- Third Quarter Net Sales of $21.0 Million, Sequentially Flat with the
Second Quarter and Up 21% From Year-Ago Period
- Third Quarter Gross Margin at 29%, Improved From 18% in the Second
Quarter and 27% in Year-Ago Period
- Third Quarter GAAP Net Loss Per Share of $0.18, Improved From $0.19 in
the Second Quarter, Up From $0.15 in Year-Ago Period
MILPITAS, Calif., Nov. 8 /PRNewswire-FirstCall/ -- Sipex (OTC: SIPX.PK)
today reported fiscal third quarter operating results. Net Sales for the
third quarter of 2006 were $21.0 million, flat with second quarter net
sales of $21.0 million and an increase of 21% from net sales of $17.4
million recorded in the year-ago period. Third quarter 2006 GAAP net loss
was $6.3 million, or $0.18 per share, compared with GAAP net loss of $6.9
million, or $0.19 per share, in the previous quarter and GAAP net loss of
$5.2 million, or $0.15 per share, in the year-ago period. Included in the
second and third quarter 2006 GAAP net loss is stock-based compensation of
$0.8 million and $0.9 million, or $0.02 and $0.02 per share, respectively.
Third quarter 2006 non-GAAP net loss was $5.3 million, or $0.15 per
share, a decrease from $6.1 million, or $0.17 per share, in the previous
quarter and an increase from $4.8 million, or $0.13 per share in the third
quarter of 2005. Non-GAAP results exclude the impact of stock-based
compensation, restructuring and impairment charges. A reconciliation of the
adjustments made to GAAP net loss to compute non-GAAP net loss is contained
in the financial tables of this press release.
"We have now closed our wafer manufacturing facility in Milpitas,
California and in the third quarter we saw the first small improvements in
our margin structure based on this operational change," stated Ray Wallin,
CFO of Sipex. "These margin improvements should continue over the next few
quarters as we drain the inventory that was built to bridge the transition
to a fabless model. Beyond these margin improvements, this was a momentous
quarter for us as we were able to get current with our SEC financial
filings and get the SEC investigation behind us."
"While we were disappointed in our top line revenue performance, we
were in-line with the majority of the other analog players in the market
with a flat quarter," explained Ralph Schmitt, CEO of Sipex. "Our commodity
business was slightly down due to elevated inventory at our customers. We
grew our proprietary business in the quarter with new designs at some major
customers. I am pleased with the operational progress we have made, but
concerned about some of the signs in the market. The expanded component
lead-times noted earlier in the year have led to some inventory build. Now
that these lead- times have moderated back to normal and our customer
re-order rates are down, we believe this will affect fourth quarter results
as well, especially in the commodity business."
Conference Call -- Today Sipex will host a conference call at 4:30 p.m.
Eastern time (1:30 p.m. Pacific time). Chief Executive Officer Ralph
Schmitt and Chief Financial Officer Ray Wallin will present an overview of
the financial results for the third quarter of 2006 and answer any
questions.
The call is available, live, to any interested party by dialing (888)
428-4473. For international callers, please dial (612) 234-9960. Interested
callers should dial in at least five minutes before the scheduled start
time and ask to be connected to the Sipex Investor Call. A replay of the
investor call will be available approximately 24 hours after the event at
http://www.sipex.com/investors.
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 further information, contact Ray Wallin at: Sipex Corporation, 233
South Hillview Drive, Milpitas, California 95035, (408) 934-7500; or visit
our website at http://www.sipex.com .
Safe Harbor Statement
This press release contains forward-looking statements concerning
Sipex's future events and results of operations including, but not limited
to statements about improvements in gross margin, reductions in inventory
levels and revenue growth in future quarters. 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 Securities
Exchange Act of 1934, 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
predictions and involve risks and uncertainties, such that actual results
may differ significantly. These risks include, but are not limited to, the
risk that inventory levels will not decrease as expected, that margins will
not improve despite reductions in inventory, that Sipex may be unable to
execute operational improvements, that Sipex may be unable to grow revenues
in future quarters, and that general market conditions in the semiconductor
industry may decline. 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 further discussion of these risks
and uncertainties, we refer you to the documents the Company files with the
SEC from time to time, including the Company's Annual Report on Form 10-K
for the year ended December 31, 2005 and Quarterly Reports on Form 10-Q for
the quarter ended April 1, 2006 and July 1, 2006. All forward-looking
statements are made as of today, and the Company disclaims any duty to
update such statements.
Non-GAAP Reporting -- The Company's management uses non-GAAP measures
to evaluate the performance of our business and to estimate future
performance. Since management finds this measure to be useful, we believe
that our investors benefit from seeing our results "through the eyes" of
management in addition to seeing our GAAP results. For comparison purposes,
the Company makes reference to certain gross margin, operating margin, net
loss and net loss per share. These non-GAAP results were reached by
excluding stock-based compensation expense, restructuring and impairment
charges, and additional depreciation expense. We reference those results to
allow a better comparison of results in the current period to those in
prior periods and to provide meaningful insight to the Company's on-going
operating performance. We have reconciled such non-GAAP results to the most
directly comparable GAAP financial measures.
Our reference to these non-GAAP results should be considered in
addition to results that are prepared under current accounting standards
but should not be considered a substitute for results that are presented as
consistent with GAAP. It should also be noted that our non-GAAP information
may be different from the non-GAAP information provided by other companies.
Clyde Ray Wallin, Chief Financial Officer
Phone: 408-934-7500
Fax: 408-935-7678
Email: rwallin@sipex.com
SIPEX CORPORATION
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited)
September 30, December 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $11,304 $1,969
Restricted cash 800 500
Short-term investment securities 3,583 --
Accounts receivable, net 6,406 3,735
Accounts receivable, related party, net 2,876 3,011
Inventories 16,875 13,400
Prepaid expenses and other current assets 2,989 1,300
Total current assets 44,833 23,915
Property, plant and equipment, net 20,481 25,803
Restricted cash - noncurrent 255 500
Other assets 204 224
Total assets $65,773 $50,442
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowing $-- $3,000
Current portion of lease financing
obligation 178 --
Accounts payable 9,759 7,394
Accrued expenses 6,829 7,282
Accrued restructuring costs 991 1,407
Deferred income, related party 5,368 5,707
Deferred income, other 2,962 2,510
Total current liabilities 26,087 27,300
Long-term accrued restructuring costs 186 584
Long-term lease financing obligation 12,203 --
Convertible senior notes 25,634 --
Other long-term liabilities 53 37
Total liabilities 64,163 27,921
Stockholders' equity:
Common stock 356 355
Additional paid-in capital 230,070 224,026
Accumulated deficit (228,797) (201,841)
Accumulated other comprehensive loss (19) (19)
Total stockholders' equity 1,610 22,521
Total liabilities and stockholders' equity $65,773 $50,442
SIPEX CORPORATION
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
For the Three Months For the Nine Months
Ended Ended
Sept. 30, July 1, Oct. 1, Sept. 30, Oct. 1,
2006 2006 2005 2006 2005
Net sales $12,243 $11,558 $9,258 $33,104 $31,632
Net sales, related party 8,781 9,455 8,115 26,787 23,800
Total net sales 21,024 21,013 17,373 59,891 55,432
Cost of sales 9,246 9,781 7,445 29,205 25,757
Cost of sales, related party 5,582 7,366 5,302 20,819 16,427
Total cost of sales 14,828 17,147 12,747 50,024 42,184
Gross profit 6,196 3,866 4,626 9,867 13,248
Operating expenses:
Research and development 3,923 3,883 4,024 13,302 12,143
Marketing and selling 3,827 3,765 2,299 11,248 7,596
General and administrative 3,988 2,743 3,133 10,752 10,357
Restructuring 77 (22) 386 362 445
Impairment of fixed assets -- -- -- -- 9,377
Total operating
expenses 11,815 10,369 9,842 35,664 39,918
Loss from operations (5,619) (6,503) (5,216) (25,797) (26,670)
Other income (expense):
Interest income 275 221 36 545 182
Interest expense (898) (582) (5) (1,663) (22)
Other income, net (19) 59 37 82 131
Total other income
(expense), net (642) (302) 68 (1,036) 291
Loss before income
tax expense (6,261) (6,805) (5,148) (26,833) (26,379)
Income tax expense 38 53 13 123 35
Net loss $(6,299) $(6,858) $(5,161) $(26,956) $(26,414)
Net loss per common share
- basic and diluted $(0.18) $(0.19) $(0.15) $(0.76) $(0.74)
Weighted average common
share outstanding
- basic and diluted 35,551 35,550 35,550 35,551 35,542
SIPEX CORPORATION
Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, July 1, Oct. 1, Sept. 30, Oct. 1,
2006 2006 2005 2006 2005
GAAP - gross profit $6,196 $3,866 $4,626 $9,867 $13,248
Increased depreciation due to
shorter economic life of
Hillview facility
included in:
Total cost of sales -- -- -- 4,519 --
Stock based compensation
included in:
Total cost of sales 135 (59) -- 203 --
Non-GAAP - gross profit $6,331 $3,807 $4,626 $14,589 $13,248
GAAP gross profit as a
percent of net sales 29% 18% 27% 16% 24%
Non-GAAP gross profit as a
percent of net sales 30% 18% 27% 24% 24%
SIPEX CORPORATION
Reconciliation of GAAP Loss from Operations to Non-GAAP Loss from
Operations
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, July 1, Oct. 1, Sept. 30, Oct. 1,
2006 2006 2005 2006 2005
GAAP - loss from
operations $(5,619) $(6,503) $(5,216) $(25,797) $(26,670)
Increased depreciation
due to shorter economic
life of Hillview
facility included in:
Total cost of sales -- -- -- 4,519 --
Research and
development -- -- -- 1,118 --
Marketing and selling -- -- -- 322 --
General and
administrative -- -- -- 744 --
Stock based compensation
included in:
Total cost of sales 135 (59) -- 203 --
Research and
development 261 311 -- 910 --
Marketing and selling 229 235 -- 654 --
General and
administrative 258 309 -- 845 --
Restructuring 77 (22) 386 362 445
Impairment of fixed
assets -- -- -- -- 9,377
Non-GAAP - loss from
operations $(4,659) $(5,729) $(4,830) $(16,120) $(16,848)
SIPEX CORPORATION
Reconciliation of GAAP Net Loss to Non-GAAP Net Loss
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, July 1, Oct. 1, Sept. 30, Oct. 1,
2006 2006 2005 2006 2005
GAAP - Net loss $(6,299) $(6,858) $(5,161) $(26,956) $(26,414)
Increased depreciation
due to shorter economic
life of Hillview
facility included in:
Total cost of sales -- -- -- 4,519 --
Research and
development -- -- -- 1,118 --
Marketing and selling -- -- -- 322 --
General and
administrative -- -- -- 744 --
Stock based compensation
included in:
Total cost of sales 135 (59) -- 203 --
Research and
development 261 311 -- 910 --
Marketing and selling 229 235 -- 654 --
General and
administrative 258 309 -- 845 --
Restructuring 77 (22) 386 362 445
Impairment of fixed
assets -- -- -- -- 9,377
Non-GAAP - Net loss $(5,339) $(6,084) $(4,775) $(17,279) $(16,592)
SIPEX CORPORATION
Reconciliation of GAAP Net Loss Per Share to Non-GAAP Net Loss Per Share
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, July 1, Oct. 1, Sept. 30, Oct. 1,
2006 2006 2005 2006 2005
GAAP - Net loss per share $(0.18) $(0.19) $(0.15) $(0.76) $(0.74)
Increased depreciation
due to shorter economic
life of Hillview facility
included in:
Total cost of sales 0.00 0.00 0.00 0.13 0.00
Research and development 0.00 0.00 0.00 0.03 0.00
Marketing and selling 0.00 0.00 0.00 0.01 0.00
General and
administrative 0.00 0.00 0.00 0.02 0.00
Stock based compensation
included in:
Total cost of sales 0.00 (0.00) 0.00 0.01 0.00
Research and development 0.01 0.01 0.00 0.03 0.00
Marketing and selling 0.01 0.01 0.00 0.02 0.00
General and
administrative 0.01 0.01 0.00 0.02 0.00
Restructuring 0.00 (0.00) 0.01 0.01 0.01
Impairment of fixed assets 0.00 0.00 0.00 0.00 0.26
Non-GAAP - Net loss
per share (1) $(0.15) $(0.17) $(0.13) $(0.49) $(0.47)
Weighted average common
shares outstanding
- basic and diluted 35,551 35,550 35,550 35,551 35,542
(1) Amounts may not aggregate to the total due to rounding
SOURCE Sipex Corporation
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Related links:
http://www.sipex.com
http://www.prnewswire.com/comp/111683.html/
CONTACT:
Clyde Ray Wallin, Chief Financial Officer of
Sipex Corporation, +1-408-934-7500, or fax, +1-408-935-7678, or
rwallin@sipex.com
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