EXHIBIT 99
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[ZOLTEK logo]
FOR IMMEDIATE RELEASE NASDAQ NMS SYMBOL: "ZOLT"
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ZOLTEK REPORTS CONTINUED IMPROVEMENT IN RESULTS OF OPERATIONS,
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OPERATING CASH FLOW AND FINANCIAL CONDITION
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ST. LOUIS, MISSOURI -- AUGUST 9, 2006 -- Zoltek Companies, Inc. today
reported operating income from continuing operations of $4.0 million in the
third quarter of its 2006 fiscal year, combined with 58% growth in quarterly
sales over fiscal 2005. In addition, cash flows from operating activities were
$9.3 million in the recently completed quarter.
For the quarter ended June 30, 2006, Zoltek's net sales grew to $27.9
million, from $17.6 million in the third quarter of fiscal 2005. Zoltek
reported operating income from continuing operations of $4.0 million, compared
to an operating loss from continuing operations of $1.2 million in the third
quarter of fiscal 2005.
For the nine months ended June 30, 2006, Zoltek's net sales grew 63%
to $71.9 million, from $44.2 million in the first nine months of fiscal 2005.
Zoltek reported operating income from continuing operations of $6.3 million in
the first three quarters of fiscal 2006, compared to an operating loss from
continuing operations of $4.5 million in the first three quarters of fiscal
2005.
During the quarter ended June 30, 2006, Zoltek's gross margin reached
28%. As the convertible debt issues were converted during the quarter,
shareholders' equity increased by $68.2 million to $124.3 million, a
significant improvement in Zoltek's balance sheet.
"Zoltek is continuing its recent trends of much improved financial
performance while ramping up to meet whole new levels of demand for low-cost,
high-performance carbon fibers coming from new applications outside of
aerospace and sporting goods, including wind energy, oil services and
infrastructure," Zsolt Rumy, Zoltek's Chairman and Chief Executive Officer
said. "Our significantly improved sales and operating income reflect our
success in starting the new production lines in Hungary and achieving improved
production at our facilities in Abilene, Texas. Due to the timing of our
capacity additions, our sales in the third quarter of this year were only
slightly higher than they were in the second quarter. We are now in the
process of bringing four new carbon fiber production lines into operation at
our facilities in Hungary, which will bring to 13 the total number of lines in
operation. We expect that expansion will result in significantly increased
revenues and profitability beginning in the fourth quarter of this fiscal year
and continuing into fiscal 2007."
[ZOLTEK logo]
Zoltek Reports Continued Improvement In Results of Operations, Operating Cash
Flow And Financial Condition
Page 2
August 9, 2006
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"Right now and for the foreseeable future, the only limitation on our
growth is our ability to bring new capacity into production on a timely and
efficient basis," Rumy said. "In today's market we could increase our carbon
fiber prices to our customers to take advantage of tight supply conditions.
However, Zoltek is committed to its long-term pricing strategy of supplying
carbon fiber at prices that will spur development of new applications for
carbon fibers. Contrary to a recent report in a national business publication,
we have not deviated from this policy in raising prices for selected
customers. Significant price increases for consumer goods produced from carbon
fibers are not a reflection of Zoltek's pricing policy."
Rumy said that the just-ended quarter would be the last in which the
Company's reported net income would be subject to wide swings due to
derivative accounting rules applied to Zoltek's earlier issuance of
convertible debt and warrants. "For some time," Rumy said, "we have been in
the strange and anomalous position of having to report substantial net losses
as our financial performance actually improved significantly. Due to the
conversion of outstanding debt and the exercise of related warrants into
Zoltek shares, our net results, beginning in the fourth quarter of this fiscal
year, will no longer be subject to such swings. In addition, this has enhanced
our equity base."
Zoltek Companies, Inc. will host a conference call to review third
quarter 2006 results and answer questions on Thursday, August 10, at 10:00 am
CT. The conference dial-in number is (847) 413-3237. The confirmation code is
8443040. Individuals who wish to participate should dial in 5 to 10 minutes
prior to the scheduled start time.
FOR FURTHER INFORMATION CONTACT:
ZSOLT RUMY, CEO OR KEVIN SCHOTT, CFO
3101 MCKELVEY ROAD
ST. LOUIS, MO 63044
(314) 291-5110
This press release contains forward-looking statements, which are based upon
the current expectations of the Company. Because these forward-looking
statements are inherently subject to risks and uncertainties, there are a
number of factors that could cause the Company's plans, actions and actual
results to differ materially. Among these factors are the Company's ability
to: re-activate its formerly idle manufacturing facilities on a timely and
cost-effective basis, to meet current order levels for carbon fibers;
successfully add new capacity for the production of carbon fiber and precursor
raw material; execute plans to exit its specialty products business and reduce
costs; achieve profitable operations; raise new capital and increase its
borrowing at acceptable costs; manage changes in customers' forecasted
requirements for the Company's products; continue investing in application and
market development; manufacture low-cost carbon fibers and profitably market
them; and penetrate existing, identified and emerging markets. The timing and
occurrence (or non-occurrence) of transactions and events that determine the
future effect of these factors on the Company, as well as other factors, may
be beyond the control of the Company. The Company undertakes no obligation to
update any forward-looking statement to reflect events or circumstances after
the date of this press release.
[ZOLTEK logo]
Zoltek Reports Continued Improvement In Results of Operations, Operating Cash
Flow And Financial Condition
Page 3
August 9, 2006
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ZOLTEK COMPANIES, INC.
SUMMARY FINANCIAL RESULTS
(Amounts In Thousands Except Per Share Data)
(Unaudited)
Three Months Ended
June 30
2006 2005
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Net sales..........................................................$ 27,900 $ 17,643
Cost of sales, excluding available unused capacity costs........... 20,041 16,107
Available unused capacity costs.................................... - 704
Application and development costs.................................. 1,268 835
Selling, general and administrative expenses....................... 2,585 1,207
OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS................. 4,006 (1,210)
Interest income.................................................... 59 -
Net interest expense related to non-convertible debt*.............. (68) (103)
Other, net......................................................... (224) (1,327)
Income tax expense................................................. 410 212
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
CONVERTIBLE DEBT EXPENSE*....................................... 3,363 (2,852)
Income (expense) related to convertible debt issuances*............ (24,584) 1,617
Loss from continuing operations.................................... (21,219) (1,235)
Loss from discontinued operations, net of taxes.................... (248) (233)
NET LOSS .......................................................... (21,467) (1,468)
Net loss per share:
Basic loss per share:
Continuing operations....................................$ (0.90) $ (0.07)
Discontinued operations.................................. (0.01) (0.01)
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Total..............................................$ (0.91) $ (0.08)
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Diluted loss per share:
Continuing operations....................................$ (0.90) $ (0.13)
Discontinued operations.................................. (0.01) (0.01)
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Total..............................................$ (0.91) $ (0.14)
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Weighted average common shares outstanding - basic................. 23,567 18,888
Weighted average common shares outstanding - diluted............... 23,567 20,810
<FN>
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* To provide transparency about measures of the Company's financial
performance which management considers most relevant, we supplement the
reporting of Zoltek's consolidated financial information under GAAP with
"income (loss) from continuing operations before convertible debt expense"
which is a non-GAAP financial measure. This non-GAAP financial measure
should be considered in addition to, and not as a substitute or superior
to, the other measures of financial performance prepared in accordance
with GAAP. Using only the non-GAAP financial measures to analyze our
performance would have material limitations because its calculation is
based on the subjective determination of management regarding the nature
and classification of events and circumstances that investors may find
material. Management compensates for these limitations by utilizing both
the GAAP and non-GAAP measure of its business. Zoltek believes the
presentation of this measure is useful to investors because it is more
indicative of the company's underlying business performance and, since the
Company expects, based on the recent amendment to its September 2005
financing package, that after the third quarter of fiscal 2006, the
Company will no longer have any convertible debt or warrants that require
derivative accounting.
[ZOLTEK logo]
Zoltek Reports Continued Improvement In Results of Operations, Operating Cash
Flow And Financial Condition
Page 4
August 9, 2006
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ZOLTEK COMPANIES, INC.
SUMMARY FINANCIAL RESULTS (CONTINUED)
(Amounts In Thousands Except Per Share Data)
(Unaudited)
Nine Months Ended
June 30
2006 2005
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Net sales ........................................................$ 71,941 $ 44,194
Cost of sales, excluding available unused capacity costs........... 53,894 40,911
Available unused capacity costs.................................... - 1,753
Application and development costs.................................. 3,636 2,487
Selling, general and administrative expenses....................... 8,114 3,540
OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS................. 6,297 (4,497)
Interest expense related to non-convertible debt*.................. (333) (810)
Interest income.................................................... 59 2
Other, net ........................................................ (404) (1,741)
Income tax expense................................................. 688 431
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
CONVERTIBLE DEBT EXPENSE*....................................... 4,931 (7,477)
Expense related to convertible debt issuances*..................... (47,659) (20,719)
Loss from continuing operations.................................... (42,728) (28,196)
Loss from discontinued operations, net of taxes.................... (195) (1,090)
NET LOSS .......................................................... (42,923) (29,286)
Net loss per share:
Basic loss per share:
Continuing operations...................................$ (1.98) $ (1.60)
Discontinued operations................................. (0.01) (0.06)
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Total.............................................$ (1.99) $ (1.66)
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Diluted loss per share:
Continuing operations...................................$ (1.98) $ (1.63)
Discontinued operations................................. (0.01) (0.06)
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Total.............................................$ (1.99) $ (1.69)
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Weighted average common shares outstanding - basic................. 21,540 17,701
Weighted average common shares outstanding - diluted............... 21,540 18,701
<FN>
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* To provide transparency about measures of the Company's financial
performance which management considers most relevant, we supplement the
reporting of Zoltek's consolidated financial information under GAAP with
"income (loss) from continuing operations before convertible debt expense"
which is a non-GAAP financial measure. This non-GAAP financial measure
should be considered in addition to, and not as a substitute or superior
to, the other measures of financial performance prepared in accordance
with GAAP. Using only the non-GAAP financial measures to analyze our
performance would have material limitations because its calculation is
based on the subjective determination of management regarding the nature
and classification of events and circumstances that investors may find
material. Management compensates for these limitations by utilizing both
the GAAP and non-GAAP measure of its business. Zoltek believes the
presentation of this measure is useful to investors because it is more
indicative of the company's underlying business performance and, since the
Company expects, based on the recent amendment to its September 2005
financing package, that after the third quarter of fiscal 2006, the
Company will no longer have any convertible debt or warrants that require
derivative accounting.