8-K 1 eightk.txt ZOLTEK COMPANIES, INC. FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________________________ 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 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. ------------------------------------------- Not required. (b) Pro forma financial information. The ------------------------------- 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. -------- - 2 - PRO FORMA FINANCIAL INFORMATION ------------------------------- 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. - 3 - UNAUDITED PRO FORMA CONDENSED BALANCE SHEET AS OF JUNE 30, 2000 (Amounts in thousands of U.S. Dollars)
Historical Pro Forma Notes to Pro Forma Zoltek Adjustments Adjustments Zoltek ---------- ----------- ----------- --------- 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 -------- -------- -------- 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 -------- -------- -------- Total assets $215,763 $(71,317) $144,446 ======== ======== ======== 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) - -------- -------- -------- 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 -------- -------- -------- 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) -------- -------- -------- Total shareholders' equity 131,924 (20,259) 111,665 -------- -------- -------- Total liabilities and shareholders' equity $215,763 $(71,317) $144,446 ======== ======== ========
- 4 - 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). - 5 - 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)
Historical Pro Forma Notes to Pro Forma Zoltek Adjustments Adjustments Zoltek ---------- ----------- ----------- --------- Net sales $96,711 $(39,212) (1) $57,499 Cost of sales - products sold 73,085 (27,719) (1) 45,366 ------- ------- ------- 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) ------- ------- ------- 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) ------- ------- ------- 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 ------- ------- ------- Net loss before majority interest in consolidated partnership (3,822) (3,688) (7,510) Majority interest in loss of consolidated partnership 146 - 146 ------- ------- ------- 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) ------- ------- ------- Net loss $(3,676) $(4,085) $(7,761) ======= ======= ======= 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
- 6 - 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. - 7 - 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 ------------------------------------- Daniel D. Greenwell Chief Financial Officer and Secretary - 8 - EXHIBIT INDEX Exhibit Number Description ------- ----------- 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 - 9 -