Affymetrix (NASDAQ:AFFX)
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Affymetrix Reports 2004 Fourth Quarter and Full-Year Results
New Products Drive Record Revenue and Over 200% EPS Growth
SANTA CLARA, Calif., Jan. 26 /PRNewswire-FirstCall/ -- Affymetrix, Inc.,
(NASDAQ:AFFX) today reported its results for the fourth quarter and fiscal year
ended December 31, 2004. The Company reported net income of $27.1 million or
$0.44 per basic share and $0.41 per diluted share in the fourth quarter of
2004, as compared to net income of $16.0 million or $0.27 per basic share and
$0.26 per diluted share in the fourth quarter of 2003.
For fiscal year 2004, the Company reported net income of $47.6 million or $0.79
per basic share and $0.74 per diluted share, as compared to $14.3 million or
$0.24 per basic and diluted share for 2003. Net cash provided by operations was
$19.8 million for the quarter and $48.9 million for the year ended December 31,
2004.
Total revenue for the quarter was $107.7 million, of which $1.3 million was
related to the sale of products and wafers to Perlegen Sciences, Inc., compared
to total revenue of $89.2 million in the fourth quarter of 2003, of which $1.5
million was related to the sale of products and wafers to Perlegen. For the
full year, total revenue increased to $346.0 million as compared to $300.8
million for 2003.
Product and product related revenue increased to $104.9 million for the fourth
quarter of 2004, compared to $85.3 million in the same period in 2003. Fourth
quarter product sales included record GeneChip(R) array revenue of $57.4
million, record instrument revenue of $25.2 million and record reagent revenue
of $9.6 million. In 2004, total product and product related revenue increased
to $330.9 million as compared to $280.8 million for 2003. Affymetrix shipped
approximately 200 systems in 2004 compared to approximately 150 systems in
2003, an increase of approximately 30%. The cumulative systems shipped grew to
approximately 1,200 at the end of the fourth quarter.
Royalties and other revenue were $1.5 million for the fourth quarter of 2004
compared to $2.4 million in the fourth quarter of 2003. In 2004, royalties and
other revenue were $9.8 million compared to $10.6 million in 2003.
Total operating costs and expenses were $79.7 million for the fourth quarter of
2004 compared to $74.2 million in the fourth quarter of 2003. In 2004, total
operating costs and expenses were $286.2 million as compared to $283.3 million
in 2003.
Cost of product and product related revenue was $26.8 million in the fourth
quarter of 2004 compared to $26.8 million in the same period of 2003. Product
and product related gross margin was 74.4% in the fourth quarter of 2004
compared to 68.6% in the fourth quarter of 2003. In 2004, cost of product and
product related revenue was $91.3 million as compared to $89.8 million in 2003,
resulting in product and product related gross margin of 72.4% in 2004 as
compared to 68.0% in 2003.
Research and development expenses were $20.5 million during the fourth quarter
of 2004 compared to $16.9 million in the fourth quarter of 2003. In 2004,
research and development expenses were $73.4 million as compared to $65.9
million in 2003.
Selling, general and administrative expenses were $31.8 million for the fourth
quarter of 2004 compared to $28.5 million in the fourth quarter of 2003. In
2004, selling, general, and administrative expenses were $117.0 million as
compared to $104.8 million in 2003.
Fiscal 2004 highlights:
Financial
-- Achieved record total revenue of $346 million and record product and
product related revenue of more than $330 million
-- Grew full-year earnings per diluted share by over 200% compared to
fiscal 2003
-- Improved product and product related gross margin by more than 400
basis points compared to fiscal 2003
-- Reduced total debt by over $250 million in 2004, lowering the Company's
interest expense
RNA analysis
-- Introduced new products and applications to fuel landmark discoveries
and to expand market opportunities
-- Offered early access to tiling array technologies, enabling new
analyses of biological function, including DNA methylation sites,
transcription factor binding sites (ChIP-on-Chip), and sites of
chromatin modification
-- Introduced early access to Exon Scanning Arrays, enabling
researchers to study splice variants across the entire human genome
for the first time
-- Shipped automation systems designed to enable large scale studies
such as compound profiling, molecular toxicology, and clinical
trials
DNA analysis
-- Launched market-transforming SNP genotyping products, enabling
unprecedented, large-scale research studies to understand genetics of
complex diseases, including recently announced projects in autism,
diabetes, obesity, and neurological conditions
-- Launched GeneChip(R) Mapping 100K Set, the first in a family of
products for large-scale association studies
-- Drove demand for new Mapping 500K Set, which will be offered in
early access in the first half of 2005 and will launch commercially
in the second half of 2005
-- Expanded comprehensive genotyping portfolio with products and
services through commercial relationships with ParAllele and
Perlegen
-- Enhanced chromosomal copy number applications of the Mapping 10K
Array and 100K Set by launching a dedicated software tool
Molecular Diagnostics
-- Continued to demonstrate the strength of microarrays for molecular
diagnostics
-- Received FDA 510(k) clearance of the GeneChip(R) System 3000Dx
-- FDA clearance of Roche's AmpliChip Cytochrome P450 Genotyping Test
for use with the Affymetrix GeneChip System 3000Dx
-- Obtained CE Marking of the GeneChip System 3000Dx and AmpliChip
products for sale in the European Union
-- Granted Veridex, LLC, a Johnson & Johnson company, access to
GeneChip technology to create and market in vitro diagnostics for
cancer through the "Powered by Affymetrix(TM)" program
Translational Medicine
-- Continued to drive translation of basic research discoveries into
clinical utility through translational medicine relationships
-- Partnered with IBM to deliver tools to accelerate translational and
information-based medicine
-- Signed an enterprise-wide agreement with Erasmus University Medical
Center to use Affymetrix technology in translational medicine
initiatives
-- Collaborated with the Broad Institute of MIT and Harvard to use the
GeneChip HT System for large-scale expression, SNP genotyping, and
resequencing projects
Financial Outlook for 2005
For fiscal 2005, the Company expects product and product related revenue of
approximately $390 million, total revenue of approximately $405 million, and
earnings per diluted share of approximately $1.12. For the first quarter of
2005, the Company projects approximately $87 million in product and product
related revenue, approximately $90 million in total revenue, and earnings per
diluted share of approximately $0.20.
Affymetrix' management team will host a conference call to review its operating
results for the fourth quarter of 2004 and to provide financial guidance for
the first quarter and fiscal year 2005. A live webcast of the conference call
on January 26th at 2:00 p.m. PT can be accessed by visiting the Investor
Relations section of the Company's website at http://www.affymetrix.com/. In
addition, investors and other interested parties can listen by dialing
domestic: (888) 396-2356, international: (617) 847-8709. The passcode for both
domestic and international callers is 75652162. A replay of the conference call
will be available until 5:00 p.m. PT on February 2, 2005 at the following
numbers: domestic: (888) 286-8010, international: (617) 801-6888. The passcode
for both domestic and international callers is 28234721. An archived webcast of
the conference call will be available under the Investor Relations section of
the Company's website at http://www.affymetrix.com/.
About Affymetrix
Affymetrix scientists invented the world's first high-density microarray in
1989 and began selling the first commercial microarray in 1994. Since then,
Affymetrix GeneChip(R) technology has become the industry standard in molecular
biology research. Affymetrix technology is used by the world's top
pharmaceutical, diagnostic and biotechnology companies as well as leading
academic, government and not-for-profit research institutes. More than 1,200
systems have been installed around the world and nearly 3,000 peer-reviewed
papers have been published using the technology. Affymetrix' patented
photolithographic manufacturing process provides the most information capacity
available today on an array, enabling researchers to use a whole-genome
approach to analyzing the relationship between genetics and health. Affymetrix
is headquartered in Santa Clara, Calif., with manufacturing facilities in
Sacramento, Calif., and Bedford, Mass. The company maintains important sales
and marketing operations in Europe and Asia and has about 900 employees
worldwide.
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, including Affymetrix' financial outlook for 2005, are subject
to risks and uncertainties that could cause actual results to differ materially
for Affymetrix from those projected, including, but not limited to, risks of
the Company's ability to achieve and sustain higher levels of revenue, higher
gross margins, reduced operating expenses, market acceptance, personnel
retention, global economic conditions, the fluctuations in overall capital
spending in the academic and biotechnology sectors, changes in government
funding policies, unpredictable fluctuations in quarterly revenues,
uncertainties related 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, 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, 2003 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 and GeneChip are trademarks owned or used by
Affymetrix, Inc. CustomExpress is a trademark of Affymetrix, Inc.
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
December 31,
2004 2003
(Note 1)
ASSETS
Current assets:
Cash and cash equivalents $42,595 $275,928
Available-for-sale securities 163,120 183,955
Accounts receivable 93,405 71,343
Inventories 17,997 22,632
Prepaid expenses and other current assets 5,833 7,443
Total current assets 322,950 561,301
Property and equipment, net 64,179 62,611
Acquired technology rights, net 64,334 27,818
Goodwill 18,601 18,601
Notes receivable from employees 1,900 1,500
Other assets 27,807 28,333
Total assets $499,771 $700,164
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $61,265 $69,646
Deferred revenue - current portion 33,776 30,019
Convertible subordinated notes - short-term -- 267,460
Other current liabilities 1,698 1,398
Total current liabilities 96,739 368,523
Deferred revenue - long-term portion 29,463 43,346
Other long-term liabilities 4,382 3,240
Convertible notes 120,000 120,000
Stockholders' equity:
Common stock 616 595
Additional paid-in capital 407,258 370,304
Notes receivable from stockholders -- (428)
Deferred stock compensation (4,265) (5,185)
Accumulated other comprehensive loss (3,371) (1,572)
Accumulated deficit (151,051) (198,659)
Total stockholders' equity 249,187 165,055
$499,771 $700,164
Note 1: The condensed consolidated balance sheet at December 31, 2003 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, 2003.
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003
Revenue:
Product sales $92,183 $69,307 $277,256 $222,748
Product related revenue 12,668 16,040 53,629 58,032
Total product and product
related revenue 104,851 85,347 330,885 280,780
Royalties and other revenue 1,532 2,362 9,832 10,556
Revenue from Perlegen Sciences 1,325 1,455 5,245 9,460
Total revenue 107,708 89,164 345,962 300,796
Costs and expenses:
Cost of product sales 24,473 23,948 81,700 80,158
Cost of product related revenue 2,335 2,852 9,634 9,657
Cost of revenue from Perlegen
Sciences 572 1,455 3,611 9,460
Research and development 20,514 16,919 73,405 65,909
Selling, general and
administrative 31,760 28,547 116,973 104,797
Stock-based compensation 5 386 920 2,238
Amortization of purchased
intangibles -- 93 -- 937
Acquired in-process research and
development -- -- -- 10,096
Total costs and expenses 79,659 74,200 286,243 283,252
Income from operations 28,049 14,964 59,719 17,544
Interest income and other, net 544 5,897 2,317 16,662
Interest expense (427) (3,632) (11,102) (17,358)
Income before income taxes 28,166 17,229 50,934 16,848
Income tax provision (1,111) (1,219) (3,326) (2,563)
Net income $27,055 $16,010 $47,608 $14,285
Basic net income per share $0.44 $0.27 $0.79 $0.24
Diluted net income per share $0.41 $0.26 $0.74 $0.24
Shares used in computing basic net
income per share 61,151 59,298 60,512 58,860
Shares used in computing diluted
net income per share 67,425 61,633 66,798 60,742
DATASOURCE: Affymetrix, Inc.
CONTACT: Doug Farrell, Vice President of Investor Relations of
Affymetrix, Inc., +1-408-731-5285
Web site: http://www.affymetrix.com/