Affymetrix Reports Third Quarter 2004 Results - Company Raises
Full-Year Earnings Guidance and Maintains Full-Year Revenue
Guidance - SANTA CLARA, Calif., Oct. 20 /PRNewswire-FirstCall/ --
Affymetrix, Inc., (NASDAQ:AFFX) today reported its results for the
third quarter of 2004. The Company reported net income of
approximately $15.4 million or $0.25 per basic and diluted share in
the third quarter of 2004, as compared to a net income of $5.8
million or $0.10 per basic and diluted share in the third quarter
of 2003. Total revenue for the quarter was $79.9 million, of which
$0.9 million was related to the sale of products and wafers to
Perlegen Sciences, Inc., as compared to total revenue of $76.2
million in the third quarter of 2003, of which $2.7 million was
related to the sale of products and wafers to Perlegen. Third
quarter 2004 product orders exceeded product revenue by $9 million.
This included over $4 million in selected arrays and reagents that
exceeded the Company's inventory for those products. The Company
expects the $4 million in orders to ship early in the fourth
quarter. Product and product related revenue increased to $76.2
million for the third quarter of 2004, compared to $71.1 million in
the same period in 2003. Third quarter product sales included
GeneChip(R) array revenue of $37.5 million and instrument revenue
of $16.4 million. The year-over-year growth in product and product
related revenue was driven by continued adoption of the
next-generation GeneChip(R) instrumentation and continued growth of
consumable sales including arrays and reagents. In addition,
Affymetrix increased its installed base to more than 1120 GeneChip
systems. Royalties and other revenue were $2.7 million for the
third quarter of 2004 compared to $2.3 million in the third quarter
of 2003. Total operating costs and expenses were $65.1 million for
the third quarter of 2004 compared to $68.8 million in the third
quarter of 2003. Cost of product and product related revenue was
$19.5 million in the third quarter of 2004 compared to $24.7
million in the same period of 2003. Product and product related
gross margin was 74.5% in the third quarter of 2004 compared to
65.3% in the third quarter of 2003. Research and development
expenses were $17.8 million during the third quarter of 2004
compared to $16.5 million in the third quarter of 2003. Selling,
general and administrative expenses were $27.0 million for the
third quarter of 2004 compared to $24.1 million in the third
quarter of 2003. Company Highlights -- Affymetrix achieved ISO
Certification for the Company's instrumentation and chip
manufacturing facilities. This achievement supports CE marking
(Conformite Europeene) of GeneChip-based in-vitro diagnostic
products for sale within the European Community. -- The first
microarray-based instrument system for clinical diagnostics -- the
GeneChip(R) System 3000Dx -- was CE marked for in-vitro diagnostic
use. This begins the European commercialization of the Affymetrix
platform in clinical diagnostics. In addition, Roche Diagnostics
launched the Roche AmpliChip(TM) CYP450 Test in Europe for clinical
use. -- The National Human Genome Research Institute has selected
Perlegen Sciences to perform over 600 million genotypes for Phase
II of the International HapMap Project using Affymetrix technology.
-- The Environmental Protection Agency will be working with
Affymetrix to develop improved tests for identifying hazardous
chemicals in order to protect human health and the environment. --
Affymetrix received a grant from the National Institute for Allergy
and Infectious Diseases to develop a multi-pathogen identification
DNA microarray test that is expected to offer researchers the
quickest, most comprehensive test to date for combating
bioterrorism. -- Affymetrix announced that researchers at the Broad
Institute of the Massachusetts Institute of Technology and Harvard
University will use Affymetrix products, including the new
GeneChip(R) High-Throughput System, to perform large-scale,
comprehensive studies in RNA expression analysis, SNP genotyping,
and DNA resequencing. -- Affymetrix announced that Erasmus
University Medical Center in Rotterdam will use Affymetrix
technology in a wide variety of translational medicine initiatives
ranging from pediatrics to geriatrics; infectious disease to
cancer. -- Affymetrix was named an "Outstanding Corporate Innovator
for 2004" by the Product Development & Management Association.
In addition, Affymetrix received the R&D 100 Award from R&D
Magazine for the GeneChip Scanner 3000 with AutoLoader. Financial
Outlook For fiscal year 2004, the Company maintains its previous
guidance of product and product related revenue of around $330-335
million. The Company is raising its guidance for earnings per
diluted share from $0.60 to $0.70. Affymetrix' management team will
host a conference call to review its operating results for the
third quarter of 2004 and to provide financial guidance for the
remainder of 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: 877-691-0878; international: 973-582-2776 on October 20
at 2:00 p.m. Pacific Time. A replay of the conference call will be
available until 5:00 p.m. Pacific Time on October 27, 2004 at the
following numbers: domestic: 877-519-4471; international:
973-341-3080; passcode for both: #5265716. 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) September 30, December 31, 2004
2003 (Note 1) ASSETS Current assets: Cash and cash equivalents
$26,369 $275,928 Available-for-sale securities 155,359 183,955
Accounts receivable 65,823 71,343 Inventories 19,807 22,632 Prepaid
expenses and other current assets 7,683 7,443 Total current assets
275,041 561,301 Property and equipment, net 62,630 62,611 Acquired
technology rights, net 65,578 27,818 Goodwill 18,601 18,601 Notes
receivable from employees 2,715 1,500 Other assets 27,443 28,333
$452,008 $700,164 LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable and accrued liabilities $52,960
$71,044 Deferred revenue - current portion 31,932 30,019
Convertible subordinated notes - short-term -- 267,460 Total
current liabilities 84,892 368,523 Deferred revenue - long-term
portion 33,064 43,346 Other long-term liabilities 4,299 3,240
Convertible notes 120,000 120,000 Stockholders' equity: Common
stock 608 595 Additional paid-in capital 393,270 370,304 Notes
receivable from stockholders -- (428) Deferred stock compensation
(4,270) (5,185) Accumulated other comprehensive loss (1,749)
(1,572) Accumulated deficit (178,106) (198,659) Total stockholders'
equity 209,753 165,055 $452,008 $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 Nine Months Ended September 30,
September 30, 2004 2003 2004 2003 Revenue: Product sales $62,318
$57,467 $185,073 $153,441 Product related revenue 13,928 13,625
40,961 41,992 Total product and product related revenue 76,246
71,092 226,034 195,433 Royalties and other revenue 2,742 2,349
8,300 8,194 Revenue from Perlegen Sciences 879 2,744 3,920 8,005
Total revenue 79,867 76,185 238,254 211,632 Costs and expenses:
Cost of product sales 17,107 22,393 57,227 56,210 Cost of product
related revenue 2,367 2,304 7,299 6,805 Cost of revenue from
Perlegen Sciences 569 2,744 3,039 8,005 Research and development
17,791 16,463 52,892 48,990 Selling, general and administrative
26,989 24,092 85,212 76,250 Amortization of deferred stock
compensation 267 484 915 1,852 Amortization of purchased
intangibles -- 281 -- 844 Charge for acquired in-process technology
-- -- -- 10,096 Total costs and expenses 65,090 68,761 206,584
209,052 Income from operations 14,777 7,424 31,670 2,580 Interest
and other income, net 1,638 2,403 1,773 10,765 Interest expense
(437) (3,559) (10,675) (13,726) Income (loss) before income taxes
15,978 6,268 22,768 (381) Income tax provision (601) (466) (2,215)
(1,344) Net income (loss) $15,377 $5,802 $20,553 $(1,725) Basic net
income (loss) per share $0.25 $0.10 $0.34 $(0.03) Diluted net
income (loss) per share $0.25 $0.10 $0.33 $(0.03) Shares used in
computing basic net income (loss) per share 60,617 58,881 60,300
58,717 Shares used in computing diluted net income (loss) per share
62,688 60,485 62,749 58,717 DATASOURCE: Affymetrix, Inc. CONTACT:
Doug Farrell, Vice President of Investor Relations of Affymetrix,
Inc., +1-408-731-5285 Web site: http://www.affymetrix.com/
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