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Exhibit 99.4
PROFESSOR HOFBAUER DELIVERS HIS "LETTER TO SHAREHOLDERS"
AS ADDRESS AT THE SHAREHOLDER MEETING
CARPINTERIA, CA - MAY 15, 2000 - Turbodyne Technologies Inc.'s (EASDAQ:TRBD)
Chairman of the Board, Professor Dr. Peter Hofbauer, addressed the company's
shareholders at the shareholder meeting, after the close of the official
business, with the following speech:
"Ladies and Gentlemen, Esteemed Shareholders!
First of all, thank you for your continued support of Turbodyne and our
corporate goals. At this point I also want to thank my colleagues on the Board,
management and employees of Turbodyne for their work and dedication.
1999 was an extremely challenging year for our company. Those challenges and
major portions of my report are contained in detail in our Annual Report on Form
10-K, a public document, from which I quote here in the retrospect portions of
my speech. I would like to summarize the necessary restructuring of our Company,
which commenced in September last year. Then I am going to focus on the
opportunities for Turbodyne, the ongoing Joint Development with Honeywell to
bring our Dynachargers(TM) and Turbopacs(TM) to mass production - for the
automotive industry.
There are seven principal elements of our restructuring.
1) We sold the assets of our Light Metals Division, which was engaged in
manufacturing aluminum products, in a Chapter 11 bankruptcy proceeding.
2) Since October 1999, we have significantly restructured our operations. All
activities were relocated to the present headquarters in Carpinteria, CA.
Costs were drastically reduced by closing almost all of Turbodyne's outlying
subsidiaries and offices in London, Paris, New York, Encinitas and Woodland
Hills. Turbodyne's office in Frankfurt, Germany, remains our strong European
presence for potential customers and strategic partners and capital markets
liaison. The number of employees consequently has been reduced by 40%.
3) We entered into an agreement with Honeywell, under which Turbodyne and
Honeywell Turbocharging Systems will continue the development of the
Dynacharger(TM) and the Turbopac(TM).
4) We shifted our emphasis from aftermarket applications to automotive original
equipment manufacturers.
5) We made substantial changes in management to emphasize research and
development.
6) We settled many of the accumulated lawsuits and claims against us.
7) We raised an aggregate of $15.6 million in capital to finance the
restructuring of our operations and continued research and development.
Although there are many challenges still before us, these decisive actions have
better positioned the Company to exploit its technical strength.
In June 1999, Peter Kitzinski was appointed as a new member of the Board. In
October last year the Board appointed me as its new chairman and Dr. Friedrich
Goes as a new member of the Board of Directors and we agreed on the new
structure of the Board. Since that date, we have had a Board meeting every
month. The Executive Committee holds a telephone conference between Carpinteria,
Phoenix, Minneapolis, Detroit and Frankfurt every Thursday at 9 AM PST in which
the CEO gives a report if necessary. The Board, especially Bob Taylor, helped
substantially to get the Form 10-K done. I have to thank the Board members for
their permanent availability and for their excellent contributions.
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We consolidated most of our legal matters with a new legal counsel: Sheppard,
Mullin, Richter & Hampton. We selected new accountants: McGowan Gunterman, and
we reorganized the new Disclosure Committee: with Mssrs. John Fedders, Irving
Einhorn and Jim Sanders. Each of these esteemed gentlemen, who are highly
respected representatives in their field, has formerly served with the SEC.
Inevitably, substantial changes in management occurred: a new CEO, Gerhard E.
Delf, and a new CFO, Joseph D. Castano, have been appointed.
We will structure Turbodyne into a holding company with three subsidiaries:
Turbodyne Technologies Inc. (TTI) will act as the parent company with the
following functions: Corporate Financing, legal affairs, Shareholders Relations,
Public Relations, and the Board of Directors and its administration will be
integrated into this holding company. Turbodyne Systems Inc. (TSI) will continue
to concentrate on the Honeywell "Joint Development" and the Supply Agreement.
Turbodyne Europe GmbH (TEG) is already managing Turbodyne's very important
European potential customers and strategic partners and capital markets liaison.
Turbodyne Innovations Inc. (TII): In this new subsidiary we will develop
innovative products outside the Honeywell contract.
Shareholders! Turbodyne is today a new and lean high tech company! Let me now
focus on the automotive industry and Turbodyne's potential role in it. The
passenger car industry is forced to meet the emission legislation in three
dramatic steps in 2004, 2007 and 2010.
For diesel engines, to meet the "Super Ultra Low Emission Vehicle" regulation
the Government requires the car manufacturers to reduce 96% of NO(x), and 80% of
PM from the very clean state-of-the-art "Ultra Low Emission Vehicle" and this
must be done using a new, much more challenging, EPA test. This cannot be
reached with even advanced after-treatment systems alone. Also, the raw
emissions of the engine must be reduced dramatically. Parallel to an innovative
combustion system and a new injection system, additional reduction of NO(x) is
necessary. Theoretically, this could be achieved with Dynachargers(TM) or
Turbopacs(TM) to boost the engine with high "exhaust-gas recirculation rates"
and sufficient air. We do not know any other theoretical solution to meet this
emission regulation and maintain good driveability and fuel consumption.
Turbocharged diesel engines will continue to represent a large and increasing
share of the engines in passenger cars worldwide and almost all new passenger
car diesels are turbocharged. In 1999, over 4 million of these diesel engines
were built. Most of them are in the displacement range from 1.8 through 2.5 L.
It is precisely for this market segment that the joint development is developing
the Dynacharger(TM), which should reach production in 2003.
In contrast to diesel engines, turbocharged gasoline engines currently represent
only a very small share, about 1% of the engines in passenger cars. The
automobile engineers want to downsize gasoline engines to improve engine
efficiency and vehicle fuel economy. The reduced power output of smaller engines
can be offset by turbocharging the downsized engine.
But to meet the "Super Ultra Low Emission Vehicle" regulation, the catalytic
converter must ignite in a few seconds after the cold start. A conventional
turbocharger would act as a heat-sink between exhaust valve and catalytic
converter and would delay the warm up of the catalytic converter. With
Dynachargers(TM) and Turbopacs(TM) this warm up problem could theoretically be
solved and the turbo lag of the downsized engine could be eliminated. Thus, we
believe that solving this problem has the potential to increase the share of
turbocharged gasoline engines in passenger cars.
This technical background about diesel and gasoline engines that I showed you
gives you an idea of the huge market-potential for our Dynachargers(TM) and
Turbopacs(TM). To develop the Dynacharger(TM) and the Turbopac(TM) product lines
for mass production to the automotive industry,
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Turbodyne entered into joint development and supply agreements with Honeywell
Turbocharging Systems, the world's leading turbocharger manufacturer with a
world market share of over 50%. In 1999 Honeywell sold over 4 million
turbochargers.
Turbodyne retains the sole worldwide rights to manufacture, market and sell all
motors, generators, electronic controls and light metal components for both the
Dynacharger(TM) and the Turbopac(TM). For the supply of the high-tech
assemblies, Turbodyne will be compensated at agreed margins. In addition,
Turbodyne will receive from Honeywell royalties on the net sales of the
Dynachargers(TM) and the Turbopacs(TM).
Our work was also rewarded in October 1999 by an outstanding recognition: The
Dynacharger(TM) was awarded the Grand Jury's Special Prize for Technical
Innovation at the '99 AutoEquip in Paris, possibly the most prestigious award in
the automotive supply industry. And in March 2000 the US Department of Energy
committed to partially fund joint research work by Honeywell, Turbodyne and
Navistar for: "improved vehicular response, reduced fuel consumption and lower
emission levels".
Dear Shareholders, I therefore invite you to continue your support of Turbodyne.
The possible perspective of Turbodyne's future that I developed for you and that
we are committed to, indicates that Turbodyne can be a very profitable company
when mass production starts.
On behalf of the directors, officers and employees of Turbodyne, I thank you for
your continued support of our dedicated work and your company.
Thank you!"
Turbodyne Technologies Inc., a California based high technology company,
specializes in the development of charging technology for internal combustion
engines plus the development and manufacturing of high-tech assemblies for
electrically assisted turbochargers and superchargers. Turbodyne Technologies
Inc.'s headquarters is located in Carpinteria, CA; the European business
location is Frankfurt, Germany. Additional information about the company is
available on the Internet at http://www.turbodyne.com.
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This release contains forward-looking statements as defined in Section 21E of
the Securities Exchange Act of 1934, including statements about future business
operations, financial performance and market conditions. Such forward-looking
statements involve risks and uncertainties inherent in business forecasts.
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Contacts:
Corporate Communications, Peter Weichselbraun (800) 566-1130
VP Group Finance - Investor Relations, Ken Fitzpatrick (800) 566-1130
European Investor Relations, Markus Kumbrink +49-69-975-44-665
