AFFX Affymetrix, Inc.

Affymetrix Reports First Quarter 2004 Results Product and Product Related Revenue Increases by 22% Over Prior Year SANTA CLARA, Calif., April 21 /PRNewswire-FirstCall/ -- Affymetrix, Inc. , today reported its results for the first quarter of 2004. The Company reported a net loss of approximately $1.8 million or $0.03 per basic and diluted share in the first quarter of 2004, as compared to a net loss of $12.7 million or $0.22 per basic and diluted share in the first quarter of 2003. This loss includes a charge of $8.1 million or $0.14 per share associated with the Company's redemption of its 4.75% and 5.0% convertible subordinated notes. Total revenue for the quarter was $78.6 million, of which $1.6 million was related to the sale of products and wafers to Perlegen Sciences, Inc., compared to total revenue of $66.8 million in the first quarter of 2003, of which $2.5 million was related to the sale of products and wafers to Perlegen. Product and product related revenue increased to $74.6 million for the first quarter of 2004, compared to $61.1 million in the same period in 2003. First quarter product sales included GeneChip(R) array revenue of $38.0 million and instrument revenue of $15.6 million. Strong product sales resulted from continued adoption of the next-generation GeneChip scanner 3000 system, rapid adoption of new DNA analysis products, record reagent sales, and customer adoption of the Company's single-chip, whole-genome expression products. In addition, Affymetrix increased its installed base to more than 1,000 GeneChip systems. Royalties and other revenue were $2.4 million for the first quarter of 2004 compared to $3.2 million in the first quarter of 2003. Total operating costs and expenses were $70.8 million for the first quarter of 2004 compared to $76.5 million in the first quarter of 2003. Cost of product and product related revenue was $23.6 million in the first quarter of 2004 compared to $19.0 million in the same period of 2003. Product and product related gross margin was 68.4% in the first quarter of 2004 compared to 68.9% in the first quarter of 2003. Research and development expenses were $17.3 million during the first quarter of 2004 compared to $15.9 million in the first quarter of 2003. Selling, general and administrative expenses were $28.3 million for the first quarter of 2004 compared to $28.0 million in the first quarter of 2003. Quarterly Highlights -- IBM and Affymetrix teamed to deliver tools to accelerate translational and information-based medicine. -- The Company continued to solidify its presence in the DNA analysis market with the following accomplishments: -- Affymetrix and the Translational Genomics Research Institute (TGen) partnered to offer genotyping services to collaborators using GeneChip DNA analysis products. -- New evidence for whole genome linkage in Bipolar Disorder discovered using Affymetrix GeneChip Mapping 10K array. -- NHGRI and UC Davis to conduct large scale SNP discovery in Drosophila melanogaster using Affymetrix arrays. -- The new GeneChip Mapping 100K Array Set now broadly available through an early technology access program. -- Affymetrix and the Centers for Disease Control and Prevention (CDC) developed a GeneChip brand array set for resequencing the entire smallpox genome. -- Affymetrix launched new rat and drosophila arrays in whole-genome, single-chip format for gene expression analysis. -- Affymetrix entered into an agreement with Aventis Pharmaceuticals on its High-Throughput GeneChip platform. Financial Outlook For the second quarter of 2004 the Company expects product and product related revenue of approximately $75 million, total revenue of around $78 million, and net income per diluted share of $0.03. Affymetrix' management team will host a conference call to review its operating results for the first quarter of 2004 and to provide financial guidance for the second quarter of 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 April 21 at 2:00 p.m. PT. A replay of the conference call will be available until 5:00 p.m. PT on April 28, 2004 at the following numbers: domestic: 800-642-1687, international: 706-645-9291; passcode for both: 6683630#. 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, uncertainties relating to global economic weakness, 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. 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) March 31, Dec. 31, 2004 2003 (Note 1) ASSETS Current assets: Cash and cash equivalents $40,005 $275,928 Available-for-sale securities 171,726 183,955 Accounts receivable 65,144 71,343 Inventories 20,901 22,632 Prepaid expenses and other current assets 4,646 7,443 Total current assets 302,422 561,301 Property and equipment, net 62,421 62,611 Acquired technology rights, net 26,874 27,818 Goodwill 18,601 18,601 Notes receivable from employees 2,717 1,500 Other assets 26,862 28,333 $439,897 $700,164 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $60,427 $69,646 Deferred revenue - current portion 34,686 30,019 Convertible subordinated notes - short-term -- 267,460 Other current liabilities 1,149 1,398 Total current liabilities 96,262 368,523 Deferred revenue - long-term portion 40,225 43,346 Other long-term liabilities 3,577 3,240 Convertible notes 120,000 120,000 Stockholders' equity: Common stock 603 595 Additional paid-in capital 386,115 370,304 Notes receivable from stockholders (440) (428) Deferred stock compensation (4,861) (5,185) Accumulated other comprehensive loss (1,092) (1,572) Accumulated deficit (200,492) (198,659) Total stockholders' equity 179,833 165,055 $439,897 $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 March 31, 2004 2003 Revenue: Product sales $61,091 $46,754 Product related revenue 13,522 14,394 Total product and product related revenue 74,613 61,148 Royalties and other revenue 2,371 3,154 Revenue from Perlegen Sciences 1,649 2,509 Total revenue 78,633 66,811 Costs and expenses: Cost of product sales 20,732 16,820 Cost of product related revenue 2,856 2,193 Cost of revenue from Perlegen Sciences 1,371 2,509 Research and development 17,296 15,905 Selling, general and administrative 28,269 27,975 Amortization of deferred stock compensation 324 695 Amortization of purchased intangibles -- 281 Charge for acquired in-process technology -- 10,096 Total costs and expenses 70,848 76,474 Income (loss) from operations 7,785 (9,663) Interest income and other, net 1,075 2,375 Interest expense (9,834) (4,900) Net loss before income taxes (974) (12,188) Income tax provision (859) (534) Net loss $(1,833) $(12,722) Basic and diluted net loss per share $(0.03) $(0.22) Shares used in computing basic and diluted net loss per share 59,903 58,549 DATASOURCE: Affymetrix, Inc. CONTACT: Doug Farrell, Vice President of Investor Relations of Affymetrix, Inc., +1-408-731-5285 Web site: http://www.affymetrix.com/

Copyright