Affymetrix, Inc., (NASDAQ:AFFX) today reported its operating results for the second quarter of 2010. Total revenue for the quarter was $71.7 million, in line with previously announced expectations, as compared to total revenue of $81.6 million in the second quarter of 2009.
“Since the beginning of the second quarter, we have bought back approximately $96 million of our 3.5% convertible notes, strengthening our balance sheet and significantly reducing future interest payments”
For the second quarter of 2010, product revenue was $65.1 million, service revenue was $4.7 million, and royalties and other revenue were $1.9 million. This compares to second quarter 2009 product revenue of $67.2 million, service revenue of $12.2 million, and royalties and other revenue of $2.2 million.
The Company reported a net loss of approximately $5.5 million, or $0.08 per diluted share, in the second quarter of 2010, which includes a $1.7 million, or $0.02 per diluted share, gain on debt repurchase from the convertible notes buyback of $26.7 million of aggregate principal amount. This compares to a net income of $7.3 million, or $0.11 per diluted share, in the second quarter of 2009, which included a $17.4 million, or $0.25 per diluted share, gain on debt repurchase from the convertible notes buyback.
For the second quarter of 2010, cost of product sales was $27.5 million compared to $29.9 million in the same period of 2009, which included $4.6 million of manufacturing consolidation-related costs. Cost of services and other was $3.6 million compared to $7.6 million in the same period of 2009.
Product gross margin was 57.7 percent, as compared to 55.5 percent in the same period of 2009.
For the second quarter of 2010, operating expenses were $46.2 million as compared to operating expenses of $52.3 million in the second quarter of 2009.
"Despite the market and commercial challenges that impacted our second quarter results, we continued to make significant operational improvements, including expanding product gross margins and reducing our operating expenses by 12% year-over-year," stated Kevin M. King, president and CEO. "We remain confident and are committed to our strategy of expanding the business in the large and growing validation and routine testing markets."
"Since the beginning of the second quarter, we have bought back approximately $96 million of our 3.5% convertible notes, strengthening our balance sheet and significantly reducing future interest payments," said Tim Barabe, executive vice president and CFO. "Our balance sheet remains strong, with approximately $120 million in net cash, and we continue to be cash-flow positive from operations."
Since the beginning of the second quarter, the Company repurchased a total of $95.8 million of its 3.5% convertible notes maturing in January 2013 for $88.9 million. During the second quarter, the Company repurchased $26.7 million of notes at face value for $24.6 million, and since June 30, 2010, it repurchased an additional $69.1 million face value of notes for $64.3 million. At the end of the second quarter, the Company had approximately $220 million of outstanding convertible debt, and, as of July 15, 2010, following the additional notes repurchases, the Company had approximately $151 million of outstanding convertible debt.
Quarterly Highlights