Financial Accounting Blog

Monday, December 01, 2003

This article discusses how Sipex, a semiconductor manufacturer, is taking a $1.2M non-cash reduction in net sales by changing the accounting treatment of a previously announced convertible promissory note.
Sipex Corporation (Nasdaq: SIPX) today reported that, following consultation with its independent auditors, it will modify the accounting treatment of the previously announced convertible promissory note issued in June 2003 to an affiliate of Future Electronics, Inc., the Company's largest distributor. The effect of the revised accounting treatment is a non cash reduction of $1.2 million to GAAP net sales, based on the fair value of the conversion rights attributed to the proportion of the annual sales target achieved in the third quarter of 2003. Net loss was also increased by the same amount. In addition, following a post close review, the Company reduced net sales by $85,000 and increased net loss by $39,000 ($0.002 per share). The modified accounting treatment has no effect on the Company's operational results or cash flow.