Affymetrix Inc. (NASDAQ:AFFX) filed Quarterly Report for the period ended 2010-03-31.
Affymetrix Inc. has a market cap of $470 million; its shares were traded at around $6.63 with and P/S ratio of 1.5. AFFX is in the portfolios of Chuck Royce of Royce& Associates, PRIMECAP Management, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:Total product sales increased $8.6 million or 13% in the first quarter of 2010 as compared to the first quarter of 2009. Consumables sales increased as a result of a higher volume of sales of both our RNA and DNA analysis chips partially offset by a decline in overall average selling price. Additionally, instruments revenue increased due to the increased volume of sales in the GeneTitan® family of products that was introduced in 2009, partially offset by a decrease in the volume of sales of other instruments. In constant currency terms, the first quarter of 2010 was negatively impacted by $1.4 million, as compared to the first quarter of 2009.
The decrease in research and development expenses in the first quarter of 2010 as compared to the first quarter of 2009 was primarily due to decreases in compensation and benefits of $1.2 million resulting from lower headcount in 2010, a $1.0 million reduction in spending on masks, chips and supplies due to lower grant research activity in the first quarter of 2010 and decreased spending due to the commercialization of certain products in late 2009.
In 2008, we closed our West Sacramento manufacturing facility, moving probe array manufacturing to our Singapore facility, consolidating reagent manufacturing to our Cleveland facility and outsourcing instrument manufacturing operations to third parties. Total cash payments of $8.2 million related to employee termination benefits and noncash charges of $36.9 million related to the abandonment and impairment of certain manufacturing assets were presented as a component of “Restructuring charges” in our Condensed Consolidated Statements of Operations. We completed the closure of the West Sacramento facility during the second quarter of 2009 and no expenses were recognized during the three months ended March 31, 2010 compared to $1.7 million of expense pertaining to employee severance and relocation benefits recognized during the three months ended March 31, 2009.
In 2007, we consolidated an administrative facility located in Sunnyvale, California into our main campus in Santa Clara, California and terminated certain employees in the research and development and selling, general and administrative functions (the “2007 Plan”). The Sunnyvale, California facility was vacated during the fourth quarter of 2007. Additionally, in 2006, we initiated a restructuring plan (the “2006 Plan”) intended to better align certain of our expenses our business outlook, which primarily consisted of the reorganization of the general and administrative functions as well as the rationalization of our facilities. The cash payments made in connection with the 2007 Plan and 2006 Plan were approximately $4.6 million and $16.5 million, respectively, while the 2006 Plan also had $8.5 million in noncash charges. These costs were included as a component of “Restructuring charges” in our Condensed Consolidated Statements of Operations. For the three months ended March 31, 2010 and 2009, the expense incurred on these two plans was immaterial and we have recognized all costs in association with the 2007 Plan and the majority of the costs related to the 2006 Plan, except for the remaining contract termination costs of $1.0 million.
Interest income and other, net decreased in the first quarter of 2010 as compared to the first quarter of 2009 primarily due to an other-than-temporary impairment loss recognized on a non-marketable investment in a private biotechnology company of $4.9 million during the first quarter of 2010 as compared to a $1.1 million impairment recognized on several investments in our non-marketable equity securities portfolio in the first quarter of 2009. The $4.9 million charge was recognized as the investee s board of directors approved a financing round during the quarter ended March 31 at a valuation that indicated our investment was impaired. Additionally, interest income decreased primarily due to lower effective interest rates in the first quarter of 2010 compared to the first quarter of 2009. These losses were partially offset by a net realized gain on our equity investments in the first quarter of 2010 as compared to the first quarter of 2009.
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