SIPEX Corporation Reports First Quarter 2001 Financial Results

Apr 19, 2001, 01:00 ET from SIPEX Corporation

    BILLERICA, Mass., April 19 /PRNewswire/ -- SIPEX Corporation
 (Nasdaq:   SIPX) today reported revenues of $19.7 million for the first quarter
 of 2001, which ended March 31, 2001.  The $19.7 million revenue for the
 quarter was after the impact of a $4.5 million charge relating to the timing
 of revenue recognition for sales into distribution as announced in our
 February 15, 2001 press release.  Excluding this adjustment, revenue for the
 quarter would have been $24.2 million vs. revenue of $26.7 million for the
 same quarter in 2000 on the same basis.
     Diluted (loss) per share for the first quarter of 2001 was $(0.22) vs.
 $(0.23) per share in the prior quarter and $0.07 per share reported for the
 same quarter in 2000.  Included in the net loss for the quarter were special
 adjustments for distributor revenue reported above and inventory write-offs of
 $3.5 million relating to our fab start-up.  Prior to these charges, diluted
 loss per share would have been $(0.03) vs. the $(0.04) per share reported in
 the prior quarter, prior to adjustments, and $0.07 per share reported in the
 first quarter of 2000.
     Gross margins for the first quarter of 2001 were 5%.  Gross margins prior
 to these special adjustments, would have been 36.7% for the first quarter of
 2001 vs. the 36.3% reported in the first quarter of 2000.
     James E. Donegan, Chairman and Chief Executive Officer commented, "The
 first quarter of 2001 for SIPEX, like most in the Industry, was very
 challenging.  Revenue was down year over year by 9% ($24.2 million vs. $26.7
 million), 12% below fourth quarter ($24.2 million vs. $27.6 million adjusted)
 and 32% below our peak during the third quarter of 2000.  While the first
 quarter was more stable than the fourth quarter of 2000 (as measured by
 customer cancellations and re-schedules), it still was difficult to react to a
 changing backlog and scheduling environment.  Order cancellations during the
 quarter were down substantially from the $8.0 million in the fourth quarter of
 2000 but were still $3.0 million.  Bookings for the quarter were $20.0 million
 and backlog at quarter end was $37.0 million of which $20.0 million is
 scheduled for the second quarter."
     Mr. Donegan continued, "To respond to the downturn in business, we
 initiated and completed a number of significant cost reductions.  Total
 payroll has been reduced from 614 employees in the third quarter to 502
 employees at the end of the first quarter.  All personnel reductions were from
 administrative and operational positions.  In addition, we completed the sale
 of our old 4" Fremont Fab (Calogic Fab), reducing both operating expenses and
 avoiding the anticipated closure expenses.  Going forward, all operations will
 be closed for one week during the second quarter.  We will continue to pursue
 all cost reduction/cost saving activities consistent with the current business
 environment  in the operational and administrative side of the business while
 simultaneously introducing a record number of new products and aggressively
 marketing our broad product portfolio.  Operationally, we continued to improve
 production in our Milpitas 6" Wafer Fab.  Cycle time has improved
 substantially to just under six weeks at the end of the first quarter, from a
 baseline of over ten weeks.  While total inventory increased slightly overall,
 inventory within the fab continued to drop from the start of the first
 quarter, the results of which are allowing us to improve on our lead times,
 new product development times and delivery performance.  We took an inventory
 write-off within the fab for material that had yield problems associated with
 the qualification of the fab.  We believe those yield issues have now been
 resolved and we are processing material successfully today.  During the
 quarter we also released additional products into our Milpitas fab that had
 been run at outside foundries resulting in approximately 15% more internal
 demand.  Internal wafer starts for these products began in early April.  This
 increased loading of our fab is in line with our strategies and predictions
 moving forward."
     Mr. Donegan concluded, "As we enter the second quarter, we continue to
 drive our fab to better performance focusing on gross margin improvements.
 While a considerable amount of effort during the first quarter was obviously
 focused on the current environment, there were significant and positive
 achievements in the first quarter.  SIPEX won the Year 2000 "EDN Innovation of
 the Year Award" from EDN magazine for our SP508 Multi-protocol Transceiver
 Product.  This is the first for the Company, and one that puts us in the
 company of winners who are generally from much larger companies. In addition,
 we introduced our first optical product, the SP8020, an automatic power
 control circuit (APC) for DVD applications.  The SP8020 is now being sampled
 at over twelve major DVD manufacturers worldwide.  In addition, two of the
 largest DVD manufacturers in the world have recently funded development of two
 new photo diode products (PDIC) based on our patented "photo detector"
 technology."
     SIPEX will conduct a conference call concerning this announcement today at
 5:30PM EDT.  To gain access to this teleconference, the toll free number is
 888-323-9689, passcode is SIPEX and the conference leader is Frank R.
 DiPietro. A live audio webcast will be available during the conference call at
 http://www.videonewswire.com/SIPEX/041901/.  A recording of this call will be
 available for replay through Friday, April 27, 2001.  The toll free number for
 replay is 888-562-2901.
     The statements by James E. Donegan contain information which is forward-
 looking in nature and is subject to risks and uncertainties.  These statements
 are based on current expectations, and are the Company's targets, not
 predictions or guarantees of actual performance.  The Company's performance
 has deviated, often materially, from its targets as of the beginning of any
 quarter.  The Company does not intend to update these targets during the
 quarter or comment on its progress in the quarter to analysts or investors
 until after it has closed its books on the quarter.  Any statements by persons
 outside the Company speculating on the progress of the quarter will not be
 based on internal Company information and should be assessed accordingly by
 investors.
     Safe Harbor Statement under the Private Securities Litigation Reform Act
 of 1995:  This news release contains forward-looking statements that involve
 risk and uncertainty, including statements regarding our revenue growth, our
 expectations regarding our backlog, our expectations regarding bookings, our
 new product strategy and introduction goals, expected demand from our
 customers and distributors, our outlook for the remainder of 2001, our
 expected production capacity and lead times and performance of our new Fab,
 ability to manage production costs and costs of raw materials, and the general
 conditions of the semiconductor market.  There are numerous factors that could
 cause the Company's actual results to differ materially from results predicted
 or implied in this news release.
     Other important factors that could cause actual results to differ
 materially from those predicted include overall economic conditions, demand
 for electronic products and semiconductors generally, demand for the end-user
 products for which the Company's semiconductors are suited, timely
 availability of raw materials (including subcontractor wafers from Taiwan),
 equipment, supplies and services, unanticipated manufacturing problems,
 technological and product development risks, competitors' actions, and other
 risk factors described in the Company's filings with the Securities and
 Exchange Commission.
     All forward-looking statements included in this document are made as of
 the date hereof, based on the information available to the Company as of the
 date hereof, and the Company assumes no obligation to update any forward-
 looking statement.
     SIPEX Corporation is a leading manufacturer of high performance, high
 value-added analog integrated circuits.  SIPEX serves the broad analog signal
 processing market with single, dual and multiprotocol interface circuits, low
 power and high voltage application specific circuits, electroluminescent
 drivers, data converters and power management products.  Applications for the
 Company's products include telecommunications including personal computers and
 peripherals, battery powered hand-held devices, cellular telephones, test
 equipment factory automation, networking, process controls and satellites.
 
                Condensed Consolidated Statements of Operations
                     (In thousands, except per share data)
                                  (Unaudited)
 
                                                      Three Months Ended
                                               March 31, 2001  April 1, 2000
 
     Net sales                                        $19,694        $26,736
     Cost of sales                                     18,797         17,035
     Gross profit                                         897          9,701
 
     Operating expenses:
       Research and development                         4,045          2,765
       Marketing and selling                            2,659          2,485
       General and administrative                       2,076          2,152
       Facility exit costs                              (317)              -
       Amortization of intangible assets                   96             96
         Total operating expenses                       8,559          7,498
 
     Operating income (loss)                          (7,662)          2,203
     Other income, net                                    139            378
     Income (loss) before income taxes                (7,523)          2,581
     Income tax expense (benefit)                     (2,495)            929
     Net income (loss)                               $(5,028)         $1,652
 
     Net income (loss) per common share - basic       $(0.22)          $0.08
 
     Net income (loss) per common share -
     assuming dilution                                $(0.22)          $0.07
 
     Weighted average common shares
     outstanding - basic                               22,514         21,878
 
     Weighted average common shares
     outstanding - assuming dilution                   22,514         23,433
 
 
                       Condensed Consolidated Balance Sheets
                                   (In thousands)
 
 
                                                  (Unaudited)      (Audited)
                                               March 31, 2001 December 31, 2000
 
 
     Current assets:
       Cash and short-term investments                 $1,942         $1,732
       Accounts receivable, net                        19,014         20,688
       Inventories                                     34,354         33,324
       Other current assets                             7,142          7,019
         Total current assets                          62,452         62,763
     Property, plant and equipment, net                33,740         32,993
     Intangible assets
      (net of accumulated amortization)                 3,266          3,360
     Restricted cash                                   36,750         36,750
     Other assets                                      15,400         12,902
 
         Total assets                                $151,608       $148,768
 
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Current liabilities:
       Accounts payable                               $13,722        $10,583
       Accrued expenses                                 4,704          5,372
       Deferred income                                  2,953          1,963
         Total current liabilities                     21,379         17,918
     Long-term debt                                    11,042          7,057
     Other long-term liabilities                        1,195            996
 
         Total liabilities                             33,616         25,971
     Shareholders' equity                             117,992        122,797
 
         Total liabilities and
          shareholders' equity                       $151,608       $148,768
 
     For further information, contact Frank R. DiPietro, Executive Vice
 President & CFO at SIPEX Corporation, 22 Linnell Circle, Billerica, MA 01821,
 Telephone (978) 671-1909.
 
 

SOURCE SIPEX Corporation
    BILLERICA, Mass., April 19 /PRNewswire/ -- SIPEX Corporation
 (Nasdaq:   SIPX) today reported revenues of $19.7 million for the first quarter
 of 2001, which ended March 31, 2001.  The $19.7 million revenue for the
 quarter was after the impact of a $4.5 million charge relating to the timing
 of revenue recognition for sales into distribution as announced in our
 February 15, 2001 press release.  Excluding this adjustment, revenue for the
 quarter would have been $24.2 million vs. revenue of $26.7 million for the
 same quarter in 2000 on the same basis.
     Diluted (loss) per share for the first quarter of 2001 was $(0.22) vs.
 $(0.23) per share in the prior quarter and $0.07 per share reported for the
 same quarter in 2000.  Included in the net loss for the quarter were special
 adjustments for distributor revenue reported above and inventory write-offs of
 $3.5 million relating to our fab start-up.  Prior to these charges, diluted
 loss per share would have been $(0.03) vs. the $(0.04) per share reported in
 the prior quarter, prior to adjustments, and $0.07 per share reported in the
 first quarter of 2000.
     Gross margins for the first quarter of 2001 were 5%.  Gross margins prior
 to these special adjustments, would have been 36.7% for the first quarter of
 2001 vs. the 36.3% reported in the first quarter of 2000.
     James E. Donegan, Chairman and Chief Executive Officer commented, "The
 first quarter of 2001 for SIPEX, like most in the Industry, was very
 challenging.  Revenue was down year over year by 9% ($24.2 million vs. $26.7
 million), 12% below fourth quarter ($24.2 million vs. $27.6 million adjusted)
 and 32% below our peak during the third quarter of 2000.  While the first
 quarter was more stable than the fourth quarter of 2000 (as measured by
 customer cancellations and re-schedules), it still was difficult to react to a
 changing backlog and scheduling environment.  Order cancellations during the
 quarter were down substantially from the $8.0 million in the fourth quarter of
 2000 but were still $3.0 million.  Bookings for the quarter were $20.0 million
 and backlog at quarter end was $37.0 million of which $20.0 million is
 scheduled for the second quarter."
     Mr. Donegan continued, "To respond to the downturn in business, we
 initiated and completed a number of significant cost reductions.  Total
 payroll has been reduced from 614 employees in the third quarter to 502
 employees at the end of the first quarter.  All personnel reductions were from
 administrative and operational positions.  In addition, we completed the sale
 of our old 4" Fremont Fab (Calogic Fab), reducing both operating expenses and
 avoiding the anticipated closure expenses.  Going forward, all operations will
 be closed for one week during the second quarter.  We will continue to pursue
 all cost reduction/cost saving activities consistent with the current business
 environment  in the operational and administrative side of the business while
 simultaneously introducing a record number of new products and aggressively
 marketing our broad product portfolio.  Operationally, we continued to improve
 production in our Milpitas 6" Wafer Fab.  Cycle time has improved
 substantially to just under six weeks at the end of the first quarter, from a
 baseline of over ten weeks.  While total inventory increased slightly overall,
 inventory within the fab continued to drop from the start of the first
 quarter, the results of which are allowing us to improve on our lead times,
 new product development times and delivery performance.  We took an inventory
 write-off within the fab for material that had yield problems associated with
 the qualification of the fab.  We believe those yield issues have now been
 resolved and we are processing material successfully today.  During the
 quarter we also released additional products into our Milpitas fab that had
 been run at outside foundries resulting in approximately 15% more internal
 demand.  Internal wafer starts for these products began in early April.  This
 increased loading of our fab is in line with our strategies and predictions
 moving forward."
     Mr. Donegan concluded, "As we enter the second quarter, we continue to
 drive our fab to better performance focusing on gross margin improvements.
 While a considerable amount of effort during the first quarter was obviously
 focused on the current environment, there were significant and positive
 achievements in the first quarter.  SIPEX won the Year 2000 "EDN Innovation of
 the Year Award" from EDN magazine for our SP508 Multi-protocol Transceiver
 Product.  This is the first for the Company, and one that puts us in the
 company of winners who are generally from much larger companies. In addition,
 we introduced our first optical product, the SP8020, an automatic power
 control circuit (APC) for DVD applications.  The SP8020 is now being sampled
 at over twelve major DVD manufacturers worldwide.  In addition, two of the
 largest DVD manufacturers in the world have recently funded development of two
 new photo diode products (PDIC) based on our patented "photo detector"
 technology."
     SIPEX will conduct a conference call concerning this announcement today at
 5:30PM EDT.  To gain access to this teleconference, the toll free number is
 888-323-9689, passcode is SIPEX and the conference leader is Frank R.
 DiPietro. A live audio webcast will be available during the conference call at
 http://www.videonewswire.com/SIPEX/041901/.  A recording of this call will be
 available for replay through Friday, April 27, 2001.  The toll free number for
 replay is 888-562-2901.
     The statements by James E. Donegan contain information which is forward-
 looking in nature and is subject to risks and uncertainties.  These statements
 are based on current expectations, and are the Company's targets, not
 predictions or guarantees of actual performance.  The Company's performance
 has deviated, often materially, from its targets as of the beginning of any
 quarter.  The Company does not intend to update these targets during the
 quarter or comment on its progress in the quarter to analysts or investors
 until after it has closed its books on the quarter.  Any statements by persons
 outside the Company speculating on the progress of the quarter will not be
 based on internal Company information and should be assessed accordingly by
 investors.
     Safe Harbor Statement under the Private Securities Litigation Reform Act
 of 1995:  This news release contains forward-looking statements that involve
 risk and uncertainty, including statements regarding our revenue growth, our
 expectations regarding our backlog, our expectations regarding bookings, our
 new product strategy and introduction goals, expected demand from our
 customers and distributors, our outlook for the remainder of 2001, our
 expected production capacity and lead times and performance of our new Fab,
 ability to manage production costs and costs of raw materials, and the general
 conditions of the semiconductor market.  There are numerous factors that could
 cause the Company's actual results to differ materially from results predicted
 or implied in this news release.
     Other important factors that could cause actual results to differ
 materially from those predicted include overall economic conditions, demand
 for electronic products and semiconductors generally, demand for the end-user
 products for which the Company's semiconductors are suited, timely
 availability of raw materials (including subcontractor wafers from Taiwan),
 equipment, supplies and services, unanticipated manufacturing problems,
 technological and product development risks, competitors' actions, and other
 risk factors described in the Company's filings with the Securities and
 Exchange Commission.
     All forward-looking statements included in this document are made as of
 the date hereof, based on the information available to the Company as of the
 date hereof, and the Company assumes no obligation to update any forward-
 looking statement.
     SIPEX Corporation is a leading manufacturer of high performance, high
 value-added analog integrated circuits.  SIPEX serves the broad analog signal
 processing market with single, dual and multiprotocol interface circuits, low
 power and high voltage application specific circuits, electroluminescent
 drivers, data converters and power management products.  Applications for the
 Company's products include telecommunications including personal computers and
 peripherals, battery powered hand-held devices, cellular telephones, test
 equipment factory automation, networking, process controls and satellites.
 
                Condensed Consolidated Statements of Operations
                     (In thousands, except per share data)
                                  (Unaudited)
 
                                                      Three Months Ended
                                               March 31, 2001  April 1, 2000
 
     Net sales                                        $19,694        $26,736
     Cost of sales                                     18,797         17,035
     Gross profit                                         897          9,701
 
     Operating expenses:
       Research and development                         4,045          2,765
       Marketing and selling                            2,659          2,485
       General and administrative                       2,076          2,152
       Facility exit costs                              (317)              -
       Amortization of intangible assets                   96             96
         Total operating expenses                       8,559          7,498
 
     Operating income (loss)                          (7,662)          2,203
     Other income, net                                    139            378
     Income (loss) before income taxes                (7,523)          2,581
     Income tax expense (benefit)                     (2,495)            929
     Net income (loss)                               $(5,028)         $1,652
 
     Net income (loss) per common share - basic       $(0.22)          $0.08
 
     Net income (loss) per common share -
     assuming dilution                                $(0.22)          $0.07
 
     Weighted average common shares
     outstanding - basic                               22,514         21,878
 
     Weighted average common shares
     outstanding - assuming dilution                   22,514         23,433
 
 
                       Condensed Consolidated Balance Sheets
                                   (In thousands)
 
 
                                                  (Unaudited)      (Audited)
                                               March 31, 2001 December 31, 2000
 
 
     Current assets:
       Cash and short-term investments                 $1,942         $1,732
       Accounts receivable, net                        19,014         20,688
       Inventories                                     34,354         33,324
       Other current assets                             7,142          7,019
         Total current assets                          62,452         62,763
     Property, plant and equipment, net                33,740         32,993
     Intangible assets
      (net of accumulated amortization)                 3,266          3,360
     Restricted cash                                   36,750         36,750
     Other assets                                      15,400         12,902
 
         Total assets                                $151,608       $148,768
 
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Current liabilities:
       Accounts payable                               $13,722        $10,583
       Accrued expenses                                 4,704          5,372
       Deferred income                                  2,953          1,963
         Total current liabilities                     21,379         17,918
     Long-term debt                                    11,042          7,057
     Other long-term liabilities                        1,195            996
 
         Total liabilities                             33,616         25,971
     Shareholders' equity                             117,992        122,797
 
         Total liabilities and
          shareholders' equity                       $151,608       $148,768
 
     For further information, contact Frank R. DiPietro, Executive Vice
 President & CFO at SIPEX Corporation, 22 Linnell Circle, Billerica, MA 01821,
 Telephone (978) 671-1909.
 
 SOURCE  SIPEX Corporation