Affymetrix Reports Third Quarter 2009 Results

Product revenue was $66.2 million, which consisted of consumable revenue of $62.0 million and instrument revenue of $4.2 million. Service revenue was $9.9 million, and royalties and other revenue were $2.1 million. This compares to third quarter 2008 product revenue of $66.0 million, service revenue of $6.1 million, and royalties and other revenue of $3.1 million.

Affymetrix shipped 21 systems in the third quarter of 2009, bringing its cumulative systems shipped to about 1,890.

The Company reported a net loss of approximately $8.8 million, or $0.13 per diluted share, in the third quarter of 2009 which included a pretax restructuring credit of $0.3 million. This compares to a net loss of $31.8 million, or $0.46 per diluted share, in the third quarter of 2008, which included a pretax restructuring charge of $14.6 million, or $0.21 per diluted share.

Cost of product sales was $30.7 million in the third quarter of 2009 as compared to $32.3 million in the same period of 2008. Cost of services and other was $5.1 million compared to $5.8 million in the third quarter of 2008.

Product gross margin was 54 percent in the third quarter of 2009 compared to 51 percent in the third quarter of 2008.

Operating expenses were $49.1 million for the third quarter of 2009, which includes restructuring credit of $0.3 million, as compared to operating expenses of $68.8 million in the third quarter of 2008, which included restructuring charges and in-process research and development costs of $14.6 million and $5.1 million, respectively.

"Revenue for the third quarter increased 4% over the prior year and was within the range of our guidance," stated Kevin King, CEO of Affymetrix. "While gross margin improved by 5 points over last year, we have more work to do to generate additional margin contribution from new products going forward. Finally, we maintained good control of our operating expenses."

King continued, "I'm very excited about the launch of our Axiom Genotyping Solution, and our groundbreaking partnership with Kaiser Permanente and the University of California, San Francisco on one of the largest genotyping projects ever that will study disease, health and aging with our new platform."

Quarterly Highlights

Genotyping

In October, Kaiser Permanente and the University of California at San Francisco (UCSF) entered into an agreement with Affymetrix to conduct genome-wide analyses of DNA samples from 100,000 Kaiser Permanente members for a large-scale research program designed to create a new resource for studying disease, health, and aging. Scientists from the program will use the just-launched Axiom Genotyping Solution, which delivers high-throughput, automated technology enabling researchers to find novel and common genetic variations associated with complex disease.

Instrumentation

Affymetrix and Beckman Coulter announced an agreement to offer researchers co-developed products from the market leaders in microarrays and automated liquid handlers. The collaboration will provide scientists with optimized, robust solutions for genomic research. This partnership will yield an expanding list of Affymetrix-validated automated target preparation methods, developed on an Affymetrix-specific configuration of Beckman Coulter's precise and reliable Biomek FXp Liquid Handler.

Affymetrix's management team will host a conference call on October 21, 2009 at 2:00 p.m. PT to review its operating results for the third 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 October 21, 2009 until 8:00 p.m. PT on October 28, 2009 at the following numbers: domestic: (800) 642-1687, international: (706) 645-9291. The passcode for both replays is 34032730. An archived webcast of the conference call will be available under the Investor Relations section of the Company's website at www.affymetrix.com.

About Affymetrix

GeneChip(R) microarray technology is the industry-standard tool for analyzing complex genetic information. After inventing the technology in the late 1980s, Affymetrix scientists have been dedicated to developing innovative products that provide researchers with a more complete view of the genome. These products accelerate genetic research that will allow physicians to develop diagnostics and tailor treatments for individual patients by identifying and measuring the genetic information associated with complex diseases. Today, Affymetrix technology is used by the world's top pharmaceutical, diagnostic, and biotechnology companies, as well as by leading academic, government, and non-profit organizations. Affymetrix has installed almost 1,900 systems around the world and almost 20,000 peer-reviewed papers have been published using its microarray technology. Affymetrix is headquartered in Santa Clara, California. For more information about Affymetrix, please visit the company's website at 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 are subject to risks and uncertainties that could cause actual results to differ materially for Affymetrix from those projected, including, but not limited to: risk relating to past and future acquisitions, including the ability of the company to successfully integrate such acquisitions into its existing business; risks of the company's ability to achieve and sustain higher levels of revenue, higher gross margins and reduced operating expenses; uncertainties relating to technological approaches, risks associated with manufacturing and product development, including risks relating to the relocation of a substantial portion of our manufacturing; personnel retention; uncertainties relating 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, 2008, 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, GeneChip, and all other trademarks are the property of Affymetrix, Inc.

AFFYMETRIX,INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
                                                     September 30,      December 31,
                                                     2009               2008
ASSETS:
Current assets:
Cash and cash equivalents                            $      62,487      $      113,292
Restricted cash--short-term portion                         1,683              4,402
Available-for-sale securities -- short-term portion         220,818            250,970
Accounts receivable, net                                    56,630             62,726
Inventories                                                 50,556             51,333
Deferred tax assets--current portion                        1,867              1,077
Prepaid expenses and other current assets                   12,330             15,725
Total current assets                                        406,371            499,525
Available-for-sale securities--long-term portion            56,009             26,900
Property and equipment, net                                 70,870             89,345
Acquired technology rights, net                             52,412             62,569
Deferred tax assets--long-term portion                      4,410              4,764
Restricted cash--long-term portion                          1,109              2,175
Other assets                                                25,788             28,032
Total assets                                         $      616,969     $      713,310
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and accrued liabilities             $      51,911      $      62,559
Deferred revenue--current portion                           14,545             16,198
Total current liabilities                                   66,456             78,757
Deferred revenue--long-term portion                         3,329              3,583
Other long-term liabilities                                 10,742             10,972
Convertible notes                                           247,201            316,341
Stockholders' equity:
Common stock                                                710                703
Additional paid-in capital                                  728,822            721,641
Accumulated other comprehensive income (loss)               2,804              (2,296   )
Accumulated deficit                                         (443,095 )         (416,391 )
Total stockholders' equity                                  289,241            303,657
Total liabilities and stockholders' equity           $      616,969     $      713,310
Note1: The condensed consolidated balance sheet at December31,
2008 has been derived from the audited consolidated financial
statements at that date included in the Company's Form10-K for
the fiscal year ended December31, 2008.

AFFYMETRIX,INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
                                                                     Three Months Ended           Nine Months Ended
                                                                     September 30,                September 30,
                                                                     2009          2008           2009           2008
REVENUE:
Product sales                                                        $  66,172     $  65,952      $  198,198     $  203,780
Services                                                                9,901         6,132          33,678         23,557
Royalties and other revenue                                             2,118         3,105          6,430          104,338
Total revenue                                                           78,191        75,189         238,306        331,675
COSTS AND EXPENSES:
Cost of product sales                                                   30,728        32,347         95,047         90,581
Cost of services and other                                              5,142         5,820          20,299         18,241
Research and development                                                18,764        20,739         60,408         59,098
Selling, general and administrative                                     30,608        28,409         96,276         92,782
Acquired in-process technology                                          -             5,100          -              5,900
Restructuring charges                                                   (296   )      14,571         1,897          29,379
Total costs and expenses                                                84,946        106,986        273,927        295,981
(Loss) income from operations                                           (6,755 )      (31,797 )      (35,621 )      35,694
Interest income and other, net                                          774           1,672          1,290          10,830
Interest expense                                                        (2,430 )      (3,497  )      (8,510  )      (10,634 )
Gain from repurchase of convertible notes                               -             -              17,447         -
(Loss) income before income taxes                                       (8,411 )      (33,622 )      (25,394 )      35,890
Income tax provision                                                    (408   )      1,802          (1,310  )      (25,093 )
Net (loss) income                                                    $  (8,819 )   $  (31,820 )   $  (26,704 )   $  10,797
Basic net (loss) income per common share                             $  (0.13  )   $  (0.46   )   $  (0.39   )   $  0.16
Diluted net (loss) income per common share                           $  (0.13  )   $  (0.46   )   $  (0.39   )   $  0.16
Shares used in computing basic net (loss) income per common share       68,799        68,582         68,569         68,542
Shares used in computing diluted net (loss) income per common share     68,799        68,582         68,569         68,650

SOURCE: Affymetrix Inc.

Affymetrix Inc. 
Doug Farrell, 408-731-5285 
Vice President of Investor Relations