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Affymetrix Reports Third Quarter 2009 Results
Business Wire
Oct 21, 2009
Affymetrix Inc., (NASDAQ:AFFX) today reported its operating results for the third quarter of 2009. Total revenue for the quarter was $78.2 million, as compared to total revenue of $75.2 million in the third quarter of 2008. In constant currency terms, the third quarter of 2009 was negatively impacted by $1.2 million as compared to the third quarter of 2008.
Product revenue was $66.2 million, which consisted of consumable revenue of $62.0 million and instrument revenue of $4.2 million. Service revenue was $9.9 million, and royalties and other revenue were $2.1 million. This compares to third quarter 2008 product revenue of $66.0 million, service revenue of $6.1 million, and royalties and other revenue of $3.1 million.
Affymetrix shipped 21 systems in the third quarter of 2009, bringing its cumulative systems shipped to about 1,890.
The Company reported a net loss of approximately $8.8 million, or $0.13 per diluted share, in the third quarter of 2009 which included a pretax restructuring credit of $0.3 million. This compares to a net loss of $31.8 million, or $0.46 per diluted share, in the third quarter of 2008, which included a pretax restructuring charge of $14.6 million, or $0.21 per diluted share.
Cost of product sales was $30.7 million in the third quarter of 2009 as compared to $32.3 million in the same period of 2008. Cost of services and other was $5.1 million compared to $5.8 million in the third quarter of 2008.
Product gross margin was 54 percent in the third quarter of 2009 compared to 51 percent in the third quarter of 2008.
Operating expenses were $49.1 million for the third quarter of 2009, which includes restructuring credit of $0.3 million, as compared to operating expenses of $68.8 million in the third quarter of 2008, which included restructuring charges and in-process research and development costs of $14.6 million and $5.1 million, respectively.
“Revenue for the third quarter increased 4% over the prior year and was within the range of our guidance,” stated Kevin King, CEO of Affymetrix. “While gross margin improved by 5 points over last year, we have more work to do to generate additional margin contribution from new products going forward. Finally, we maintained good control of our operating expenses.”
King continued, “I’m very excited about the launch of our Axiom Genotyping Solution, and our groundbreaking partnership with Kaiser Permanente and the University of California, San Francisco on one of the largest genotyping projects ever that will study disease, health and aging with our new platform.”
Quarterly Highlights
Genotyping
In October, Kaiser Permanente and the University of California at San Francisco (UCSF) entered into an agreement with Affymetrix to conduct genome-wide analyses of DNA samples from 100,000 Kaiser Permanente members for a large-scale research program designed to create a new resource for studying disease, health, and aging. Scientists from the program will use the just-launched Axiom Genotyping Solution, which delivers high-throughput, automated technology enabling researchers to find novel and common genetic variations associated with complex disease.
Instrumentation
Affymetrix and Beckman Coulter announced an agreement to offer researchers co-developed products from the market leaders in microarrays and automated liquid handlers. The collaboration will provide scientists with optimized, robust solutions for genomic research. This partnership will yield an expanding list of Affymetrix-validated automated target preparation methods, developed on an Affymetrix-specific configuration of Beckman Coulter’s precise and reliable Biomek FXp Liquid Handler.
Affymetrix's management team will host a conference call on October 21, 2009 at 2:00 p.m. PT to review its operating results for the third quarter of 2009. A live webcast can be accessed by visiting the Investor Relations section of the Company’s website at www.affymetrix.com. In addition, investors and other interested parties can listen by dialing domestic: (866) 500-AFFX, international: (706) 643-2771.
A replay of this call will be available from 5:00 p.m. PT on October 21, 2009 until 8:00 p.m. PT on October 28, 2009 at the following numbers: domestic: (800) 642-1687, international: (706) 645-9291. The passcode for both replays is 34032730. An archived webcast of the conference call will be available under the Investor Relations section of the Company's website at www.affymetrix.com.
About Affymetrix
GeneChip® microarray technology is the industry-standard tool for analyzing complex genetic information. After inventing the technology in the late 1980s, Affymetrix scientists have been dedicated to developing innovative products that provide researchers with a more complete view of the genome. These products accelerate genetic research that will allow physicians to develop diagnostics and tailor treatments for individual patients by identifying and measuring the genetic information associated with complex diseases. Today, Affymetrix technology is used by the world's top pharmaceutical, diagnostic, and biotechnology companies, as well as by leading academic, government, and non-profit organizations. Affymetrix has installed almost 1,900 systems around the world and almost 20,000 peer-reviewed papers have been published using its microarray technology. Affymetrix is headquartered in Santa Clara, California. For more information about Affymetrix, please visit the company's website at www.affymetrix.com.
All statements in this press release that are not historical are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act as amended, including statements regarding Affymetrix' "expectations," "beliefs," "hopes," "intentions," "strategies" or the like. Such statements are subject to risks and uncertainties that could cause actual results to differ materially for Affymetrix from those projected, including, but not limited to: risk relating to past and future acquisitions, including the ability of the company to successfully integrate such acquisitions into its existing business; risks of the company's ability to achieve and sustain higher levels of revenue, higher gross margins and reduced operating expenses; uncertainties relating to technological approaches, risks associated with manufacturing and product development, including risks relating to the relocation of a substantial portion of our manufacturing; personnel retention; uncertainties relating to cost and pricing of Affymetrix products; dependence on collaborative partners; uncertainties relating to sole-source suppliers; uncertainties relating to FDA and other regulatory approvals; competition; risks relating to intellectual property of others and the uncertainties of patent protection and litigation. These and other risk factors are discussed in Affymetrix' Form 10-K for the year ended December 31, 2008, and other SEC reports, including its Quarterly Reports on Form 10-Q for subsequent quarterly periods. Affymetrix expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Affymetrix' expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.
PLEASE NOTE:
Affymetrix, the Affymetrix logo, GeneChip, and all other trademarks are the property of Affymetrix, Inc.
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AFFYMETRIX, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(IN THOUSANDS) |
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(UNAUDITED) |
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| September 30, | December 31, | |||||||
| 2009 | 2008 | |||||||
| ASSETS: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 62,487 | $ | 113,292 | ||||
| Restricted cash—short-term portion | 1,683 | 4,402 | ||||||
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Available-for-sale securities — short-term portion |
220,818 | 250,970 | ||||||
| Accounts receivable, net | 56,630 | 62,726 | ||||||
| Inventories | 50,556 | 51,333 | ||||||
| Deferred tax assets—current portion | 1,867 | 1,077 | ||||||
| Prepaid expenses and other current assets | 12,330 | 15,725 | ||||||
| Total current assets | 406,371 | 499,525 | ||||||
| Available-for-sale securities—long-term portion | 56,009 | 26,900 | ||||||
| Property and equipment, net | 70,870 | 89,345 | ||||||
| Acquired technology rights, net | 52,412 | 62,569 | ||||||
| Deferred tax assets—long-term portion | 4,410 | 4,764 | ||||||
| Restricted cash—long-term portion | 1,109 | 2,175 | ||||||
| Other assets | 25,788 | 28,032 | ||||||
| Total assets | $ | 616,969 | $ | 713,310 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 51,911 | $ | 62,559 | ||||
| Deferred revenue—current portion | 14,545 | 16,198 | ||||||
| Total current liabilities | 66,456 | 78,757 | ||||||
| Deferred revenue—long-term portion | 3,329 | 3,583 | ||||||
| Other long-term liabilities | 10,742 | 10,972 | ||||||
| Convertible notes | 247,201 | 316,341 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 710 | 703 | ||||||
| Additional paid-in capital | 728,822 | 721,641 | ||||||
| Accumulated other comprehensive income (loss) | 2,804 | (2,296 | ) | |||||
| Accumulated deficit | (443,095 | ) | (416,391 | ) | ||||
| Total stockholders’ equity | 289,241 | 303,657 | ||||||
| Total liabilities and stockholders’ equity | $ | 616,969 | $ | 713,310 | ||||
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Note 1: The condensed consolidated balance sheet at December 31, 2008 has been derived from the audited consolidated financial statements at that date included in the Company’s Form 10-K for the fiscal year ended December 31, 2008. |
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AFFYMETRIX, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(IN THOUSANDS) |
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(UNAUDITED) |
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| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| REVENUE: | ||||||||||||||||
| Product sales | $ | 66,172 | $ | 65,952 | $ | 198,198 | $ | 203,780 | ||||||||
| Services | 9,901 | 6,132 | 33,678 | 23,557 | ||||||||||||
| Royalties and other revenue | 2,118 | 3,105 | 6,430 | 104,338 | ||||||||||||
| Total revenue | 78,191 | 75,189 | 238,306 | 331,675 | ||||||||||||
| COSTS AND EXPENSES: | ||||||||||||||||
| Cost of product sales | 30,728 | 32,347 | 95,047 | 90,581 | ||||||||||||
| Cost of services and other | 5,142 | 5,820 | 20,299 | 18,241 | ||||||||||||
| Research and development | 18,764 | 20,739 | 60,408 | 59,098 | ||||||||||||
| Selling, general and administrative | 30,608 | 28,409 | 96,276 | 92,782 | ||||||||||||
| Acquired in-process technology | - | 5,100 | - | 5,900 | ||||||||||||
| Restructuring charges | (296 | ) | 14,571 | 1,897 | 29,379 | |||||||||||
| Total costs and expenses | 84,946 | 106,986 | 273,927 | 295,981 | ||||||||||||
| (Loss) income from operations | (6,755 | ) | (31,797 | ) | (35,621 | ) | 35,694 | |||||||||
| Interest income and other, net | 774 | 1,672 | 1,290 | 10,830 | ||||||||||||
| Interest expense | (2,430 | ) | (3,497 | ) | (8,510 | ) | (10,634 | ) | ||||||||
| Gain from repurchase of convertible notes | - | - | 17,447 | - | ||||||||||||
| (Loss) income before income taxes | (8,411 | ) | (33,622 | ) | (25,394 | ) | 35,890 | |||||||||
| Income tax provision | (408 | ) | 1,802 | (1,310 | ) | (25,093 | ) | |||||||||
| Net (loss) income | $ | (8,819 | ) | $ | (31,820 | ) | $ | (26,704 | ) | $ | 10,797 | |||||
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Basic net (loss) income per common share |
$ | (0.13 | ) | $ | (0.46 | ) | $ | (0.39 | ) | $ | 0.16 | |||||
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Diluted net (loss) income per common share |
$ | (0.13 | ) | $ | (0.46 | ) | $ | (0.39 | ) | $ | 0.16 | |||||
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Shares used in computing basic net (loss) income per common share |
68,799 | 68,582 | 68,569 | 68,542 | ||||||||||||
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Shares used in computing diluted net (loss) income per common share |
68,799 | 68,582 | 68,569 | 68,650 | ||||||||||||
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