Zoltek dropped to a second-quarter loss, as its net sales in the quarter rose 90 percent and the firm plans to clarify its financial reports.

The company also plans to restart a St. Charles County production line, according to a release.

Zoltek reported a loss of $27.7 million in the second quarter ended March 31 compared to a profit of $2.1 million in the second quarter of fiscal 2005.

The company's net sales for the second quarter ended March 31 were $27.3 million, up 90.9 percent from $14.3 million in fiscal 2005's second quarter..

After quarterly losses dating back to 1999, the company said in a release, in the second quarter it returned to profitability on an operating basis. Zoltek reported operating income from continuing operations of $3.2 million, compared to an operating loss from continuing operations of $1.9 million in the second quarter of 2005.

"From a financial viewpoint, the second quarter was truly a breakthrough quarter for Zoltek," said Zsolt Rumy, Zoltek's chairman and CEO, in a statement. "Our significantly improved sales and profitability reflect our success in starting the new production lines in Hungary and expanding production at our facilities in Abilene, Texas, along with increased prices."

Of the company's previously announced expansion plans in Hungary, Rumy said the firm expects to start four new Panex carbon fiber production lines in June/July and another four in October/November.

To further keep pace with demand, the company plans to restart its original production line at its Missouri Research Park facility in St. Charles County to produce chopped and milled carbon fibers. Rumy said the firm is finalizing plans for adding capacity in 2007 to be announced soon.

Zoltek announced a revised refinancing agreement April 28 that Rumy said in a statement will eliminate confusion over its financial results. A group of private investors agreed to convert their remaining convertible debt and exercise all remaining warrants that are subject to derivative accounting rules. So, starting with the fiscal 2006 third quarter ending June 30, Zoltek's reported net earnings won't be subject to wide swings due to those rules.

Rumy said, "Under the accounting rules applied to our use of convertible debt and warrants, we were in the strange and anomalous position of having to report substantial net losses due to upward movement in the market price of Zoltek's common stock, while falling share prices during an earlier time period actually boosted our net income."

St. Louis-based Zoltek Cos. Inc. (Nasdaq: ZOLT) manufactures carbon fiber products.