Note 10 - Foreign Currency Translation

3 Months Ended

Dec. 31, 2011

Foreign Currency Disclosure [Text Block]

10. FOREIGN CURRENCY TRANSLATION

The Company’s Hungarian subsidiary, Zoltek Zrt. has a functional currency of the HUF. As a result, the Company is exposed to foreign currency risks related to this investment. The consolidated balance sheet of Zoltek Zrt. was translated from Hungarian Forints to U.S. dollars, at the exchange rate in effect at the applicable balance sheet date, while its consolidated statements of operations were translated using the average exchange rates in effect for the periods presented.  The related translation adjustments are reported as other comprehensive income (loss) within shareholders’ equity.  Gains and losses from foreign currency transaction of Zoltek Zrt. are included in the results of operations as other income (expense). The HUF weakened by 12.2% against the U.S. dollar during the first quarter of fiscal 2012 compared to the fourth quarter of fiscal 2011. This currency fluctuation caused an increase of $16.0 million in our accumulated other comprehensive loss for the three months ended December 31, 2011.

The functional currency of Zoltek de Mexico is the U.S. dollar.