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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Affymetrix, Inc. | NASDAQ:AFFX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 14.01 | 0 | 01:00:00 |
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DELAWARE
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77-0319159
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification Number)
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3420 CENTRAL EXPRESSWAY
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SANTA CLARA, CALIFORNIA 95051
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(Address of principal executive offices and Zip Code)
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Page No.
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Item 4
.
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||
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June 30,
2013 |
|
December 31,
2012 |
||||
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(Unaudited)
|
|
(See Note 1)
|
||||
ASSETS:
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
43,674
|
|
|
$
|
25,671
|
|
Restricted cash
|
412
|
|
|
699
|
|
||
Available-for-sale securities
|
—
|
|
|
9,366
|
|
||
Accounts receivable, net
|
46,962
|
|
|
53,893
|
|
||
Inventories—short-term portion
|
69,210
|
|
|
72,691
|
|
||
Deferred tax assets—short-term portion
|
294
|
|
|
359
|
|
||
Prepaid expenses and other current assets
|
8,632
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|
|
10,126
|
|
||
Total current assets
|
169,184
|
|
|
172,805
|
|
||
Property and equipment, net
|
23,330
|
|
|
28,663
|
|
||
Inventories—long-term portion
|
6,454
|
|
|
11,772
|
|
||
Goodwill
|
159,108
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|
|
159,736
|
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||
Intangible assets, net
|
140,610
|
|
|
152,718
|
|
||
Deferred tax assets—long-term portion
|
401
|
|
|
3,394
|
|
||
Other long-term assets
|
13,086
|
|
|
15,206
|
|
||
Total assets
|
$
|
512,173
|
|
|
$
|
544,294
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY:
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
38,977
|
|
|
$
|
50,355
|
|
Convertible notes—short-term portion
|
—
|
|
|
3,855
|
|
||
Term loan—short-term portion
|
12,750
|
|
|
12,713
|
|
||
Deferred revenue—short-term portion
|
19,382
|
|
|
8,498
|
|
||
Total current liabilities
|
71,109
|
|
|
75,421
|
|
||
Deferred revenue—long-term portion
|
3,303
|
|
|
3,450
|
|
||
Convertible notes
|
105,000
|
|
|
105,000
|
|
||
Term loan—long-term portion
|
54,150
|
|
|
60,563
|
|
||
Other long-term liabilities
|
20,813
|
|
|
22,689
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock
|
714
|
|
|
710
|
|
||
Additional paid-in capital
|
763,176
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|
|
759,549
|
|
||
Accumulated other comprehensive income
|
4,842
|
|
|
6,302
|
|
||
Accumulated deficit
|
(510,934
|
)
|
|
(489,390
|
)
|
||
Total stockholders’ equity
|
257,798
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|
|
277,171
|
|
||
Total liabilities and stockholders’ equity
|
$
|
512,173
|
|
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$
|
544,294
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
REVENUE:
|
|
|
(See Note 1)
|
|
|
|
(See Note 1)
|
||||||||
Product sales
|
$
|
74,170
|
|
|
$
|
58,505
|
|
|
$
|
145,728
|
|
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$
|
116,996
|
|
Services and other
|
5,294
|
|
|
7,898
|
|
|
11,681
|
|
|
14,654
|
|
||||
Total revenue
|
79,464
|
|
|
66,403
|
|
|
157,409
|
|
|
131,650
|
|
||||
COSTS AND EXPENSES:
|
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||||||||
Cost of product sales
|
33,587
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|
|
24,363
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|
68,021
|
|
|
47,928
|
|
||||
Cost of services and other
|
3,706
|
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|
3,319
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|
7,213
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|
|
7,098
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|
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Research and development
|
11,959
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13,588
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24,207
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26,919
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|
||||
Selling, general and administrative
|
33,518
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40,526
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68,638
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68,450
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|
||||
Restructuring charges
|
(355
|
)
|
|
—
|
|
|
4,487
|
|
|
—
|
|
||||
Total costs and expenses
|
82,415
|
|
|
81,796
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|
172,566
|
|
|
150,395
|
|
||||
Loss from operations
|
(2,951
|
)
|
|
(15,393
|
)
|
|
(15,157
|
)
|
|
(18,745
|
)
|
||||
Interest income and other, net
|
89
|
|
|
2,276
|
|
|
432
|
|
|
2,302
|
|
||||
Interest expense
|
2,724
|
|
|
218
|
|
|
5,622
|
|
|
1,198
|
|
||||
Loss before income taxes
|
(5,586
|
)
|
|
(13,335
|
)
|
|
(20,347
|
)
|
|
(17,641
|
)
|
||||
Income tax provision (benefit)
|
521
|
|
|
(36,984
|
)
|
|
1,196
|
|
|
(37,073
|
)
|
||||
Net (loss) income
|
$
|
(6,107
|
)
|
|
$
|
23,649
|
|
|
$
|
(21,543
|
)
|
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$
|
19,432
|
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||||||||
Basic net (loss) income per common share
|
$
|
(0.09
|
)
|
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$
|
0.34
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$
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(0.30
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)
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$
|
0.28
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Diluted net (loss) income per common share
|
$
|
(0.09
|
)
|
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$
|
0.33
|
|
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$
|
(0.30
|
)
|
|
$
|
0.27
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||||||||
Shares used in computing basic net (loss) income per common share
|
71,154
|
|
|
70,161
|
|
|
71,038
|
|
|
70,069
|
|
||||
Shares used in computing diluted net (loss) income per common share
|
71,154
|
|
|
71,918
|
|
|
71,038
|
|
|
72,263
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
|
|
(See Note 1)
|
|
|
|
(See Note 1)
|
||||||||
Net (loss) income
|
$
|
(6,107
|
)
|
|
$
|
23,649
|
|
|
$
|
(21,543
|
)
|
|
$
|
19,432
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
1,268
|
|
|
(111
|
)
|
|
(1,856
|
)
|
|
(266
|
)
|
||||
Unrealized change in available-for-sale and non-marketable securities
|
(55
|
)
|
|
(214
|
)
|
|
(331
|
)
|
|
391
|
|
||||
Unrealized change in cash flow hedges
|
(361
|
)
|
|
248
|
|
|
727
|
|
|
(268
|
)
|
||||
Net change in other comprehensive income (loss), net of tax
|
852
|
|
|
(77
|
)
|
|
(1,460
|
)
|
|
(143
|
)
|
||||
Comprehensive (loss) income
|
$
|
(5,255
|
)
|
|
$
|
23,572
|
|
|
$
|
(23,003
|
)
|
|
$
|
19,289
|
|
|
Six Months Ended June 30,
|
||||||
|
2013
|
|
2012
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
(See Note 1)
|
||||
Net (loss) income
|
$
|
(21,543
|
)
|
|
$
|
19,432
|
|
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
20,427
|
|
|
14,210
|
|
||
Amortization of inventory step-up in fair value
|
9,084
|
|
|
—
|
|
||
Share-based compensation
|
3,110
|
|
|
12,598
|
|
||
Deferred tax assets
|
—
|
|
|
(44,643
|
)
|
||
Other non-cash transactions
|
479
|
|
|
(263
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
6,253
|
|
|
140
|
|
||
Inventories
|
(1,128
|
)
|
|
2,625
|
|
||
Prepaid expenses and other assets
|
1,704
|
|
|
2,006
|
|
||
Accounts payable and accrued liabilities
|
(5,796
|
)
|
|
(10,585
|
)
|
||
Deferred revenue
|
10,783
|
|
|
553
|
|
||
Other long-term liabilities
|
(1,661
|
)
|
|
393
|
|
||
Net cash provided by (used in) operating activities
|
21,712
|
|
|
(3,534
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Acquisition of business, net of cash acquired
|
—
|
|
|
(308,011
|
)
|
||
Proceeds from sales of available-for-sale securities
|
9,364
|
|
|
52,063
|
|
||
Proceeds from maturities of available-for-sale securities
|
—
|
|
|
388
|
|
||
Capital distribution from non-marketable investments
|
—
|
|
|
681
|
|
||
Capital expenditures
|
(2,271
|
)
|
|
(5,174
|
)
|
||
Purchase of non-marketable investment
|
(200
|
)
|
|
—
|
|
||
Purchase of technology rights
|
(440
|
)
|
|
(1,950
|
)
|
||
Net cash provided by (used in) investing activities
|
6,453
|
|
|
(262,003
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Issuance of common stock, net
|
521
|
|
|
338
|
|
||
Payments of term loan
|
(6,376
|
)
|
|
—
|
|
||
Net proceeds from term loan
|
—
|
|
|
80,500
|
|
||
Net proceeds from issuance of 4.00% convertible senior notes
|
—
|
|
|
101,062
|
|
||
Bond and loan issuance costs
|
(228
|
)
|
|
—
|
|
||
Repurchase of 3.50% senior convertible notes
|
(3,855
|
)
|
|
(91,614
|
)
|
||
Net cash (used in) provided by financing activities
|
(9,938
|
)
|
|
90,286
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(224
|
)
|
|
46
|
|
||
Net increase (decrease) in cash and cash equivalents
|
18,003
|
|
|
(175,205
|
)
|
||
Cash and cash equivalents at beginning of period
|
25,671
|
|
|
201,937
|
|
||
Cash and cash equivalents at end of period
|
$
|
43,674
|
|
|
$
|
26,732
|
|
|
December 31, 2012
|
|
(Decrease)/ Increase
|
|
Reclassification
Adjustments
|
|
June 30, 2013
|
|||||||||
Foreign currency translation adjustments
|
$
|
5,374
|
|
|
$
|
(1,857
|
)
|
|
$
|
—
|
|
|
$
|
3,517
|
|
|
Unrealized change in available-for-sale and non-marketable securities
|
896
|
|
|
(231
|
)
|
|
(99
|
)
|
(1
|
)
|
566
|
|
||||
Unrealized change in cash flow hedges
|
32
|
|
|
1,424
|
|
|
(697
|
)
|
(2
|
)
|
759
|
|
||||
Total accumulated other comprehensive income, net of tax
|
$
|
6,302
|
|
|
$
|
(664
|
)
|
|
$
|
(796
|
)
|
|
$
|
4,842
|
|
(1)
|
Net gain recognized in Interest income and other, net.
|
(2)
|
Net gain recognized in Revenue, except for
$0.2 million
gain that was recognized in Interest income and other, net due to hedging ineffectiveness. See Note 4. “Financial Instruments–Derivative Financial Instruments” for further information.
|
|
Quoted
Prices
In Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Total
|
||||||
June 30, 2013
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
||||||
Derivative assets
|
$
|
—
|
|
|
$
|
804
|
|
|
$
|
804
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
93
|
|
|
$
|
93
|
|
|
|
|
|
|
|
||||||
December 31, 2012
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
||||||
U.S. government obligations and agency securities
|
$
|
—
|
|
|
$
|
6,829
|
|
|
$
|
6,829
|
|
U.S. corporate debt
|
—
|
|
|
664
|
|
|
664
|
|
|||
Foreign corporate debt and equity securities
|
—
|
|
|
1,873
|
|
|
1,873
|
|
|||
Total
|
$
|
—
|
|
|
$
|
9,366
|
|
|
$
|
9,366
|
|
|
|
|
|
|
|
||||||
Derivative assets
|
$
|
—
|
|
|
$
|
842
|
|
|
$
|
842
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
829
|
|
|
$
|
829
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
U.S. government obligations and agency securities
|
$
|
6,775
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
6,829
|
|
U.S. corporate debt
|
651
|
|
|
13
|
|
|
—
|
|
|
664
|
|
||||
Foreign corporate debt and equity securities
|
1,837
|
|
|
36
|
|
|
—
|
|
|
1,873
|
|
||||
Total available-for-sale securities
|
$
|
9,263
|
|
|
$
|
103
|
|
|
$
|
—
|
|
|
$
|
9,366
|
|
|
June 30, 2013
|
|
December 31, 2012
|
||||
Euro
|
$
|
18,363
|
|
|
$
|
16,933
|
|
Japanese Yen
|
3,677
|
|
|
10,542
|
|
||
British Pound
|
4,373
|
|
|
4,278
|
|
||
Interest rate swap
|
27,519
|
|
|
27,519
|
|
||
Total
|
$
|
53,932
|
|
|
$
|
59,272
|
|
|
June 30, 2013
|
|
December 31, 2012
|
|
Balance Sheet
Classification
|
||||
Derivative assets:
|
|
|
|
|
|
||||
Foreign exchange contracts
|
$
|
804
|
|
|
$
|
842
|
|
|
Other current assets
|
Derivative liabilities:
|
|
|
|
|
|
||||
Foreign exchange contracts
|
19
|
|
|
752
|
|
|
Accrued liabilities
|
||
Interest rate swap
|
74
|
|
|
77
|
|
|
Accrued liabilities
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
||||||||
Net (loss) gain recognized in OCI, net of tax (1)
|
$
|
(361
|
)
|
|
$
|
248
|
|
|
$
|
725
|
|
|
$
|
(268
|
)
|
Net gain reclassified from accumulated OCI into Revenue, net of tax (2)
|
254
|
|
|
697
|
|
|
1,081
|
|
|
1,215
|
|
||||
Net gain reclassified from accumulated OCI into Interest income and other, net, net of tax (3)
|
—
|
|
|
—
|
|
|
158
|
|
|
—
|
|
||||
Net gain recognized in Interest income and other, net, net of tax (4)
|
30
|
|
|
3
|
|
|
45
|
|
|
28
|
|
||||
Derivatives not designated as hedging relationships:
|
|
|
|
|
|
|
|
||||||||
Net gain (loss) recognized in Interest income and other, net, net of tax (5)
|
4
|
|
|
22
|
|
|
147
|
|
|
(126
|
)
|
(1)
|
Net change in the fair value of the effective portion classified in OCI
|
(2)
|
Effective portion classified as Revenue
|
(3)
|
Ineffective portion classified as Interest income and other, net
|
(4)
|
Amount excluded from effectiveness testing classified as Interest income and other, net
|
(5)
|
Classified in Interest and other, net
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Costs of product sales
|
$
|
262
|
|
|
$
|
340
|
|
|
$
|
429
|
|
|
$
|
712
|
|
Research and development
|
202
|
|
|
306
|
|
|
531
|
|
|
673
|
|
||||
Selling, general and administrative
|
812
|
|
|
9,560
|
|
|
2,150
|
|
|
11,213
|
|
||||
Total share-based compensation expense
|
$
|
1,276
|
|
|
$
|
10,206
|
|
|
$
|
3,110
|
|
|
$
|
12,598
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Risk free interest rate
|
0.9
|
%
|
|
0.7
|
%
|
|
0.9
|
%
|
|
0.8
|
%
|
Expected dividend yield
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Expected volatility
|
68
|
%
|
|
67
|
%
|
|
68
|
%
|
|
67
|
%
|
Expected option term (in years)
|
4.6
|
|
|
4.6
|
|
|
4.6
|
|
|
4.6
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Risk free interest rate
|
0.1
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
Expected dividend yield
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
Expected volatility
|
52.6
|
%
|
|
67
|
%
|
|
52.6
|
%
|
|
67
|
%
|
Expected term (in years)
|
0.6
|
|
|
0.8
|
|
|
0.6
|
|
|
0.8
|
|
|
June 30, 2013
|
|
December 31, 2012
|
||||
Raw materials
|
$
|
12,007
|
|
|
$
|
11,167
|
|
Work-in-process
|
30,843
|
|
|
35,562
|
|
||
Finished goods
|
32,814
|
|
|
37,734
|
|
||
Total
|
$
|
75,664
|
|
|
$
|
84,463
|
|
|
|
|
|
||||
Short-term portion
|
69,210
|
|
|
72,691
|
|
||
Long-term portion
|
6,454
|
|
|
11,772
|
|
|
|
Carrying Value, Gross
|
|
Accumulated Amortization
|
|
Intangible Assets, Net
|
|
Weighted
Average
Useful Life
|
||||||||||||||||||||||||||
|
|
December 31,
2012 |
|
(Decrease)/ Increase (1)
|
|
June 30,
2013 |
|
December 31,
2012 |
|
(Increase)/
Decrease (2)
|
|
June 30,
2013 |
|
December 31,
2012 |
|
June 30,
2013 |
|
|||||||||||||||||
Customer relationships
|
|
$
|
76,874
|
|
|
$
|
(294
|
)
|
|
$
|
76,580
|
|
|
$
|
(14,346
|
)
|
|
$
|
(3,529
|
)
|
|
$
|
(17,875
|
)
|
|
$
|
62,528
|
|
|
$
|
58,705
|
|
|
11 years
|
Developed technologies
|
|
76,814
|
|
|
(304
|
)
|
|
76,510
|
|
|
(18,489
|
)
|
|
(2,902
|
)
|
|
(21,391
|
)
|
|
58,325
|
|
|
55,119
|
|
|
10 years
|
||||||||
Trademarks and tradenames
|
|
17,818
|
|
|
(4
|
)
|
|
17,814
|
|
|
(3,009
|
)
|
|
(1,694
|
)
|
|
(4,703
|
)
|
|
14,809
|
|
|
13,111
|
|
|
5 years
|
||||||||
Other contractual agreements
|
|
3,055
|
|
|
(14
|
)
|
|
3,041
|
|
|
(785
|
)
|
|
(756
|
)
|
|
(1,541
|
)
|
|
2,270
|
|
|
1,500
|
|
|
2 years
|
||||||||
Licenses
|
|
81,156
|
|
|
481
|
|
|
81,637
|
|
|
(66,370
|
)
|
|
(3,092
|
)
|
|
(69,462
|
)
|
|
14,786
|
|
|
12,175
|
|
|
14 years
|
||||||||
Total definite-lived intangible assets
|
|
$
|
255,717
|
|
|
$
|
(135
|
)
|
|
$
|
255,582
|
|
|
$
|
(102,999
|
)
|
|
$
|
(11,973
|
)
|
|
$
|
(114,972
|
)
|
|
$
|
152,718
|
|
|
$
|
140,610
|
|
|
|
(1)
|
Includes a decrease in carrying value of
$0.6 million
related to foreign currency translation
|
(2)
|
The impact of foreign currency translation on accumulated amortization was not significant.
|
For the Year Ending December 31,
|
Amortization
Expense
|
||
2013, remainder thereof
|
$
|
11,577
|
|
2014
|
20,843
|
|
|
2015
|
14,696
|
|
|
2016
|
13,173
|
|
|
2017
|
11,498
|
|
|
Thereafter
|
68,823
|
|
|
Total
|
$
|
140,610
|
|
Balance at December 31, 2012
|
$
|
159,736
|
|
Effects of foreign currency change
|
(628
|
)
|
|
Balance at June 30, 2013
|
$
|
159,108
|
|
Balance at December 31, 2012
|
$
|
802
|
|
Additions charged to cost of product sales
|
353
|
|
|
Repairs and replacements
|
(205
|
)
|
|
Balance at June 30, 2013
|
$
|
950
|
|
2013, remainder thereof
|
$
|
—
|
|
2014
|
9,563
|
|
|
2015
|
13,813
|
|
|
2016
|
17,000
|
|
|
2017
|
26,524
|
|
|
Total
|
$
|
66,900
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Employee stock compensation plans
|
5,646
|
|
|
5,780
|
|
|
5,646
|
|
|
5,785
|
|
ESPP
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
Restricted stock subject to repurchase
|
3,887
|
|
|
2,026
|
|
|
3,887
|
|
|
2,057
|
|
Convertible notes
|
17,857
|
|
|
—
|
|
|
17,868
|
|
|
—
|
|
Total
|
27,404
|
|
|
7,806
|
|
|
27,415
|
|
|
7,842
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Affymetrix Core
|
$
|
60,618
|
|
|
$
|
65,027
|
|
|
$
|
119,555
|
|
|
$
|
130,274
|
|
eBioscience
|
18,846
|
|
|
1,376
|
|
|
37,854
|
|
|
1,376
|
|
||||
Totals
|
$
|
79,464
|
|
|
$
|
66,403
|
|
|
$
|
157,409
|
|
|
$
|
131,650
|
|
Loss from operations:
|
|
|
|
|
|
|
|
||||||||
Affymetrix Core
|
$
|
1,251
|
|
|
$
|
(15,552
|
)
|
|
$
|
(6,590
|
)
|
|
$
|
(18,904
|
)
|
eBioscience
|
(4,202
|
)
|
|
159
|
|
|
(8,567
|
)
|
|
159
|
|
||||
Totals
|
$
|
(2,951
|
)
|
|
$
|
(15,393
|
)
|
|
$
|
(15,157
|
)
|
|
$
|
(18,745
|
)
|
•
|
Expression:
This business unit markets the Company’s GeneChip gene expression products and services, and the QuantiGene® line of low-to-mid-plex RNA measurement products.
|
•
|
Genetic Analysis and Clinical Applications:
This business unit markets the Company’s genotyping products, such as the Axiom® product line, and products with clinical research applications, such as the CytoScan® cytogenetics arrays.
|
•
|
Life Science Reagents:
This business unit sells reagents, enzymes, purification kits and biochemicals used by life science researchers.
|
•
|
Corporate:
This business unit is comprised primarily of incidental revenue from royalty arrangements and field revenue from services provided to customers of the Company.
|
•
|
eBioscience:
This reportable segment specializes in the development, manufacturing, marketing and distribution of research products in the areas of flow cytometry reagents, immunoassays, microscopic imaging and other protein-based analyses.
|
•
|
Phase 1 (2011-2012) –Portfolio Realignment.
During this phase, we reorganized ourselves into business units to sharpen our business focus based on target markets. We also launched CytoScan®, our growing cytogenetic microarray product line, grew our Axiom® genotyping platform aggressively and acquired eBioscience. We believe these actions will lead to a stabilization of our core business and the realignment of our product portfolio will position us for growth.
|
•
|
Phase II (2013-2014) – Profitability, Strengthen Balance Sheet, Development of Newer Product Lines.
In the beginning of 2013, we communicated a corporate restructuring with a goal of accelerating our path to profitability. The corporate restructuring is expected to result in annualized savings of approximately $25 million based on 2013 run rates, of which $5 million is expected to be in cost of goods sold. Our priorities for this phase will be to achieve profitability, repay our senior secured debt, successfully commercialize our newer product lines (CytoScan®, Axiom® and QuantiGene® lines, as well as our eBioscience products) and invest in new product offerings. In addition, we will train and refocus our global commercial organization to expand our reach to customers in the translational medicine, molecular diagnostics and applied markets.
|
•
|
Phase III (2015 -2016) –
Strategic Flexibility, Expansion of Product Lines; Growth.
Our goal is to have a strong balance sheet in this phase that will provide us with the flexibility to make strategic acquisitions. In addition, we aim to grow revenues with developed product lines and new product offerings in the translational medicine and molecular diagnostic markets.
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
|
Six Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
||||||||||||||||
|
2013
|
|
2012
|
|
|
|
2013
|
|
2012
|
|
|
||||||||||||||||
Consumables
|
$
|
69,973
|
|
|
$
|
54,691
|
|
|
$
|
15,282
|
|
|
28%
|
|
$
|
138,099
|
|
|
$
|
108,479
|
|
|
$
|
29,620
|
|
|
27%
|
Instruments
|
4,197
|
|
|
3,814
|
|
|
383
|
|
|
10
|
|
7,629
|
|
|
8,517
|
|
|
(888
|
)
|
|
(10)
|
||||||
Product sales
|
74,170
|
|
|
58,505
|
|
|
15,665
|
|
|
27
|
|
145,728
|
|
|
116,996
|
|
|
28,732
|
|
|
25
|
||||||
Services and other revenue
|
5,294
|
|
|
7,898
|
|
|
(2,604
|
)
|
|
(33)
|
|
11,681
|
|
|
14,654
|
|
|
(2,973
|
)
|
|
(20)
|
||||||
Total revenue
|
$
|
79,464
|
|
|
$
|
66,403
|
|
|
$
|
13,061
|
|
|
20%
|
|
$
|
157,409
|
|
|
$
|
131,650
|
|
|
$
|
25,759
|
|
|
20%
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
|
Six Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
||||||||||||||||
|
2013
|
|
2012
|
|
|
|
2013
|
|
2012
|
|
|
||||||||||||||||
Expression
|
$
|
24,370
|
|
|
$
|
29,808
|
|
|
$
|
(5,438
|
)
|
|
(18)%
|
|
$
|
47,334
|
|
|
$
|
62,122
|
|
|
$
|
(14,788
|
)
|
|
(24)%
|
Genetic analysis and clinical applications
|
23,063
|
|
|
20,140
|
|
|
2,923
|
|
|
15
|
|
44,794
|
|
|
38,970
|
|
|
5,824
|
|
|
15
|
||||||
Life science reagents
|
8,292
|
|
|
7,998
|
|
|
294
|
|
|
4
|
|
16,600
|
|
|
16,199
|
|
|
401
|
|
|
2
|
||||||
Corporate
|
4,893
|
|
|
7,081
|
|
|
(2,188
|
)
|
|
(31)
|
|
10,827
|
|
|
12,983
|
|
|
(2,156
|
)
|
|
(17)
|
||||||
eBioscience
|
18,846
|
|
|
1,376
|
|
|
17,470
|
|
|
1,270
|
|
37,854
|
|
|
1,376
|
|
|
36,478
|
|
|
2,651
|
||||||
Total product sales
|
$
|
79,464
|
|
|
$
|
66,403
|
|
|
$
|
13,061
|
|
|
20%
|
|
$
|
157,409
|
|
|
$
|
131,650
|
|
|
$
|
25,759
|
|
|
20%
|
Percentage of revenue
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||
Expression
|
31
|
%
|
|
45
|
%
|
|
30
|
%
|
|
47
|
%
|
Genetic analysis and clinical applications
|
29
|
|
|
30
|
|
|
28
|
|
|
30
|
|
Life science reagents
|
10
|
|
|
12
|
|
|
11
|
|
|
12
|
|
Corporate
|
6
|
|
|
11
|
|
|
7
|
|
|
10
|
|
eBioscience
|
24
|
|
|
2
|
|
|
24
|
|
|
1
|
|
Total product sales
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Dollar/Point change from 2012
|
|
Six Months Ended June 30,
|
|
Dollar/Point change from 2012
|
||||||||||||||||
|
2013
|
|
2012
|
|
|
2013
|
|
2012
|
|
||||||||||||||
Total gross margin on product sales
|
$
|
40,583
|
|
|
$
|
34,142
|
|
|
$
|
6,441
|
|
|
$
|
77,707
|
|
|
$
|
69,068
|
|
|
$
|
8,639
|
|
Total gross margin on services and other revenue
|
1,588
|
|
|
4,579
|
|
|
(2,991
|
)
|
|
4,468
|
|
|
4,968
|
|
|
(500
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product gross margin as a percentage of products sales
|
55
|
%
|
|
58
|
%
|
|
(3
|
)
|
|
53
|
%
|
|
59
|
%
|
|
(6
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service and other revenue gross margin as a percentage of services and other revenue
|
30
|
%
|
|
58
|
%
|
|
(28
|
)
|
|
38
|
%
|
|
34
|
%
|
|
4
|
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
|
Six Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
||||||||||||||||
|
2013
|
|
2012
|
|
|
|
2013
|
|
2012
|
|
|
||||||||||||||||
Research and development
|
$
|
11,959
|
|
|
$
|
13,588
|
|
|
$
|
(1,629
|
)
|
|
(12)%
|
|
$
|
24,207
|
|
|
$
|
26,919
|
|
|
$
|
(2,712
|
)
|
|
(10)%
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
|
Six Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
||||||||||||||||
|
2013
|
|
2012
|
|
|
|
2013
|
|
2012
|
|
|
||||||||||||||||
Selling, general and administrative
|
$
|
33,518
|
|
|
$
|
40,526
|
|
|
$
|
(7,008
|
)
|
|
(17)%
|
|
$
|
68,638
|
|
|
$
|
68,450
|
|
|
$
|
188
|
|
|
0%
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
|
Six Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
||||||||||||||||
|
2013
|
|
2012
|
|
|
|
2013
|
|
2012
|
|
|
||||||||||||||||
Interest income
|
$
|
5
|
|
|
$
|
282
|
|
|
$
|
(277
|
)
|
|
(98)%
|
|
$
|
(11
|
)
|
|
$
|
579
|
|
|
$
|
(590
|
)
|
|
(102)%
|
Realized (loss) income on equity investments, net
|
(16
|
)
|
|
477
|
|
|
(493
|
)
|
|
103
|
|
51
|
|
|
522
|
|
|
(471
|
)
|
|
90
|
||||||
Currency income (loss), net
|
72
|
|
|
(751
|
)
|
|
823
|
|
|
110
|
|
(521
|
)
|
|
(1,069
|
)
|
|
548
|
|
|
51
|
||||||
Other
|
28
|
|
|
2,268
|
|
|
(2,240
|
)
|
|
(99)
|
|
913
|
|
|
2,270
|
|
|
(1,357
|
)
|
|
(60)
|
||||||
Total interest income and other, net
|
$
|
89
|
|
|
$
|
2,276
|
|
|
$
|
(2,187
|
)
|
|
(96)%
|
|
$
|
432
|
|
|
$
|
2,302
|
|
|
$
|
(1,870
|
)
|
|
81%
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
|
Six Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
||||||||||||||||
|
2013
|
|
2012
|
|
|
|
2013
|
|
2012
|
|
|
||||||||||||||||
Interest expense
|
$
|
2,724
|
|
|
$
|
218
|
|
|
$
|
2,506
|
|
|
1,150%
|
|
$
|
5,622
|
|
|
$
|
1,198
|
|
|
$
|
4,424
|
|
|
369%
|
Dollars in thousands
|
Three Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
|
Six Months Ended June 30,
|
|
Dollar change from 2012
|
|
Percentage change from 2012
|
|||||||||||||||||
|
2013
|
|
2012
|
|
|
|
2013
|
|
2012
|
|
|
|||||||||||||||||
Income tax provision (benefit)
|
$
|
521
|
|
|
$
|
(36,984
|
)
|
|
$
|
37,505
|
|
|
(101)%
|
|
$
|
1,196
|
|
|
$
|
(37,073
|
)
|
|
$
|
38,269
|
|
|
(103
|
)%
|
|
Six Months Ended June 30,
|
||||||
|
2013
|
|
2012
|
||||
Net cash provided by (used in) operating activities
|
$
|
21,712
|
|
|
$
|
(3,534
|
)
|
Net cash provided by (used in) investing activities
|
6,453
|
|
|
(262,003
|
)
|
||
Net cash (used in) provided by financing activities
|
(9,938
|
)
|
|
90,286
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(224
|
)
|
|
46
|
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
18,003
|
|
|
$
|
(175,205
|
)
|
•
|
availability, quality and price as compared to competitive technologies, products and services;
|
•
|
the functionality of new and existing products and services, and whether they address market requirements;
|
•
|
the timing of introduction of our technologies, products and services as compared to competitive technologies, products and services;
|
•
|
the existence of product defects;
|
•
|
scientists' and customers' opinions of the utility of our products and services and our ability to incorporate their feedback into future products and services;
|
•
|
citation of our products in published research; and
|
•
|
general trends in life science and clinical diagnostics research and life science informatics software development.
|
•
|
our ability to retain key employees of the acquired company;
|
•
|
the performance of the acquired business, technology, product or service;
|
•
|
our ability to integrate operations, financial and other systems;
|
•
|
the ability of the combined company to achieve synergies among its constituent companies, such as increasing sales of the combined company's products and services, achieving expected cost savings and effectively combining technologies to develop new products and services;
|
•
|
any disruption in order fulfillment or loss of sales due to integration processes, including relationships with suppliers or distributors;
|
•
|
the presence or absence of adequate internal controls and/or significant fraud in the financial systems of acquired companies;
|
•
|
any decrease in customer and distributor loyalty and product orders caused by dissatisfaction with the combined companies' product lines and sales and marketing practices, including price increases; and
|
•
|
our assumption of known contingent liabilities that are realized, known liabilities that prove greater than anticipated, or unknown liabilities that come to light, to the extent that the realization of any of these liabilities increases our expenses or adversely affects our business or financial position.
|
•
|
incur additional debt, including guarantees by us or our subsidiaries;
|
•
|
make investments, pay dividends on our capital stock, redeem or repurchase our capital stock, redeem or repurchase the notes or any subordinated obligations;
|
•
|
create liens;
|
•
|
make capital expenditures;
|
•
|
dispose of assets;
|
•
|
make acquisitions;
|
•
|
create or permit restrictions on the ability of our subsidiaries to pay dividends or make other distributions to us;
|
•
|
engage in transactions with affiliates;
|
•
|
engage in sale and leaseback transactions; and
|
•
|
consolidate or merge with or into other companies or sell all or substantially all of our assets.
|
•
|
changes in government programs, including available funding, which support research and development expenditures by companies and research institutions;
|
•
|
weakness in the global economy and changing market conditions that affect our customers;
|
•
|
changes in the extent to which the pharmaceutical industry may use genetic information and genetic testing as a methodology for drug discovery and development;
|
•
|
changes in the regulatory environment affecting life science companies and life science research;
|
•
|
impact of consolidation within the pharmaceutical industry; and
|
•
|
cost reduction initiatives of customers.
|
•
|
our partners may develop technologies or components competitive with our products and services;
|
•
|
our existing collaborations may preclude us from entering into additional future arrangements or impact the integration of acquired businesses and technologies;
|
•
|
our partners may not obtain regulatory approvals necessary to continue the collaborations in a timely manner;
|
•
|
some of our agreements may terminate prematurely due to disagreements between us and our partners or licensors;
|
•
|
our partners may not devote sufficient resources to the development and sale of our products and services;
|
•
|
our partners may be unable to provide the resources required for us to progress in the collaboration on a timely basis;
|
•
|
our collaborations may be unsuccessful; or
|
•
|
some of our agreements have expired and we may not be able to negotiate future collaborative arrangements or renew current licenses on acceptable terms.
|
•
|
competition;
|
•
|
our inability to produce products in sufficient quantities and with appropriate quality;
|
•
|
the frequency of experiments conducted by our customers;
|
•
|
our customers' inventory of products;
|
•
|
the receipt of relatively large orders with short lead times; and
|
•
|
our customers' expectations as to how long it takes us to fill future orders.
|
Exhibit
Number |
|
Description of Document
|
|
|
|
10.51 ‡
|
|
Offer Letter from the Company to Gavin Wood dated May 20, 2013.
|
10.52 ‡
|
|
Separation Agreement between the Company and Timothy Barabe dated June 28, 2013.
|
31.1
|
|
Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
|
31.2
|
|
Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
|
32
|
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
|
EX-101.INS
|
|
XBRL Instance Document(1)
|
EX-101.SCH
|
|
XBRL Taxonomy Extension Schema Document(1)
|
EX-101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document(1)
|
EX-101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document(1)
|
EX-101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document(1)
|
EX-101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document(1)
|
(1)
|
Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
|
By:
|
/s/ GAVIN WOOD
|
|
Name:
|
Gavin H. J. Wood
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
|
|
|
August 6, 2013
|
|
|
|
|
|
|
|
Duly Authorized Officer and Principal Financial
And Accounting Officer
|
|
|
|
|
|
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