Affymetrix Reports 2013 First Quarter Results

  Affymetrix Reports 2013 First Quarter Results

Business Wire

SANTA CLARA, Calif. -- April 30, 2013

Affymetrix, Inc., (NASDAQ: AFFX) today reported its operating results for the
three months ended March 31, 2013.

Results for the three months ended March 31, 2013:

  *Total revenue was $77.9 million, which included revenue from eBioscience
    of $19.0 million.
  *GAAP net loss was $15.4 million, or $0.24 per diluted share, as compared
    to a net loss of $4.2 million, or $0.06 per diluted share, in the first
    quarter of 2012.
  *Non-GAAP net loss was $0.9 million, or $0.01 per diluted share, as
    compared to a Non-GAAP net loss of $1.8 million, or $0.03 per diluted
    share, for the first quarter of 2012. Please refer to the “Itemized
    Reconciliation Between GAAP and Non-GAAP Net Loss” for a reconciliation of
    these GAAP and non-GAAP financial measures.
  *Total balance in cash and cash equivalents was $38.2 million at the end of
    March 31, 2013, net of payment of $3.9 million to redeem all of the
    remaining 3.50% notes and a $3.2 million payment on the Term Loan during
    the quarter. Total cash and cash equivalents included a prepayment of
    approximately $13.4 million from customers.

Product revenue for the first quarter of 2013 was $71.6 million and service
and other revenue was $6.4 million. This compares to product revenue of $58.5
million and service and other revenue of $6.8 million in the first quarter of
2012. Product revenue for the first quarter of 2013 included Affymetrix core
consumable revenue of $49.1 million, instrument revenue of $3.5 million and
revenue from eBioscience of $19.0 million. Product revenue for the first
quarter of 2012 included Affymetrix core consumable revenue of $53.8 million
and instrument revenue of $4.7 million.

Total gross margin was 51%, as compared to 58% in the same period of 2012.
Excluding non-GAAP adjustments such as the amortization of step-up in
inventory fair value, total margin was 59% for both years. Please refer to the
“Itemized Reconciliation Between GAAP and Non-GAAP Gross Margin” for a
reconciliation of these GAAP and non-GAAP financial measures.

For the first quarter of 2013, operating expenses were $52.2 million on a GAAP
basis as compared to $41.3 million in 2012. Excluding non-GAAP adjustments
such as the amortization of acquired intangible assets and non-recurring
charges, operating expenses were $43.6 million, compared to an adjusted total
of $39.3 million in 2012. The increase in 2013 is primarily due to the
acquisition of eBioscience in June 2012 offset by net savings in Affymetrix
Core operating expense of approximately $4.4 million primarily driven by lower
headcount and variable compensation expenditure following the restructuring
announced January 11, 2013. Please refer to the “Itemized Reconciliation
Between GAAP and Non-GAAP Operating Expenses” for a reconciliation of these
GAAP and non-GAAP financial measures.

“Although the quarter was a challenging one, we continue to focus on
opportunities in translational science, molecular diagnostics and applied
markets. We again demonstrated strong growth in our Genetic Analysis business
segments of cytogenetics and genotyping and a modest increase in eBioscience,”
said Frank Witney, President and CEO. “In addition, we continue to pay down
our senior debt which we have reduced from $85 million to approximately $70
million over the last 9 months.”

Recent developments:

  *The Company recently signed a contract with UK Biobank to genotype 500,000
    DNA samples donated by UK residents as part of a prospective
    epidemiological study of complex diseases that are of great relevance to
    public health. Affymetrix’s Axiom^® Genotyping Solution will be used to
    generate billions of high-quality genotypes which will provide UK Biobank
    and the research community with valuable insight to genetic factors
    underlying human diseases for improved prevention, diagnosis, and
    treatment of conditions such as heart disease, cancer, and diabetes. The
    Company expects to begin processing these samples in the second half of
    2013.
  *In February, the Company submitted a 510K for its CytoScan Dx whole genome
    cytogenetics test intended to detect chromosomal copy number variants
    (CNVs) and loss of heterozygosity associated with developmental delay,
    intellectual disability, congenital anomalies, and dysmorphic features.
  *The Company announced a collaboration with Aqua Gen and Center for
    Integrative Genomics (CIGENE) at the Norwegian University of Life Sciences
    (UMB) to genotype more than 900,000 markers per sample from the Atlantic
    salmon (Salmo salar), thereby achieving the capability to implement
    genomic selection and improve their salmon breeding program at Aqua Gen.
  *During the first quarter the Company redeemed all of the remaining $3.9
    million of its 3.5% convertible notes (due in 2038). In April 2013, the
    Company entered into an amendment to its credit agreement to provide a
    limited waiver and to amend certain covenants with respect to fiscal year
    2013. In the first quarter the Company prepaid an additional $3.2 million
    of its senior-secured debt, reducing the total balance outstanding to
    $70.1 million.

Affymetrix will host a conference call on April 30, 2013 at 2:00 p.m. PT to
review its operating results for the first quarter of 2013. 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: (877) 407-8291, international: (201)
689-8345.

A replay of this call will be available from 5:00 p.m. PT on April 30, 2013
until 8:00 p.m. PT on May 7, 2013 at the following numbers: domestic: (877)
660-6853, international: (201) 612-7415. The conference call passcode to
access the replay is 411930. An archived webcast of the conference call will
be available under the Investor Relations section of the Company's website.

About Affymetrix

Affymetrix technology is used by the world's top pharmaceutical, diagnostic,
and biotechnology companies, as well as leading academic, government, and
nonprofit research institutes. More than 2,300 systems have been shipped
around the world and more than 48,000 peer-reviewed papers have been published
using the technology. Affymetrix is headquartered in Santa Clara, California,
and has manufacturing facilities in Cleveland, Ohio, and Singapore.
eBioscience is headquartered in San Diego, California and has manufacturing
facilities in San Diego and Vienna, Austria. Including eBioscience, the
Company has about 1,100 employees worldwide and maintains sales and
distribution operations across Europe, Asia and Latin America.

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 related to our plans
to return to growth and profitability in 2013 and our estimated annualized
cost savings as well as other statements regarding Affymetrix's
"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: Affymetrix's ability to stabilize its business and grow
revenue, Affymetrix’s ability to timely and successfully integrate and realize
the anticipated strategic benefits and costs savings or other synergies of the
acquisition of eBioscience in a cost-effective manner while minimizing the
disruption to its business; risks that eBioscience’s future performance may
not be consistent with its historical performance; risks relating to
Affymetrix's ability to make scheduled payments of the principal of, to pay
interest on or to refinance its indebtedness; risks relating to Affymetrix's
ability to successfully develop and commercialize new products, including its
ability to successfully develop and commercialize novel molecular solutions
based on eBioscience’s portfolio of reagents; risks relating to past and
future acquisitions, including the ability of Affymetrix to successfully
integrate such acquisitions into its existing business; risks of Affymetrix's
ability to achieve and sustain higher levels of revenue, higher gross margins
and reduced operating expenses; risks relating to Affymetrix’s ability to
generate cash after interest and principal payments; uncertainties relating to
technological approaches; risks associated with manufacturing and product
development; 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's Annual Report on Form 10-K
for the year ended December 31, 2012, and other SEC reports. 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's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statements are
based.

In addition to providing financial measures based on generally accepted
accounting principles in the United States (GAAP), Affymetrix has disclosed in
this press release its net loss and net loss per share as well as its total
gross margin and operating expenses for the first quarter of 2013 and 2012
excluding specified items. Reconciliation of GAAP to non-GAAP measures can be
found in the tables included in this press release. Affymetrix has determined
to disclose this financial information to investors because it believes it
will be useful, as a supplement to GAAP measures, in comparing Affymetrix’s
operating performance in the first quarter of 2013 as compared to the
prior-year period. These non-GAAP financial measures should not be considered
in isolation from, or as a substitute for, financial information prepared in
accordance with GAAP.

PLEASE NOTE:
Affymetrix, the Affymetrix logo, GeneChip, and all other trademarks are the
property of Affymetrix, Inc.


AFFYMETRIX, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)
                                               March 31,  December 31,
                                                2013              2012
ASSETS:                                                           (Note 1)
Current assets:
Cash and cash equivalents                       $37,496           $25,671
Restricted cash                                 690               699
Available-for-sale securities—short-term        -                 9,366
portion
Accounts receivable, net                        52,111            53,893
Inventories—short-term portion                  74,196            72,691
Deferred tax assets—short-term portion          317               359
Prepaid expenses and other current assets       10,076            10,126
Total current assets                            174,886           172,805
Property and equipment, net                     25,868            28,663
Inventories—long-term portion                   8,876             11,772
Goodwill                                        158,338           159,736
Intangible assets, net                          145,785           152,718
Deferred tax assets—long-term portion           1,916             3,394
Other long-term assets                          13,707            15,206
Total assets                                    $529,376          $544,294
                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable and accrued liabilities        $49,019           $50,355
Convertible notes—short-term portion            -                 3,855
Term loan—short-term portion                    12,750            12,713
Deferred revenue—short-term portion             18,911            8,498
Total current liabilities                       80,680            75,421
Deferred revenue—long-term portion              4,041             3,450
Convertible notes                               105,000           105,000
Term loan—long-term portion                     57,338            60,563
Other long-term liabilities                     21,010            22,689
Stockholders’ equity:
Common stock                                    711               710
Additional paid-in capital                      761,435           759,549
Accumulated other comprehensive income          3,988             6,302
Accumulated deficit                             (504,827)         (489,390)
Total stockholders’ equity                      261,307           277,171
Total liabilities and stockholders’ equity      $529,376          $544,294
__________________

        The condensed consolidated balance sheet at December 31, 2012 has been
Note 1: derived from the audited consolidated financial statements at that
        date included in the Company’s Annual Report on Form 10-K for the
        fiscal year ended December 31, 2012.
        

AFFYMETRIX, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)
                                                         Three Months Ended
                                                          March 31,
                                                          2013       2012
REVENUE:
Product sales                                             $71,557     $58,491
Services and other                                        6,388       6,756
Total revenue                                             77,945      65,247
COSTS AND EXPENSES:
Cost of product sales                                     34,433      23,565
Cost of services and other                                3,507       3,779
Research and development                                  12,248      13,331
Selling, general and administrative                       35,121      27,924
Restructuring charges                                     4,842       -
Total costs and expenses                                  90,151      68,599
Loss from operations                                      (12,206)    (3,352)
Interest income and other, net                            342         26
Interest expense                                          2,898       980
Loss before income taxes                                  (14,762)    (4,306)
Income tax provision (benefit)                            675         (89)
Net loss                                                  $(15,437)   $(4,217)
Basic and diluted net loss per common share               $(0.22)     $(0.06)
Shares used in computing basic and diluted net loss per   70,919      69,977
common share
                                                                      

AFFYMETRIX, INC.

RESULTS OF OPERATIONS – NON-GAAP

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)

ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET LOSS

                                                         Three Months Ended
                                                          March 31,
                                                          2013       2012
GAAP net loss - basic and diluted                         $(15,437)  $(4,217)
Amortization of inventory fair value adjustment           4,589       -
Amortization of acquired intangible assets                4,635       1,361
Acquisition-related transaction costs                     -           1,057
Acquisition-related integration costs                     515         -
Restructuring charges                                     4,842      -
Non-GAAP net loss - basic and diluted                     $(856)     $(1,799)
Basic and diluted net loss per common share               $(0.01)    $(0.03)
Shares used in computing basic and diluted net loss per   70,919     69,977
common share
                                                                      

ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP GROSS MARGIN
                                               
                                                 Three Months Ended
                                                 March 31,
                                                 2013           2012
GAAP total gross margin                          $40,005  51%   $37,903  58%
Amortization of inventory fair value             4,589     6%    -         0%
adjustment
Amortization of acquired intangible assets       1,366    2%    450      1%
Non-GAAP total gross margin                      $45,960  59%   $38,353  59%
                                                                           

ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP OPERATING EXPENSES
                                            
                                               Three Months Ended
                                               March 31,
                                               2013        2012
Total GAAP operating expenses                  $52,211     $41,255
Amortization of acquired intangible assets     (3,269)      (911)
Acquisition-related transaction costs          -            (1,057)
Acquisition-related integration costs          (515)        -
Restructuring charges                          (4,842)     -
Total non-GAAP operating expenses              $43,585     $39,287

Contact:

Affymetrix, Inc.
Doug Farrell, 408-731-5285
Vice President of Investor Relations
 
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