Exhibit 99.1 Capstone Turbine Announces First Quarter Fiscal-Year 2005 Results CHATSWORTH, Calif.--(BUSINESS WIRE)--July 29, 2004--Capstone Turbine Corporation (Nasdaq:CPST) (www.microturbine.com) reported results for its first quarter of fiscal year 2005. The Company reported exiting the quarter with 8 megawatts of backlog, its highest level since 2001. "We are delighted at the strength of the order rate we experienced this quarter," said John Tucker, Capstone's President and CEO. "In our last fiscal year, which ended on March 31, we sold 11.5 megawatts of product for the full year. When we shared our strategic plan for fiscal year 2005, we said we expect to at least double our sales as compared with fiscal 2004. With 2.7 megawatts of products shipped in this first quarter and the 8 megawatts existing in backlog, we believe we are on track with our plans." Sales for the period, which included $0.7 million from sales of parts, accessories, service and training, totaled $3.0 million. Last year's first fiscal quarter was the strongest period that year, representing 40% of the year's total product shipments. By comparison, this year's first fiscal quarter was $1.2 million lower in net sales, but the gross loss realized in the period was improved by $0.5 million from $2.6 million a year ago to $2.1 million this quarter. "The lower costs we recognized this period for warranty and sales return reserves accounted for the difference in the gross loss," said Karen Clark, Capstone's CFO. Operating expenses were $8.6 million for the quarter, compared with $7.1 million in the prior year's first quarter. The increase was driven primarily by increased spending in research and development related to the Company's C200 microturbine product that is currently in beta testing, and for higher engineering personnel costs related to the company's continuing product robustness and enhancement efforts. For the period, Capstone's reported net loss was $10.5 million, or $0.13 per share, compared with $9.4 million, or $0.12 per share for the same period a year ago. "Our cash usage for the first quarter was $6.8 million," Clark said. "This is $2.6 million less than we used last quarter, but on par with the $6.2 million we used in the first quarter last year. We had a cash flow benefit this period from collecting a $1.8 million receivable from the government. Two months ago, we communicated that we expected our fiscal 2005 cash usage to be slightly higher than in the last two years, as a result of our investments to reshape the Company. We believe we are still on track to those expectations." Cash and cash equivalents at the end of the period were $95.6 million. Conference Call The Company will host a conference call today, Thursday, July 29, at 2:00 p.m. Pacific Time. Access to the live broadcast and a replay of the webcast will be available until October 29, 2004 through the Company's website: 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 energy products utilizing microturbine technology, the result of more than ten years of focused research. Capstone Turbine has sold and shipped more than 2800 Capstone MicroTurbine systems to customers worldwide. These award-winning systems have logged more than 6 million hours of documented 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, among other items, its expected results of the strategic plan, including expected improvements in cash flow, and its ability to implement the plan. Forward-looking statements may be identified by words such as "expects", "objective", "intend", "targeted", "plan", "driving to" and similar phrases. 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. Many of these risks and uncertainties are described in our periodic filing with the Securities and Exchange Commission. Capstone cautions readers not to place undue reliance on these forward-looking 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. CAPSTONE TURBINE CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, 2004 March 31, 2004 ------------------------------------ Assets Current Assets: Cash and cash equivalents $95,628,000 $102,380,000 Accounts receivable, net of allowance for doubtful accounts and sales returns of $696,000 at June 30, 2004 and $479,000 at March 31, 2004 1,534,000 4,170,000 Inventory 7,902,000 7,893,000 Prepaid expenses and other current assets 791,000 1,099,000 ------------------------------------ Total current assets 105,855,000 115,542,000 ------------------------------------ Equipment and Leasehold Improvements: Machinery, equipment, and furniture 20,738,000 20,877,000 Leasehold improvements 8,501,000 8,499,000 Molds and tooling 4,360,000 4,363,000 ------------------------------------ 33,599,000 33,739,000 Less accumulated depreciation and amortization 19,695,000 18,718,000 ------------------------------------ Total equipment and leasehold improvements 13,904,000 15,021,000 ------------------------------------ Non-Current Portion of Inventory 3,574,000 3,936,000 Intangible Asset, Net 1,627,000 1,694,000 Other Assets 352,000 352,000 ------------------------------------ Total $125,312,000 $136,545,000 ==================================== Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $3,220,000 $2,790,000 Accrued salaries and wages 1,553,000 1,664,000 Other accrued liabilities 1,603,000 2,043,000 Accrued warranty reserve 11,316,000 11,695,000 Deferred revenue 1,059,000 1,166,000 Current portion of capital lease obligations 358,000 582,000 ------------------------------------ Total current liabilities 19,109,000 19,940,000 ------------------------------------ Long-Term Portion of Capital Lease Obligations -- 13,000 Other Long-Term Liabilities 1,003,000 1,149,000 Commitments and Contingencies -- -- Stockholders' Equity: Common stock, $.001 par value; 415,000,000 shares authorized; 85,278,839 shares issued and 84,727,631 shares outstanding at June 30, 2004; 85,025,817 shares issued and 84,474,609 shares outstanding at March 31, 2004 85,000 85,000 Additional paid-in capital 530,649,000 530,394,000 Accumulated deficit (424,554,000) (414,020,000) Deferred stock compensation (467,000) (503,000) Less treasury stock, at cost; 551,208 shares (513,000) (513,000) ------------------------------------ Total stockholders' equity 105,200,000 115,443,000 ------------------------------------ Total $125,312,000 $136,545,000 ==================================== CAPSTONE TURBINE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, -------------------------- 2004 2003 ------------- ------------ Revenues $2,955,000 $4,132,000 Cost of Goods Sold 5,090,000 6,739,000 ------------- ------------ Gross Loss (2,135,000) (2,607,000) Operating Costs and Expenses: Research and development 3,414,000 2,450,000 Selling, general and administrative 5,208,000 4,676,000 ------------- ------------ Total operating costs and expenses 8,622,000 7,126,000 ------------- ------------ Loss from Operations (10,757,000) (9,733,000) Interest Income 244,000 400,000 Interest Expense (20,000) (64,000) Other Income 1,000 (1,000) ------------- ------------ Loss Before Income Taxes (10,532,000) (9,398,000) Provision for Income Taxes 2,000 - ------------- ------------ Net Loss $(10,534,000) $(9,398,000) ============= ============ Weighted Average Common Shares Outstanding 84,239,797 81,231,192 ============= ============ Net Loss Per Share of Common Stock -- Basic and Diluted $(0.13) $(0.12) ============= ============ CAPSTONE TURBINE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended June 30, -------------------------- 2004 2003 -------------------------- Cash Flows from Operating Activities: Net loss $(10,534,000) $(9,398,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,353,000 1,628,000 Provision for doubtful accounts and sales returns 217,000 314,000 Inventory write-down 49,000 (76,000) Provision for warranty expenses 697,000 1,056,000 Loss on disposal of equipment 30,000 188,000 Non-employee stock compensation 24,000 3,000 Employee deferred stock-based compensation 37,000 - Employee and director stock compensation 4,000 193,000 Changes in operating assets and liabilities: Accounts receivable 2,419,000 451,000 Inventory 303,000 2,163,000 Prepaid expenses and other current assets 309,000 (1,143,000) Accounts payable 430,000 (481,000) Accrued salaries and wages and deferred compensation (210,000) 147,000 Other accrued liabilities and deferred rent (488,000) 330,000 Accrued warranty reserve (1,075,000) (928,000) Deferred revenue (107,000) (1,000) -------------------------- Net cash used in operating activities ( 6,542,000) (5,554,000) -------------------------- Cash Flows from Investing Activities: Acquisition of and deposits on fixed assets (203,000) (290,000) Proceeds from disposal of fixed assets 1,000 26,000 -------------------------- Net cash used in investing activities (202,000) (264,000) -------------------------- Cash Flows from Financing Activities: Repayment of capital lease obligations (234,000) (375,000) Exercise of stock options and employee stock purchases 226,000 70,000 Acquisition of treasury stock - (92,000) -------------------------- Net cash used in financing activities (8,000) (397,000) -------------------------- Net Decrease in Cash and Cash Equivalents ( 6,752,000) ( 6,215,000) Cash and Cash Equivalents, Beginning of Period 102,380,000 132,584,000 -------------------------- Cash and Cash Equivalents, End of Period $95,628,000 $126,369,000 ========================== Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $20,000 $64,000 Income taxes $2,000 $- CONTACT: Capstone Turbine Corporation General Media Inquiries: Keith Field, 818-734-5465 Investor and Investment Media Inquires: Cindy Martinez, 818-407-3643