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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): NOVEMBER 6, 2000
ZOLTEK COMPANIES, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 0-20600 43-1311101
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
organization) Number)
3101 MCKELVEY ROAD
ST. LOUIS, MISSOURI 63044
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 291-5110
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 6, 2000, Zoltek Companies, Inc., a
Missouri corporation (the "Company"), sold all of the issued
and outstanding share capital of its subsidiary Structural
Polymer (Holdings) Limited, a corporation organized under the
laws of England and Wales ("SP Systems"). The sale was
effected pursuant to the terms and conditions of a Stock
Purchase Agreement, dated as of November 6, 2000 (the
"Agreement"), by and among the Company, Structural Polymer
Group Limited ("SP Group") and fifteen former shareholders of
SP Systems (the "SP Shareholders") from whom the Company
acquired SP Systems in November 1999. Pursuant to the
Agreement, as consideration for the sale of SP Systems'
outstanding share capital to SP Group, the Company received $30
million in cash and a note receivable in the principal amount
of $5 million, the Company reacquired approximately 2.5 million
shares of the Company's common stock from the former SP
Shareholders, and was repaid approximately $7.3 million of
intercompany loans. In connection with the transaction, the
Company and SP Group also entered into a 10-year supply
agreement pursuant to which the Company will supply carbon
fibers to SP Systems, and a Patent and Technology License
Agreement under which the Company will utilize SP Systems'
formulations for the Company's prepreg and formulated products
and the Company was granted a license to offer SP Systems'
propriety SPRINT composite process technology. The
consideration payable pursuant to the Agreement was determined
through arms'-length negotiations between the parties to the
Agreement.
The Company utilized the cash proceeds of the sale
of SP Systems to repay amounts outstanding under the Company's
senior credit agreement with its bank.
The foregoing description is qualified its entirety
by the complete text of the Agreement included as Exhibit 10.1
to this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
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Not required.
(b) Pro forma financial information. The
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following unaudited pro forma combined financial statements of
Zoltek giving effect to the divestiture of SP Holdings are
filed herewith:
Unaudited Pro Forma Condensed Balance Sheet as of
June 30, 2000
Notes to Unaudited Pro Forma Condensed Balance
Sheet as of June 30, 2000
Unaudited Pro Forma Condensed Statement of
Operations for the Nine Months Ended June 20,
2000
Notes to Unaudited Pro Forma Combined Condensed
Statement of Operations for the Nine Months Ended
June 30, 2000
(c) Exhibits. See Exhibit Index.
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PRO FORMA FINANCIAL INFORMATION
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On November 6, 2000, the Company divested its
wholly-owned subsidiary Structural Polymer (Holdings) Limited
("SP Systems") in order to further focus management resources
to execute the Company's carbon fibers strategy and deleverage
the Company's balance sheet.
In connection with the sale, the Company received
$30,000,000 in cash, an interest-bearing note receivable of
$5,000,000 and 2,499,993 shares of the Company's common stock,
and was repaid $7,923,690 consisting of intercompany loans,
accrued interest and closing expenses. The note receivable is
an obligation of the buyer and accrues interest at a 9.5% per
annum rate and is payable in full in 2002. Cash proceeds
received from the sale and repayment of the intercompany loans
were used to retire $35,375,000 of bank debt and interest of
$794,980.
In addition, the Company entered into various
agreements which provide for continuing relationships with SP
Systems. These include a long-term carbon fiber supply
agreement, an agreement to utilize SP Systems' resin
formulations and a license agreement for the Company to
manufacture SP Systems' proprietary SPRINT composite materials.
The Company originally acquired SP Systems on
November 19, 1999 for $30,000,000 cash and 2,499,993 shares of
the Company's common stock.
As a result of the sale of SP Systems, the Company
will report the results of SP Systems as discontinued
operations as defined in Accounting Principles Board Opinion
No. 30.
The pro forma financial information is not intended
to be indicative of the actual results had these transactions
occurred as of the dates indicated below nor do they purport to
indicate results which may be attained in the future. The pro
forma financial information should be read in conjunction with
the historical consolidated financial statements of Zoltek
Companies, Inc., including its consolidated financial statements
and the notes thereto as of and for the fiscal year ended September
30, 1999, included in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1999 filed with the
Securities and Exchange Commission.
The Unaudited Pro Forma Condensed Balance Sheet
gives effect to the sale of SP Systems and related transactions
as if they had been completed on June 30, 2000. The Unaudited
Pro Forma Condensed Statement of Operations gives effect to the
sale of SP Systems and related transactions as if they had been
completed on October 1, 1999.
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UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF JUNE 30, 2000
(Amounts in thousands of U.S. Dollars)
<CAPTION>
Historical Pro Forma Notes to Pro Forma
Zoltek Adjustments Adjustments Zoltek
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 1,404 $ 1,902 (1) $ 3,306
Marketable securities 1,273 - 1,273
Accounts receivable, net 27,585 (13,810) (2) 13,775
Inventories, net 40,396 (7,410) (2) 32,986
Prepaid expenses 652 - 652
Other receivables 1,557 (1,305) (2) 252
Refundable income taxes 200 - 200
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Total current assets 73,067 (20,623) $ 52,444
Notes receivable - 5,000 (3) 5,000
Property and equipment, net 94,494 (10,596) (2) 83,898
Other assets 1,940 (684) (2) 1,256
Intangible assets (including goodwill), net 46,262 (44,414) (2) 1,848
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Total assets $215,763 $(71,317) $144,446
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Short-term notes payable $ 1,257 $ - $ 1,257
Current maturities of long-term debt 5,497 (4,250) (4) 1,247
Trade accounts payable 20,749 (11,343) (2) 9,406
Accrued expenses and other liabilities 6,152 (407) (2) 5,745
Income taxes payable 1,484 (1,484) (2) -
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Total current liabilities 35,139 (17,484) 17,655
Long-term debt, less current maturities 45,548 (32,709) (4) 12,839
Other long-term liabilities 768 (417) (2) 351
Deferred income taxes 1,726 (448) (2) 1,278
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Total liabilities 83,181 (51,058) 32,123
Majority interest in consolidated partnership 658 - 658
Common stock 187 - 187
Additional paid-in capital 127,677 - 127,677
Retained earnings 27,509 (5,579) (5) 21,930
Treasury common stock (118) (19,062) (6) (19,180)
Accumulated other comprehensive
income (loss) (23,331) 4,382 (2) (18,949)
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Total shareholders' equity 131,924 (20,259) 111,665
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Total liabilities and shareholders' equity $215,763 $(71,317) $144,446
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NOTES TO UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF JUNE 30, 2000
(Amounts in thousands of U.S. Dollars)
(1) To record proceeds received from the sale of SP Systems
of $37,924, less cash paid to repay Zoltek debt and
accrued interest of $36,170 and SP Systems' recorded cash
balances, net of closing expenses of $148.
(2) To eliminate the recorded balances of SP Systems as of
June 30, 2000.
(3) To record the note receivable due to Zoltek from the sale
consideration.
(4) To record the repayment of debt to Firstar Bank and other
third parties. Repayment to Firstar Bank was $4,250 of
current maturities of long-term debt plus $31,125 of
long-term debt. The remainder was debt of SP Systems
assumed by the buyers.
(5) To record a charge for impairment of goodwill as of
September 30, 2000, net of the gain on sale of SP
Systems.
(6) To record the treasury stock received as part of the sale
consideration (2,500 shares at $7.625 per share).
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UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 2000
(Amounts in thousands of U.S. Dollars, except per share data)
<CAPTION>
Historical Pro Forma Notes to Pro Forma
Zoltek Adjustments Adjustments Zoltek
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<S> <C> <C> <C> <C>
Net sales $96,711 $(39,212) (1) $57,499
Cost of sales - products sold 73,085 (27,719) (1) 45,366
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Gross profit 23,626 (11,493) 12,133
Available unused capacity costs 3,398 - 3,398
Selling, general and administrative expenses 20,580 (8,409) (1) 12,171
Goodwill amortization 1,977 (1,972) (1) 5
Special charge - impairment of goodwill - (5,521) (2) (5,521)
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Operating loss from continuing operations (2,329) (6,633) (8,962)
Other income (expense):
Interest income 512 (69) (1) 443
Interest expense (2,956) 2,336 (1) (620)
Gain on sale of SP Systems - 339 339
Other, net (72) 6 (1) (66)
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Loss from continuing operations before
income taxes and extraordinary item (4,845) (4,021) (8,866)
Benefit for income taxes 1,023 333 (3) 1,356
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Net loss before majority interest in
consolidated partnership (3,822) (3,688) (7,510)
Majority interest in loss of consolidated
partnership 146 - 146
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Net loss before extraordinary item (3,376) (3,688) (7,364)
Extraordinary loss - writeoff of loan
origination fees, net of tax benefit - (397) (4) (397)
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Net loss $(3,676) $(4,085) $(7,761)
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Net loss per share:
Basic and diluted net loss per share $ (0.20) $ (0.48)
Weighted average common shares
outstanding - basic and diluted 18,245 (2,044) (5) 16,201
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NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 2000
(Amounts in thousands of U.S. Dollars)
(1) To eliminate the operations of SP Systems for the period
beginning from acquisition date of November 19, 1999 to
June 30, 2000.
(2) To record the impairment of goodwill related to SP
Systems as of September 30, 2000.
(3) To record the additional tax benefit that results from
the elimination of SP Systems operations. In addition,
the Company recognized for tax purposes a deferred tax
asset of $680. However, due the uncertainty of utilizing
the capital loss against future capital gains, a full
valuation reserve of $680 was established.
(4) To record the writeoff of loan origination fees ($620),
net of the tax benefit of $223.
(5) To adjust the weighted shares outstanding during the
period October 1, 1999 to June 30, 2000 as a result of
the sale.
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SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto
duly authorized.
Dated: November 20, 2000
ZOLTEK COMPANIES, INC.
By /s/ Daniel D. Greenwell
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Daniel D. Greenwell
Chief Financial Officer and Secretary
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EXHIBIT INDEX
Exhibit
Number Description
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2.1 Stock Purchase Agreement, dated as of
November 6, 2000, by and among Structural
Polymer Group Limited, Zoltek Companies, Inc.
and certain shareholders of Zoltek Companies,
Inc.
99 Press Release, dated November 6, 2000
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