Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACT:
Jackie Cossmon
Catalytica, Inc.
650-960-3000, ext. 6204
CATALYTICA REPORTS THIRD QUARTER AND NINE MONTH FINANCIAL
RESULTS
MOUNTAIN VIEW, CA (October 24, 2000) - Catalytica, Inc. (Nasdaq: CTAL)
today reported financial results for the third quarter and nine months ended
September 30, 2000.
For the third quarter, total revenues were $77,224,000 compared with
$98,465,000 reported in the same period of the prior year. The decline in
revenues for the quarter was primarily related to the scheduled step-down in
product sales to Glaxo Wellcome. Continued growth in research revenues during
the third quarter partially offset the decline in product sales. Research
revenues grew to $9,616,000, an increase of 49% over research revenues of
$6,434,000 reported during the same period last year. Operating income for the
quarter was $66,000 compared with operating income of $2,890,000 reported during
the third quarter of 1999. Operating income for the quarter was impacted by an
increase in selling, general and administrative expenses associated primarily
with costs incurred by the Catalytica Energy Systems, Inc. subsidiary for its
anticipated spin-off later this year to Catalytica, Inc. shareholders, and with
costs associated with the sale of Catalytica, Inc. to DSM. As a result of lower
sales volumes and higher operating expenses, the Company experienced a net loss
of $775,000, or a loss of $0.01 per diluted share, for the third quarter ended
September 30, 2000, compared with net income of $1,438,000, or $0.02 per diluted
share, in the corresponding period last year.
For the nine months ended September 30, 2000, total revenues were
$273,178,000, compared with $312,495,000 reported in the corresponding period
last year. The decline in revenue from product sales was partially offset by a
continued upward trend in research revenues which were $29,863,000 for the first
nine months of 2000, nearly double the $16,748,000 reported during the same
period last year. Operating income for the nine months ended September 30,
2000, was $21,839,000 and net income was $10,980,000, or $0.15 per diluted
share. This compares with operating income of $26,615,000 and net income of
$17,336,000, or $0.25 per diluted share, reported in the same period last year.
Ricardo B. Levy, president and chief executive officer of Catalytica,
Inc., commented, "Our top line sales this quarter were clearly impacted by
timing issues related to our ability to offset the decline in sales from our
original supply agreement with Glaxo Wellcome with new products and new customer
business. We believe that this quarter is an anomaly and, in spite of the fact
that we will continue to transition some of the original Glaxo business out of
the
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CATALYTICA REPORTS THIRD QUARTER
AND NINE MONTH RESULTS 2-2-2-2
Greenville facility, we believe that new business will contribute more
significantly to next quarter's revenues. In this respect, we are very pleased
with the progress that we are making in several areas. We are experiencing
continued strong interest from customers for our sterile manufacturing
operations. In fact, we are in active negotiations for commercial production of
five new products at the facility. With the anticipated growing demand for this
unique capability, we have initiated a major expansion of the sterile facility.
Also, the continued increase in research revenues on the pharmaceuticals side of
the business reinforces the value that our customers have placed on our product
development services which we believe is an important indicator of future
business. At the same time, we are reviewing all our operations to identify
areas where we can improve and streamline our business. As a result of this
review, we expect to implement cost saving measures in the near future."
Catalytica announced on August 2, 2000, that DSM will acquire Catalytica's
pharmaceuticals business through the purchase of Catalytica, Inc. for
approximately $750 million plus the assumption of debt, for a total current
value of approximately $800 million. The transaction is structured as a merger
of a wholly-owned U.S. subsidiary of DSM with Catalytica and a taxable spin-off
of the Catalytica Combustion Systems and Catalytica Advanced Technologies
businesses as a single entity to Catalytica stockholders. As a result,
Catalytica will operate as a subsidiary of DSM and the Catalytica Combustion
Systems and Catalytica Advanced Technologies businesses will comprise a stand-
alone company that has been named Catalytica Energy Systems, Inc. Shares of the
spin-off company will be distributed in conjunction with the close of the
merger. Catalytica has filed documents with the SEC for the spin-off of
Catalytica Energy Systems. Concurrently, DSM and Catalytica are moving forward
with all the filing requirements for the merger and plan to complete this
transaction in the fourth quarter.
Regarding the transaction with DSM, Levy commented, "DSM and Catalytica
continue to receive positive feedback in the pharmaceutical market regarding the
proposed merger of our two companies. We feel that the strong synergies of the
two companies brings important opportunities for the future."
Also during the quarter, as announced in a separate release issued today,
Catalytica Energy Systems appointed Dennis Riebe as its chief financial officer.
Mr. Riebe joins Catalytica Energy Systems with over 34 years of financial
management and business experience in the gas turbine and aircraft industries.
Catalytica, Inc. (www.Catalytica-inc.com) finds new pathways to improve
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chemical processes--reducing time, waste, and costs.
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CATALYTICA REPORTS THIRD QUARTER
AND NINE MONTH RESULTS 3-3-3-3
This news release contains forward-looking statements regarding
Catalytica's business, future performance and competitive position in its
markets. Such forward-looking statements include the prospects for our
business, the market demand of our products, the benefits from our agreements,
obtaining additional Xonon orders, developing new energy-related products,
securing additional manufacturing business through our research and development
associations with our customers, our future ability to obtain new Catalytica
Pharmaceuticals' customers, our expectations of future agreements, our ability
to identify and implement cost-saving measures in the near future, the future
performance of the Xonon system, the proposed spin-off of Catalytica Energy
Systems, and the merger with DSM. Actual results may differ and such
differences may be material from those anticipated in such forward-looking
statements. These statements involve risks and uncertainties, including without
limitation the ability to complete the spin-off and merger with DSM, the ability
of Catalytica Pharmaceuticals and Catalytica Energy Systems to perform cost-
effectively and in a timely manner, the impact of product development delays at
both Catalytica Pharmaceuticals and Catalytica Energy Systems, the impact of
market demand, the ability to continue to increase revenue from new customers
and research services and offset declines in revenue from Glaxo Wellcome and
Warner Lambert, the ability to operate the manufacturing, research and
development facilities efficiently, changes in market conditions, changes in the
Companies' competitive positions, changes in the pharmaceutical and energy
production industries and the impact of the FDA on the pharmaceutical market,
the EPA on the energy market, and other regulations on pharmaceutical and
biotech manufacturing, as well as the impact of environmental regulations on the
demand for ultra-low NOx emissions. Readers are cautioned not to place undo
reliance on these forward-looking statements, which speak only as of the date of
this release. The Company undertakes no obligation to update publicly any
forward-looking statements to reflect new information, events or circumstances
after the date of this release or to reflect the incurrence of unanticipated
events. Investors are encouraged to review Catalytica's preliminary Proxy
Statement on Schedule 14-A as filed on September 6, 2000, Form 10K for the year
ending December 31, 1999, Form 10Q's for the periods ending March 31 and June
30, 2000, and Catalytica Energy Systems' Registration Statement on Form S-1 as
filed on October 16, 2000 with the Securities and Exchange Commission for a
discussion of additional factors that could affect Catalytica's and Catalytica
Energy Systems' future performance.
Editors' Note: Xonon and Cool Combustion are trademarks of Catalytica.
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CATALYTICA REPORTS THIRD QUARTER
AND NINE MONTH RESULTS 4-4-4-4
Catalytica, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
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2000 1999 2000 1999
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Revenues:
Product sales $67,608 $92,031 $243,315 $295,747
Research and development
contracts 9,616 6,434 29,863 16,748
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Total revenues 77,224 98,465 273,178 312,495
Costs and expenses:
Cost of product sales 56,458 77,594 195,686 235,457
Research and development 13,277 11,200 36,024 30,140
Selling, general and administrative 7,423 6,781 19,629 20,283
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Total costs and expenses 77,158 95,575 251,339 285,880
Operating income (loss) 66 2,890 21,839 26,615
Interest expense, net (1,129) (1,461) (3,631) (4,298)
Loss on joint venture (236) (158) (236) (1,132)
Income taxes 524 167 (6,992) (3,849)
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Net income (loss) $ (775) $ 1,438 $ 10,980 $ 17,336
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Net income (loss) per share:
Basic $ (0.01) $ 0.02 $ 0.19 $ 0.30
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Diluted1 $ (0.01) $ 0.02 $ 0.15 $ 0.25
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Shares used in computing
net income (loss) per share:
Basic 58,234 57,639 58,089 57,544
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Diluted1 58,234 64,067 64,269 63,867
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1 For the three months ended September 30, 2000, potentially dilutive securities
of 6,354 were outstanding and are not included in the diluted earnings per share
computation because they are anti-dilutive.
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CATALYTICA REPORTS THIRD QUARTER
AND NINE MONTH RESULTS 5-5-5-5
Catalytica, Inc.
Condensed Consolidated Balance Sheet
(in thousands)
September 30, 2000 December 31, 1999
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(unaudited)
Assets:
Cash and short-term investments $ 19,755 $ 40,346
Accounts and notes receivable, net 32,393 42,320
Inventory 110,754 105,519
Other current assets 15,940 17,011
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Total current assets 178,842 205,196
Property and equipment, net 248,589 221,131
Other assets 1,065 2,181
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$428,496 $428,508
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Liabilities and Stockholders' Equity:
Current liabilities $ 67,272 $ 73,751
Current portion of long-term debt 19,750 12,948
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Total current liabilities 87,022 86,699
Long-term debt 36,000 51,000
Other long-term liabilities 23,327 23,982
Minority interest 41,000 41,000
Class A and B common stock 97,079 97,079
Stockholders' equity 144,068 128,748
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$428,496 $428,508
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