Affymetrix Reports Second Quarter 2008 Results
2008-07-24 15:00:00
Affymetrix Reports Second Quarter 2008 Results
Announces Manufacturing Restructuring to Improve Gross Margins
Acquires New Platform to Enter Low to Mid-Multiplex Markets
SANTA CLARA, Calif.–(EMWNews)–Affymetrix Inc., (Nasdaq:AFFX) today reported its operating results for
the second quarter of 2008. Total revenue for the quarter was $86.9
million, as compared to total revenue of $88.3 million in the second
quarter of 2007.
Product revenue was $75.0 million, which consists of array and reagent
revenue of $68.9 million and instrument revenue of $6.1 million. Service
revenue was $9.0 million, and royalties and other revenue were $2.9
million for the second quarter of 2008. This compares to second quarter
2007 product revenue of $68.4 million. Service revenue was $12.0
million, and royalties and other revenue were $7.9 million for the
second quarter of 2007. Affymetrix shipped 22 GeneChip®
systems in the quarter, bringing its cumulative systems shipped to 1,761
at the end of the second quarter.
The Company reported net loss of approximately $3.6 million or $0.05 per
diluted share in the second quarter of 2008, which includes a pretax
restructuring charge of $0.9 million or $0.01 per diluted share, as
compared to net income of $1.2 million or $0.02 per diluted share in the
second quarter of 2007, which included a pretax restructuring charge of
$1.8 million or $0.03 per diluted share.
Cost of product sales was $32.3 million in the second quarter of 2008
compared to $25.7 million in the same period of 2007. Cost of services
was $6.7 million compared to $10.8 million in the second quarter of
2007. Product gross margin was 57.0 percent in the second quarter of
2008 compared to 62.4 percent in the second quarter of 2007.
Operating expenses were $50.1 million for the second quarter of 2008,
which includes restructuring charges of $0.9 million, as compared to
$54.8 million in the second quarter of 2007, which includes
restructuring charges of $1.8 million.
Updated Financial Outlook for 2008
Due to predicted ongoing weakness in the Company’s pharmaceutical
revenue, the Company now expects 2008 revenue to be in the range of $455
million to $460 million, including a one-time $90 million payment. Total
gross margin is expected to be approximately 65 percent, of which 9
points is expected to be attributable to the one-time $90 million
payment. The Company expects total operating expenses between $262
million to $267 million, including total restructuring charges of
approximately $32 million and acquisition related charges of $21 million.
Operations
-
Affymetrix announces its plan to consolidate manufacturing to three
locations. These manufacturing consolidations are expected to improve
capacity utilization, increase operational efficiencies and expand the
Company’s product gross margin.
Acquisitions
-
In July, Affymetrix completed an acquisition of a privately held San
Francisco-based company that develops digitally encoded microparticle
technology for approximately $25 million in cash. This high
performance and flexible platform technology will enable the Company
to enter low to mid-multiplex markets and compete with bead-based
platforms. In addition, this technology is applicable to the research,
applied, and diagnostic markets.
Recent Highlights
DNA Analysis
-
The Wellcome Trust of Great Britain has awarded Affymetrix the second
phase of its Case Control Consortium (WTCCC) project. The project will
analyze the genetic information of 60,000 additional individuals,
30,000 of them with the Affymetrix Genome-Wide Human SNP Array 6.0,
plus 6,000 common controls.
-
The Company announced that the Republic of Korea’s National Institute
of Health (NIH) and Center for Disease Control and Prevention is
expanding the Korean Association Resource project from its original
10,000 samples to include an additional 13,000 samples, which will use
the Affymetrix Genome-Wide Human SNP Array 6.0.
-
Affymetrix announced that Case Western Reserve University and the
Translational Genomics Research Institute will run 10,000 samples with
the Affymetrix Genome-Wide Human SNP Array 6.0 to discover genetic
pathways associated with diabetic nephropathy.
-
The Company announced that the Center for Inherited Disease Research
(CIDR) has adopted its Genome-Wide Human SNP Array 6.0 for large-scale
genotyping and copy number projects. CIDR is making Affymetrix-based
genotyping available to supporting members of the National Institutes
of Health.
-
Affymetrix and LineaGen Inc. announced that a team of prominent
researchers at the University of Utah and Vanderbilt University are
leveraging Utah’s deep domain expertise in human genetic research and
the Affymetrix Genome-Wide Human SNP Array 6.0 to discover genetic
markers associated with multiple sclerosis and autism.
RNA Analysis
-
The Company announced that a team of researchers at the Fraunhofer
Institute in Germany is using Affymetrix’ Whole Transcript gene
expression technology to better understand the molecular basis of
drug-induced liver injury.
Molecular Diagnostics
-
Affymetrix and Asuragen Inc., a leading molecular biology diagnostic
company and service provider, announced an agreement to license,
develop and manufacture in vitro transcription (IVT) reagent kits for
molecular diagnostic applications.
-
Affymetrix announced that its technology powers the Ipsogen MapQuant Dx™
Genomic Grade, the first genomic test designed to provide a more
precise measurement of tumor grade than previous techniques.
Affymetrix’ management team will host a conference call on July 24, 2008
at 2:00 p.m. PT to review its operating results for the second quarter
of 2008. 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: (866) 500-AFFX, international: (706) 643-2771.
A replay of this call will be available from 5:00 p.m. PT on July 24,
2008 until 8:00 p.m. PT on July 31, 2008 at the following numbers:
domestic: (800) 642-1687, international: (706) 645-9291. The passcode
for both replays is 55629576. An archived webcast of the conference call
will be available under the Investor Relations section of the Company’s
website at www.affymetrix.com.
About Affymetrix
Affymetrix GeneChip® microarray technology is
the industry-standard tool for analyzing complex genetic information.
After inventing microarray 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 continue to accelerate genetic research and enable scientists
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 leading academic,
government and not-for-profit research institutes. More than 1,700
systems have been shipped around the world and more than 12,000
peer-reviewed papers have been published using the technology.
Affymetrix is headquartered in Santa Clara, Calif., and has
manufacturing facilities in Sacramento, Calif., Cleveland, Ohio and
Singapore. The Company has about 1,100 employees worldwide and maintains
sales and distribution operations across Europe and Asia. For more
information about Affymetrix, please visit: 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 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; 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 to Singapore; 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, 2007, 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.
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED) |
|||||||
|
|||||||
June 30, |
December 31, |
||||||
(Note 1) |
|||||||
ASSETS: |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
325,728 |
$ |
288,644 |
|||
Restricted cash |
4,000 |
— |
|||||
Available-for-sale securities – short-term portion |
263,948 |
205,718 |
|||||
Accounts receivable, net ($67 in 2008 and $389 in 2007 from Perlegen Sciences) |
77,889 |
81,941 |
|||||
Inventories |
49,296 |
42,912 |
|||||
Deferred tax assets – current portion |
15,322 |
28,584 |
|||||
Notes receivable from employees – current portion |
135 |
1,376 |
|||||
Prepaid expenses and other current assets |
10,275 |
17,933 |
|||||
Total current assets |
746,593 |
667,108 |
|||||
Available-for-sale securities – long-term portion |
19,658 |
89,912 |
|||||
Property and equipment, net |
126,639 |
143,884 |
|||||
Acquired technology rights, net |
57,717 |
46,797 |
|||||
Goodwill |
174,129 |
125,050 |
|||||
Deferred tax assets – long-term portion |
38,942 |
18,426 |
|||||
Notes receivable from employees – long-term portion |
— |
487 |
|||||
Other assets |
35,151 |
41,927 |
|||||
Total assets |
$ |
1,198,829 |
$ |
1,133,591 |
|||
|
|||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||
Current liabilities: |
|||||||
Accounts payable and accrued liabilities |
$ |
60,609 |
$ |
61,543 |
|||
Deferred revenue – current portion |
18,024 |
22,498 |
|||||
Total current liabilities |
78,633 |
84,041 |
|||||
Deferred revenue – long-term portion |
3,754 |
3,922 |
|||||
Other long-term liabilities |
10,587 |
10,971 |
|||||
Convertible notes |
436,250 |
436,250 |
|||||
Stockholders’ equity: |
|||||||
Common stock |
702 |
692 |
|||||
Additional paid-in capital |
734,658 |
704,189 |
|||||
Accumulated other comprehensive income |
100 |
1,998 |
|||||
Accumulated deficit |
(65,855 |
) |
(108,472 |
) |
|||
Total stockholders’ equity |
669,605 |
598,407 |
|||||
Total liabilities and stockholders’ equity |
$ |
1,198,829 |
$ |
1,133,591 |
|||
|
Note 1: The condensed consolidated balance sheet at December 31, 2007
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, 2007.
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED) |
||||||||||||||||
|
|
|||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2008 |
|
2007 |
2008 |
|
2007 |
|||||||||||
Revenue: |
||||||||||||||||
Product sales ($6 and $797 in 2008 and $4,423 and $11,101 in 2007 from Perlegen Sciences) |
$ |
75,022 |
$ |
68,409 |
$ |
137,828 |
$ |
132,894 |
||||||||
Services |
9,005 |
12,031 |
17,425 |
20,788 |
||||||||||||
Royalties and other revenue |
2,884 |
7,867 |
101,233 |
15,060 |
||||||||||||
Total revenue |
86,911 |
88,307 |
256,486 |
168,742 |
||||||||||||
|
||||||||||||||||
Costs and expenses: |
||||||||||||||||
Cost of product sales ($0 and $442 in 2008 and $1,907 and $4,328 in 2007 from Perlegen Sciences) |
32,257 |
25,726 |
58,234 |
47,871 |
||||||||||||
Cost of services |
6,691 |
10,760 |
12,369 |
17,166 |
||||||||||||
Cost of royalties and other revenue |
52 |
80 |
52 |
146 |
||||||||||||
Research and development |
19,591 |
19,427 |
38,359 |
38,654 |
||||||||||||
Selling, general and administrative |
29,640 |
33,643 |
64,373 |
69,501 |
||||||||||||
Acquired in-process technology |
— |
— |
800 |
— |
||||||||||||
Restructuring charges |
898 |
1,771 |
14,808 |
7,142 |
||||||||||||
Total costs and expenses |
89,129 |
91,407 |
188,995 |
180,480 |
||||||||||||
Loss (income) from operations |
(2,218 |
) |
(3,100 |
) |
67,491 |
(11,738 |
) |
|||||||||
Interest income and other, net |
2,286 |
5,340 |
9,158 |
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