Affymetrix (NASDAQ:AFFX)
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Affymetrix Reports Second Quarter 2004 Results
Company Reiterates Full-Year Revenue and Earnings Guidance
SANTA CLARA, Calif., July 21 /PRNewswire-FirstCall/ -- Affymetrix, Inc.,
(NASDAQ:AFFX) today reported its results for the second quarter of 2004. The
Company reported net income of approximately $7.0 million or $0.12 per basic
share and $0.11 per diluted share in the second quarter of 2004, as compared to
a net income of $5.2 million or $0.09 per basic and diluted share in the second
quarter of 2003.
Total revenue for the quarter was $79.8 million, of which $1.4 million was
related to the sale of products and wafers to Perlegen Sciences, Inc., as
compared to total revenue of $68.6 million in the second quarter of 2003, of
which $2.8 million was related to the sale of products and wafers to Perlegen.
Product and product related revenue increased to $75.2 million for the second
quarter of 2004, compared to $63.2 million in the same period in 2003. Second
quarter product sales included GeneChip(R) array revenue of $35.4 million and
instrument revenue of $20.1 million. The year-over-year growth in product and
product related revenue was driven by continued adoption of the next-generation
GeneChip instrumentation and continued growth of consumable sales including
arrays and reagents. In addition, Affymetrix increased its installed base to
approximately 1,070 GeneChip systems.
Royalties and other revenue were $3.2 million for the second quarter of 2004
compared to $2.7 million in the second quarter of 2003.
Total operating costs and expenses were $70.6 million for the second quarter of
2004 compared to $63.8 million in the second quarter of 2003.
Cost of product and product related revenue was $21.5 million in the second
quarter of 2004 compared to $19.3 million in the same period of 2003. Product
and product related gross margin was 71.4% in the second quarter of 2004
compared to 69.5% in the second quarter of 2003.
Research and development expenses were $17.8 million during the second quarter
of 2004 compared to $16.6 million in the second quarter of 2003.
Selling, general and administrative expenses were $30.0 million for the second
quarter of 2004 compared to $24.2 million in the second quarter of 2003.
Company Highlights
-- Accomplishments in the DNA analysis market include:
-- Whole genome population studies are now possible with the full commercial
release of the 100K Mapping Array Set, the first in a family of large-scale
genotyping products.
-- The entire adult population of the Micronesian island of Kosrae will be
genotyped with over 200,000 SNPs to study the genetics of obesity and related
diseases in a project led by Dr. Jeffrey Friedman of Rockefeller University.
-- Leveraging the strength of photolithographic manufacturing, a
higher-density, more cost-effective GeneChip Mapping 10K 2.0 Array is now
broadly available to enable a wide variety of genetic studies, including loss
of heterozygosity (LOH), familial linkage studies and gene amplification.
-- The genetics of autism will be examined by a team of over 170 researchers
worldwide in a study funded by the National Alliance for Autism Research (NAAR)
using Affymetrix GeneChip 10K technology.
-- A gene responsible for a form of Sudden Infant Death Syndrome has been
identified using the Affymetrix 10K Mapping Array by scientists at the
Translational Genomics Research Institute and the Clinic for Special Children.
-- Professor John Todd of Cambridge University is leading a large-scale genetic
study of diabetes utilizing technologies from Affymetrix and ParAllele
BioScience.
-- The genetics of Parkinson's disease are being studied by the Mayo Clinic in
collaboration with Perlegen Sciences using Affymetrix whole-genome technology.
-- Access to Perlegen Sciences' whole genome services is now broadly available
to the entire research community through Affymetrix' global sales channels.
-- In Affymetrix' expression product portfolio, more than 100 recently
sequenced genomes have been added using its custom array design options.
-- On June 14th, the Company announced that it had converted an ongoing royalty
obligation to a fully paid-up license, thereby increasing product gross
margins. Based on this, the Company increased its guidance for net income and
earnings per share for fiscal 2004.
Financial Outlook
For fiscal year 2004, the Company reiterates its previous guidance of product
and product related revenue of $330-335 million and earnings per basic and
diluted share of around $0.60. For the third quarter of 2004, the Company
expects product and product related revenue in the range of $80-85 million,
total revenue in the range of $83-88 million, and earnings per basic and
diluted share of approximately $0.18.
Affymetrix' management team will host a conference call to review its operating
results for the second quarter of 2004 and to provide financial guidance for
the third quarter and fiscal year 2004. A live webcast of the conference call
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: 888-737-3798;
international: 706-643-2578 on July 21 at 2:00 p.m. PT.
A replay of the conference call will be available until 5:00 p.m. PT on July
28, 2004 at the following numbers: domestic: 800-642-1687; international:
706-645-9291; passcode for both: #8350582. 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 is a pioneer in creating breakthrough tools that are driving the
genomic revolution. By applying the principles of semiconductor technology to
the life sciences, Affymetrix develops and commercializes systems that enable
scientists to improve the quality of life. The Company's customers include
pharmaceutical, biotechnology, agrichemical, diagnostics and consumer products
companies as well as academic, government and other non-profit research
institutes. Affymetrix offers an expanding portfolio of integrated products and
services, including its integrated GeneChip platform, to address growing
markets focused on understanding the relationship between genes and human
health. Additional information on Affymetrix can be found at
http://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, including Affymetrix' financial outlook for 2004, 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, 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, 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)
June 30, December 31,
2004 2003
(Note 1)
ASSETS
Current assets:
Cash and cash equivalents $54,227 $275,928
Available-for-sale securities 105,692 183,955
Accounts receivable 62,812 71,343
Inventories 18,801 22,632
Prepaid expenses and other current assets 5,510 7,443
Total current assets 247,042 561,301
Property and equipment, net 62,882 62,611
Acquired technology rights, net 67,511 27,818
Goodwill 18,601 18,601
Notes receivable from employees 2,699 1,500
Other assets 26,341 28,333
$425,076 $700,164
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $42,028 $71,044
Deferred revenue - current portion 32,110 30,019
Convertible subordinated notes - short-term -- 267,460
Total current liabilities 74,138 368,523
Deferred revenue - long-term portion 36,664 43,346
Other long-term liabilities 3,913 3,240
Convertible notes 120,000 120,000
Stockholders' equity:
Common stock 606 595
Additional paid-in capital 389,689 370,304
Notes receivable from stockholders (451) (428)
Deferred stock compensation (4,537) (5,185)
Accumulated other comprehensive loss (1,463) (1,572)
Accumulated deficit (193,483) (198,659)
Total stockholders' equity 190,361 165,055
$425,076 $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 Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Revenue:
Product sales $61,664 $49,216 $122,755 $95,974
Product related
revenue 13,511 13,977 27,033 28,366
Total product and
product related
revenue 75,175 63,193 149,788 124,340
Royalties and other
revenue 3,187 2,690 5,558 5,845
Revenue from
Perlegen Sciences 1,392 2,751 3,041 5,261
Total revenue 79,754 68,634 158,387 135,446
Costs and expenses:
Cost of product sales 19,388 16,997 40,120 33,817
Cost of product
related revenue 2,076 2,308 4,932 4,501
Cost of revenue
from Perlegen Sciences 1,099 2,751 2,470 5,261
Research and
development 17,804 16,622 35,100 32,527
Selling, general and
administrative 29,955 24,183 58,224 52,159
Amortization of
deferred stock
compensation 324 673 648 1,368
Amortization of
purchased intangibles -- 281 -- 562
Charge for acquired
in-process technology -- -- -- 10,096
Total costs and
expenses 70,646 63,815 141,494 140,291
Income (loss)
from operations 9,108 4,819 16,893 (4,845)
Interest income
and other, net (940) 5,986 135 8,362
Interest expense (404) (5,266) (10,238) (10,167)
Net income
(loss) before
income taxes 7,764 5,539 6,790 (6,650)
Income tax provision (755) (344) (1,614) (878)
Net income (loss) $7,009 $5,195 $5,176 $(7,528)
Basic net income
(loss) per share $0.12 $0.09 $0.09 $(0.13)
Diluted net income
(loss) per share $0.11 $0.09 $0.08 $(0.13)
Shares used in
computing basic
net income (loss)
per share 60,376 58,708 60,140 58,628
Shares used in
computing diluted
net income (loss)
per share 62,970 60,193 62,775 58,628
DATASOURCE: Affymetrix, Inc.
CONTACT: Doug Farrell, Vice President of Investor Relations of
Affymetrix, Inc., +1-408-731-5285
Web site: http://www.affymetrix.com/