DENVER, Nov. 1 /PRNewswire-FirstCall/ -- Evergreen Energy Inc
(NYSE:EEE) today reported financial results for the third quarter
of 2006. The loss from operations for the third quarter of 2006 was
$17.4 million or $0.22 per diluted share compared with $4.9 million
or $0.07 per diluted share in the corresponding 2005 period. The
loss for the first nine months of 2006 was $33.1 million or $0.43
per diluted share, as opposed to a $11.7 million loss or $0.18 per
diluted share for the same period a year earlier. The wider loss in
the third quarter 2006 is attributed to plant start-up costs as
well as higher G&A expenses. The third quarter 2006 results
include a full quarter of operations from the Company's Ft. Union
facility in Gillette, Wyoming. In addition to the financial
results, the Company confirmed that several customers have now
received shipments of K-Fuel(TM) Refined Coal and are in various
stages of scheduling, conducting, or reviewing their test burns.
"In the third quarter, we continued to make progress towards our
goal of becoming a vertically integrated energy production
Company," commented Mark Sexton, Chairman, and CEO. "Each time we
ship K-Fuel(TM) to a customer, or improve our operational
processes, or sign an agreement with a business partner, we take a
step closer towards the fulfillment of that vision." Recent
Developments During the third quarter, Evergreen Energy Inc ramped
up production at its Ft. Union K-Fuel(TM) plant and mine in
Wyoming's Power River Basin, which is the first plant producing
K-Fuel(TM) Refined Coal. During the course of the quarter, the
Company shipped K-Fuel(TM) Refined Coal to several customers. "Our
goals at the Ft. Union plant are simple: to maintain continuous
operations and to manage it with a high level of quality,
delivering clean, consistent Refined Coal," added Sexton. Also
during the quarter, the Company announced it entered into a
Technical Services Agreement with Bechtel Power Corporation for
plant engineering standardization and design optimization of
K-Fuel(TM) Refined Coal plants. The Company expects this
optimization activity to yield a replicable, scalable plant design
footprint that will accelerate development of future K-Fuel(TM) and
K-Direct plants. Financial Results Evergreen Energy Inc revenue for
the third quarter of 2006 was $12.1 million compared to $100,000 in
the third quarter of 2005. Revenue for the nine months ended
September 30, 2006 was $23.8 million compared to $953,000 during
the nine months ended September 30, 2005. Plant start-up costs were
$10.0 million and $458,000 for the third quarter ended 2006 and
2005, respectively. Plant start-up costs were $17.2 million and
$1.5 million for the nine months ended September 30, 2006 and 2005,
respectively. Plant start-up costs were higher than anticipated due
to general start-up issues with this first-of-a-kind plant and the
acceleration of initial production runs. The commissioning of the
facility at this accelerated pace led to a number of plant
operating inefficiencies. Plant start-up costs included purchased
raw materials, coal transportation, outsourced engineering and
technical support, fluid processing, by-products and water
disposal, and employee-related costs. The Company incurred higher
feed stock costs as they chose to purchase coal from a nearby mine
and incurred trucking costs for the transportation of that
purchased coal. Outsourced engineering and employee- related costs
were incurred to assist with the acceleration of the initial
production. The water handling system was limited in its ability to
process water from the production process. Disposal of excess water
required using third parties to transport water to state (or
federal) approved disposal sites. This resulted in higher water
disposal costs. The Company anticipates that the start-up costs
will trend downward in the fourth quarter of 2006 through early
2007. The Company believes that the start-up costs incurred in 2006
are not indicative of future continuous operations. Continuing
operations are being improved by upgrading the existing water
treatment system, eliminating plant inefficiencies, enhancing
existing processing equipment and reducing support costs. General
and administrative costs for the third quarter 2006 were $8.2
million, compared with $2.9 million for the same period a year
earlier. For the nine month period ended September 30, 2006,
G&A was $19.5 million, compared with $9.2 million for the nine
month period ended September 30, 2005. This included
employee-related costs of $1.9 million in the third quarter 2006,
compared to $971,000 in employee-related costs in the third quarter
2005. The increase was primarily attributable to the addition of
staff to support plant operations and corporate functions. The
Company also recognized a non-cash expense for equity compensation
in the amounts of $2.6 million and $807,000, as a result of FAS
123(R) and performance based compensation, for the three months
ended September 30, 2006 and 2005, respectively. For the nine-month
period ended September 30, 2006 and 2005, these non-cash equity
compensation costs were $7.4 million and $2 million, respectively.
During 2005, the Company entered into two agreements with Arch
Coal, which were extended to allow additional time for evaluation.
In connection with the extension, the expiration date for the
warrants associated with the agreements was also extended and,
pursuant to SFAS 123R, the Company recognized an additional $1.3
million of non-cash expense for the three and nine months ended
September 30, 2006. Based on discussions with Arch Coal, both
parties mutually agreed not to further extend these agreements. The
agreement expired on September 30, 2006 and the warrant agreement
expired on October 31, 2006. As market conditions and other
circumstances change, the Company may enter into new agreements
with Arch Coal. Evergreen Energy Inc incurred $10.8 million in coal
mining operating expenses in the third quarter 2006, up from $0 in
the third quarter 2005. On a nine-month basis, ended September 30,
2006, mining expenses were $20.7 million, compared with $0 for the
period ended September 30, 2005. Depreciation and amortization
expense was $1.7 million for the third quarter 2006 compared to
$188,000 for the 2005 third quarter. For the nine month period
ended September 30, 2006, Evergreen Energy Inc reported $3.6
million and reported $542,000 for the nine month period ended
September 30, 2005. Evergreen Energy Inc expects depreciation
expense to increase in the third quarter of 2006 as the Ft. Union
plant moves into continuous commercial operations. Amortization on
patents was $42,000 and $32,000 for the third quarters ended 2006
and 2005, respectively. Other income was $1.5 million during the
three months ended September 30, 2006 as compared to $503,000 for
the same period ended in the prior year. On a nine month basis
ended September 30, 2006 and September 30, 2005, other income was
$5.3 million and $1.4 million, respectively. The majority of the
increase in the third quarter 2006 is attributed to interest
income, which was significantly higher compared to the same period
in 2005, primarily as a result of its public stock offering in
February 2006. The initial capital budget for 2006 was $90 million
for Evergreen. The Company has spent $31.3 million during the nine
months ended September 30, 2006 on capital expenditures. Evergreen
is reducing its capital expenditures to $44 million in 2006. The
decrease is due to not purchasing a coal fired boiler for Ft. Union
at the present time, as well as fewer costs on new construction
projects that we now anticipate incurring in 2007. Evergreen Energy
Inc's combined cash, marketable securities and restricted cash
balance at the end of the 2006 third quarter was $108 million,
compared with $34 million on December 31, 2005. At September 30,
2006 Evergreen Energy Inc had no long-term debt. Conference Call
Evergreen Energy Inc will host a conference call on Wednesday,
November 1, 2006 at 11:30 a.m. Eastern Time (9:30 a.m. MT, 8:30
a.m. PT) with investors, analysts and other interested parties.
Investors can access the conference call via a live webcast on the
Company's website, http://www.kfx.com/, or by dialing
1-866-383-8108. Access code is 53274457 or Evergreen Energy Inc
Conference Call. Investors calling from international locations
should dial 617-597- 5343. An on-line archive of the call will be
available at http://www.kfx.com/ for thirty days. Additionally, a
replay of the call will be available by dialing 888-
286-8010(domestic) or 617-801-6888 (International), pass code
79126719, through November 10, 2006. About Evergreen Energy Inc
Evergreen Energy Inc is leveraging a vertically integrated,
coal-based platform to deliver combined energy, environmental and
economic solutions, producing clean, efficient and affordable
energy. Evergreen Energy is meeting the specific needs of vital
industrial, international and public utility market customers. Our
proprietary K-Fuel(TM) process uses heat and pressure to physically
and chemically transform high moisture, low BTU coals into a more
energy efficient, lower emission fuel. A co-benefit of the
K-Fuel(TM) process is the removal of significant amounts of mercury
and reductions in the emissions of carbon dioxide, sulfur dioxide
and nitrogen oxides. Please visit http://www.kfx.com/ for more
information. Forward Looking Statements Statements in this news
release that relate to future plans or projected results of
Evergreen Energy Inc are 'forward-looking statements' within the
meaning of Section 27A of the Securities Act of 1933, as amended by
the Private Securities Litigation Reform Act of 1995 (the "PSLRA"),
and Section 21E of the Securities Exchange Act of 1934, as amended
by the PSLRA, and all such statements fall under the 'safe harbor'
provisions of the PSLRA. Our actual results may vary materially
from those described in any 'forward- looking statement' due to,
among other possible reasons, the realization of any one or more of
the risk factors described in our Annual Report on Form 10- K, or
in any of our other filings with the Securities and Exchange
Commission, all of which filings any reader of this news release is
encouraged to study. Readers of this news release are cautioned not
to put undue reliance on forward-looking statements. KFx INC d/b/a
EVERGREEN ENERGY INC CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31, 2006 2005 (unaudited) (in thousands)
Assets Current: Cash and cash equivalents $ 99,111 $ 28,793
Marketable securities 4,000 - Accounts receivable 5,040 - Inventory
2,707 64 Prepaid and other current assets 2,252 900 Total current
assets 113,110 29,757 Property, plant and equipment, net of
accumulated depreciation 106,138 4,679 Mineral rights and mine
development, net of accumulated depletion 22,175 - Construction in
progress 13,386 71,612 Restricted cash 4,976 5,198 Patents, net of
accumulated amortization 1,082 1,123 Deferred royalty cost, less
current portion 1,448 1,461 Other assets 293 342 $262,608 $114,172
Liabilities and Stockholders' Equity Current liabilities: Accounts
payable $ 4,745 $ 1,303 Accrued liabilities 7,267 8,365 Other
current liabilities 218 179 Total current liabilities 12,230 9,847
Deferred revenue, less current portion 6,737 6,751 Asset retirement
obligations 5,556 3,558 Other liabilities, less current portion 275
375 Total liabilities 24,798 20,531 Stockholders' equity: Preferred
stock, $.001 par value, shares authorized 20,000; none outstanding
Common stock, $.001 par value, shares authorized 280,000; 82,019
and 68,143 shares issued and outstanding, respectively 82 68
Additional paid-in capital 422,728 245,443 Accumulated deficit
(185,000) (151,870) Total stockholders' equity 237,810 93,641
$262,608 $114,172 KFx INC d/b/a EVERGREEN ENERGY INC CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months
Ended Nine Months Ended September 30, September 30, 2006 2005 2006
2005 (in thousands, except for per share amounts) Operating
revenues: Mining $11,849 $ - $ 23,262 $ - Licensing 42 5 277 782
K-Fuel 192 - 192 - Consulting and other 14 95 50 171 Total
operating revenue 12,097 100 23,781 953 Operating expenses: General
and administrative 8,195 2,938 19,528 9,197 Coal mining operating
costs 10,841 - 20,713 - Plant start-up costs 9,956 458 17,173 1,543
Depreciation, depletion and amortization 1,735 188 3,613 542
Research and development 262 549 1,091 1,154 Cost of licensing and
consulting revenue 15 71 100 422 Bad debt - 1,255 - 1,255 Total
operating expenses 31,004 5,459 62,218 14,113 Operating loss
(18,907) (5,359) (38,437) (13,160) Other income (expense): Other
income (expense), net 4 1 1,082 (16) Interest income, net 1,540 502
4,225 1,451 Total other income 1,544 503 5,307 1,435 Net loss
$(17,363) $(4,856) $(33,130) $(11,725) Basic and diluted net loss
per common share $ (0.22) $ (0.07) $ (0.43) $ (0.18)
Weighted-average common shares outstanding 79,582 66,397 76,917
65,767 KFx INC d/b/a EVERGREEN ENERGY INC CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended September
30, 2006 2005 (in thousands) Increase (decrease) in cash and cash
equivalents Operating activities: Net loss $(33,130) $(11,725)
Adjustments to reconcile net loss to cash used in operating
activities: Share-based compensation expense to employees and
others 8,622 2,509 Depreciation, depletion and amortization 3,613
542 Bad debt - 1,255 Asset retirement obligation accretion 159 104
Other (55) 72 Changes in operating assets and liabilities, net of
assets acquired: Accounts receivable (391) - Accounts receivable
from related party - 750 Inventory (506) - Prepaid expenses and
other assets (589) (233) Deferred revenue and other current
obligations 25 (702) Accounts payable and accrued expenses 2,583
(856) Cash used in operating activities (19,669) (8,284) Investing
activities: Purchases of construction in progress (32,182) (30,419)
Purchases of property, plant and equipment (2,493) (703) Purchase
of marketable securities (7,974) - Proceeds of marketable
securities 3,974 - Purchases of mineral rights and development
(1,026) - Cash paid for acquisition, net of cash received (36,913)
(574) Restricted cash 222 - Other (46) 310 Cash used in investing
activities (76,438) (31,386) Financing Activities: Proceeds from
exercise of options and warrants 21,922 7,167 Proceeds from
issuance of common stock, net of offering costs 144,559 - Payments
on capital leases and note payable (56) (209) Cash provided by
financing activities 166,425 6,958 Increase (decrease) in cash and
cash equivalents 70,318 (32,712) Cash and cash equivalents,
beginning of period 28,793 79,381 Cash and cash equivalents, end of
period $ 99,111 $ 46,669 DATASOURCE: Evergreen Energy Inc CONTACT:
Analyst Contact - Karli Anderson, Director of Investor Relations,
+1-303-293-2992, Media and Public Affairs Contact - Paul Jacobson,
Vice President of Corporate Communications, +1-303-293-2992, both
of Evergreen Energy Inc Web site: http://www.kfx.com/
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