Exhibit 99.1 Capstone Turbine Announces Second Quarter Results CHATSWORTH, Calif.--(BUSINESS WIRE)--July 17, 2003--Capstone Turbine Corporation (Nasdaq:CPST) (www.microturbine.com), the world's leading microturbine power systems manufacturer, today reported its results for the quarter ended June 30, 2003. Revenue for the quarter was $4.1 million as compared with $7.4 million for the second quarter of 2002. Capstone shipped 108 units, comprised of 48 of its 60-kilowatt systems and 60 of its 30-kilowatt systems, in the second quarter of 2003. For the second quarter of 2003, Capstone's net loss was $9.4 million, or ($0.12) per share compared to a net loss of $30.8 million or ($0.40) per share during the second quarter of 2002. The loss during the second quarter of 2002 included $16.0 million from the impairment of marketing rights and $1.8 million related to excess inventory charges. Interim CEO, Emily Liggett, noted, "The soft economic environment remains challenging for distributed generation manufacturers, but we saw encouraging results in this most recent quarter. Capstone shipped 4.7 megawatts of power products during the second quarter of 2003. This is the highest quarterly shipment total since the 7.4 megawatts shipped during the second quarter of 2002. We began the second quarter with 7.0 megawatts of backlog and we begin the third quarter with a 5.1 megawatt backlog. "We are working with our business partners to increase adoption of Capstone Microturbines around the world," said Liggett, "and some interesting applications were unveiled recently: -- An A&P Waldbaum's supermarket on Long Island held an event to showcase its C60 that not only conserves energy on the strained Long Island power grid, its exhaust is used to dehumidify the in-store air. This conserves even more energy by cutting air conditioning use; -- The Santa Fe Hilton where a Capstone Microturbine's exhaust heats an outdoor pool, and -- A Wisconsin landfill running an array of biogas-fueled microturbines." On the company's business plan initiatives, Ms. Liggett said, "During the quarter we shipped the first commercial units of our new integrated combined heat and power product based upon our C60 system. These systems are now being deployed in commercial applications. We reached another important milestone in the second quarter by beginning testing of the power electronics for the C200 product that we target for release in 2004." Second Quarter Financial Highlights Gross loss in the quarter was $2.6 million, compared to $4.2 million for the same period in the prior year. The 2002 period included charges of $1.8 million related to excess inventory. Research and development ("R&D") costs increased to $2.5 million in the period, as compared to $1.6 million in the second quarter of 2002. R&D expenses are reported net of contract offsets. These offsets were $0.1 million and $1.3 million in 2003 and 2002, respectively. Selling, general and administrative expenses decreased to $4.7 million, less than half the $9.7 million recorded in the second quarter of 2002. As of June 30, 2003, Capstone had $126.4 million in cash and cash equivalents, with no long-term debt. The company's cash utilization was $6.2 million in the second quarter of 2003, compared to $9.2 million in the second quarter of 2002 and $7.7 million in the first quarter of 2003. Conference call The company will host a conference call today, Thursday, July 17, at 2:00 p.m. Pacific Time, to further review the company's second quarter results. Access to the live broadcast and a replay of the webcast will be available until July 31 through the company's web site: www.microturbine.com. About Capstone Turbine Capstone Turbine Corporation (www.microturbine.com)(Nasdaq:CPST) is the world's leading producer of low-emission microturbine systems. In 1998, Capstone was the first to offer commercial power products utilizing microturbine technology, the result of more than ten years of focused research. Capstone Turbine has sold and shipped more than 2,500 commercial production Capstone MicroTurbine systems to customers worldwide. These award-winning systems have logged more than 4 million hours of operation. This press release contains "forward-looking statements," as that term is used in the federal securities laws, about Capstone's business, with regard to its ability to address its market challenges, maintain or strengthen its position as a leading technology, develop new products according to plans, or its ability to increase installations or build its rate of adoption. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause Capstone's actual results to be materially different from any future results expressed or implied in such statements. Such factors include, but are not limited to: 1) Market acceptance and quality of Capstone's technology and products; 2) Limited operating history characterized by net losses; 3) The size, timing, shipment and pricing of individual orders; 4) The ability of Capstone to successfully execute its production and marketing plans; 5) The Company's ability to develop additional microturbine product releases; and 6) Other factors detailed in the Company's filings with the Securities and Exchange Commission. Capstone cautions readers not to place undue reliance on these statements, which speak only as of the date of this release. Capstone undertakes no obligation, and specifically disclaims any obligation, to release any revisions to any forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. "Capstone Turbine Corp." is a registered trademark of Capstone Turbine Corporation. All other trademarks mentioned in this press release are the property of their respective owners. CAPSTONE TURBINE CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, December 31, 2003 2002 Assets Current Assets: Cash and cash equivalents $126,369,000 $140,310,000 Accounts receivable, net of allowance for doubtful accounts and sales returns of $589,000 at June 30, 2003 and $194,000 at December 31, 2002 2,983,000 4,893,000 Inventory 13,299,000 9,124,000 Prepaid expenses and other current assets 2,484,000 2,331,000 Total current assets 145,135,000 156,658,000 Equipment and Leasehold Improvements: Machinery, equipment, and furniture 23,157,000 22,996,000 Leasehold improvements 8,482,000 8,480,000 Molds and tooling 4,281,000 4,350,000 35,920,000 35,826,000 Less accumulated depreciation and amortization 17,442,000 15,346,000 Total equipment and leasehold improvements 18,478,000 20,480,000 Non-Current Portion of Inventory 1,147,000 6,784,000 Deposits on Fixed Assets 6,000 708,000 Other Assets 494,000 532,000 Intangible Asset, Net 1,894,000 2,029,000 Total $167,154,000 $187,191,000 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $1,675,000 $4,321,000 Accrued salaries and wages 1,648,000 2,088,000 Other accrued liabilities 1,496,000 1,132,000 Accrued warranty reserve 6,785,000 6,913,000 Deferred revenue 1,252,000 734,000 Current portion of capital lease obligations 1,253,000 1,522,000 Total current liabilities 14,109,000 16,710,000 Long-Term Portion of Capital Lease Obligations 502,000 974,000 Other Long-Term Liabilities 1,199,000 1,325,000 Commitments and Contingencies -- -- Stockholders' Equity: Common stock, $.001 par value; 415,000,000 shares authorized; 81,808,455 shares issued and 81,257,247 shares outstanding at June 30, 2003; 81,635,035 shares issued and 81,437,822 shares outstanding at December 31, 2002 82,000 82,000 Additional paid-in capital 527,454,000 526,952,000 Accumulated deficit (375,679,000) (358,646,000) Less Treasury stock, at cost; 551,208 shares at June 30, 2003; 197,213 shares at December 31, 2002 (513,000) (206,000) Total stockholders' equity 151,344,000 168,182,000 Total $167,154,000 $187,191,000 CAPSTONE TURBINE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Six Months Ended Months Ended June 30, June 30, 2003 2002 2003 2002 Revenues $4,132,000 $7,408,000 $6,914,000 $11,999,000 Cost of Goods Sold 6,739,000 11,631,000 11,695,000 19,180,000 Gross Loss (2,607,000) (4,223,000) (4,781,000) (7,181,000) Operating Expenses: Research and development 2,450,000 1,619,000 3,456,000 3,058,000 Selling, general and administrative 4,676,000 9,650,000 9,497,000 18,010,000 Impairment loss on Marketing Rights - 15,999,000 - 15,999,000 Total operating expenses 7,126,000 27,268,000 12,953,000 37,067,000 Loss from Operations (9,733,000) (31,491,000) (17,734,000) (44,248,000) Interest Income 400,000 756,000 839,000 1,579,000 Interest Expense (64,000) (105,000) (137,000) (219,000) Other Income (Expense), net (1,000) 5,000 1,000 25,000 Loss Before Income Taxes (9,398,000) (30,835,000) (17,031,000) (42,863,000) Provision for Income Taxes - - 2,000 2,000 Net Loss $(9,398,000) $(30,835,000) $(17,033,000) $(42,865,000) Weighted Average Common Shares Outstanding 81,231,192 77,453,602 81,289,027 77,420,588 Net Loss Per Share of Common Stock - Basic and Diluted $(0.12) $(0.40) $(0.21) $(0.55) CAPSTONE TURBINE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 2003 2002 Cash Flows from Operating Activities: Net loss $(17,033,000) $(42,865,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,201,000 6,229,000 Impairment loss on marketing rights - 15,999,000 Non-cash reversal of administrative expenses (1,099,000) Provision for doubtful accounts and sales returns 534,000 125,000 Inventory write-down 167,000 2,853,000 Provision for warranty expenses 1,442,000 1,532,000 Loss on disposal of equipment 188,000 86,000 Non-employee stock compensation 7,000 - Employee and director stock compensation 403,000 528,000 Changes in operating assets and liabilities: Accounts receivable 1,377,000 (100,000) Other assets - 100,000 Inventory 1,294,000 2,206,000 Prepaid expenses and other current assets (154,000) (1,509,000) Accounts payable (1,547,000) 1,953,000 Accrued salaries and wages and deferred compensation (477,000) 466,000 Other accrued liabilities and deferred rent 276,000 (145,000) Accrued warranty reserve (1,569,000) (1,056,000) Deferred revenue 517,000 (409,000) Net cash used in operating activities (12,473,000) (14,007,000) Cash Flows from Investing Activities: Acquisition of and deposits on fixed assets (561,000) (1,289,000) Proceeds from disposal of fixed assets 26,000 - Net cash used in investing activities (535,000) (1,289,000) Cash Flows from Financing Activities: Repayment of capital lease obligations (718,000) (654,000) Exercise of stock options and employee stock purchases 92,000 208,000 Acquisition of treasury stock (307,000) - Net cash used in financing activities (933,000) (446,000) Net Decrease in Cash and Cash Equivalents (13,941,000) (15,742,000) Cash and Cash Equivalents, Beginning of Period 140,310,000 170,868,000 Cash and Cash Equivalents, End of Period $126,369,000 $155,126,000 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $137,000 $219,000 Income taxes $2,000 $2,000 CONTACT: Capstone Turbine Corporation Investor Media: Wade Welch, 818-734-5555 General Media: Keith Field, 818-734-5465