Exhibit 99
Environmental Power Announces Results for the First Quarter Of 2004
PORTSMOUTH, N.H.--(BUSINESS WIRE)--May 12, 2004--Environmental
Power Corporation (OTCBB: POWR), ("Environmental Power" or the
"Company"), an industry leader in the innovative development of
alternative and renewable clean energy systems, reported a 24%
increase in net income to $1,428,851, or $0.05 per common share,
compared to net income of $1,149,468 for the three months ended March
31, 2003, or $0.05 per common share, an increase of 24%. The increase
in net income was primarily attributable to decrease in income tax
expense.
Power generation revenues, all attributable to Scrubgrass,
decreased to $14,338,388 for the three months ended March 31, 2004
from $14,535,334 for the three months ended March 31, 2003. This
decrease is due to a $745,031 reduction in accrued power generation
revenues as a result of lowered straight-line lease expenses recorded
under generally accepted accounting principles. Under the 22-year
power sales agreement with Penelec, we record accrued power generation
revenues and an offsetting amount of accrued lease expenses. Although
our capacity factor dropped from 97.3% to 95.2% for the first quarter
2004, peak and off-peak energy revenues were up $548,458 because of a
5% increase in billable rates.
Jeff Macartney, Chief Financial Officer said, "We had a solid
quarter of performance from our Buzzard subsidiary and expect to have
another successful year from this business unit. However, we are most
excited by the start of construction on the first project of our
Microgy subsidiary. We have raised additional capital which is being
applied to the execution of our corporate strategy. We expect our
first sales from these products in 2004 and see a profitable future."
Kam Tejwani, Chief Executive Officer, stated, "The kick-off of the
construction of the system at Five Star Dairy of Elk Mound, Wisconsin
represents an important milestone. It heralds the beginning of a new
era of our corporate history. Our current backlog of power generation
projects employing Microgy's technology will provide us with years of
growth and value to our shareholders." Mr. Tejwani added, "In addition
to power plants based upon this technology, we are seeing great
opportunities to capture the value of the biogas for purposes other
than the generation of electricity. For example, our agreement with
The Scoular Company will allow us to tap into new revenue sources by
using biogas to generate thermal energy."
ENVIRONMENTAL POWER CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2004
& December 31, 2003
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March 31, December 31,
2004 2003
ASSETS (unaudited)
CURRENT ASSETS:
Cash and cash equivalents $275,418 $1,444,870
Restricted cash 1,949,086 1,554,308
Receivable from utility 13,794,598 13,063,529
Fuel inventory 983,278 485,021
Other current assets 125,669 194,104
--------------------------
TOTAL CURRENT ASSETS 17,128,049 16,741,832
PROPERTY, PLANT AND EQUIPMENT, NET 404,063 $435,516
LEASE RIGHTS, NET 1,826,244 1,863,495
ACCRUED POWER GENERATION REVENUES 75,850,127 75,314,725
GOODWILL 4,912,866 4,912,866
UNRECOGNIZED PRIOR PENSION SERVICE COST 241,427 241,427
LICENSED TECHNOLOGY RIGHTS, NET 3,210,421 3,256,796
OTHER ASSETS 379,099 387,711
--------------------------
TOTAL ASSETS $103,952,296 $103,154,368
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $9,807,083 $10,042,990
Working capital loan 1,490,000 2,433,261
Other current liabilities 207,183 389,535
--------------------------
TOTAL CURRENT LIABILITIES 11,504,266 12,865,786
DEFERRED GAIN, NET 3,778,031 3,855,133
LONG TERM DEBT OBLIGATIONS 4,540,915 4,499,190
ACCRUED LEASE EXPENSES 75,850,127 75,314,725
--------------------------
TOTAL LIABILITIES 95,673,339 96,534,834
SHAREHOLDERS' EQUITY:
Preferred stock (1) - -
Preferred stock of subsidiary (2) 100 100
Common stock (3) 275,770 272,638
Additional paid-in capital 9,478,333 9,071,127
Retained earnings (accumulated deficit) 59,435 (1,368,166)
Accumulated other comprehensive loss (324,815) (324,815)
--------------------------
9,488,823 7,650,884
Treasury stock (4) (385,402) (385,402)
Deferred compensation (178,516) -
Notes receivable from officers and board
members (645,948) (645,948)
--------------------------
TOTAL SHAREHOLDERS' EQUITY 8,278,957 6,619,534
--------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $103,952,296 $103,154,368
See Notes to Condensed Consolidated
Financial Statements.
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(1) $.01 par value; 2,000,000 shares authorized, no shares issued.
(2) no voting rights, no par value, 10 shares authorized; 10 shares
issued as of March 31, 2004 and December 31, 2003, respectively
(3) $.01 par value; 50,000,000 shares authorized; 27,576,749 issued
and 26,957,949 outstanding as of March 31, 2004; 27,263,749 issued
and 26,644,735 outstanding as of December 31, 2003
(4) 619,014 shares at cost, as of March 31, 2004 and December 31, 2003
ENVIRONMENTAL POWER CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (unaudited) for
the Three Months Ended March 31, 2004 and March 31, 2003
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Three Months Ended
March 31, March 31,
2004 2003
(unaudited)(unaudited)
POWER GENERATION REVENUES $14,338,388 $14,535,334
COSTS AND EXPENSES:
Operating expenses 6,281,122 5,589,847
Lease expenses 4,796,684 5,039,952
General and administrative 1,554,487 1,445,103
Depreciation and amortization 123,989 123,930
------------------------
12,756,282 12,198,832
OPERATING INCOME 1,582,106 2,336,502
OTHER INCOME (EXPENSE):
Interest income 6,296 6,482
Interest expense (207,980) (25,362)
Amortization of deferred gain 77,102 77,103
------------------------
(124,582) 58,223
INCOME BEFORE INCOME TAXES 1,457,524 2,394,725
INCOME TAX EXPENSE 28,673 1,245,257
------------------------
NET INCOME 1,428,851 1,149,468
PREFERRED SECURITIES DIVIDEND REQUIREMENTS OF
SUBSIDAIRY (1,250) (1,250)
------------------------
INCOME AVAILABLE TO COMMON SHAREHOLDERS $1,427,601 $1,148,218
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 26,752,612 21,814,465
Diluted 29,939,390 21,826,499
EARNINGS PER COMMON SHARE
Basic $0.05 $0.05
Diluted $0.05 $0.05
See Notes to Condensed Consolidated
Financial Statements.
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ENVIRONMENTAL POWER CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (unaudited) for
Three Months Ended March 31, 2004 and March 31, 2003
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Three Months Ended
March 31, March 31,
2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES: (unaudited) (unaudited)
Net income $1,428,851 $1,149,468
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 123,989 123,930
Amortization of deferred gain (77,102) (77,103)
Interest expense, accrued and added to balance
of borrowing 79,363 -
Non-cash, stock based compensation expense 231,822 -
Accrued power generation revenues (535,402)(1,280,433)
Accrued lease expenses 535,402 1,280,433
Changes in operating assets and liabilities:
Increase in receivable from utility (731,069) (635,918)
(Increase) decrease in other current assets (429,822) 24,484
(Increase) decrease in other assets (298) 827
Decrease in accounts payable and accrued
expenses (235,907) (695,384)
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Net cash provided by (used for) operating
activities 389.827 (109,696)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in restricted cash (394,778) (226,130)
Property, plant and equipment expenditures - (1,750)
-----------------------
Net cash used for investing activities (394,778) (227,880)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividend payments on preferred stock of
subsidiary (1,250) (1,250)
Repayments under secured promissory note
payable (37,638) -
Repurchase of Treasury stock - (21,274)
Net (borrowings) repayments under working
capital loan (1,125,613) 79,875
-----------------------
Net cash (used for) provided by financing
activities (1,164,501) 57,351
DECREASE IN CASH AND CASH EQUIVALENTS $(1,169,452) $(280,225)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,444,870 734,743
-----------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $275,418 $454,518
See Notes to Condensed Consolidated
Financial Statements.
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ABOUT ENVIRONMENTAL POWER CORPORATION
Environmental Power Corporation (OTCBB: POWR) is an
entrepreneurial energy company established in 1982 with annual
revenues in excess of $50 million. The company focuses on
environmentally sound power generation and anaerobic digestion
systems.
Environmental Power is targeting its proposed anaerobic digestions
systems to animal feeding operations in the U.S. with an estimated
initial target market of approximately $6.7 billion and an estimated
initial and expanded target market potential which exceed $14 billion.
For more information visit the company's web site at
www.environmentalpower.com.
CAUTIONARY STATEMENT
The Private Securities Litigation Reform Act of 1995 (the "Act")
provides a "safe harbor" for forward-looking statements. Certain
statements contained in this press release such as statements
concerning planned projects, statements regarding sales pipeline,
backlog and revenue projections, statements containing the words
"expects," "estimates," "anticipates," "believes," "projects" and
variations thereof, and other statements contained in this press
release regarding matters that are not historical facts are forward
looking statements as such term is defined in the Act. Because such
statements involve risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ
materially include, but are not limited to, uncertainties involving
development stage companies, uncertainties regarding project
financing, the lack of binding commitments and the need to negotiate
and execute definitive agreements for the construction and financing
of projects, financing and cash flow requirements and uncertainties,
difficulties involved in developing and executing on a business plan,
difficulties and uncertainties regarding acquisitions, technological
uncertainties, risks relating to managing and integrating acquired
businesses, unpredictable developments (including plant outages and
repair requirements), the difficulty of estimating construction,
development, repair and maintenance costs and timeframes, the
uncertainties involved in estimating insurance and implied warranty
recoveries, if any, the inability to predict the course or outcome of
any negotiations with parties involved with Environmental Power's or
Microgy's projects, uncertainties relating to general economic and
industry conditions, the amount and rate of growth in expenses,
uncertainties relating to government and regulatory policies, the
legal environment, intellectual property issues, the competitive
environment in which Environmental Power and Microgy operate and other
factors, including those described in the Company's Annual Report on
Form 10-K for the year ended December 31, 2003, as well as other
filings with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date that they are made.
Environmental Power undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
For more information, please contact:
jmacartney@environmentalpower.com
www.environmentalpower.com
CONTACT: Environmental Power Corporation
Investor Contact
Kam Tejwani, 603-431-1780
ktejwani@environmentalpower.com
or
Media Contact
Kate Dolan, 603-431-1780
kdolan@environmentalpower.com