Exhibit 99.1 Capstone Turbine Announces Second Quarter Fiscal-Year 2005 Results CHATSWORTH, Calif.--(BUSINESS WIRE)--Nov. 4, 2004--Capstone Turbine Corporation (Nasdaq:CPST) (www.microturbine.com) reported results for its second quarter of fiscal year 2005. "This period, Capstone set a new record for its highest backlog level since 2001, with 11.3 megawatts of product," said John Tucker, President and CEO of Capstone. "We are pleased that the order rate year-to-date has been right in line with our expectations." Tucker noted, "A year ago, we shipped 11.5 megawatts of product for the full year. This year, for the first six months, we shipped 6.8 megawatts of product and have booked orders for 12.8 megawatts. We believe, based on this performance and the interest we see in the market, that we are on track to achieve our plan." Sales for the second quarter, which totaled $3.9 million, included 4.1 megawatts of product sales and $0.9 million from sales of parts, accessories, service and training. The period's sales were nearly 70% stronger than in the same period a year ago when 1.9 megawatts of product were sold and parts, accessories, service and training revenues amounted to $0.7 million. "This quarter, we reported a gross loss of $1.7 million, which was $0.5 million better than the $2.2 million gross loss reported in the second quarter last year," said Karen Clark, Capstone's CFO. The improved gross loss resulted from the contribution margin from the higher sales and a $0.8 million benefit from a warranty accrual adjustment. These were partially offset by higher production costs. Operating expenses were $8.1 million for the quarter, compared with $7.0 million in the prior year's second quarter. The increase was driven primarily by increased spending for engineering personnel costs and higher costs in general and administrative for Sarbanes-Oxley compliance work, quality department staffing and recruiting costs. Capstone's net loss was nearly identical between the second quarters this year and last year, with this period's reported net loss of $9.1 million as compared with $9.0 million a year ago. The per share net loss was $0.11 in each period. "Our cash usage for the second quarter was $9.2 million and year-to-date we have spent $15.9 million," Clark said. "This is on track with our stated expectations that this year's cash outflow is anticipated to be somewhat higher than we've experienced in recent years." For the last two years, Capstone has used cash of approximately $30 million a year. A year ago, in the second quarter, cash spending was $6.4 million. The higher spending in the current year's second quarter reflected higher operating costs, increased usage for working capital and less cash contributed by stock option exercises, partially offset by higher contribution margin from sales and favorable other income. As compared with the first quarter of this year, cash usage this period was $2.4 million higher. Last quarter we received a benefit of collecting a $1.8 million receivable from the government, and also had higher receipts from stock option exercises and used less cash for working capital. Cash and cash equivalents at the end of the period were $86.4 million. Conference Call The Company will host a conference call today, Thursday, November 4, at 2:00 p.m. Pacific Time. Access to the live broadcast and a replay of the webcast will be available for 90-days 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 2900 Capstone MicroTurbine systems to customers worldwide. These award-winning systems have logged more than 7 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, sales expectations, achievement of objectives, and cash flow expectations. Forward-looking statements may be identified by words such as "believe," "expects," "objective," "intend," "targeted," "plan," "on track" 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) September 30, March 31, 2004 2004 ------------- ------------- Assets Current Assets: Cash and cash equivalents $86,433,000 $102,380,000 Accounts receivable, net of allowance for doubtful accounts and sales returns of $561,000 at September 30, 2004 and $479,000 at March 31, 2004 1,323,000 4,170,000 Inventory 9,795,000 7,893,000 Prepaid expenses and other current assets 1,115,000 1,099,000 ------------- ------------- Total current assets 98,666,000 115,542,000 ------------- ------------- Equipment and Leasehold Improvements: Machinery, equipment, and furniture 19,019,000 20,877,000 Leasehold improvements 8,533,000 8,499,000 Molds and tooling 4,471,000 4,363,000 ------------- ------------- 32,023,000 33,739,000 Less accumulated depreciation and amortization 18,928,000 18,718,000 ------------- ------------- Total equipment and leasehold improvements 13,095,000 15,021,000 ------------- ------------- Non-Current Portion of Inventory 2,401,000 3,936,000 Intangible Asset, Net 1,559,000 1,694,000 Other Assets 352,000 352,000 ------------- ------------- Total $116,073,000 $136,545,000 ============= ============= Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $3,552,000 $2,790,000 Accrued salaries and wages 1,271,000 1,664,000 Other accrued liabilities 1,982,000 2,043,000 Accrued warranty reserve 10,775,000 11,695,000 Deferred revenue 1,310,000 1,166,000 Current portion of notes payable 19,000 582,000 ------------- ------------- Total current liabilities 18,909,000 19,940,000 ------------- ------------- Long-Term Portion of Notes Payable and Capital Lease Obligations 74,000 13,000 Other Long-Term Liabilities 970,000 1,149,000 Commitments and Contingencies -- -- Stockholders' Equity: Preferred stock, $.001 par value; 10,000,000 shares authorized; none issued -- -- Common stock, $.001 par value; 415,000,000 shares authorized; 85,285,708 shares issued and 84,734,500 shares outstanding at September 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 530,679,000 530,394,000 Accumulated deficit (433,701,000) (414,020,000) Deferred stock compensation (430,000) (503,000) Less treasury stock, at cost; 551,208 shares (513,000) (513,000) ------------- ------------- Total stockholders' equity 96,120,000 115,443,000 ------------- ------------- Total $116,073,000 $136,545,000 ============= ============= CAPSTONE TURBINE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Six Months Ended Months Ended September 30, September 30, ------------------------ --------------------------- 2004 2003 2004 2003 ------------ ----------- ------------- ------------- Revenues $3,925,000 $2,347,000 $6,880,000 $6,479,000 Cost of Goods Sold 5,625,000 4,551,000 10,715,000 11,290,000 ------------ ----------- ------------- ------------- Gross Loss (1,700,000) (2,204,000) (3,835,000) (4,811,000) Operating Expenses: Research and development 2,919,000 2,402,000 6,333,000 4,852,000 Selling, general and administrative 5,193,000 4,643,000 10,401,000 9,319,000 ------------ ----------- ------------- ------------- Total operating costs and expenses 8,112,000 7,045,000 16,734,000 14,171,000 ------------ ----------- ------------- ------------- Loss from Operations (9,812,000) (9,249,000) (20,569,000) (18,982,000) Interest Income 315,000 309,000 559,000 709,000 Interest Expense (15,000) (52,000) (35,000) (116,000) Other Income 365,000 - 366,000 (1,000) ------------ ----------- ------------- ------------- Loss Before Income Taxes (9,147,000) (8,992,000) (19,679,000) (18,390,000) Provision for Income Taxes - - 2,000 - ------------ ----------- ------------- ------------- Net Loss $(9,147,000) $(8,992,000) $(19,681,000) $(18,390,000) ============ ============ ============= ============= Weighted Average Common Shares Outstanding 84,358,761 81,788,427 84,299,279 81,511,505 ============ ============ ============= ============= Net Loss Per Share of Common Stock - Basic and Diluted $ (0.11) $ (0.11) $ (0.23) $ (0.23) ============ ============ ============= ============= CAPSTONE TURBINE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six months Ended September 30, --------------------------- 2004 2003 ------------- ------------- Cash Flows from Operating Activities: Net loss $(19,681,000) $(18,390,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 2,589,000 3,217,000 Provision for doubtful accounts and sales returns 81,000 336,000 Inventory write-down/(recovery) (181,000) (181,000) Provision for warranty expenses 675,000 1,626,000 Loss on disposal of equipment 30,000 217,000 Non-employee stock compensation 53,000 24,000 Employee deferred stock-based compensation 73,000 13,000 Employee and director stock compensation 4,000 314,000 Changes in operating assets and liabilities: Accounts receivable 2,766,000 664,000 Inventory (186,000) 2,330,000 Prepaid expenses and other current assets (16,000) (752,000) Accounts payable 762,000 (430,000) Accrued salaries and wages and severance (491,000) (79,000) Other accrued liabilities (142,000) 179,000 Accrued warranty reserve (1,595,000) (2,087,000) Deferred revenue 144,000 564,000 ------------- ------------- Net cash used in operating activities (15,115,000) (12,435,000) ------------- ------------- Cash Flows from Investing Activities: Acquisition of and deposits on fixed assets (472,000) (679,000) Proceeds from disposal of fixed assets 1,000 26,000 ------------- ------------- Net cash used in investing activities (471,000) (653,000) ------------- ------------- Cash Flows from Financing Activities: Repayment of capital lease obligations (589,000) (730,000) Exercise of stock options and employee stock purchases 228,000 1,275,000 Acquisition of treasury stock - (92,000) ------------- ------------- Net cash (used in)/provided by financing activities (361,000) 453,000 ------------- ------------- Net Decrease in Cash and Cash Equivalents (15,947,000) (12,635,000) Cash and Cash Equivalents, Beginning of Period 102,380,000 132,584,000 ------------- ------------- Cash and Cash Equivalents, End of Period $86,433,000 $119,949,000 ============= ============= Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $35,000 $116,000 Income taxes $2,000 $ - CONTACT: Capstone Turbine Corporation General Media Inquiries: Keith Field, 818-734-5465 or Investor and Investment Media Inquires: Cindy Martinez, 818-407-3643