UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 29, 2015
AFFYMETRIX, INC.
(Exact name of registrant as specified in its charter)
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| | | | |
DELAWARE | | 0-28218 | | 77-0319159 |
(State of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
3420 Central Expressway
Santa Clara, California 95051
(Address of principal executive offices) (Zip Code)
(408) 731-5000
Registrant's telephone number, including area code
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On July 29, 2015, Affymetrix, Inc. (the "Company") issued a press release announcing the Company's operating results for the three and six months ended June 30, 2015. A copy of the Company's press release is attached hereto as Exhibit 99.1.
The information furnished under Item 2.02 of this Current Report on Form 8-K, including the exhibit, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor shall it be deemed incorporated by reference into Affymetrix' filings with the SEC under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific referen
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
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| | |
Exhibit No. | | Description |
| | |
99.1 | | Press Release dated July 29, 2015 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | |
| AFFYMETRIX, INC. |
| |
| |
| By: | /s/ GAVIN WOOD |
| | Name: | Gavin H. J. Wood |
| | Title: | Executive Vice President and |
| | | Chief Financial Officer |
Dated: July 29, 2015
EXHIBIT INDEX
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| | |
Exhibit No. | | Description |
| | |
99.1 | | Press Release dated July 29, 2015 |
EXHIBIT 99.1
Contact:
Doug Farrell
Vice President of Investor Relations
408-731-5285
AFFYMETRIX REPORTS SECOND QUARTER 2015 OPERATING RESULTS
Santa Clara, Calif.—July 29, 2015—Affymetrix, Inc., (NASDAQ: AFFX) today reported its operating results for the second quarter of 2015.
Results for the three months ended June 30, 2015:
| |
• | Reported revenue growth of 4.1% and 7.9% on a constant currency basis. |
| |
• | Total revenue was $89.0 million, compared to $85.4 million in second quarter of 2014. |
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• | GAAP net income was $7.0 million, or $0.08 per diluted share, as compared to a GAAP net loss of $0.9 million, or $0.01 per diluted share, in the second quarter of 2014, an increase of $7.9 million or $0.09 per diluted share. |
| |
• | Non-GAAP net income was $10.5 million, or $0.12 per diluted share, compared to a non-GAAP net income of $5.2 million, or $0.07 per diluted share, for the second quarter of 2014. Please refer to "Itemized Reconciliation Between GAAP and Non-GAAP Net Income (Loss)" for a reconciliation of these GAAP and non-GAAP financial measures. |
| |
• | The Company announced the acquisition of Eureka Genomics for $15 million in an all cash transaction. |
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• | Net proceeds of $19.4 million were raised through an "at-the-market" offering. |
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• | Total balance in cash and cash equivalents was $119.6 million and senior debt was $21.0 million as of June 30, 2015. |
Product revenue for the second quarter of 2015 was $79.9 million and service and other revenue was $9.1 million. This compares to product revenue of $75.9 million and service and other revenue of $9.6 million in the second quarter of 2014. Product revenue for the second quarter of 2015 included consumable revenue of $76.1 million and instrument revenue of $3.8 million. Product revenue for the second quarter of 2014 included consumable revenue of $72.6 million and instrument revenue of $3.3 million.
Total GAAP gross margin was 64%, as compared to 57% in the same period of 2014. Excluding non-GAAP adjustments such as the amortization of acquired intangible assets, non-GAAP gross margin for the second quarter of 2015 was 65% compared to 61% in the same period of 2014. This improvement was driven by higher utilization rates in our manufacturing plants as well as favorable product mix in the quarter. Please refer to the "Itemized Reconciliation Between GAAP and Non-GAAP Gross Margin" for a reconciliation of these GAAP and non-GAAP financial measures.
For the second quarter of 2015, operating expenses were $48.6 million on a GAAP basis as compared to $49.1 million in the same period of 2014. Excluding non-GAAP adjustments, such as the amortization of acquired intangible assets, non-GAAP operating expenses for the second quarter of 2015 were $46.4 million, compared to an adjusted total of $46.2 million in the same period of 2014. Operating expenses remained flat as targeted investments in the business were offset by lower amortization and depreciation and reduced legal expenses. Please refer to the "Itemized Reconciliation Between GAAP and Non-GAAP Operating Expenses" for a reconciliation of these GAAP and non-GAAP financial measures.
“We generated topline growth of 8% on a constant currency basis in the second quarter driven by continued momentum in our clinical business and solid performance in our eBioscience business,” stated Frank Witney, President and CEO.
“We reiterate our guidance for full year revenue growth in the mid-single digit range on a constant currency basis and we are raising our adjusted EBITDA guidance from a range of 16-18% to 17-19% for 2015.”
Recent developments:
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• | The Company announced the acquisition of Eureka Genomics for $15 million in an all cash transaction. Eureka Genomics has developed proprietary, low-to mid-plex, high throughput genotyping assays that use next-generation sequencing (NGS) platforms for signal readout. These assays enable the cost-effective detection of hundreds to thousands of genetic markers which are increasingly in demand for routine agrigenomic testing of both crops and animals. |
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• | Affymetrix, BioRealm LLC, and RUCDR Infinite Biologics announced a broad strategic alliance. This alliance will leverage BioRealm's SmokeScreen® platform to genotype the National Institute on Drug Abuse (NIDA) biorepository of more than 50,000 samples, collected from human subjects studied in NIDA-funded research. NIDA preserves these samples in a biorepository at RUCDR Infinite Biologics, on the campus of Rutgers University. The biorepository is maintained by RUCDR Infinite Biologics and in part through collaboration with the BioProcessing Solutions Alliance which was created by RUDCR Infinite Biologics and BioStorage Technologies, the global leader in comprehensive sample management. |
| |
• | Riccardo Pigliucci has been appointed to the company’s board of directors effective May 13, 2015. Mr. Pigliucci will serve as a member of the Compensation Committee. Mr. Pigliucci has served as the Managing Partner of Aldwych Associates, LLP, a management and technology consulting partnership since 2006. Prior to joining Aldwych Associates, Mr. Pigliucci was Chairman and Chief Executive Officer of Discovery Partners International (DPI), a supplier of equipment and services to the drug discovery market. |
Affymetrix will host a conference call on Wednesday, July 29, 2015 at 2:00 p.m. PT to review its operating results for the second quarter of 2015. 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: (877) 407-8291, international: (201) 689-8345.
A replay of this call will be available from 5:00 p.m. PT on July 29, 2015 until 8:00 p.m. PT on August 5, 2015 at the following numbers: domestic: (877) 660-6853, international: (201) 612-7415. The conference call passcode to access the replay is 13613606. An archived webcast of the conference call will be available under the Investor Relations section of the Company's website.
About Affymetrix
Affymetrix technology is used by the world's top pharmaceutical, diagnostic and biotechnology companies, as well as leading academic, government and nonprofit research institutes. More than 2,300 systems have been shipped around the world and more than 94,500 peer-reviewed papers have been published using the technology. Affymetrix is headquartered in Santa Clara, California, and has manufacturing facilities in Cleveland, Ohio, San Diego, California, Singapore and Vienna, Austria. The Company has about 1,200 employees worldwide and maintains sales and distribution operations across Europe, Asia and Latin America.
All statements in this press release that are not historical in nature, are predicative in nature or that depend upon or refer to future events or conditions are "forward-looking statements" within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These include statements regarding our strategic initiatives, market expectations, integration of and synergies related to eBioscience, anticipated product and revenue growth, financial strength and regulatory environment, as well as all other "expectations," "beliefs," "hopes," "intentions," "strategies" and words of similar import and the negatives thereof. Such statements are based on our current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. We cannot assure you that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, those discussed in “Risk Factors” contained in Part I, Item
1A of our Annual Report on Form 10-K for the year ended December 31, 2014. These forward-looking statements speak only as of the date of the press release. Unless required by law, we do not undertake to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.
In addition to providing financial measures based on generally accepted accounting principles in the United States (GAAP), Affymetrix has disclosed in this press release its net income (loss) and net income (loss) per share as well as its total gross margin and operating expenses for the second quarter of 2015 and 2014 excluding specified items. Reconciliation of GAAP to Non-GAAP measures can be found in the tables included in this press release. Affymetrix has determined to disclose this financial information to investors because it believes it will be useful, as a supplement to GAAP measures, in comparing Affymetrix's operating performance in the second quarter of 2015 as compared to the prior-year period. These Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
PLEASE NOTE:
Affymetrix, the Affymetrix logo, GeneChip, and all other trademarks are the property of Affymetrix, Inc.
- Financial Charts to Follow -
AFFYMETRIX, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS) |
| | | | | | | |
| June 30, 2015 | | December 31, 2014 |
ASSETS: | | | (Note 1) |
Current assets: | | | |
Cash and cash equivalents | $ | 119,597 |
| | $ | 79,923 |
|
Accounts receivable, net | 52,769 |
| | 46,896 |
|
Inventories, net—short-term portion | 54,030 |
| | 50,676 |
|
Deferred tax assets—short-term portion | 3,731 |
| | 3,778 |
|
Prepaid expenses and other current assets | 9,065 |
| | 9,197 |
|
Total current assets | 239,192 |
| | 190,470 |
|
Property and equipment, net | 20,861 |
| | 18,087 |
|
Inventories, net—long-term portion | 4,849 |
| | 5,956 |
|
Goodwill | 156,834 |
| | 156,178 |
|
Intangible assets, net | 107,920 |
| | 106,183 |
|
Deferred tax assets—long-term portion | 297 |
| | 303 |
|
Other long-term assets | 8,417 |
| | 9,371 |
|
Total assets | $ | 538,370 |
| | $ | 486,548 |
|
| |
| | |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY: | |
| | |
|
Current liabilities: | | | |
Accounts payable and accrued liabilities | $ | 45,882 |
| | $ | 53,063 |
|
Current portion of long-term debt | 4,000 |
| | 4,000 |
|
Deferred revenue—short-term portion | 8,128 |
| | 9,210 |
|
Total current liabilities | 58,010 |
| | 66,273 |
|
Deferred revenue—long-term portion | 2,348 |
| | 2,372 |
|
4.00% notes | 105,000 |
| | 105,000 |
|
Term loan—long-term portion | 16,950 |
| | 18,950 |
|
Other long-term liabilities | 20,601 |
| | 21,626 |
|
Total liabilities | 202,909 |
| | 214,221 |
|
Stockholders’ equity: | | | |
Common stock | 798 |
| | 743 |
|
Additional paid-in capital | 840,400 |
| | 781,747 |
|
Accumulated other comprehensive income | (7,578 | ) | | (612 | ) |
Accumulated deficit | (498,159 | ) | | (509,551 | ) |
Total stockholders’ equity | 335,461 |
| | 272,327 |
|
Total liabilities and stockholders’ equity | $ | 538,370 |
| | $ | 486,548 |
|
|
| |
Note 1: | The condensed consolidated balance sheet at December 31, 2014 has been derived from the audited consolidated financial statements at that date included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014. |
AFFYMETRIX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
|
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
REVENUE: | | | | | | | |
Product sales | $ | 79,897 |
| | $ | 75,880 |
| | $ | 159,265 |
| | $ | 149,576 |
|
Services and other | 9,069 |
| | 9,552 |
| | 18,419 |
| | 18,827 |
|
Total revenue | 88,966 |
| | 85,432 |
| | 177,684 |
| | 168,403 |
|
COSTS AND EXPENSES: | |
| | |
| | | | |
Cost of product sales | 27,156 |
| | 30,560 |
| | 54,741 |
| | 60,071 |
|
Cost of services and other | 4,731 |
| | 6,028 |
| | 11,027 |
| | 12,932 |
|
Research and development | 12,911 |
| | 12,882 |
| | 25,032 |
| | 24,517 |
|
Selling, general and administrative | 35,642 |
| | 36,266 |
| | 71,074 |
| | 74,828 |
|
Litigation settlement | — |
| | — |
| | — |
| | 5,100 |
|
Total costs and expenses | 80,440 |
| | 85,736 |
| | 161,874 |
| | 177,448 |
|
Income (loss) from operations | 8,526 |
| | (304 | ) | | 15,810 |
| | (9,045 | ) |
Other income (expense), net | 275 |
| | 1,418 |
| | (398 | ) | | 1,711 |
|
Interest expense | 1,471 |
| | 1,623 |
| | 2,953 |
| | 3,377 |
|
Income (loss) before income taxes | 7,330 |
| | (509 | ) | | 12,459 |
| | (10,711 | ) |
Income tax provision | 324 |
| | 402 |
| | 1,067 |
| | 674 |
|
Net income (loss) | $ | 7,006 |
| | $ | (911 | ) | | $ | 11,392 |
| | $ | (11,385 | ) |
| | | | | | | |
Basic net income (loss) per common share | $ | 0.09 |
| | $ | (0.01 | ) | | $ | 0.15 |
| | $ | (0.16 | ) |
Diluted net income (loss) per common share | $ | 0.08 |
| | $ | (0.01 | ) | | $ | 0.14 |
| | $ | (0.16 | ) |
| | | | | | | |
Shares used in computing basic net income (loss) per common share | 78,476 |
| | 72,944 |
| | 76,951 |
| | 72,722 |
|
Shares used in computing diluted net income (loss) per common share | 99,462 |
| | 72,944 |
| | 98,019 |
| | 72,722 |
|
AFFYMETRIX, INC.
RESULTS OF OPERATIONS – NON-GAAP
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME (LOSS)
|
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
GAAP net income (loss) - basic and diluted | $ | 7,006 |
| | $ | (911 | ) | | $ | 11,392 |
| | $ | (11,385 | ) |
Amortization of inventory fair value adjustment | — |
| | 1,770 |
| | — |
| | 4,666 |
|
Amortization of acquired intangible assets | 3,448 |
| | 4,298 |
| | 6,946 |
| | 8,680 |
|
Litigation settlement | — |
| | — |
| | — |
| | 5,100 |
|
Non-GAAP net income - basic and diluted | $ | 10,454 |
| | $ | 5,157 |
| | $ | 18,338 |
| | $ | 7,061 |
|
| | | | | | | |
Non-GAAP basic net income per common share | $ | 0.13 |
| | $ | 0.07 |
| | $ | 0.24 |
| | $ | 0.10 |
|
Non-GAAP diluted net income per common share (Note 1) | $ | 0.12 |
| | $ | 0.07 |
| | $ | 0.21 |
| | $ | 0.10 |
|
| | | | | | | |
Shares used in computing Non-GAAP basic net income per common share | 78,476 |
| | 72,944 |
| | 76,951 |
| | 72,722 |
|
Shares used in computing Non-GAAP diluted net income per common share (Note 2) | 99,462 |
| | 72,944 |
| | 98,019 |
| | 72,722 |
|
Note 1 - For non-GAAP diluted net income per common share calculations, exclude $1.2 million and $2.4 million, respectively, of interest expense for the three and six months ended June 30, 2015, related to the interest rate on the Company's 4.00% convertible senior notes, since these securities were dilutive.
Note 2 - Weighted average shares outstanding includes the dilutive effect, if any, of employee stock options, employee stock purchase plan, restricted stock awards, and convertible senior notes.
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP GROSS MARGIN
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
GAAP total gross margin | $ | 57,079 |
| | 64 | % | | $ | 48,844 |
| | 57 | % | | $ | 111,916 |
| | 63 | % | | $ | 95,400 |
| | 57 | % |
Amortization of inventory fair value adjustment | — |
| | — | % | | 1,770 |
| | 2 | % | | — |
| | — | % | | 4,666 |
| | 3 | % |
Amortization of acquired intangible assets | 1,247 |
| | 1 | % | | 1,362 |
| | 2 | % | | 2,515 |
| | 1 | % | | 2,722 |
| | 1 | % |
Non-GAAP total gross margin | $ | 58,326 |
| | 65 | % | | $ | 51,976 |
| | 61 | % | | $ | 114,431 |
| | 64 | % | | $ | 102,788 |
| | 61 | % |
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP OPERATING EXPENSES
|
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Total GAAP operating expenses | $ | 48,553 |
| | $ | 49,148 |
| | $ | 96,106 |
| | $ | 104,445 |
|
Amortization of acquired intangible assets | (2,201 | ) | | (2,936 | ) | | (4,431 | ) | | (5,958 | ) |
Litigation settlement | — |
| | — |
| | — |
| | (5,100 | ) |
Total Non-GAAP operating expenses | $ | 46,352 |
| | $ | 46,212 |
| | $ | 91,675 |
| | $ | 93,387 |
|
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP ADJUSTED EBITDA AS PERCENTAGE OF REVENUE
|
| | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
GAAP net income (loss) | $ | 7,006 |
| | $ | (911 | ) | | $ | 11,392 |
| | $ | (11,385 | ) |
Depreciation and amortization | 5,340 |
| | 7,808 |
| | 10,855 |
| | 16,527 |
|
Amortization of inventory fair value adjustment | — |
| | 1,770 |
| | — |
| | 4,666 |
|
Interest expense, net | 1,468 |
| | 1,607 |
| | 2,969 |
| | 3,331 |
|
Income tax provision | 324 |
| | 402 |
| | 1,067 |
| | 674 |
|
EBITDA | 14,138 |
| | 10,676 |
| | 26,283 |
| | 13,813 |
|
| | | | | | | |
Adjustments to EBITDA: | | | | | | | |
Share-based compensation | 3,224 |
| | 3,128 |
| | 7,287 |
| | 6,272 |
|
(Gain) loss on foreign currency | (245 | ) | | 103 |
| | 931 |
| | 335 |
|
Litigation charges | 44 |
| | 1,462 |
| | 312 |
| | 8,359 |
|
(Gain) loss on sales of securities | 5 |
| | (1,255 | ) | | (54 | ) | | (1,240 | ) |
Other adjustments | (32 | ) | | (250 | ) | | (494 | ) | | (759 | ) |
Adjusted EBITDA | $ | 17,134 |
| | $ | 13,864 |
| | $ | 34,265 |
| | $ | 26,780 |
|
| | | | | | | |
Revenue | $ | 88,966 |
| | $ | 85,432 |
| | $ | 177,684 |
| | $ | 168,403 |
|
| | | | | | | |
Adjusted EBITDA as percentage of revenue | 19 | % | | 16 | % | | 19 | % | | 16 | % |
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