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Affymetrix Reports Second Quarter 2009 Results

SANTA CLARA, Calif., July 22 /PRNewswire-FirstCall/ -- Affymetrix Inc., (Nasdaq: AFFX) today reported its operating results for the second quarter of 2009. Total revenue for the quarter was $81.6 million, as compared to total revenue of $86.9 million in the second quarter of 2008. The negative currency impact for the quarter was $3.0 million.

Product revenue was $67.2 million, which consisted of consumable (array and reagent) revenue of $62.2 million and instrument revenue of $5.0 million. Service revenue was $12.2 million, and royalties and other revenue were $2.2 million. This compares to second quarter 2008 product revenue of $75.0 million, service revenue of $9.0 million, and royalties and other revenue of $2.9 million.

Affymetrix shipped 27 Systems in the second quarter of 2009, bringing its cumulative systems shipped to 1,866.

The Company reported a net income of approximately $7.3 million, or $0.11 per diluted share, in the second quarter of 2009 which included a pretax restructuring charge of $0.2 million, or $0.01 per diluted share, and a $17.4 million, or $0.25 per diluted share, gain on debt repurchase from the convertible notes buyback of $69.1 million of aggregate principal amount. This compares to a net loss of $3.6 million, or $0.05 per diluted share, in the second quarter of 2008, which included a pretax restructuring charge of $0.9 million, or $0.01 per diluted share.

Cost of product sales was $29.9 million in the second quarter of 2009 which included $4.6 million of manufacturing consolidation-related costs. This compares to $32.3 million in the same period of 2008. Cost of services and other was $7.6 million compared to $6.7 million in the second quarter of 2008.

Product gross margin was 55 percent in the second quarter of 2009 compared to 57 percent in the second quarter of 2008.

Operating expenses were $52.3 million for the second quarter of 2009, which includes restructuring charges of $0.2 million, as compared to operating expenses of $50.1 million in the second quarter of 2008, which included restructuring charges of $0.9 million.

"Despite challenging macro-economic conditions, we achieved our financial and operational goals through the first half of 2009," stated Kevin King, CEO of Affymetrix. "The combination of new product introductions, recent acquisitions, and revenue from partners is expanding our business into the larger markets for validation and routine testing."

Quarterly Highlights

Corporate Finance

During the second quarter of 2009, the Company repurchased approximately $69.1 million of aggregate principal amount of its 3.50% senior convertible notes due in 2038 in private transactions for total consideration of $50.6 million, including accrued interest of $0.9 million. The recognized gain on the repurchase of debt of $17.4 million is net of transaction and deferred financing costs of $1.9 million.


During the second quarter, the Company completed the previously announced initiatives to consolidate array manufacturing in Singapore and reagent manufacturing to Cleveland, Ohio.


In May, Gary S. Guthart, Ph.D. joined the Board of Directors of Affymetrix. The Board of Directors appointed Dr. Guthart to serve as a member of its Compensation Committee.

Dr. Guthart is President and Chief Operating Officer of Intuitive Surgical, Inc. He joined Intuitive Surgical in April 1996, was named Chief Operating Officer in 2006, and was promoted to President in July 2007. Prior to joining Intuitive Surgical, Dr. Guthart was part of the core team developing foundation technology for computer enhanced-surgery at SRI International (formally Stanford Research Institute).

Affymetrix' management team will host a conference call on July 22, 2009 at 2:00 p.m. PT to review its operating results for the second quarter of 2009. A live webcast can be accessed by visiting the Investor Relations section of the Company's website at 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 July 22, 2009 until 8:00 p.m. PT on July 29, 2009 at the following numbers: domestic: (800) 642-1687, international: (706) 645-9291. The passcode for both replays is 19153613. An archived webcast of the conference call will be available under the Investor Relations section of the Company's website at

About Affymetrix

GeneChip(R) 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 more than 1,800 systems around the world and more than 18,000 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

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.


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

- Financial Charts to Follow -

                                AFFYMETRIX, INC.
                                (IN THOUSANDS)

                                        June 30,     December 31,
                                         2009           2008
                                         ----           ----
                                                      (Note 1)
     Current assets:
      Cash and cash equivalents         $73,267       $113,292
      Restricted cash - short-term
       portion                            1,182          4,402
      Available-for-sale securities -
       short-term portion               208,075        250,970
      Accounts receivable, net           57,108         62,726
      Inventories                        51,803         51,333
      Deferred tax assets -
       current portion                    1,649          1,077
      Prepaid expenses and
       other current assets               9,155         15,725
                                          -----         ------
           Total current assets         402,239        499,525
                                        -------        -------
      securities - long-term
      portion                            68,277         26,900
     Property and equipment, net         74,107         89,345
     Acquired technology rights, net     55,714         62,569
     Deferred tax assets -
      long-term portion                   4,269          4,764
     Restricted cash -
      long-term portion                   2,359          2,175
     Other assets                        26,299         28,032
                                         ------         ------
           Total assets                $633,264       $713,310
                                       ========       ========

     Current liabilities:
      Accounts payable and
       accrued liabilities              $61,333        $62,559
      Deferred revenue -
       current portion                   16,274         16,198
                                         ------         ------
           Total current liabilities     77,607         78,757
     Deferred revenue -
      long-term portion                   3,415          3,583
     Other long-term liabilities         11,213         10,972
     Convertible notes                  247,201        316,341
     Stockholders' equity:
      Common stock                          706            703
      Additional paid-in capital        725,463        721,641
      Accumulated other comprehensive
       income (loss)                      1,935         (2,296)
      Accumulated deficit              (434,276)      (416,391)
                                       --------       --------
           Total stockholders' equity   293,828        303,657
                                        -------        -------
         Total liabilities and
          stockholders' equity         $633,264       $713,310
                                       ========       ========

    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.


                         Three Months Ended       Six Months Ended
                              June 30,                June 30,
                         ------------------       ----------------
                          2009        2008        2009        2008
                          ----        ----        ----        ----
      Product sales     $67,156    $75,022     $132,026   $137,828
      Services           12,221      9,005       23,777     17,425
      Royalties and
       other revenue      2,177      2,884        4,312    101,233
                          -----      -----        -----    -------
          Total revenue  81,554     86,911      160,115    256,486
                         ------     ------      -------    -------

     Costs and expenses:
      Cost of product
       sales             29,885     32,257       64,319     58,234
      Cost of services
       and other          7,567      6,743       15,157     12,421
      Research and
       development       20,361     19,591       41,644     38,359
      Selling, general
       administrative    31,686     29,640       65,668     64,373
       technology             -          -            -        800
       charges              226        898        2,193     14,808
                            ---        ---        -----     ------
         Total costs
          and expenses   89,725     89,129      188,981    188,995
                         ------     ------      -------    -------
     (Loss) income
      from operations    (8,171)    (2,218)     (28,866)    67,491
     Interest income
      and other, net      1,356      2,286          516      9,158
     Interest expense    (2,903)    (3,548)      (6,080)    (7,137)
     Gain from
      of debt            17,447          -       17,447         -
                         ------        ---       ------       ---
     Income (loss) before
      income taxes        7,729     (3,480)     (16,983)    69,512
     Income tax provision  (409)      (155)        (902)   (26,895)
                            ----       ----         ----    -------
     Net income (loss)   $7,320    $(3,635)    $(17,885)   $42,617
                         ======     ========    =========   =======

     Basic net income
      (loss) per common
      share               $0.11     $(0.05)      $(0.26)     $0.62
                          =====     ======       ======      =====
     Diluted net income
      (loss) per common
      share               $0.11     $(0.05)      $(0.26)     $0.56
                          =====     ======       ======      =====

     Shares used in
      computing basic net
      income (loss) per
      share              68,651     68,540       68,527     68,522
                         ======     ======       ======     ======
     Shares used in
      diluted net income
      (loss) per share   68,939     68,540       68,527     82,971
                         ======     ======       ======     ======

SOURCE Affymetrix, Inc.
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