Sipex and its executive officers and directors may be deemed to be participants in the solicitation of proxies from Sipex's stockholders with respect to the transactions contemplated by the merger agreement. Information regarding such executive officers and directors is included in Sipex's Proxy Statement for its 2006 Annual Meeting of Stockholders filed with the SEC on October 24, 2006, which is available free of charge at the SEC's web site at http://www.sec.gov and from Sipex Investor Relations which can be contacted by e-mail at Email Contact or by telephone at 1-408-934-7586. Certain executive officers and directors of Sipex have interests in the transaction that may differ from the interests of Sipex stockholders generally. These interests will be described in the proxy statement/prospectus when it becomes available.
SIPEX CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, December 30,
2007 2006
ASSETS
Current assets:
Cash and cash equivalents $2,845 $13,041
Restricted cash - 350
Short-term investment
securities 597 2,388
Accounts receivable, net 5,427 6,222
Accounts receivable, related
party, net 2,069 949
Inventories, net 11,356 15,586
Prepaid expenses and other
current assets 1,914 1,641
Total current assets 24,208 40,177
Property, plant and equipment,
net 19,301 19,113
Restricted cash - noncurrent 58 57
Other assets 204 202
Total assets $43,771 $59,549
LIABILITIES AND STOCKHOLDERS'
DEFICIT
Current liabilities:
Current portion of long-term
bank borrowing $667 $667
Current portion of lease
financing obligation 220 191
Accounts payable 8,360 10,331
Accrued expenses 5,582 7,185
Accrued restructuring costs 524 1,728
Deferred income, related
party 5,248 5,543
Deferred income, other 2,014 2,555
Total current liabilities 22,615 28,200
Long-term portion of bank borrowing 1,000 1,333
Long-term lease financing obligation 12,033 12,152
Long-term accrued restructuring costs - 139
Convertible senior notes 26,224 25,826
Other long-term liabilities 22 24
Total liabilities 61,894 67,674
Stockholders' deficit:
Common stock 190 184
Additional paid-in capital 239,063 234,785
Accumulated deficit (257,357) (243,075)
Accumulated other
comprehensive loss (19) (19)
Total stockholders'
deficit (18,123) (8,125)
Total liabilities and
stockholders' deficit $43,771 $59,549
SIPEX CORPORATION
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
For the Three Months For the Six Months
Ended Ended
June 30, March 31, July 1, June 30, July 1,
2007 2007 2006 2007 2006
Net sales $9,857 $8,758 $11,558 $18,615 $20,861
Net sales, related party 8,562 8,101 9,455 16,663 18,006
Total net sales 18,419 16,859 21,013 35,278 38,867
Cost of sales 8,177 7,073 9,781 15,250 19,959
Cost of sales, related
party 6,241 5,347 7,366 11,588 15,237
Total cost of sales 14,418 12,420 17,147 26,838 35,196
Gross profit 4,001 4,439 3,866 8,440 3,671
Operating expenses:
Research and development 3,431 3,686 3,883 7,117 9,379
Marketing and selling 3,115 3,293 3,765 6,408 7,421
General and
administrative 4,650 2,968 2,743 7,617 6,764
Restructuring and other (103) 63 (22) (40) 285
Total operating
expenses 11,093 10,010 10,369 21,102 23,849
Loss from operations (7,092) (5,571) (6,503) (12,662) (20,178)
Other income (expense):
Interest income 60 131 221 191 270
Interest expense (897) (834) (582) (1,731) (765)
Other income, net - 1 59 - 101
Total other expense, net (837) (702) (302) (1,540) (394)
Loss before income tax
expense (7,929) (6,273) (6,805) (14,202) (20,572)
Income tax expense 51 17 53 68 85
Net loss $(7,980) $(6,290) $(6,858) $(14,270) $(20,657)
Net loss per common share $(0.42) $(0.34) $(0.39) $(0.76) $(1.16)
- basic and diluted
Weighted average common
shares outstanding
- basic and diluted 18,798 18,547 17,775 18,673 17,775
SIPEX CORPORATION
Reconciliation of GAAP Gross Profit (Loss) to Non-GAAP Gross Profit
(Loss)
(In thousands)
(Unaudited)
For the Three Months For the Six Months
Ended Ended
June 30, March 31, July 1, June 30, July 1,
2007 2007 2006 2007 2006
GAAP - gross profit $4,001 $4,439 $3,866 $8,440 $3,671
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 124 111 (59) 235 68
Non-GAAP - gross profit $4,125 $4,550 $3,807 $8,675 $8,258
GAAP gross profit as a
percent of net sales 22% 26% 18% 24% 9%
Non-GAAP gross profit as a
percent of net sales 22% 27% 18% 25% 21%
SIPEX CORPORATION 
