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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2001

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from                      to

Commission File Number 0-27892

SIPEX CORPORATION
(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (978) 667-8700
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x Noo

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o

The aggregate market value of common stock held by non-affiliates of the registrant at March 22, 2002 was approximately $274,000,000 based upon $11.00 per share, the last reported sale price of the common stock on The Nasdaq National Market on that date. The number of shares of the registrant’s common stock outstanding at March 22, 2002 was 24,908,434.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates by reference certain portions of information from the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 17, 2002.

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PART I

Item 1. Business:

Company Overview

     Sipex Corporation is a semiconductor company that designs, manufactures and markets, high performance, value-added analog integrated circuits (ICs) that are used primarily by original equipment manufacturers (OEMs) operating in the historically high growth markets of computing, communications and networking infrastructure.

     While advances in digital technology have fueled the demand for digital integrated circuits, they have also created a rapidly growing demand for more precise, faster and more power efficient analog ICs. Sipex possesses a broad portfolio of analog ICs, organized into four product families: power management, serial interface, analog display and the newly created optical storage. Sipex uses its facility in Milpitas, California and a number of third party vendors to fabricate, package and test its ICs. Sipex’s products are sold either directly or through a global network of manufacturers’ representatives and distributors.

Semiconductor Industry Overview

     Integrated circuits, the essential building blocks of today’s electronic products, are classified as either digital or analog ICs. Digital ICs (e.g. memory products, microprocessors and DSPs), process binary signals composed of strings of “0s” and “1s”. Often they are constrained by market-based standards and depend on a company’s ability to design and manufacture very large-scale circuits, using expensive, state-of-the-art process technologies that minimize device size.

     Analog ICs transform signals derived from the physical environment or monitor and condition analog signals derived from external electronic inputs. By contrast with digital ICs, analog ICs are most often designed and optimized for specialized applications in niche markets. Their development and successful market adoption require close customer contact and the deployment of small, tightly coordinated teams of experienced and highly skilled engineers who understand the complex interrelations of the IC with its layout, process technology, packaging and end application.

     Although analog and digital IC manufacturers share the vagaries of the semiconductor industry: e.g., cyclical market demands, capacity limitations, occasional oversupply, manufacturing variation, accelerated product life cycles, price erosion, global competition, capital equipment expenditures and rapid technology changes, analog IC manufacturers are often less adversely affected by them, with exception of the recent downturn in the market. Product life cycles in the analog IC market tend to be longer and customer pricing less volatile because competition, particularly foreign competition, is limited and customers often avoid major changes in the analog portions of their products due to the design complexities involved. The capital expenditures for analog IC manufacturers are lower because their fabrication processes are focused on device matching and careful layout and do not require frequent and expensive equipment upgrades or replacements to remain competitive.

Sipex’s Business Strategy

     Sipex realizes that remaining competitive in the analog IC market depends on developing and supplying customers in its target markets with a broad portfolio of synergistic standard product choices that offer features, performance and pricing which enable and enhance their end products. Sipex has responded to this realization by maintaining close working relationships with strategic key customers, creating and following future directed product and technology roadmaps, and shortening its product development cycles to permit the rapid introduction of new products.

Sipex Markets, Applications and Products

     Sipex focuses on selling its integrated circuits into specific applications in three major markets: networking and communications, computer and digital peripherals, and industrial controls and instrumentation. The markets, their end applications and the product lines involved are recorded on page 4.

     The customer end products in these three target markets are driven by the same requirements: higher operating efficiency, more power at lower voltages, and faster data transfer. These “must haves” provide numerous opportunities for Sipex to develop niche specific power management, serial interface, display driver, and optical storage ICs with unique

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feature sets that are optimized for a wide variety of devices, ranging from power modules in routers to pick up heads in CD/DVD systems.

     Sipex currently supports over 1300 products in four active product categories. These mostly innovative, proprietary products are optimized for specific end applications that require unique feature sets, specific electrical performance criteria (speed, precision, power, etc.), and/or additional system-level integration. Sipex focuses on developing these products as standard analog ICs in order to serve larger markets and reduce the risk of dependency on single customer requirements.

     Power Management Products - These circuits regulate, control, monitor or provide the reference voltage for a system or portion of a system. DC/DC regulators and PWM/PFM controllers convert voltage up or down within a system and provide a controlled level of power to the system, independent of normal operating load, line and temperature fluctuations. Supervisory ICs monitor power levels and notify controller ICs of out-of-range power conditions. Voltage references establish benchmark voltages within systems and provide constant outputs independent of temperature and other operating variations.

     The power management product portfolio continued to expand in 2001 with more DC/DC regulators and controllers. These new products delivered key benefits to portable power and distributed power applications, providing better power efficiency, increased miniaturization and more power at lower voltage levels.

     Interface Products - Interface products facilitate the transfer of digital signals between or within electronic systems and ensure reliable connectivity between networks, computers and the rapidly expanding mix of digital peripherals and portable devices that connect to them. The single protocol RS-232 and RS-485 transceivers comply with international standards in delivering multi-channel digital signals between two parties. The multi-protocol transceivers enable network equipment to communicate with a large population of peripherals that use a diverse set of serial protocol standards without the added burden of multiple add on boards and cables.

     Low voltage, serial interface ICs produced this year are popular in a variety of digital peripherals including data cables for PDAs, cellular phones and digital still cameras. Multi-protocol ICs continue to be used in networking and telecommunications equipment.

     Analog Display Products – Electroluminescent lamp drivers are DC/AC switches that develop high voltage AC signals from low voltage battery sources. When a high voltage is applied across electroluminescent material, the material fluoresces, providing backlighting for LCD displays. This technology is used in cell phones, PDAs, watches, pagers, remote controls and other portable devices. In addition to generic lamp driver ICs, Sipex offers specialized electroluminescent lamp drivers for specific applications.

     Optical Storage Products – The optical storage product family is a recent addition to the Sipex product portfolio. Although no production orders were shipped in 2001 from this family, intense research and development activity was ongoing and limited sampling of strategic customers occurred. The family is focused on providing complete electronic solutions for pick up heads used in optical storage systems such as CD and DVD devices.

     The family currently consists of photo-detector ICs, advanced power control ICs and laser diode drivers. The photo-detector ICs capture a portion of the light reflected from the optical storage medium, convert it to a set of electronic digital signals and forward these along for processing. The reflected light contains both data and tracking information. The advanced power control ICs capture a portion of the optical power coming from the laser and feed it back into a control system that regulates laser intensity. This control function is used to prevent damage to the laser diode and extend the life of the system. For both of these functions, Sipex has developed a new technology that permits the photo-detection functions to be incorporated with their signal conditioning circuitry. This functional integration enables faster read speeds and smaller footprints in DVD-R/W, DVD-RAM and CD-R/W systems.

     Sipex has also developed a family of laser diode drivers that excite the laser diode in the pick up head. The Sipex devices are designed to drive two lasers at high speed. This allows the customer to build a 780nm and 650nm system on one pick up head for combo CD/DVD devices.

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     By offering the three products families, Sipex is able to provide complete silicon solutions to CD/DVD manufacturers of optical pick up heads.

     Legacy Products – Legacy products include data converters and assembled products. Data converter products are incorporated into systems that translate real world (analog) events into digital data which can be manipulated by a microprocessor. Sipex’s analog-to-digital and digital-to-analog products are components that allow microprocessors to monitor real world conditions and then control responses to the conditions monitored. The main focus of Sipex’s product offerings has been high performance 12-bit analog-to-digital and digital-to-analog converters. Sipex believes that the data converter marketplace for 12-bit products is highly fragmented and design wins are characterized by long life cycles. The primary markets served by Sipex are industrial controls, instrumentation and test equipment. Sipex expects sales of data converter products to continue to decline in future years as Sipex continues to focus resources on its target markets.

     In the fourth quarter of 2000, Sipex adopted an end-of-life strategy for the discontinuance of its line of assembled products that were supplied principally to commercial customers for aerospace and military applications. Sipex is not currently designing new products for the military market.

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     The following table lists examples of user applications and Sipex products sold into our target markets.

Sales, Distribution and Marketing

     Sipex sells its products to OEM customers through a direct sales force, a network of independent sales representatives and a small number of independent distributors. The direct sales force consists of regional sales managers and field applications engineers who support our sales representatives, distributors and customers with a variety of sales and technical support. Our sales staff and field application engineers also manage, train and support our network of distributors and representatives. The sales and field applications staff are located in our Billerica and Milpitas facilities and in field offices in China, France, Germany, Japan, Korea, Taiwan and the United Kingdom.

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     Sipex continually seeks to broaden its customer base by increasing sales through its distributor network. Domestic and international distributor sales were 43.9%, 51.8% and 28.8% of net sales in 2001, 2000 and 1999, respectively.

     In North America and Europe, Sipex sells its products principally through one distributor, Future Electronics, who is our largest distributor, and accounted for 21%, 23% and 17% for the years ended December 31, 2001, 2000 and 1999, respectively. Distributor sales to these regions in 2001, 2000 and 1999 were approximately $13.5 million, $24.6 million and $15.2 million, respectively, representing 18.5%, 21.5%, and 16.9% of total net sales, respectively. Sipex has entered into a distributor agreement that provides for this distributor to act as our sole distributor for certain products within these territories. Sales to this distributor are made under an agreement that provides protection against price reduction for their inventory of Sipex products. Sipex maintains a separate price list for products sold to the distributor, which reflects discounts from the prices charged to customers in direct sales transactions. On a semi-annual basis, this distributor is permitted to return for credit a total of 10% of its total purchases during the most recent six-month period. We recognize revenue on sales to this distributor under the distribution agreement when the distributor reports to us the products have been sold through to the end customer. For sales to all other customers we recognize revenue upon shipment.

     In Japan and the Far East, Sipex sells its products through 13 distributors. Distributor sales to these regions in 2001, 2000 and 1999 were approximately $18.3 million, $34.8 million and $14.6 million, respectively, representing 25.4%, 30.3%, and 16.3% of total net sales, respectively. Substantially all sales to these international locations are denominated in U.S. dollars. Sipex maintains separate price lists for products sold to distributors, which typically reflect discounts from the prices charged to customers in direct sales transactions. Sales to these distributors do not include protection against price reductions by Sipex on items that are included in their inventory of Sipex products. On a semi-annual basis, these distributors are permitted to return for credit against product purchases of an equivalent dollar value, up to 5% of their total purchases during the most recent six-month period.

     In North America, Sipex also sells its products through 19 independent sales representative organizations having approximately 38 offices. In Europe there are 10 sales representative organizations. In Asia and Japan, with the exception of one representative for Australia, all of the revenue is generated by distributors. These independent entities are selected for their ability to provide effective field sales, marketing communications and technical support to Sipex’s customers. Sipex has entered into Sales Representative Agreements with each of its independent sales representatives. These agreements typically permit sales representatives to act as an exclusive or a non-exclusive sales representative in appropriate circumstances. Sales representatives directly solicit orders for Sipex’s products, which Sipex fills either directly with the customer or through distribution, generating a commission paid by Sipex to the sales representative.

     Sipex is subject to the normal risks of conducting business internationally, including exchange rate fluctuations. To date, Sipex has not hedged the risks associated with fluctuations in exchange rates but may undertake such transactions in the future. Sipex currently does not have a policy relating to hedging.

     Our marketing team develops long term product and technology roadmaps based on first hand market knowledge, close customer links, industry experience, and a variety of public and private market data. Detailed technical information in the form of data sheets, application notes and tutorials is posted on Sipex’s website and a variety of technical and sales materials are printed and distributed to customers, sales representative and distributors. Sipex engages in print advertising to raise market awareness of our products and services.

Customers

     Our customer base is comprised of merchant manufacturers, electronics distributors and customers with captive manufacturing operations. The captive manufacturers use our products as integral components in their equipment and systems. In certain cases, we sell our products to a subcontract-assembly company specified by the captive manufacturer. The merchant manufacturers typically function as original equipment manufacturers (OEMs) as well as suppliers of sub-systems to other OEMs.

     The end users of our products, of which Snecma accounted for ten percent of direct net sales in 2001, include Cisco Systems, Hewlett-Packard, Nortel, Alcatel, Lucent Technologies, ADC Telecommunications, Dell, Lexmark, Schlumberger, Xerox, Symbol, 3Com and IBM in the networking/data communications markets; Timex, 3Com, Casio, ETA Swatch, Seiko, Sharp and Handspring in the consumer markets; Motorola, Garmin, Hyundai, L.G. Information Systems, Samsung, NEC and Cidco in the telecommunications markets; and Andover Controls, Siemens and Honeywell in the industrial controls market. Customers incorporating our high reliability assembled products in military applications include Honeywell, Raytheon,

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Snecma, BF Goodrich, Space Systems/Loral and Lockheed Martin.

Backlog

     Our product backlog was approximately $22.3 million at December 31, 2001 compared to $49.1 million at December 31, 2000. The decrease in Sipex’s backlog as of December 31, 2001 reflects the reduced sales and bookings as a result of the slowdown in the semiconductor industry. We generally include in backlog all orders scheduled for delivery within one year. However, our business, and to a large extent the entire semiconductor industry, is characterized by short-term orders and shipment schedules. Sipex generally permits orders to be canceled or rescheduled without significant penalty to customers, as indicated in our fourth quarter of 2000 results and press releases. As a result, the quantities of our products to be delivered and their delivery schedules may be revised by customers to reflect changes in their needs. Since backlog can be canceled or rescheduled, our backlog at any time is not necessarily indicative of future revenues.

Manufacturing

     Sipex has a wafer fabrication facility in Milpitas, California and has assembly operations in Billerica, Massachusetts. Sipex’s wafer fabrication facility commenced manufacturing operations in the second half of 1999. The Milpitas wafer fabrication facility is used to produce both four-inch and six-inch diameter wafers for use in the production of Sipex devices. Sipex’s facilities have been certified as ISO-9001 compliant. Sipex closed its Fremont facility in the second quarter of 2001 after transitioning the last of the manufacturing operations into the Milpitas facility.

     Sipex broadens its manufacturing capabilities by using third-party foundries to produce junction isolation complementary metal-oxide semiconductor (CMOS) processed wafers and BiCMOS processed wafers. The use of third-party foundries enables Sipex to focus on its design strengths and minimize fixed costs and capital expenditures while providing access to diverse manufacturing technologies without bearing the full risk of obsolescence. Sipex uses a variety of third-party foundries to supply fully processed semiconductor wafers for its CMOS, BiCMOS and bipolar products. All of these foundries have been certified as ISO-9001 compliant. Sales of these products collectively represented 26.4% of Sipex’s net sales in 2001, although this was made up of approximately 32% in the first half of 2001 and 18% in the last half of 2001. Sales of these products were 30.2% in 2000 and 35.8% in 1999.

     In the third and fourth quarters of 1999, our allocation of wafers produced by one third-party foundry was significantly reduced. This shortage continued for most of 2000 into the first half of 2001, resulting in an increased cost of these wafers. We have transitioned production of many of these wafers into our Milpitas facility. We have qualified certain products to begin production in our facility and are continuing the process for the remaining devices. Our basic process technologies include silicon gate CMOS and BiCMOS processes. We also have two complementary bipolar processes. Our bipolar processes provide switching characteristics required for many linear circuit functions. The CMOS and BiCMOS processes are typically used in circuits where high voltage, high power and low noise are necessary.

     Sipex tests integrated circuits or “die” on the wafers produced by Sipex and its foundries for compliance with performance specifications before assembly. Sipex’s commercial products are assembled by a variety of subcontractors in Malaysia, Indonesia and other locations in Asia which have been certified as ISO-9002, QS 9000, and ISO-14000 compliant. Following assembly, the packaged units are either returned to Sipex for final testing and inspection or are tested and inspected offshore before shipment to customers. Sipex manufactures its precision high-reliability assembled products in Billerica, Massachusetts. Sipex is in conformance with stringent quality and reliability requirements for military and aerospace applications.

Product Quality Assurance and Reliability

     Sipex is committed to customer satisfaction and continuous improvement in all aspects of its business. This is accomplished through a comprehensive quality and reliability system founded on documented procedures. Sipex uses quality tools such as statistical process control, cross-functional teaming and advanced statistical analysis in its qualification, production processes and improvement activities. Sipex maintains strong relationships with its subcontractors and routinely qualifies suppliers to established standards. Sipex is ISO-9001 Registered and has continuously maintained conformance to MIL-PRF-38534.

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Patents, Licenses and Trademarks

     Sipex seeks to protect its proprietary technology through patents and trade secret protection. Currently, Sipex holds a number of patents expiring between now and 2020 and has additional pending United States patent applications, although there can be no assurance that any patents will result from these applications. While Sipex intends to continue to seek patent coverage for its products and manufacturing technology where appropriate, Sipex believes that its success depends more heavily on the technical expertise and innovative abilities of its personnel than on its patent position. Accordingly, Sipex also relies on trade secrets and confidential technological know-how in the conduct of its business. There can be no assurance that Sipex’s patents or applicable trade secret laws will provide adequate protection for Sipex’s technology against competitors who may develop or patent similar technology or reverse engineer Sipex’s products. In addition, the laws of certain territories in which Sipex’s products are or may be developed, manufactured or sold, including Asia, Europe and Latin America, may not protect Sipex’s products and intellectual property rights to the same extent as the laws of the United States.

     Pursuant to license agreements, Sipex pays a royalty to Timex Corporation for certain electroluminescent product sales, to Maxim Integrated Products and Analog Devices for certain interface product sales and to the Lemelson Medical, Education and Research Foundation.

Research and Development

     Sipex believes that continued introduction of new products in its target markets is essential to its growth. As performance demands have increased the complexity of analog circuits, the design and development process has become a multi-disciplinary effort, requiring diverse competencies to achieve customers’ desired performance. Sipex supports its key designers with an infrastructure of product and test engineers who perform various support functions and allow the designer to focus on the core elements of the design.

     In 2001, 2000 and 1999, Sipex spent approximately $12.9 million, $13.2 million and $10.6 million, respectively, on research and development, representing 17.9%, 11.5% and 11.8%, respectively, of net sales for these periods. Sipex expects that expenditures in support of research and development activity will increase in absolute dollars in the near future as per historic trends.

     Sipex’s ability to compete depends in part upon its continued introduction of technologically innovative products on a timely basis. Sipex’s research and development efforts are directed primarily at designing and introducing new products and technologies. Sipex continually upgrades its internal technology while also working with foundries to develop new technologies for new generations of products. In addition, Sipex continually refines its manufacturing practices and technology to improve yields of its products.

Competition

     Sipex competes in the high performance segment of the analog integrated circuit market. The analog integrated circuit segment of the semiconductor industry is intensely competitive and many major semiconductor companies presently compete or could compete with Sipex in the same arena. Sipex’s current primary competitors in the high-performance segment of the analog circuit market include Analog Devices, Intersil, Linear Technology, Maxim Integrated Products, Micrel Semiconductor, National Semiconductor, On Semiconductor, Semtech and Texas Instruments. Our primary competitors have substantially greater financial, technical, manufacturing, marketing, distribution and other resources and broader product lines than Sipex. Although foreign companies active in the semiconductor market have not traditionally focused on the high performance analog market, many foreign companies have the financial and other resources to participate successfully in these markets and may become formidable competitors in the future.

     Sipex believes that product innovation, quality, reliability, performance and the ability to introduce products rapidly are more important competitive factors than price in our target markets because we compete primarily during the customer’s design-in stage of product development. At this stage, we have had pricing pressure on commodity products, particularly in the second through fourth quarters of 2001.

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     Sipex believes that, by virtue of our analog expertise and rigorous design methodology, we compete favorably in the areas of rapid product introduction, product innovation, quality, reliability and performance, but may be at a disadvantage in comparison to larger companies with broader product lines, greater technical and financial resources and greater service and support capabilities.

Employees

     At December 31, 2001, we had 442 full-time employees, as compared with 597 employees in the prior year. During 2001, we implemented certain cost controls as a result of the global slowdown in the semiconductor industry, which included a reduction in headcount and mandatory shut-down time. We believe that our future success will depend, in part, on our ability to attract and retain qualified technical and manufacturing personnel. This is particularly important in the areas of product design and development, where competition for skilled personnel is intense. None of our employees are subject to a collective bargaining agreement and we have never experienced a work stoppage. We believe that our relations with our employees are good.

Item 2.  Properties:

     Sipex’s corporate office is located in Billerica, Massachusetts. Information regarding our principal plants and properties appears below:

     We believe that our existing facilities are adequate for the present and that additional space will be available as needed.

Item 3.  Legal Proceedings:

     Sipex may become involved in various legal actions arising, including securities class actions and other actions, in the ordinary course of business. Between July 10 and July 19, 2001, two virtually identical purported securities class action lawsuits were filed in the United States District Court for the District of Massachusetts, captioned “Darren Suprina v. Sipex Corp. et al” (C.A. No. 01-11185-DPW) and “Doug Howell v. Sipex Corp. et al” (C.A. No. 01-11243-DPW). The suits name as defendants Sipex and certain officers of Sipex. The suits are purportedly brought on behalf of a class of all persons who purchased Sipex’s common stock from July 20, 2000 through and including January 11, 2001. The suits allege, among other things, that Sipex’s financial statements for the second and third quarters of fiscal year 2000 contain misstatements and assert violations of Section 10(b) of the Securities and Exchange Act of 1934 and SEC Rule 10b-5. The suits seek an unspecified award of damages. Sipex believes that the allegations in the complaints are without merit and intends to contest them vigorously. At December 31, 2001, no provision was made for any potential costs related to these matters as management concluded it was not probable that any loss would be incurred.

Item 4.  Submission of Matters to a Vote of Security Holders:

     No matters were submitted to a vote of Sipex’s security holders during the quarter ended December 31, 2001.

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Executive Officers of SIPEX

     Information relating to the executive officers of Sipex is set forth below. All officers held office as of December 31, 2001.

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PART II

Item 5. Market for the Company’s Common Equity and Related Shareholder Matters:

     Since April 2, 1996, the date of our initial public offering, our common stock has been available for quotation on The Nasdaq National Market under the symbol “SIPX”. The following table sets forth, for the period indicated, the high and low sale prices per share as reported on The Nasdaq National Market:

     On December 31, 2001, there were approximately 61 shareholders of record. We believe that the number of beneficial holders of common stock exceeds 2,935. The last reported sale price of the common stock on March 22, 2002 was $11.00 per share. We have never declared or paid a cash dividend on our capital stock. We currently intend to retain all of our earnings to finance future growth and therefore, do not anticipate paying any cash dividends on our common stock in the foreseeable future.

Item 6.   Selected Consolidated Financial Data:

     Selected financial data for the last five years appear below (in thousands, except per share data):

*		The financial data has been adjusted to reflect the combined operations of Sipex Corporation and Calogic as a result of the November, 1999 merger which was recorded as a pooling of interests (see Note 3 to Consolidated Financial Statements).
**		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.

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Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations:

Certain Forward-Looking Information

     From time to time, information provided by us, statements made by our employees or information included in its filings with the Securities and Exchange Commission (including in this Form 10-K) may contain statements which are not historical facts, known as “forward-looking statements”, and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. In particular, certain statements contained in the Management’s Discussion and Analysis of Financial Condition and Results of Operations below which are not historical facts (including, but not limited to, statements concerning anticipated availability of capital for working capital and for capital expenditures, statements regarding the pending litigation against us, and statements regarding revenue recognition policies, including estimates of future returns) constitute “forward-looking” statements. Any such statements are not promises or guarantees but are subject to risks and uncertainties that may cause our actual future results to differ materially from those stated in any forward-looking statements. Factors that may cause such differences include, but are not limited to, the factors discussed below and the other risks discussed in our other filings with the Securities and Exchange Commission. Sipex disclaims any obligation to publicly update or revise any such statements to reflect any change in expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

Overview

     We are a semiconductor company that designs, manufactures and markets, high performance, value-added analog integrated circuits, primarily for original equipment manufacturers doing business in the high growth markets of networking, computing, and communications. Our four product families, power management, serial interface, analog display and optical storage constitute a broad, synergistic portfolio of standard analog ICs that address specific applications in desktop and portable computers, optical storage, handheld digital peripherals such as PDAs, cell phones and digital still cameras, and network and telecommunications infrastructure.

     We are headquartered in Billerica, Massachusetts, have manufacturing facilities in Massachusetts and California and sales offices in China, Japan, Korea, Taiwan, Germany, Belgium and the United States and a design research facility in Belgium. We use a combination of in house and outside vendors to fabricate, package and test our ICs. Our products are sold directly, or through a global network of independent sales representatives, and a small number of independent distributors.

Results of Operations

     For the periods indicated, the following table sets forth the percentage of net sales represented by the respective line items in our consolidated statements of operations.