Exhibit 99.1 Capstone Turbine Corporation Announces Second Quarter Fiscal 2007 Operating Results CHATSWORTH, Calif.--(BUSINESS WIRE)--Nov. 9, 2006--Capstone Turbine Corporation (Nasdaq:CPST) (www.microturbine.com) reported operating results for its second quarter ended September 30, 2006 in its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2006. Financial Summary Capstone's revenue for the fiscal 2007 second quarter was $2.9 million, representing a decrease of approximately 48% from the prior year comparable quarter and a decrease of 55% from the prior quarter. Product sales to the European and Russian markets declined approximately $2.3 million from the first quarter, although new orders of approximately $2.5 million were received from these markets during the quarter. Backlog at the end of the second quarter was $6.8 million, an increase of over 26% from the prior quarter, although decreased over 45% from the end of the prior year comparable quarter. In October, after the close of the second quarter, we received a new order for 1.6 megawatts or $1.4 million dollars from our major OEM customer. "We are pleased with the traction we have experienced in Europe and Russia over the past year, despite lower sales this quarter. John Fink, our Executive Vice President, Sales and Service, is continuing to build momentum with our relationships in the New York market. We have increased our commitment to the New York market by expanding our lease to build out sales and service offices, warehousing, manufacturing and light component assembly work in Brooklyn," said Mark Gilbreth, Capstone's Interim President and CEO. The reported gross loss for the second quarter was $2.3 million, or 79% of revenue compared to $1.1 million, or 19% of revenue from the prior year comparable quarter and $1.2 million, or 19% of revenue from the prior quarter. The increase in the gross loss and corresponding decline in the gross loss percentage reflects lower volume and increased warranty charges. Research and development costs were $2.6 million for the fiscal 2007 second quarter, an improvement of $0.1 million, or 5%, from the prior year comparable quarter and $0.2 million, or 8% from the prior quarter. The improvement was primarily related to continued lower spending on development hardware and reduced payroll costs. Selling general and administrative costs were $6.1 million for the fiscal 2007 second quarter, an improvement of $0.7 million, or 11%, from the prior year comparable quarter, of $6.8 million. The decrease from the prior year comparable quarter is primarily attributable to lower payroll and professional fees, offset by approximately $0.2 million of increased non-cash stock compensation charges related to the Company's adoption of SFAS 123(R). Selling, general and administrative costs increased $0.1 million, or 2% from the prior quarter. The increase from the prior quarter is due to slightly increased sales and marketing expenses and increased administrative costs associated with our Annual Shareholders Meeting and Proxy Statement distribution. Capstone's net loss was $10.4 million for the fiscal 2007 second quarter, or $0.10 per diluted common share, an increase of $1.1 million from the $9.3 million loss, or $0.09 per diluted common share, reported for the first quarter of fiscal 2007. Cash balances decreased by $9.4 million during the second quarter of fiscal 2007. As of September 30, 2006, cash and cash equivalents were $39.3 million. Conference Call The Company will host a conference call today, Thursday, November 9, at 1:45 p.m. Pacific Time. Access to the live broadcast and a replay of the webcast will be available for 90 days through the Investor Relations page on 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, and was the first to market commercially viable microturbine energy products. Capstone Turbine has shipped more than 3,500 Capstone MicroTurbine systems to customers worldwide. These award-winning systems have logged millions of documented runtime operating hours. Capstone Turbine is a member of the U.S. Environmental Protection Agency's Combined Heat and Power Partnership, which is committed to improving the efficiency of the nation's energy infrastructure and reducing emissions of pollutants and greenhouse gases. A UL-Certified ISO 9001:2000 certified company; Capstone Turbine is headquartered in the Los Angeles area with sales and/or service centers in New York, Mexico City, Milan, Nottingham, Shanghai and Tokyo. "Capstone Turbine Corporation" and "Capstone MicroTurbine" are registered trademarks of Capstone Turbine Corporation. All other trademarks mentioned are the property of their respective owners. This press release contains "forward-looking statements," as that term is used in the federal securities laws, with regard to business momentum in the New York market. Forward-looking statements may be identified by words such as "expects," "objective," "intend," "targeted," "plan" and similar phrases. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, including the fact that certain product applications in the New York market may require further regulatory approvals, that we may not achieve the growth we currently anticipated, we may not be able to retain a permanent replacement to our former CEO, and other factors described in Capstone's filings with the Securities and Exchange Commission may cause Capstone's actual results to be materially different from any future results expressed or implied in such statements. 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 CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) (Unaudited) September 30, March 31, 2006 2006 ------------- --------- ASSETS Current Assets: Cash and cash equivalents $39,329 $58,051 Accounts receivable, net of allowance for doubtful accounts and sales returns of $805 at September 30, 2006 and $858 at March 31, 2006 2,532 5,869 Inventories 18,968 12,545 Prepaid expenses and other current assets 1,695 1,050 ------------- --------- Total current assets 62,524 77,515 Property, plant and equipment, net 6,762 7,816 Non-current portion of inventories 2,569 3,113 Intangible asset, net and other long-term assets 1,139 1,273 ------------- --------- Total $72,994 $89,717 ============= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses $8,445 $8,144 Accrued salaries and wages 1,376 1,623 Accrued warranty reserve 6,876 6,998 Deferred revenue 688 632 Current portion of notes payable 19 19 ------------- --------- Total current liabilities 17,404 17,416 ------------- --------- Long-term portion of notes payable 37 47 Other long-term liabilities 592 626 Stockholders' Equity: Preferred stock, $.001 par value; 10,000,000 shares authorized; none issued -- -- Common stock, $.001 par value; 415,000,000 shares authorized; 104,765,257 shares issued and 104,214,049 shares outstanding at September 30, 2006; 103,521,829 shares issued and 102,970,621 shares outstanding at March 31, 2006 104 104 Additional paid-in capital 575,663 572,787 Accumulated deficit (520,293) (500,542) Deferred stock compensation -- (208) Treasury stock, at cost; 551,208 shares (513) (513) ------------- --------- Total stockholders' equity 54,961 71,628 ------------- --------- Total $72,994 $89,717 ============= ========= CAPSTONE TURBINE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended September 30, September 30, ------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Revenue $2,946 $5,705 $9,512 $9,512 Cost of goods sold (includes stock-based compensation of $23, $0, $51 and $0, for the periods presented, respectively) 5,282 6,768 13,084 13,992 --------- --------- --------- --------- Gross loss (2,336) (1,063) (3,572) (4,480) Operating expenses: Research and development (includes stock-based compensation of $56, $0, $112 and $0, for the periods presented, respectively) 2,592 2,728 5,398 4,833 Selling, general and administrative (includes stock-based compensation of $591, $449, $1,266 and $577, for the periods presented, respectively) 6,061 6,788 11,976 12,525 --------- --------- --------- --------- Total operating expenses 8,653 9,516 17,374 17,358 --------- --------- --------- --------- Loss from operations (10,989) (10,579) (20,946) (21,838) Interest income 571 377 1,198 773 Interest expense (1) (19) (2) (21) Other income -- 22 1 24 --------- --------- --------- --------- Loss before income taxes (10,419) (10,199) (19,749) (21,062) Provision for income taxes -- -- 2 2 --------- --------- --------- --------- Net loss $(10,419) $(10,199) $(19,751) $(21,064) --------- --------- --------- --------- Net loss per share of common stock -- Basic and Diluted $(0.10) $(0.12) $(0.19) $(0.25) ========= ========= ========= ========= Weighted average shares used to calculate Basic and Diluted net loss per share 103,901 84,955 103,612 84,673 ========= ========= ========= ========= CONTACT: Capstone Turbine Corporation Investor and investment media inquiries: Alice Barsoomian, 818-407-3628