MILPITAS, Calif., Aug. 18 /PRNewswire-FirstCall/ -- Sipex Corporation
(OTC: SIPX.PK), today announced the completion of its restatement of its
financial statements for fiscal year 2003 and the related fiscal quarters
of 2003 as well as completing the restatement of the first three quarters
of 2004. In addition, Sipex has filed its 2004 Annual Report on Form 10-K
and its 2005 Annual Report on Form 10-K along with its 2005 Quarterly
Reports on Form 10-Q. Stockholders should expect the 10-Q reports for the
first two quarters of 2006 in the coming weeks. A conference call to review
all the results will be scheduled once this date is predictable.
"We are pleased to have completed a very complex and difficult task in
revising our financial practices while evaluating financial performance
over multiple years," commented Ray Wallin, CFO of Sipex Corporation. "We
believe that our restated financials more accurately reflect the
performance of the Company. As a result of this process, we have instituted
more appropriate accounting practices consistent with our business model in
order to regain shareholder confidence."
As previously announced, during the fourth quarter of 2004, Sipex's
management became aware of certain sales return provisions that had been
provided to certain distributors for arrangements entered into after
January 1, 2003. The Audit Committee was informed and an internal
investigation was performed. The investigation was completed in 2005, and
as a result of the investigation we have taken certain remedial actions,
including the adoption of the "sell-through" accounting methodology for
fiscal 2003 and 2004 and thereafter for sales to all of our distributors
and the implementation of certain internal control procedures. As such,
with the filing of these reports, we are restating our financial statements
and quarterly information for the year ended December 31, 2003 and the
quarterly information for the periods ended April 3, 2004, July 3, 2004 and
October 2, 2004.
In addition, the Company identified and corrected various other errors
related to the following revenue items:
-- Sales cut-off errors;
-- Reversal of revenue when collectibility was not reasonably assured;
-- Reversal of revenue related to an undocumented sale; and,
-- Deferral of engineering service contract revenue.
The Company also identified and corrected various other non-revenue
errors including the following items:
-- Errors in the recording of manufacturing personnel costs;
-- Improperly capitalized fixed assets;
-- Errors in the calculation of depreciation;
-- Reclassification of foreign exchange gains to general and
administrative expenses; and,
-- Improper presentation of accrued fixed asset additions.
The adjustments for the errors referred to above resulted in an
aggregate decrease in revenue of $12.9 million to $36.5 million for the
fiscal year 2003, compared to $49.4 million previously reported. The net
impact to gross loss was an increase of $4.7 million to $9.1 million,
compared to $4.4 million previously recorded for fiscal year 2003. The net
effect to the fiscal year 2003 operating expenses was an increase of $0.3
million from the $29.2 million that was previously reported. The
consolidated statement of operations impact of all of the restatement
adjustments increased 2003 net loss by $5.2 million to $39.8 million, as
compared to $34.6 million previously reported.
The adjustments for the errors referred to above for the nine months
ended October 2, 2004, resulted in an aggregate increase in revenue of $2.2
million to $54.9 million, compared to $52.6 million previously reported.
The net impact to gross loss was a decrease of $1.2 million to $12.2
million, compared to $13.4 million previously recorded for the nine months
ended October 2, 2004. The net effect to the nine months ended October 2,
2004 operating expenses was a decrease of $1.0 million from the $26.4
million that was previously reported. The consolidated statement of
operations impact of all of the restatement adjustments increased the nine
months ended October 2, 2004 net loss by $0.3 million to $13.0 million, as
compared to $12.7 million previously reported.
For a more complete description of the restatement and the impact on
specific periods, see Note 2 to the consolidated financial statements
contained in the Company's 2004 Annual Report on Form 10-K, and for
quarterly information, the Quarterly Reports on Forms 10-Q for the fiscal
quarters ended April 2, 2005, July 2, 2005, and October 1, 2005.
The following table presents the principal effects of the restatement
adjustments on the consolidated financial statements for the year ended
December 31, 2003 (in thousands, except per share data):
Condensed Consolidated
Statement of Operations As Previously Restated Net
Reported Adjustment
Net sales $41,625 $28,760 $(12,865)
Net sales, related party 7,787 7,775 (12)
Total net sales 49,412 36,535 (12,877)
Cost of sales 36,847 26,426 (10,421)
Cost of sales, related party 16,957 19,177 2,220
Total cost of sales 53,804 45,603 (8,201)
Gross loss (4,392) (9,068) (4,676)
Research and development 13,054 13,252 198
Marketing and selling 7,430 7,408 (22)
General and administrative 7,946 8,054 108
Restructuring 737 713 (24)
Total operating expenses 29,167 29,427 260
Loss from operations (33,559) (38,495) (4,936)
Total other expense, net (746) (994) (248)
Income tax expense 318 318 --
Net loss $(34,623) $(39,807) $(5,184)
Net loss per common share
- basic and diluted $(1.23) $(1.41) $(0.18)
Condensed Consolidated
Balance Sheet As Previously Restated Net
Reported Adjustment
Cash and cash equivalents $18,185 $18,338 $153
Accounts receivable, net 8,793 8,248 (545)
Accounts receivable,
related party, net 2,054 2,120 66
Inventories 15,956 16,404 448
Prepaid expenses and
other current assets 1,434 1,498 64
Total current assets 49,416 49,602 186
Property, plant and
equipment, net 51,778 51,283 (495)
Other assets 410 411 1
Total assets 101,604 101,296 (308)
Accounts payable 11,340 11,352 12
Accrued expenses 4,087 4,496 409
Accrued restructuring costs 422 498 76
Deferred income, related party 4,636 4,805 169
Deferred income, other -- 3,983 3,983
Total current liabilities 20,485 25,134 4,649
Long-term restructuring costs 535 572 37
Long-term deferred rent -- 34 34
Total liabilities 42,343 47,063 4,720
Additional paid-in capital 194,786 194,942 156
Accumulated deficit (135,802) (140,986) (5,184)
Total stockholders equity 59,261 54,233 (5,028)
Total liabilities and
stockholders' equity 101,604 101,296 (308)
Condensed Consolidated
Statement of Cash Flows As Previously Restated Net
Reported Adjustment
Net cash used in
operating activities (7,332) (8,172) (840)
Net cash provided by
investing activities 3,969 4,962 993
Increase in cash and
cash equivalents 11,696 11,849 153
The following table presents the principal effects of the restatement
adjustments on the consolidated financial statements for the nine months
ended October 2, 2004 (in thousands, except per share data):
Nine Months Ended October 2, 2004
Previously Restated Net
Reported Adjustment
Net sales $52,615 $54,855 $2,240
Cost of sales 39,170 42,650 3,480
Gross profit 13,445 12,205 (1,240)
Operating expenses 26,406 25,424 (982)
Operating loss (12,961) (13,219) (258)
Net loss (12,728) (13,004) (276)
Net loss per share -
basic and diluted $(0.39) $(0.40) $(0.01)
Selected financial data for the last five years appear below (in
thousands, except per-share data):
Years Ended
Operating Results: 2005 2004 2003 2002 2001
Restated
Net sales $72,674 $75,453 $36,535*** $66,260 $72,062
Gross profit (loss) 13,749 11,796 (9,068)*** (8,488) (2,536)
As a % of net sales 18.9% 15.6% (24.8)% (12.8)% (3.5)%
Depreciation and
amortization 10,952 6,559 7,587 7,675 6,662
Research & development
expenses 17,248 14,710 13,252 12,944 12,858
Loss from
operations (38,515) (23,066) (38,495) (47,455) (32,928)
Loss before
income taxes (37,915) (22,881) (39,489) (47,542) (32,282)
Net loss (38,107) (22,748) (39,807) (79,276) (19,692)
As a % of
net sales (52.4)% (30.1)% (109.0)% (119.6)% (27.3)%
Net loss per common
share - basic $(1.07) $(0.69) $(1.41) $(2.92) $(0.82)
Net loss per common
share - diluted $(1.07) $(0.69) $(1.41) $(2.92) $(0.82)
Cash and cash
equivalents $1,969 $15,523 $18,338 $6,489 $4,874
Short-term investment
securities -- 249 2,994 9,980 --
Restricted cash
equivalents and
securities 1,000 1,838 -- -- --*
Total assets 50,442 88,066 101,296 98,786** 145,127
Long-term debt -- -- 21,323 10,455 7,396
Working capital
(deficit) (3,385) 14,346 24,468 27,775 36,260
Current ratio 0.9 1.5 2.0 3.0 4.7
Purchase of property,
plant and equipment 878 1,921 2,024 4,108 40,441*
Stockholders' equity 22,521 60,080 54,233 74,520 127,822
* In June 2001, Sipex purchased the land, building and equipment of its
Milpitas manufacturing facility for $35.0 million which was formerly under
lease. Proceeds for the buyout were provided through the liquidation of
$36.8 million of restricted cash that had previously secured the lease of
the facility and equipment.
** The 2002 decrease in total assets was mainly due to the
establishment of a 100% valuation allowance of $31.9 million for deferred
tax assets, the disposition of machinery and equipment with a net book
value of $6.7 million and $3.0 million write-off of goodwill.
*** The decrease in net sales in 2003 was primarily due to non-cash
charges as a reduction to sales of $14.1 million in 2003 reflecting the
fair value of conversion rights related to the 2003 convertible note issued
to Future, a related party, and $12.6 million representing the initial
impact for the revenue values of our products in the distribution channel
upon conversion to sell-through accounting. In addition, the 2003 gross
loss increased by $1.8 million as a result of the conversion to
sell-through accounting.
"This restatement marks the conclusion of a very difficult chapter in
the history of Sipex," said Ralph Schmitt, CEO of Sipex Corporation.
"Besides our financial issues, we have many operational challenges ahead of
us but are confident in the team that we have assembled to lead us to
building a meaningful and profitable analog company."
"A little over a year ago this team launched on a journey to rebuild
Sipex. We put a financial and operational strategy in place. To date we
have hit a large majority of those milestones and our plan remains intact.
Our plan is to offer transparency into the Company so stockholders can feel
confident that management is executing properly. We remain very optimistic
on the future of Sipex."
About Sipex Corporation
Sipex Corporation is an analog semiconductor company that addresses
standard linear and application specific standard products (ASSP) for
customer systems that are primarily targeted at the consumer, networking
and industrial markets. The products are categorized into three synergistic
areas of power management, interface and optical storage. Sipex is a global
company with operations in Asia, Europe and North America. It is the
mission of the Company to create innovative analog products that enable
customers to produce differentiated products. For more information about
Sipex, visit http://www.sipex.com.
Safe Harbor
This press release contains forward-looking statements. Statements
regarding the Company's beliefs, plans, expectations or intentions
regarding the future are forward-looking statements, within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Exchange Act, as amended. All such forward looking statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to
significant risks and uncertainties. In particular, the forward-looking
statements include the statements regarding Sipex's intention to file its
Quarterly Reports on Form 10-Q for 2006 within the next few weeks, the
ability of management to overcome the challenges facing Sipex, and Sipex's
ability to become profitable in the future. These statements are
predictions and involve risks and uncertainties, such that actual results
may differ significantly. These risks include, but are not limited to, the
risk that due to unforeseen issues in the preparation of our quarterly
reports we may be unable to file these reports on the anticipated timeline
and the risk that due to overall market conditions or as a result of issues
unique to Sipex, Sipex may not be able to achieve the anticipated growth or
profitability. The Company disclaims any intention or obligation to
publicly update or revise any forward-looking statements, whether as a
result of events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
For additional information, contact:
Clyde Ray Wallin, Chief Financial Officer
Tel: 408-934-7500
Fax: 408-935-7678
Email: RWallin@sipex.com
SOURCE Sipex Corporation
 back to top
Related links:
http://www.sipex.com/
http://www.prnewswire.com/comp/111683.html/
CONTACT:
Clyde Ray Wallin, Chief Financial Officer of
Sipex, +1-408-934-7500, or RWallin@sipex.com
|
