-- Company reports total revenue of $81.6 million and net income of $7.3 million --
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.
Operations
During the second quarter, the Company completed the previously announced initiatives to consolidate array manufacturing in Singapore and reagent manufacturing to Cleveland, Ohio.
Governance
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 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 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.
