, or ($0.97) per share. This compares to a net loss of $34.6 million, or ($1.00) per share, for the year ended December 31, 2003. The Company’s 2004 loss was affected by non-cash equity compensation expense related to restricted stock and warrants issued to employees and consultants of $4.5 million, or $0.10 per share. The Company also expects to recognize $5.8 million of revenue in 2005 associated with fuels produced for the DOE at the Company’s Catoosa Demonstration Facility in 2004 but not delivered until 2005.
The Company’s cash and cash equivalents balance at December 31, 2004 was $31.6 million, compared to a cash balance of $32.7 million at December 31, 2003. The Company invested $5.3 million in oil and gas properties in the United States and Nigeria related to drilling, land and lease acquisitions, and geological and geophysical evaluations during the year ended December 31, 2004.
“2004 was a transformational year for Syntroleum,” said Jack Holmes, Syntroleum’s President and CEO. “We re-directed our business strategy to that of an energy production company, entered the execution phase of our business plan with the Aje project and broadened our management team to help execute that plan. We also achieved significant business milestones, including the successful operation of the Catoosa fuels plant and road tests of our fuels, reached key agreements with Sovereign and ExxonMobil, and assembled a group of upstream companies to undertake the appraisal and development of the Aje project.”
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Syntroleum Announces 2004 Financial Results
February 1, 2005
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Fourth Quarter
Fourth quarter 2004 revenues were $317 thousand, compared to total revenues of $3.7 million for the fourth quarter of 2003. Fourth quarter 2003 revenues related to the liquidation of certain catalyst materials, which were fully disposed during the first quarter of 2004. The Company reported a net loss for the fourth quarter of 2004 of $11.2 million, or ($0.24) per share, compared to a net loss of $10.8 million, of ($0.29) per share, for the same period in 2003.
Fourth quarter 2004 operating expenses included $5.1 million of expenditures related to the Company’s research, development and engineering programs, including $2.8 million at the Company’s Catoosa Demonstration Facility. The Company’s fourth quarter 2003 research, development and engineering expenses totaled $5.5 million and included $3.6 million of expenditures on the Catoosa Demonstration Facility. The Catoosa Demonstration Facility is a 70-barrel per day gas-to-liquids plant constructed jointly by Syntroleum, the U.S. Department of Energy (“DOE”), and Marathon Oil Company, one of the Company’s licensees. The plant is supplying demonstration fuels to government vehicles and for engine testing under the DOE’s Ultra-Clean Fuels Program.
The Company incurred, during the fourth quarter of 2004, general, administrative and other costs totaling $5.3 million, including $1.3 million in non-cash equity compensation charges. General, administrative and other costs were $3.7 million for the fourth quarter of 2003, including $78 thousand in non-cash equity compensation charges.
Year End
For the year ended December 31, 2004, revenues were $6.6 million, compared to $19.2 million for the same period in 2003. The Company reported a net loss for the year ended December 31, 2004 of $41.9 million or ($0.97) per share, compared to a net loss of $34.6 million, or $(1.00) per share, for the year ended December 31, 2003.
The Company incurred expenses for the year ended December 31, 2004 of $22.3 million related to research, development and engineering programs, including $13.0 million of expenditures at our Catoosa Demonstration Facility, compared to $30.1 million for these activities, including $21.8 million related to the construction of the Catoosa Demonstration Facility, during 2003.
General, administrative and other expenses for the year ended December 31, 2004 were $21.6 million, including $4.5 million in non-cash equity compensation charges, compared to $16.1 million for general,
Syntroleum Announces 2004 Financial Results
February 1, 2005
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administrative and other costs, including $85 thousand in non-cash equity compensation charges, for the year ended December 31, 2003.
Conference Call and Operations Update
The Company’s year end 2004 conference call will take place Tuesday, February 1, 2004 at 4:00 PM EST, during which Syntroleum’s senior management will discuss financial results for the period, progress on the Company’s commercial developments and other important activities. A web cast of the call will be available via the Internet by accessing www.syntroleum.com. Listeners should allow a few minutes for registration into the web site. A replay of this conference call will be available on the web site under the Syntroleum Investor Relations tab for a period of one year.
In addition, the Company will publish an Operations Update following the completion of the conference call.
Syntroleum Corporation owns a proprietary gas-to-liquids process for converting natural gas into synthetic liquid hydrocarbons. The Company plans to use its GTL technology, as well as other third party gas processing technologies, to develop and participate in oil and gas monetization projects in a number of global locations.
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(Tables Follow)
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This document includes forward-looking statements as well as historical information. Forward-looking statements include, but are not limited to, statements relating to GTL Barge projects, oil, natural gas and GTL product production and reserves, oil and gas exploration and development plans and operations, the testing, certification, characteristics and use of synthetic fuels and alternative fuels, the Syntroleum Process and related technologies and products, GTL plants based on the Syntroleum Process (including the development of planned plants), the economic use of such plants and the continued development of the Syntroleum Process. When used in this document, the words “believe,” “expect,” “may,” “plan” and similar expressions are intended to be among the statements that identify forward-looking statements. Although Syntroleum believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include the potential that commercial-scale GTL plants will not achieve the same results as those demonstrated on a laboratory or pilot basis or that such plants will experience technological and mechanical problems, the potential that improvements to the Syntroleum Process currently under development may not be successful, the impact on plant economics of operating conditions (including energy prices), construction risks, risks associated with investments and operations in foreign countries, the ability to implement corporate strategies, competition, intellectual property risks, Syntroleum’s ability to obtain financing and other risks described in the Company’s filings with the Securities and Exchange Commission.
® “Syntroleum” is registered as a trademark and service mark in the U.S. Patent and Trademark Office.
Syntroleum Announces 2004 Financial Results
February 1, 2005
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Syntroleum Corporation and Subsidiaries
Statements of Operations (Unaudited)
(Amounts in thousands, except per share data)
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| | | Fourth Quarter
| | | Year End
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| | | 2004
| | | 2003
| | | 2004
| | | 2003
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Revenue | | | | | | | | | | | | | | | | |
Joint Development and other | | $ | 317 | | | $ | — | | | $ | 932 | | | $ | 14,274 | |
Catalyst Materials | | | — | | | | 3,707 | | | | 5,674 | | | | 4,966 | |
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Total Revenue | | | 317 | | | | 3,707 | | | | 6,606 | | | | 19,240 | |
Operating Expenses | | | | | | | | | | | | | | | | |
DOE Catoosa Project | | | 2,833 | | | | 3,634 | | | | 12,994 | | | | 21,843 | |
Catalyst Materials Cost | | | — | | | | 3,486 | | | | 3,033 | | | | 7,886 | |
R&D/Engineering | | | 2,248 | | | | 1,904 | | | | 9,275 | | | | 8,221 | |
G&A and Other | | | 5,346 | | | | 3,714 | | | | 21,572 | | | | 16,107 | |
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Total Operating Expenses | | | 10,429 | | | | 12,738 | | | | 46,874 | | | | 54,057 | |
Income (loss) from Operations | | | (10,112 | ) | | | (9,031 | ) | | | (40,268 | ) | | | (34,817 | ) |
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Investment and Interest Income | | | 209 | | | | 352 | | | | 891 | | | | 1,310 | |
Other Income (Expense) | | | (1,313 | ) | | | (2,126 | ) | | | (2,482 | ) | | | (2,438 | ) |
Taxes | | | — | | | | (12 | ) | | | (12 | ) | | | (60 | ) |
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Income (loss) from Continuing Operations | | | (11,216 | ) | | | (10,817 | ) | | | (41,871 | ) | | | (36,005 | ) |
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Income from Discontinued Real Estate Operations | | | — | | | | (12 | ) | | | — | | | | 1,367 | |
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Net Income (loss) | | $ | (11,216 | ) | | $ | (10,829 | ) | | $ | (41,871 | ) | | $ | (34,638 | ) |
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Earnings (loss) Per Share (Basic and Diluted) | | | | | | | | | | | | | | | | |
Earnings (loss) from continuing operations | | $ | (0.24 | ) | | $ | (0.29 | ) | | $ | (0.97 | ) | | $ | (1.04 | ) |
Earnings (loss) from discontinued real estate operations | | $ | 0.00 | | | $ | 0.00 | | | $ | 0.00 | | | $ | 0.04 | |
Net Earnings (loss) | | $ | (0.24 | ) | | $ | (0.29 | ) | | $ | (0.97 | ) | | $ | (1.00 | ) |
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Weighted Average Shares Outstanding | | | 45,832 | | | | 37,480 | | | | 43,318 | | | | 34,684 | |
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Syntroleum Announces 2004 Financial Results
February 1, 2005
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Syntroleum Corporation and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(Amounts in thousands)
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| | | December 31,
2004
| | | December 31,
2003
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Assets | | | | | | | | |
Cash and Cash Equivalents | | $ | 31,573 | | | $ | 32,695 | |
Restricted Cash | | | 221 | | | | 24,010 | |
Other Current Assets | | | 2,162 | | | | 5,562 | |
Total Non-current Assets | | | 10,735 | | | | 4,968 | |
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Total Assets | | $ | 44,691 | | | $ | 67,235 | |
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Liabilities and Stockholders’ Equity | | | | | | | | |
Current Liabilities | | $ | 4,650 | | | $ | 5,620 | |
Current maturities of debt and deferred credit | | | — | | | | 13,546 | |
Current maturities of convertible debt | | | 24,221 | | | | 21,842 | |
Non-current Liabilities | | | 104 | | | | 78 | |
Deferred Revenue | | | 27,575 | | | | 38,273 | |
Minority Interests | | | 706 | | | | 706 | |
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Total Liabilities | | | 57,256 | | | | 80,065 | |
Total Stockholders’ Equity (Deficit) | | | (12,565 | ) | | | (12,830 | ) |
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Total Liabilities and Stockholders’ Equity | | $ | 44,691 | | | $ | 67,235 | |
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Syntroleum Announces 2004 Financial Results
February 1, 2005
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Syntroleum Corporation and Subsidiaries
Cash Flow Statements (Unaudited)
(Amounts in Thousands)
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| | | Year Ended December 31,
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| | | 2004
| | | 2003
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CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
Net Income (Loss) | | $ | (41,871 | ) | | $ | (34,638 | ) |
Income from discontinued real estate operations | | | — | | | | (315 | ) |
Minority Interest of discontinued operations | | | — | | | | 99 | |
Gain on sale of discontinued operations | | | — | | | | (1,151 | ) |
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Income (Loss) from Continuing Operations | | | (41,871 | ) | | | (36,005 | ) |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | | | | | | | | |
Release of project equity contributions | | | — | | | | (2,000 | ) |
Depreciation and amortization | | | 606 | | | | 714 | |
Foreign currency exchange | | | 459 | | | | 7,893 | |
Non-cash compensation expense | | | 4,467 | | | | 85 | |
Impairment of note receivable and investments | | | 51 | | | | 267 | |
Non-cash interest expense | | | 1,697 | | | | 1,196 | |
Loss on sale of assets | | | (23 | ) | | | (435 | ) |
Changes in operating assets and liabilities | | | (8,924 | ) | | | 5,952 | |
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Net cash used in continuing operations | | | (43,538 | ) | | | (22,333 | ) |
Net cash provided by discontinued operations | | | — | | | | 1,510 | |
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Net cash flows from operating activities | | | (43,538 | ) | | | (20,823 | ) |
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CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
Purchase of property and equipment | | | (971 | ) | | | (897 | ) |
Purchase of oil and gas assets | | | (5,280 | ) | | | — | |
Proceeds from sale of property and equipment | | | — | | | | 621 | |
Collection of note receivable | | | — | | | | 93 | |
Change in restricted cash | | | 25,346 | | | | (18 | ) |
Syntroleum Announces 2004 Financial Results
February 1, 2005
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Change in and proceeds from investments | | | 70 | | | | 92 | |
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Net cash used in continuing operations | | | 19,165 | | | | (109 | ) |
Net cash provided by discontinued operations | | | — | | | | 3,049 | |
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Net cash flows from investing activities | | | 19,165 | | | | 2,940 | |
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CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
Proceeds from sale of common stock and option exercises | | | 37,807 | | | | 24,272 | |
Proceeds from convertible debt and long term debt | | | 682 | | | | 16,180 | |
Payment of debt and deferred credit | | | (13,546 | ) | | | — | |
Settlement of Australia Liability | | | (1,397 | ) | | | — | |
Collections on notes receivable from officers | | | 100 | | | | 1,441 | |
Purchase and Retirement of Treasury Stock | | | (238 | ) | | | — | |
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Net cash provided by continuing operations | | | 23,408 | | | | 41,893 | |
Net cash used in discontinued operations | | | — | | | | (60 | ) |
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Net cash flows from financing activities | | | 23,408 | | | | 41,833 | |
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FOREIGN EXCHANGE EFFECT ON CASH AND CASH EQUIVALENTS | | | (157 | ) | | | (5,866 | ) |
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NET CHANGE IN CASH AND CASH EQUIVALENTS | | | (1,122 | ) | | | 18,084 | |
CASH AND CASH EQUIVALENTS, beginning of year | | | 32,695 | | | | 14,611 | |
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CASH AND CASH EQUIVALENTS, end of year | | $ | 31,573 | | | $ | 32,695 | |
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