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FOR IMMEDIATE RELEASE
Contact:
Doug Farrell
Vice President of Investor Relations
408-731-5285
AFFYMETRIX REPORTS RECORD PRODUCT REVENUE AND PROFIT
—First Full Year of GAAP Profitability and Positive Cash Flow—
—Strong Adoption of Next Generation GeneChip® Technology Drives Revenue Growth—
Santa Clara, Calif.—January 28, 2004—Affymetrix, Inc., (Nasdaq: AFFX) today reported its results for the fourth quarter and fiscal year ended December 31, 2003. The Company reported net income of approximately $16.0 million or $0.27 per basic share and $0.26 per diluted share in the fourth quarter of 2003, as compared to net income of $2.9 million or $0.05 per basic and diluted share in the fourth quarter of 2002. For the year, the Company reported net income of approximately $14.3 million or $0.24 per basic and diluted share, as compared to a net loss of $1.6 million or $0.03 per basic and diluted share for 2002.
Net cash provided by operations was $13.1 million for the quarter and $84.9 million for the year ended December 31, 2003. This marked the Company's first fiscal year of positive cash flow from operations.
Total revenue for the quarter was $89.2 million, of which $1.5 million was related to the sale of products and wafers to Perlegen Sciences, Inc., compared to total revenue of $78.3 million in the fourth quarter of 2002, of which $5.1 million was related to the sale of products and wafers to Perlegen. For the full year, total revenue increased to $300.8 million as compared to $289.9 million for 2002.
Product and product related revenue increased to $85.3 million for the fourth quarter of 2003, compared to $69.7 million in the same period in 2002. Fourth quarter product sales included record GeneChip® array revenue of $42.5 million and record instrument revenue of $21.4 million. The combination of next generation system purchases and upgrades contributed to the strong instrument sales during the quarter. In 2003, total product and product related revenue increased to $280.8 million as compared to $248.5 million for 2002. Affymetrix had approximately 970 installed systems at the end of 2003, an increase of more than 20% over 2002.
Royalties and other revenue were $2.4 million for the fourth quarter of 2003 compared to $3.4 million in the fourth quarter of 2002. In 2003, royalties and other revenue were $10.6 million compared to $19.8 million in 2002.
Total operating costs and expenses were $74.2 million for the fourth quarter of 2003 compared to $73.6 million in the fourth quarter of 2002. In 2003, total operating costs and expenses were $283.3 million as compared to $284.6 million in 2002.
Cost of product and product related revenue was $26.8 million in the fourth quarter of 2003 compared to $24.4 million in the same period of 2002. Product and product related gross margin was 68.6% in the fourth quarter of 2003 compared to 65.1% in the fourth quarter of 2002. In 2003, cost of product and product related revenue was $89.8 million as compared to $88.3 million in 2002, resulting in product and product related gross margin of 68.0% in 2003 as compared to 64.5% in 2002.
Research and development expenses were $16.9 million during the fourth quarter of 2003 compared to $18.8 million in the fourth quarter of 2002. In 2003, research and development expenses were $65.9 million as compared to $69.5 million in 2002.
Selling, general and administrative expenses were $28.5 million for the fourth quarter of 2003 compared to $24.8 million in the fourth quarter of 2002. In 2003, selling, general, and administrative expenses were $104.8 million as compared to $96.3 million in 2002. This increase is primarily due to costs associated with the Company commencing direct sales in Japan.
In 2003 Affymetrix;
- •
- Achieved its first full year of GAAP profitability and positive cash flow from operations.
- •
- Launched more than twenty new products, including the world's first human whole genome expression product on a single array.
- •
- Launched a new line of GeneChip products for DNA analysis, including the Mapping 10K Array for whole genome SNP analysis and CustomSeq™ Resequencing Arrays for large-scale resequencing projects.
- •
- Began shipping the 100K Mapping Array to Early Technology Access customers.
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- Introduced its next generation GeneChip Scanner 3000 system, as well as its companion AutoLoader.
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- Introduced an industrialized, automated format of its GeneChip technology in the new HighThroughputArray (HTA) platform, with Johnson & Johnson Pharmaceutical Research & Development as its first pharmaceutical customer and the National Heart Lung and Blood Institute as its first government research institute customer.
- •
- Partnered with Roche Diagnostics in a broad-scale collaboration to commercialize array-based diagnostic products.
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- Entered into numerous collaborations including agreements with Arcturus Bioscience, Inc., Beckman Coulter, Inc., bioMerieux, Ingenuity Systems, Inc., NuGEN Technologies Inc., ParAllele Bioscience and PreAnalytiX GmbH.
- •
- Transitioned to a direct sales model in Japan, strengthening its global infrastructure in the world's three biggest markets for life science research.
Financial Outlook for 2004
For fiscal 2004, the Company expects product and product related revenue of approximately $330-$335 million and total revenue of approximately $345-$350 million. The Company projects around $73 million in product and product related revenue and around $77 million in total revenue for the first quarter in 2004.
Affymetrix' management team will host a conference call to review its operating results for the fourth quarter of 2003 and to provide financial guidance for 2004. A live webcast of the conference call can be accessed by visiting the Investor Relations section of the Company's website atwww.affymetrix.com. In addition, investors and other interested parties can listen by dialing domestic: (888) 737-3798, international: (706) 643-2578 on January 28 at 2:00 p.m. PT. A replay of the conference call will be available until 5:00 p.m. PT on February 4, 2004 at the following numbers: domestic: (800) 642-1687, international: (706) 645-9291; passcode for both: 4811561#. An archived webcast of the conference call will be available under Investor Relations section of the Company's website atwww.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 atwww.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 the length and severity of the current global economic weakness, the reduction 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, 2002 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.
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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)
| | December 31, 2003 | December 31, 2002 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| | | (Note 1) | |||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 275,928 | $ | 67,888 | |||||
| Available-for-sale securities | 183,955 | 293,570 | |||||||
| Accounts receivable, net | 71,343 | 65,986 | |||||||
| Inventories | 22,632 | 26,739 | |||||||
| Prepaid expenses and other current assets | 7,443 | 3,770 | |||||||
| Total current assets | 561,301 | 457,953 | |||||||
| Property and equipment, net | 62,611 | 72,836 | |||||||
| Acquired technology rights, net | 27,818 | 23,039 | |||||||
| Goodwill | 18,601 | 18,601 | |||||||
| Notes receivable from employees | 1,500 | 1,674 | |||||||
| Other assets | 28,333 | 27,300 | |||||||
| Total assets | $ | 700,164 | $ | 601,403 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable and accrued liabilities | $ | 69,646 | $ | 66,864 | |||||
| Deferred revenue—current portion | 30,019 | 19,381 | |||||||
| Convertible subordinated notes—short-term | 267,460 | — | |||||||
| Other current liabilities | 1,398 | — | |||||||
| Total current liabilities | 368,523 | 86,245 | |||||||
| Deferred revenue—long-term portion | 43,346 | — | |||||||
| Other long-term liabilities | 3,240 | 8,322 | |||||||
| Convertible notes | 120,000 | 368,900 | |||||||
| Common stock purchase rights | — | 3,000 | |||||||
| Stockholders' equity: | |||||||||
| Preferred stock | — | — | |||||||
| Common stock | 595 | 585 | |||||||
| Additional paid-in capital | 370,304 | 355,515 | |||||||
| Notes receivable from stockholders | (428 | ) | (720 | ) | |||||
| Deferred stock compensation | (5,185 | ) | (8,015 | ) | |||||
| Accumulated other comprehensive (loss) income | (1,572 | ) | 515 | ||||||
| Accumulated deficit | (198,659 | ) | (212,944 | ) | |||||
| Total stockholders' equity | 165,055 | 134,936 | |||||||
| Total liabilities and stockholders' equity | $ | 700,164 | $ | 601,403 | |||||
| Note 1: | The condensed consolidated balance sheet at December 31, 2002 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, 2002. |
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
| | Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2003 | 2002 | 2003 | 2002 | ||||||||||||
| Revenue: | ||||||||||||||||
| Product sales | $ | 69,307 | $ | 56,873 | $ | 222,748 | $ | 201,594 | ||||||||
| Product related revenue | 16,040 | 12,875 | 58,032 | 46,944 | ||||||||||||
| Total product and product related revenue | 85,347 | 69,748 | 280,780 | 248,538 | ||||||||||||
| Royalties and other revenue | 2,362 | 3,446 | 10,556 | 19,777 | ||||||||||||
| Revenue from Perlegen Sciences | 1,455 | 5,105 | 9,460 | 21,559 | ||||||||||||
| Total revenue | 89,164 | 78,299 | 300,796 | 289,874 | ||||||||||||
Costs and expenses: | ||||||||||||||||
| Cost of product sales | 23,948 | 22,299 | 80,158 | 82,597 | ||||||||||||
| Cost of product related revenue | 2,852 | 2,061 | 9,657 | 5,718 | ||||||||||||
| Cost of revenue from Perlegen Sciences | 1,455 | 4,546 | 9,460 | 21,000 | ||||||||||||
| Research and development | 16,919 | 18,773 | 65,909 | 69,520 | ||||||||||||
| Selling, general and administrative | 28,547 | 24,846 | 104,797 | 96,260 | ||||||||||||
| Amortization of deferred stock compensation | 386 | 781 | 2,238 | 8,388 | ||||||||||||
| Amortization of purchased intangibles | 93 | 281 | 937 | 1,125 | ||||||||||||
| Charge for acquired in-process research and development | — | — | 10,096 | — | ||||||||||||
| Total costs and expenses | 74,200 | 73,587 | 283,252 | 284,608 | ||||||||||||
| Income from operations | 14,964 | 4,712 | 17,544 | 5,266 | ||||||||||||
| Interest income and other, net | 5,897 | 3,246 | 16,662 | 13,535 | ||||||||||||
| Interest expense | (3,632 | ) | (4,942 | ) | (17,358 | ) | (19,730 | ) | ||||||||
| Net income (loss) before income taxes | 17,229 | 3,016 | 16,848 | (929 | ) | |||||||||||
| Income tax provision | (1,219 | ) | (100 | ) | (2,563 | ) | (701 | ) | ||||||||
| Net income (loss) | $ | 16,010 | $ | 2,916 | $ | 14,285 | $ | (1,630 | ) | |||||||
Basic net income (loss) per share | $ | 0.27 | $ | 0.05 | $ | 0.24 | $ | (0.03 | ) | |||||||
Diluted net income (loss) per share | $ | 0.26 | $ | 0.05 | $ | 0.24 | $ | (0.03 | ) | |||||||
Shares used in computing basic net income (loss) per share | 59,298 | 58,265 | 58,860 | 58,018 | ||||||||||||
Shares used in computing diluted net income (loss) per share | 61,002 | 60,460 | 60,583 | 58,018 | ||||||||||||
AFFYMETRIX REPORTS RECORD PRODUCT REVENUE AND PROFIT
AFFYMETRIX, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
AFFYMETRIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)