0000913077-13-000025.txt : 20130501 0000913077-13-000025.hdr.sgml : 20130501 20130501161558 ACCESSION NUMBER: 0000913077-13-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20130331 FILED AS OF DATE: 20130501 DATE AS OF CHANGE: 20130501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AFFYMETRIX INC CENTRAL INDEX KEY: 0000913077 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 770319159 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-28218 FILM NUMBER: 13803382 BUSINESS ADDRESS: STREET 1: 3420 CENTRAL EXPRESSWAY CITY: SANTA CLARA STATE: CA ZIP: 95051 BUSINESS PHONE: 4087315000 MAIL ADDRESS: STREET 1: 3420 CENTRAL EXPRESSWAY CITY: SANTA CLARA STATE: CA ZIP: 95051 10-Q 1 form10q.htm 10-Q

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2013
 
OR
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM          TO          .
COMMISSION FILE NO. 0-28218
AFFYMETRIX, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE
 
77-0319159
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification Number)
 
 
 
3420 CENTRAL EXPRESSWAY
SANTA CLARA, CALIFORNIA 95051
(Address of principal executive offices and Zip Code)

Registrant's telephone number, including area code: (408) 731-5000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
 
Accelerated filer x
 
 
 
Non-accelerated filer o
 
Smaller reporting company o
(Do not check if a smaller reporting company)
 
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
COMMON SHARES OUTSTANDING ON APRIL 25, 2013: 71,098,356

AFFYMETRIX, INC.
TABLE OF CONTENTS
 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

 
March 31,
   
December 31,
 
 
2013
   
2012
 
 
(Unaudited)
   
(See Note 1)
 
ASSETS:
 
   
 
Current assets:
       
Cash and cash equivalents
 
$
37,496
   
$
25,671
 
Restricted cash
   
690
     
699
 
Available-for-sale securities—short-term portion
   
-
     
9,366
 
Accounts receivable, net
   
52,111
     
53,893
 
Inventories—short-term portion
   
74,196
     
72,691
 
Deferred tax assets—short-term portion
   
317
     
359
 
Prepaid expenses and other current assets
   
10,076
     
10,126
 
Total current assets
   
174,886
     
172,805
 
Property and equipment, net
   
25,868
     
28,663
 
Inventories—long-term portion
   
8,876
     
11,772
 
Goodwill
   
158,338
     
159,736
 
Intangible assets, net
   
145,785
     
152,718
 
Deferred tax assets—long-term portion
   
1,916
     
3,394
 
Other long-term assets
   
13,707
     
15,206
 
Total assets
 
$
529,376
   
$
544,294
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY:
               
Current liabilities:
               
Accounts payable and accrued liabilities
 
$
49,019
   
$
50,355
 
Convertible notes—short-term portion
   
-
     
3,855
 
Term loan—short-term portion
   
12,750
     
12,713
 
Deferred revenue—short-term portion
   
18,911
     
8,498
 
Total current liabilities
   
80,680
     
75,421
 
Deferred revenue—long-term portion
   
4,041
     
3,450
 
Convertible notes
   
105,000
     
105,000
 
Term loan—long-term portion
   
57,338
     
60,563
 
Other long-term liabilities
   
21,010
     
22,689
 
Stockholders' equity:
               
Common stock
   
711
     
710
 
Additional paid-in capital
   
761,435
     
759,549
 
Accumulated other comprehensive income
   
3,988
     
6,302
 
Accumulated deficit
   
(504,827
)
   
(489,390
)
Total stockholders' equity
   
261,307
     
277,171
 
Total liabilities and stockholders' equity
 
$
529,376
   
$
544,294
 

 
See accompanying Notes to the Condensed Consolidated Financial Statements
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

 
Three Months Ended
 
 
March 31,
 
 
2013
   
2012
 
REVENUE:
 
   
 
Product sales
 
$
71,557
   
$
58,491
 
Services and other
   
6,388
     
6,756
 
Total revenue
   
77,945
     
65,247
 
COSTS AND EXPENSES:
               
Cost of product sales
   
34,433
     
23,565
 
Cost of services and other
   
3,507
     
3,779
 
Research and development
   
12,248
     
13,331
 
Selling, general and administrative
   
35,121
     
27,924
 
Restructuring charges
   
4,842
     
-
 
Total costs and expenses
   
90,151
     
68,599
 
Loss from operations
   
(12,206
)
   
(3,352
)
Interest income and other, net
   
342
     
26
 
Interest expense
   
2,898
     
980
 
Loss before income taxes
   
(14,762
)
   
(4,306
)
Income tax provision (benefit)
   
675
     
(89
)
Net loss
 
$
(15,437
)
 
$
(4,217
)
               
Basic and diluted net loss per common share
 
$
(0.22
)
 
$
(0.06
)
               
Shares used in computing basic and diluted net loss per common share
   
70,919
     
69,977
 


See accompanying Notes to the Condensed Consolidated Financial Statements
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)

 
Three Months Ended
 
 
March 31,
 
 
2013
   
2012
 
Net loss
 
$
(15,437
)
 
$
(4,217
)
Other comprehensive (loss) income, net of tax:
               
Foreign currency translation adjustment
   
(3,125
)
   
(155
)
Unrealized change in available-for-sale and non-marketable securities
   
(275
)
   
605
 
Unrealized change in cash flow hedges
   
1,086
     
(516
)
Net change in other comprehensive (loss) income, net of tax
   
(2,314
)
   
(66
)
Comprehensive loss
 
$
(17,751
)
 
$
(4,283
)


See accompanying Notes to the Condensed Consolidated Financial Statements
AFFYMETRIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 
Three Months Ended
 
 
March 31,
 
 
2013
   
2012
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
   
 
Net loss
 
$
(15,437
)
 
$
(4,217
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
         
Depreciation and amortization
   
10,316
     
7,162
 
Amortization of inventory step-up in fair value
   
4,589
     
-
 
Share-based compensation
   
1,835
     
2,392
 
Deferred tax assets
   
1,470
     
44
 
Other non-cash transactions
   
(490
)
   
(118
)
Changes in operating assets and liabilities:
               
Accounts receivable, net
   
1,164
     
(769
)
Inventories
   
(3,728
)
   
1,306
 
Prepaid expenses and other assets
   
1,027
     
1,944
 
Accounts payable and accrued liabilities
   
908
     
(9,170
)
Deferred revenue
   
11,035
     
(449
)
Other long-term liabilities
   
(1,320
)
   
575
 
Net cash provided by (used in) operating activities
   
11,369
     
(1,300
)
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Proceeds from sales of available-for-sale securities
   
9,364
     
95
 
Proceeds from maturities of available-for-sale securities
   
-
     
388
 
Capital expenditures
   
(1,104
)
   
(1,388
)
Purchase of non-marketable investment
   
(200
)
   
-
 
Purchase of technology rights
   
(335
)
   
(1,000
)
Net cash provided by (used in) investing activities
   
7,725
     
(1,905
)
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Issuance of common stock, net
   
52
     
(154
)
Payments of term loan
   
(3,188
)
   
-
 
Repurchase of senior convertible notes
   
(3,855
)
   
(91,614
)
Net cash used in financing activities
   
(6,991
)
   
(91,768
)
Effect of exchange rate changes on cash and cash equivalents
   
(278
)
   
74
 
Net increase (decrease) in cash and cash equivalents
   
11,825
     
(94,899
)
Cash and cash equivalents at beginning of period
   
25,671
     
201,937
 
Cash and cash equivalents at end of period
 
$
37,496
   
$
107,038
 

See accompanying Notes to the Condensed Consolidated Financial Statements
AFFYMETRIX, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013
(UNAUDITED)
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. The condensed consolidated financial statements include the accounts of Affymetrix, Inc. and its wholly owned subsidiaries ("Affymetrix" or the "Company"). All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring entries) considered necessary for a fair presentation have been included.
Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying Condensed Consolidated Balance Sheet as of March 31, 2013, and the Condensed Consolidated Statements of Operations, Comprehensive Loss and Cash Flows for the three months ended March 31, 2013 and 2012 are unaudited. The Condensed Consolidated Balance Sheet as of December 31, 2012 was derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 1, 2013. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and the accompanying notes to those financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.
There have been no material changes to the Company's significant accounting policies as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 except as otherwise described below:
Comprehensive (Loss) Income
Comprehensive income (loss) is comprised of net loss and other comprehensive (loss) income. Other comprehensive (loss) income includes foreign currency translation adjustments, unrealized gains and losses on the Company's available-for-sale securities that are excluded from net loss and unrealized gains and losses on cash flow hedges. Total comprehensive (loss) income has been disclosed in the accompanying Condensed Consolidated Statements of Comprehensive Loss.
During the three months ended March 31, 2013, the Company adopted Accounting Standards Update ("ASU") 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income which requires filers to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net loss. The following table summarizes the components of accumulated other comprehensive income, net of tax, for the three months ended March 31, 2013 (in thousands):
 
December 31,
   
Increase/
   
Reclassification
   
March 31,
 
 
2012
   
(Decrease)
   
Adjustments
   
2013
 
Foreign currency translation adjustments
 
$
5,374
   
$
(3,125
)
 
$
-
   
$
2,249
 
Unrealized change in available-for-sale and non-marketable securities
   
896
     
(176
)
   
(99
)
 (1)  
621
 
Unrealized change in cash flow hedges
   
32
     
2,069
     
(983
)
 (2)  
1,118
 
Total accumulated other comprehensive income, net of tax
 
$
6,302
   
$
(1,232
)
 
$
(1,082
)
 
$
3,988
 
(1) Net gain recognized in Interest income and other, net.
(2) Net gain recognized in Revenue, except for $0.2 million gain that was recognized in Interest income and other, net due to hedging ineffectiveness. See Note 3. "Financial Instruments–Derivative Financial Instruments" for further information.

NOTE 2—ACQUISITION
On June 25, 2012 (the "Acquisition Date"), pursuant to the terms of an Amended and Restated Agreement and Plan of Merger (the "Acquisition Agreement"), a wholly-owned subsidiary of the Company merged with and into eBioscience, Inc. ("eBioscience") with eBioscience surviving as a wholly-owned subsidiary of the Company (the "Acquisition"). eBioscience specializes in the development, manufacturing, marketing and distribution of research tools in the areas of flow cytometry, immunoassays, microscopic imaging and other protein-based analyses.
The results of operations of the acquired eBioscience business and the fair values of the assets acquired and liabilities assumed have been included in the accompanying Consolidated Financial Statements since the Acquisition. For the three months ended March 31, 2013, the Company recorded $19.0 million in revenue and recognized a net loss of $3.9 million from eBioscience. No amounts were recognized from eBioscience during the three months ended March 31, 2012. The Company considered the eBioscience fair value analysis to be final as of December 31, 2012.
NOTE 3—FAIR VALUE
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.
A fair value hierarchy was established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value are as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2013 and December 31, 2012 (in thousands):
 
Quoted
   
Significant
     
 
Prices
   
Other
     
 
In Active
   
Observable
     
 
Markets
   
Inputs
     
 
(Level 1)
   
(Level 2)
   
Total
 
March 31, 2013:
 
   
   
 
Assets:
           
Derivative assets
 
$
-
   
$
1,321
   
$
1,321
 
                       
Liabilities:
                       
Derivative liabilities
 
$
-
   
$
250
   
$
250
 
 
                       
December 31, 2012:
                       
Assets:
                       
U.S. government obligations and agency securities
 
$
-
   
$
6,829
   
$
6,829
 
U.S. corporate debt
   
-
     
664
     
664
 
Foreign corporate debt and equity securities
   
-
     
1,873
     
1,873
 
Total
 
$
-
   
$
9,366
   
$
9,366
 
                       
Derivative assets
 
$
-
   
$
842
   
$
842
 
                       
Liabilities:
                       
Derivative liabilities
 
$
-
   
$
829
   
$
829
 

The Company's Level 2 input assumptions are determined based on review of third-party sources.
The fair value of the Company's derivative assets and liabilities is determined based on the estimated consideration the Company would pay or receive to terminate these agreements on the reporting date. The derivative assets and liabilities are located in Other current assets and Accrued liabilities, respectively, in the accompanying Condensed Consolidated Balance Sheets.
As of March 31, 2013 and December 31, 2012, the Company had no financial assets or liabilities measured on a recurring basis requiring Level 3 classification, including those that have unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets and liabilities.
Debt Obligations
Debt obligations are not recorded at fair value on a recurring basis and are carried at amortized cost. The fair value of the 4.00% Convertible Senior Notes ("4.00% Notes") is based on quoted market prices at the balance sheet date and categorized within Level 1 of the fair value hierarchy. At March 31, 2013 and April 25, 2013, the fair value balances were approximately $109.2 million and $93.3 million, respectively. The fair value of the third-party financing ("Term Loan") approximated its carrying value and is categorized within Level 3 of the fair value hierarchy. At March 31, 2013, the fair value of the Term Loan was $70.1 million. See Note 9. "Debt Obligations" for further information on the Company's debt obligations.

NOTE 4—FINANCIAL INSTRUMENTS
Investments in Debt and Equity Securities
The fair values of the Company's available-for-sale securities are based on quoted market prices and are included in cash and cash equivalents, available-for-sale securities—short-term and available-for-sale securities—long-term on the accompanying Condensed Consolidated Balance Sheets based on each respective security's maturity.
During the three months ended March 31, 2013, the Company liquidated its entire portfolio of available-for-sale securities. The available-for-sale securities were sold for total cash consideration of $9.4 million and the resulting net gain on sale of $0.1 million was recognized in Interest income and other, net in the accompanying Condensed Consolidated Statements of Operations.
The following is a summary of available-for-sale securities as of December 31, 2012 (in thousands):
     
Gross
   
Gross
     
 
Amortized
   
Unrealized
   
Unrealized
     
 
Cost
   
Gains
   
Losses
   
Fair Value
 
U.S. government obligations and agency securities
 
$
6,775
   
$
54
   
$
-
   
$
6,829
 
U.S. corporate debt
   
651
     
13
     
-
     
664
 
Foreign corporate debt and equity securities
   
1,837
     
36
     
-
     
1,873
 
Total available-for-sale securities
 
$
9,263
   
$
103
   
$
-
   
$
9,366
 

Non-Marketable Securities
As of March 31, 2013 and December 31, 2012, the carrying amounts of the Company's non-marketable securities, totaling $4.4 million for both years, equaled their estimated fair values. They consist primarily of an investment in a limited partnership investment fund who invests in companies in the life science industry and are located in the United States. The investments are initially valued at the purchase price and subsequently on the basis of inputs that market participants would use in pricing such investments. The portfolio of investments includes Level 1 publicly-traded equity securities and Level 3 equity securities and notes. There was no other-than-temporary impairment recognized during the three months ended March 31, 2013 and 2012. Net investment results are included in Interest income and other, net in the accompanying Condensed Consolidated Statements of Operations. Depending on market conditions, the Company may incur additional charges on this investment portfolio in the future.
Derivative Financial Instruments
The Company derives a portion of its revenues in foreign currencies, predominantly in Europe and Japan, as part of its ongoing business operations. In addition, a portion of its assets is held in the nonfunctional currencies of its subsidiaries. The Company enters into foreign currency forward contracts to manage a portion of the volatility related to transactions that are denominated in foreign currencies. The Company's foreign currency forward contracts are entered into for periods consistent with the related underlying exposures and do not constitute positions that are independent of those exposures. The Company's accounting policies for these instruments are based on whether the instruments are classified as designated or non-designated hedging instruments. The Company recognizes derivatives on its accompanying Condensed Consolidated Balance Sheets at fair value. The effective portions of designated cash flow hedges are recorded in other comprehensive income ("OCI") until the hedged item is recognized in earnings. As of March 31, 2013, the Company's existing foreign currency forward exchange contracts mature within 12 months. The deferred amount related to the Company's derivatives currently recorded in OCI and expected to be recognized into earnings over the next 12 months is a net gain of $1.1 million. Derivatives that are not designated as hedging instruments and the ineffective portions of cash flow hedges are adjusted to fair value through earnings.
Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in OCI associated with such derivative instruments are reclassified immediately into operations through Interest income and other, net. Any subsequent changes in fair value of such derivative instruments are reflected in Interest income and other, net unless they are re-designated as hedges of other transactions. During the three months ended March 31, 2013, the Company recognized $0.2 million in net gains in Interest income and other, net, related to the loss of hedge designation on a portion of cash flow hedges related to the Japanese yen that were deemed ineffective due to lower-than-forecasted revenue from Japan. No additional hedges are deemed ineffective as of March 31, 2013. No cash flow hedges were de-designated during the three months ended March 31, 2012.
Under the Credit Agreement as defined in Note 9. "Long-Term Obligations", the Company is required to maintain derivative contracts to protect against fluctuations in interest rates with respect to at least 35% of the aggregate principal amount of the Term Loan, as defined in Note 9. "Long-Term Obligations," then outstanding, with such derivative contracts being required to have at least a three-year term. Accordingly, the Company has entered into an interest rate swap (the "Interest Rate Swap") for which the notional amount was originally set at $27.5 million, with quarterly reduction to the notional amount consistent with the mandatory amortization schedule of the Term Loan. The Interest Rate Swap calls for quarterly fixed rate payments of 1.70% of the notional amount in exchange for a variable rate quarterly receipts equal to a 3-month LIBOR rate with a floor of 1.50%. The Interest Rate Swap terminates on June 25, 2015.
The Company did not designate the Interest Rate Swap as a hedging instrument and will recognize adjustments to fair value through Interest and other income on the accompanying Condensed Consolidated Statements of Operations at each reporting date. As of March 31, 2013, the fair value of the Interest Rate Swap was $0.1 million.
As of March 31, 2013 and December 31, 2012, the total notional values of the Company's derivative assets and liabilities were as follows (in thousands):
 
March 31,
   
December 31,
 
 
2013
   
2012
 
Euro
 
$
17,418
   
$
16,933
 
Japanese yen
   
6,192
     
10,542
 
British pound
   
4,419
     
4,278
 
Interest rate swap
   
27,519
     
27,519
 
Total
 
$
55,548
   
$
59,272
 

Other than the Interest Rate Swap, the Company did not have any derivative assets or liabilities that were not designated or qualifying as hedges at either March 31, 2013 or December 31, 2012.
As a result of the use of derivative instruments, the Company is exposed to the risk that the counterparties may be unable to meet the terms of the underlying agreements. To mitigate this risk, only contracts with carefully selected highly-rated major financial institutions are entered into. In the event of non-performance by these counterparties, the asset position carrying values of the financial instruments represent the maximum amount of loss that can be incurred; however, no losses as a result of counterparty defaults are expected. The Company does not require and is not required to pledge collateral for these financial instruments. The Company does not enter into derivative contracts for trading or speculative purposes and is not party to any leveraged derivative instruments.
The following table shows the Company's derivative assets and liabilities measured at fair value as reflected on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012 (in thousands):
March 31,
December 31,
Balance Sheet
2013
2012
Classification
Derivative assets:
   
Foreign exchange contracts
$
1,321
$
842
 Other current assets
Derivative liabilities:
   
Foreign exchange contracts
172
752
 Accrued liabilities
Interest rate swap
78
77
 Accrued liabilities

The following table shows the effect, net of tax, of the Company's derivative instruments on the accompanying Condensed Consolidated Statements of Operations and OCI for the three months ended March 31, 2013 and 2012 (in thousands):
 
Three Months Ended
 
 
March 31,
 
   
2013
   
2012
 
Derivatives in cash flow hedging relationships:
 
   
 
Net gain (loss) recognized in OCI, net of tax (1)
 
$
1,086
   
$
(516
)
Net gain (loss) reclassified from accumulated OCI into Revenue, net of tax (2)
   
825
     
518
 
Net gain (loss) reclassified from accumulated OCI into Interest income and other, net, net of tax (3)
   
158
     
-
 
Net gain (loss) recognized in Interest income and other, net, net of tax (4)
   
15
     
25
 
Derivatives not designated as hedging relationships:
               
Net gain (loss) recognized in Interest income and other, net, net of tax (5)
   
143
     
(148
)
(1)
Net change in the fair value of the effective portion classified in OCI
(2)
Effective portion classified as Revenue
(3)
Ineffective portion classified as Interest income and other, net
(4)
Amount excluded from effectiveness testing classified as Interest income and other, net
(5)
Classified in Interest and other, net
NOTE 5—STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE
Share-based Compensation Plans
The Company has a share-based compensation program, most recently, the 2000 Amended and Restated Equity Incentive Plan (the "Plan"), that provides the Board of Directors broad discretion in creating equity incentives for employees, officers, directors and consultants. This program includes incentive and non-qualified stock options and non-vested stock awards (also known as restricted stock) granted under various stock plans. As of March 31, 2013, the Company had approximately 5.1 million shares of common stock reserved for future issuance under its share-based compensation plans including 2.0 million shares of common stock authorized for issuance under the Company's 2012 Inducement Plan that was adopted by the Board of Directors in June 2012. New shares are issued as a result of stock option exercises, restricted stock units vesting and restricted stock award grants.
The Company recognized share-based compensation expense as follows (in thousands):
 
Three Months Ended
 
 
March 31,
 
 
2013
   
2012
 
Costs of product sales
 
$
167
   
$
372
 
Research and development
   
329
     
367
 
Selling, general and administrative
   
1,339
     
1,653
 
Total share-based compensation expense
 
$
1,835
   
$
2,392
 

As of March 31, 2013, $13.1 million of total unrecognized share-based compensation expense related to non-vested awards is expected to be recognized over the respective vesting terms of each award through 2017. The weighted‑average terms of the unrecognized share-based compensation expense are 2.7 years for stock options and 2.3 years for restricted stock.
Stock Options
The fair value of options was estimated at the date of grant using the Black Scholes Merton option pricing model with the following weighted‑average assumptions:
 
Three Months Ended
 
 
March 31,
 
 
2013
   
2012
 
Risk free interest rate
   
0.8
%
   
1.0
%
Expected dividend yield
   
0.0
%
   
0.0
%
Expected volatility
   
68
%
   
67
%
Expected option term (in years)
   
4.6
     
4.6
 

The risk free interest rate for periods within the contractual life of the Company's stock options is based on the U.S. Treasury yield curve in effect at the time of grant. The expected term is derived from an analysis of the Company's historical exercise trends over ten years. The expected volatility is based on a blend of historical and market‑based implied volatility. Using the assumptions above, the weighted‑average grant date fair value of options granted during the three months ended March 31, 2013 and 2012, was $2.09 and $2.38, respectively.
Performance-Based Awards
In 2011, the Compensation Committee of the Company's Board of Directors approved a grant of performance-based restricted stock units ("PRSUs") under the Plan to the Company's Chief Executive Officer ("CEO") that is earned annually in four equal tranches based on his performance in the applicable fiscal year (the "Performance Period"). The PRSUs entitle the CEO to receive a certain number of shares of the Company's common stock based on the Company's satisfaction of certain financial and strategic performance goals as set and approved by the Board of Directors annually during the first quarter of the Company's fiscal year. Based on the achievement of the performance conditions during each Performance Period, the final settlement of the PRSU award will vest twelve months following the end of each Performance Period. The PRSU award will be forfeited if the performance goals are not met or if the executive officer is no longer employed at the vest date.
The number of shares underlying the PRSUs that were granted to the CEO during 2011 totaled 0.2 million shares. As of March 31, 2013, performance conditions pertaining to 0.1 million shares of the PRSUs were achieved. The Company expects that an additional 0.1 million shares of the PRSUs, with a grant date fair value of $4.67 per PRSU, will vest with respect to the Performance Period ending December 31, 2013 and the fair value of such PRSU's is being amortized on a straight-line basis over the related service period. The total compensation cost related to PRSUs granted but not yet recognized was $0.3 million as of March 31, 2013.
During July 2012, the Compensation Committee granted certain PRSUs following the acquisition of eBioscience referred to as an Acquisition Performance Share Program (the "Program"). The purpose of the Program is to align key management and senior leadership with stockholders' interests and to retain key employees. The measurement periods for the Program are the twelve month periods ended June 30, 2013 and June 30, 2014, respectively. Members of eBioscience management and other key employees are participating in the Program. Awards granted under the Program are granted in the form of performance shares pursuant to the terms of the Company's 2012 Inducement Plan. If pre-determined eBioscience specific performance goals are met, shares of stock will be granted to the recipient, vesting one month following the performance period representing the date of certification of achievement, contingent upon the recipient's continued service to the Company.
In 2012, the Company awarded 0.9 million PRSUs under the Program at a grant date fair value of $4.16 per PRSU and expects 66% of the PRSUs will vest. The fair value of the PRSUs is being amortized on a straight-line basis over the related service period. The total compensation cost related to PRSUs granted but not yet recognized was approximately $1.0 million as of March 31, 2013.
During the first quarter of 2013, the Compensation Committee granted certain PRSUs following the most recent restructuring referred to as the 2013 Program. The purpose of the 2013 Program is to retain key employees. The measurement period for the 2013 Program is the twelve month period ended December 31, 2013 and the awards granted under the 2013 Program are granted in the form of performance shares pursuant to the terms of our 2000 Plan. Dependent on the level of achievement of pre-determined financial performance goals, shares of stock will vest in equal installments over two or four years. The level of achievement of financial performance will be assessed during the first quarter of fiscal 2014 after which the share of stock will be issued to the participants, contingent upon the recipient's continued service to the Company.
In 2013, the Company awarded 0.3 million PRSUs under the 2013 Program at a grant date fair value of $3.84 per PRSU and expects 85% of the PRSUs will vest. The fair value of the PRSUs is being amortized on a straight-line basis over the related service period. The total compensation cost related to PRSUs granted but not yet recognized was approximately $0.8 million as of March 31, 2013.
Employee Stock Purchase Plan
In August 2011, the Company's Board of Directors adopted the 2011 Employee Stock Purchase Plan ("ESPP") that was approved by the Company's stockholders on May 11, 2012. The ESPP reserved a total of 7.0 million shares of the Company's common stock for issuance under the plan and permits eligible employees to purchase common stock at a discount through payroll deductions.
The price at which stock is purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first day of the offering period or the last day of the purchase period, whichever is lower. The offering periods are twelve months and include two six month purchase periods that result in a look-back for determining the purchase price of up to 12 months. Employees can invest up to 15% of their gross compensation through payroll deductions. In no event would an employee be permitted to purchase more than 750 shares of common stock during any six-month purchase period. The initial offering period commenced in November 2011. As of March 31, 2013, there were 308 participants in the plan. Included in total share-based compensation cost for the three months ended March 31, 2013 was $0.2 million, related to the ESPP.
During the three months ended March 31, 2013 and 2012, the fair value of shares under the ESPP was estimated using the following assumptions:
 
Three Months Ended
 
 
March 31,
 
 
2013
   
2012
 
Risk free interest rate
   
0.1
%
   
0.1
%
Expected dividend yield
   
0.0
%
   
0.0
%
Expected volatility
   
52
%
   
67
%
Expected term (in years)
   
0.6
     
0.8
 

NOTE 6—INVENTORIES
At March 31, 2013 and December 31, 2012, inventories consisted of the following (in thousands):
 
March 31,
   
December 31,
 
 
2013
   
2012
 
Raw materials
 
$
12,520
   
$
11,167
 
Work-in-process
   
33,695
     
35,562
 
Finished goods
   
36,857
     
37,734
 
Total
 
$
83,072
   
$
84,463
 
 
               
Short-term portion
 
$
74,196
   
$
72,691
 
Long-term portion
 
$
8,876
   
$
11,772
 

Inventory at March 31, 2013 includes unamortized fair value step-up in basis of $14.7 million as a result of the Acquisition. Amortization expense on the fair value step-up during the three months ended March 31, 2013 was $4.6 million.
 

NOTE 7—GOODWILL AND INTANGIBLE ASSETS
The gross carrying amounts and net book values of the Company's definite-lived intangible assets are as follows (in thousands):
 
Carrying Value, Gross
   
Accumulated Amortization
   
Intangible Assets, Net
 
Weighted
 
December 31,
   
Increase/
   
March 31,
   
December 31,
   
(Increase)/
   
March 31,
   
December 31,
   
March 31,
 
Average
 
2012
   
(Decrease) (1)
   
2013
   
2012
   
Decrease (2)
   
2013
   
2012
   
2013
 
Useful Life
Customer relationships
 
$
76,874
   
$
(650
)
 
$
76,224
   
$
(14,346
)
 
$
(2,088
)
 
$
(16,434
)
 
$
62,528
   
$
59,790
 
12 years
Developed technologies
   
76,814
     
(649
)
   
76,165
     
(18,489
)
   
(1,983
)
   
(20,472
)
   
58,325
     
55,693
 
12 years
Trademarks and tradenames
   
17,818
     
(10
)
   
17,808
     
(3,009
)
   
(1,261
)
   
(4,270
)
   
14,809
     
13,538
 
5 years
Other contractual agreements
   
3,055
     
(30
)
   
3,025
     
(785
)
   
(615
)
   
(1,400
)
   
2,270
     
1,625
 
2 years
Licenses
   
81,156
     
376
     
81,532
     
(66,370
)
   
(23
)
   
(66,393
)
   
14,786
     
15,139
 
Variable
Total definite-lived intangible assets
 
$
255,717
   
$
(963
)
 
$
254,754
   
$
(102,999
)
 
$
(5,970
)
 
$
(108,969
)
 
$
152,718
   
$
145,785
 
(1)
Includes a decrease in carrying value of $1.3 million related to foreign currency translation
(2)
Includes a decrease in accumulated amortization of $0.1 million related to foreign currency translation
The expected future annual amortization expense of the Company's intangible assets is as follows (in thousands):
 
Amortization
 
For the Year Ending December 31,
 
Expense
 
2013, remainder thereof
 
$
17,470
 
2014
   
20,770
 
2015
   
14,628
 
2016
   
13,775
 
2017
   
12,098
 
Thereafter
   
67,044
 
Total
 
$
145,785
 

Change in the Company's goodwill at March 31, 2013 is as follows (in thousands):
Balance at December 31, 2012
 
$
159,736
 
Effects of foreign currency change
   
(1,398
)
Balance at March 31, 2013
 
$
158,338
 

NOTE 8—WARRANTIES
The Company provides for anticipated warranty costs at the time the associated product revenue is recognized. Product warranty costs are estimated based upon the Company's historical experience and the applicable warranty period. The Company periodically reviews the adequacy of its warranty reserve and adjusts, if necessary, the warranty percentage and accrual based on actual experience and estimated costs to be incurred. Information in regards to the changes in the Company's product warranty liability for the three months ended March 31, 2013 is as follows (in thousands):
Balance at December 31, 2012
 
$
802
 
Additions charged to cost of product sales
   
221
 
Balance at March 31, 2013
 
$
1,023
 
 

NOTE 9—LONG-TERM DEBT OBLIGATIONS
Term Loan
On June 25, 2012, the Company entered into a credit agreement (the "Credit Agreement") by, and among, Affymetrix and its domestic subsidiaries, and General Electric Capital Corporation ("GE Capital"), Silicon Valley Bank and other financial institutions party thereto from time to time (collectively, the "Lenders"), as well as certain securities affiliates of the Lenders. The Credit Agreement provides for the Term Loan in an aggregate principal amount of $85.0 million and a revolving credit facility in an aggregate principal amount of $15.0 million (the "Revolving Credit Facility" and, together with the Term Loan, the "Senior Secured Credit Facility"), each with a term of five years. As of March 31, 2013, the Company had borrowed a total of $85.0 million under the Term Loan which was used to finance a portion of the Acquisition.
At the option of the Company (subject to certain limitations), borrowings under the Credit Agreement bear interest at either a base rate or at the London Interbank Offered Rate ("LIBOR"), plus, in each case, an applicable margin. Under the Base Rate Option, interest will be at the base rate plus 4.00% per annum, calculated on the basis of the actual number of days elapsed in a year of 365 or 366 days (as applicable) and payable quarterly in arrears. The base rate will be equal to the greatest of (a) the rate last quoted by The Wall Street Journal (or another national publication selected by GE Capital) as the U.S. "Prime Rate," (b) the federal funds rate, plus 0.50% per annum and (c) LIBOR for an interest period of one month, plus 1.00% per annum. However, the base rate will not be less than a floor of 2.50% per annum. Under the LIBOR Option, interest will be determined based on interest periods to be selected by Affymetrix of one, two, three or six months (and, to the extent available to all relevant lenders, nine or 12 months) and will be equal to LIBOR, plus 5.00%, calculated based on the actual number of days elapsed in a 360-day year. However, LIBOR will be deemed not to be less than a floor of 1.50% per annum. Interest will be paid at the end of each interest period or, in the case of interest periods longer than three months, quarterly. In 2012, the Company entered into its Interest Rate Swap as required by the terms of the Credit Agreement with a third-party lending institution. Refer to Note 4. "Financial Instruments–Derivative Financial Instruments" for further information. At March 31, 2013, the applicable interest rate was approximately 6.50%.
The loans and other obligations under the Senior Secured Credit Facility are (i) guaranteed by substantially all of the Company's domestic subsidiaries (subject to certain exceptions and limitations) and (ii) secured by substantially all of the assets of Affymetrix and each guarantor (subject to certain exceptions and limitations).
The Credit Agreement requires the Company to maintain a fixed charge coverage ratio of at least 1.5 to 1.0, a senior leverage ratio (which is the ratio of senior debt to trailing 12 months' earnings before interest, taxes, depreciation, amortization and other one-time items ("EBITDAO") not exceeding initially 2.00 to 1.00 and stepping down to 1.50 to 1.00; and a total leverage ratio (which is the ration of total debt to trailing 12 months' EBITDAO) not exceeding initially 4.75 to 1.00 and stepping down to 3.50 to 1.00. The Credit Agreement also includes other covenants, including negative covenants that, subject to certain exceptions, limit Affymetrix', and that of certain of its subsidiaries', ability to, among other things: (i) incur additional debt, including guarantees by the Company or its subsidiaries, (ii) make investments, pay dividends on capital stock, redeem or repurchase capital stock, redeem or repurchase the Company's senior convertible notes or any subordinated obligations, (iii) create liens and negative pledges, (iv) make capital expenditures, (v) dispose of assets, (vi) make acquisitions, (vii) create or permit restrictions on the ability of Affymetrix' subsidiaries to pay dividends or make distributions to Affymetrix, (viii) engage in transactions with affiliates, (ix) engage in sale and leaseback transactions, (x) consolidate or merge with or into other companies or sell all or substantially all the Company's assets and (xi) change their nature of business, their organizational documents or their accounting policies.
Following the restructuring activity discussed in Note 15. "Restructuring" and lower-than-expected revenue in the three months ended March 31, 2013, on April 8, 2013, the Company and the Lenders amended the Credit Agreement to provide a limited waiver and to amend certain covenants with respect to fiscal year 2013 (the "Amendment"). Under the Amendment, the Lenders agreed to waive any event of default arising from the failure of the Company to comply with the total leverage ratio and senior leverage ratio for the three months ended March 31, 2013. For the quarters ended March 31, 2013 through September 30, 2013, the definition of EBITDAO was amended to allow the add back of up to $11.0 million of trailing twelve month restructuring and integration charges in the calculation of EBITDAO compared to an add back of up to $7 million prior to the Amendment. In addition, the quarterly senior leverage ratio was revised to not exceeding 1.80 to 1.00 for June 30, 2013 and September 30, 2013 compared to 1.75 to 1.00 for these periods prior to the Amendment. The total leverage multiple was revised to not exceeding 4.50 to 1.00, 4.75 to 1.00 and 4.50 to 1.00 for the quarters ending March 31, June 30 and September 30, 2013, respectively, as compared to the original total leverage ratio not exceeding 4.25 to 1.00 for each of these periods. As of March 31, 2013, except for the defaults pursuant to the Amendment, the Company was in compliance with the covenants.
The Company is required to make the following mandatory prepayments: (a) annual prepayments in an amount equal to 50% of excess cash flow (as defined in the Credit Agreement), subject to a leverage-based stepdown, (b) prepayments in an amount equal to 100% of the net cash proceeds of issuances or incurrences of debt obligations of Affymetrix and its subsidiaries (other than debt incurrences expressly permitted by the Credit Agreement), (c) prepayments in an amount equal to 100% of the net proceeds of asset sales in excess of $2.5 million annually (subject to certain reinvestment rights) and (d) prepayments in an amount equal to any indemnification payments or similar payments received under the Acquisition Agreement, subject to certain exclusions. During the three months ended March 31, 2013, the Company was not obligated to make any of the aforementioned mandatory prepayments.
The Credit Agreement also contains events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-default and cross-acceleration to other indebtedness in excess of specified amounts, monetary judgment defaults in excess of specified amounts, bankruptcy or insolvency, actual or asserted invalidity or impairment of any part of the credit documentation (including the failure of any lien on a material portion of the collateral to remain perfected) and change of ownership or control defaults. In addition, the occurrence of a "fundamental change" under the indenture governing the 4.00% Notes would be an event of default under the Credit Agreement. As of March 31, 2013, except for the defaults waived pursuant to the Amendment, the Company was in compliance with the covenants.
Additionally, the proceeds from the Term Loan are net of debt issuance costs of approximately $4.5 million which are being amortized using the effective interest method.
As of March 31, 2013, the Company had an outstanding principal balance of $70.1 million and incurred $1.7 million in interest expense under the Senior Secured Credit Facility for the three months ended March 31, 2013.
The Term Loan is scheduled to amortize in quarterly installments in amounts resulting in an annual amortization of 10% during the first year, 15% during the second year, 15% during the third year, 20% during the fourth year and 40% during the fifth year after June 25, 2012. The principal amount of unpaid maturities per the Credit Agreement is as follows (in thousands):
2013, remainder thereof
$
-
2014
9,563
2015
13,813
2016
17,000
2017
29,712
Total
$
70,088

4.00% Convertible Senior Notes
On June 25, 2012, the Company issued $105.0 million principal amount of 4.00% Convertible Senior Notes due July 1, 2019. The net proceeds, after debt issuance costs totaling $3.9 million from the 4.00% Notes offering, were $101.1 million. The 4.00% Notes bear interest of 4.00% per year payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2013 until the maturity date of July 1, 2019, unless converted, redeemed or repurchased earlier. The debt issuance costs are being amortized over the effective life of the 4.00% Notes, which is 7 years.
Holders of the 4.00% Notes may convert their 4.00% Notes into shares of the Company's stock at their option any time prior to the close of business on the business day immediately preceding the maturity date. The 4.00% Notes are initially convertible into approximately 170.0319 shares of the Company's common stock per $1,000 principal amount of notes, which equates to 17,857,143 shares of common stock, or an initial conversion price of $5.88 per share of common stock. The conversion rate is subject to certain customary anti-dilution adjustments. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event in certain circumstances. Holders may also require the Company to repurchase for cash their notes upon certain fundamental changes.
On or after July 1, 2017, the Company can redeem for cash all or part of the 4.00% Notes if the last reported sale price per share of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending within 5 trading days prior to the date on which the Company provides notice of redemption. The redemption price will be equal to 100% of the principal amount of the 4.00% Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
As of March 31, 2013, outstanding balance on the 4.00% Notes was $105.0 million and interest incurred for the three months ended March 31, 2013 was $1.2 million.
3.50% Senior Convertible Notes
During the three months ended March 31, 2013, the Company redeemed its remaining outstanding 3.50% Senior Convertible Notes for $3.9 million in total cash consideration, including accrued interest of $0.1 million. The notes were redeemed at par and the related deferred financing costs were written off.
NOTE 10—NET LOSS PER COMMON SHARE
Basic net loss per common share is calculated using the weighted‑average number of common shares outstanding during the period less the weighted‑average shares subject to repurchase. Diluted net loss per common share gives effect to dilutive common stock subject to repurchase, stock options (calculated based on the treasury stock method), shares under the Company's ESPP and convertible debt (calculated using an as-if-converted method). Potentially dilutive securities are excluded from shares used in computing diluted net loss per common share if their effect would be anti-dilutive.
The potential dilutive securities excluded from diluted earnings per common share were as follows (in thousands):
 
Three Months Ended March 31,
 
 
2013
   
2012
 
Employee stock compensation plans
   
5,994
     
6,020
 
Restricted stock subject to repurchase
   
3,861
     
2,469
 
Convertible notes
   
17,878
     
2,267
 
Total
   
27,733
     
10,756
 

NOTE 11—LEGAL PROCEEDINGS
The Company has been in the past, and continues to be, a party to litigation which has consumed, and may continue to consume, substantial financial and managerial resources. The Company could incur substantial costs and divert attention of management and technical personnel in defending against litigation, and any adverse ruling or perception of an adverse ruling could have a material adverse impact on the Company's stock price. In addition, any adverse ruling could have a material adverse impact on the Company's cash flow and financial condition. The results of any litigation or any other legal proceedings are uncertain and as of the date of this report, the Company has not accrued any liability with respect to any of the litigation matters listed below:
E8 Pharmaceuticals LLC
On July 1, 2008, the Company was named as a defendant in a complaint filed by plaintiffs E8 Pharmaceuticals LLC and Massachusetts Institute of Technology ("MIT") in the United States District Court of Massachusetts. In the complaint, the plaintiffs allege that the Company is infringing one patent owned by MIT and licensed to E8 Pharmaceuticals by making and selling the Company's GeneChip® products to customers and teaching its customers how to use the products. The plaintiffs seek a permanent injunction enjoining the Company from further infringement, unspecified monetary damages, enhanced damages pursuant to 35 U.S.C. §284, costs, attorneys' fees and other relief as the court deems just and proper. On September 4, 2012, the District Court issued its ruling construing key claims of the patent at issue. The parties thereafter stipulated to the dismissal of plaintiff's claims and in September, the District Court dismissed the lawsuit in its entirety. On September 26, 2012, the plaintiffs filed an appeal with the United States Court of Appeals for the Federal Circuit appealing the District Court's dismissal of the lawsuit. The Company will continue to vigorously defend against the plaintiffs' claims.
Enzo Litigation
Southern District of New York Case: On October 28, 2003, Enzo Life Sciences, Inc., a wholly-owned subsidiary of Enzo Biochem, Inc. (collectively "Enzo"), filed a complaint against the Company that is pending in the United States District Court for the Southern District of New York for breach of contract, injunctive relief and declaratory judgment. The Enzo complaint relates to a 1998 distributorship agreement with Enzo under which the Company served as a non-exclusive distributor of certain reagent labeling kits supplied by Enzo. In its complaint, Enzo seeks monetary damages and an injunction against the Company from using, manufacturing or selling Enzo products and from inducing collaborators and customers to use Enzo products in violation of the 1998 agreement. Enzo also seeks the transfer of certain Affymetrix patents to Enzo.
On November 10, 2003, the Company filed a complaint against Enzo in the United States District Court for the Southern District of New York for declaratory judgment, breach of contract and injunctive relief relating to the 1998 agreement. In its complaint, the Company alleges that Enzo has engaged in a pattern of wrongful conduct against it and other Enzo labeling reagent customers by, among other things, asserting improperly broad rights in its patent portfolio, improperly using the 1998 agreement and distributorship agreements with others in order to corner the market for non-radioactive labeling reagents, and improperly using the 1998 agreement to claim ownership rights to the Company's proprietary technology. The court has not set a trial date for these actions, but has advised the parties to clear time for trials at the end of 2013 or the beginning of 2014, to potentially try these actions as well as other related actions between Enzo and other third parties.
Delaware Case: On April 6, 2012, Enzo filed a complaint against the Company in the United States District Court for the District of Delaware. In the complaint, plaintiff alleges that Affymetrix is infringing U.S. Patent No. 7,064,197 by making and selling certain GeneChip® products. The plaintiff seeks a preliminary and permanent injunction enjoining the Company from further infringement and unspecified monetary damages. The Company will vigorously defend against the plaintiff's case. No trial date is set for this action.
Administrative Proceedings
The Company's intellectual property is subject to a number of significant administrative actions. These proceedings could result in the Company's patent protection being significantly modified or reduced, and the incurrence of significant costs and the consumption of substantial managerial resources. For the three months ended March 31, 2013, the Company did not incur significant costs in connection with administrative proceedings.
NOTE 12—INCOME TAXES
The provision for income tax for the first quarter of 2013 was approximately $0.7 million which primarily consists of a provision for foreign taxes.
Due to the Company's history of cumulative operating losses, management concluded that, after considering all the available objective evidence, it is not more likely than not that all the Company's net deferred tax assets will be realized. Accordingly, all of the U.S. deferred tax assets continue to be subject to a valuation allowance as of March 31, 2013.
As of March 31, 2013, there have been no material changes to the total amount of unrecognized tax benefits.
NOTE 13—SEGMENT AND GEOGRAPHIC INFORMATION
The Company reports segment information on the "management" approach which designates the internal reporting used by management for making decisions and assessing performance as the source of the Company's reportable segments. The Company has determined that its Chief Executive Officer is the Company's chief operating decision maker ("CODM") as he is responsible for reviewing and approving investments in the Company's technology platforms and manufacturing infrastructure. Prior to 2012, the Company was organized as one reportable operating segment. Subsequent to the Acquisition, the Company's business was reorganized into two reportable operating segments for financial reporting purposes, Affymetrix Core and eBioscience.
In 2012, the Company reorganized its business in the following four business units: Expression, Genetic Analysis and Clinical Applications, Life Science Reagents and Corporate. The Expression business unit markets the Company's gene expression products and services, including in vitro transcription and other whole transcript arrays and QuantiGene line targeted at low-to-mid-plex products. The Genetic Analysis and Clinical Applications business unit markets the Company's genotyping and clinical arrays, including cytogenetics products. The Life Science Reagents business unit targets the life science reagent markets, marketing reagents, enzymes, purification kits and biochemicals used by life science researchers. The Corporate business unit is comprised primarily of revenue from royalty arrangements, and field revenue from services provided to customers by the Company. The Company determined that its manufacturing operations are centralized and based on platforms that are used to produce various products that serve multiple applications and markets. Additionally, the business units share research, development and common corporate services that provide capital, infrastructure and functional support. Based on the facts and circumstances, the Company concluded that the four business units represent one reportable operating segment, Affymetrix Core.
The Company's other reportable operating segment, eBioscience, was acquired in the second quarter of 2012 and operates as a separate business unit. eBioscience specializes in the development, manufacturing, marketing and distribution of research tools in the areas of flow cytometry, immunoassays, microscopic imaging and other protein-based analyses. The Acquisition allows the Company to expand addressable markets and continue to diversify the business beyond genomics discovery into cell and protein analysis.
The Company evaluates the performance of its reportable operating segments based on revenue and income (loss) from operations. Revenue is allocated to each business unit based on product codes excluding eBioscience whose business is primarily operated on a stand-alone basis.
The following table shows revenue and income (loss) from operations by reportable operating segment for the three months ended March 31, 2013 and 2012 (in thousands):
 
Three Months Ended
 
 
March 31,
 
 
2013
   
2012
 
Revenue:
 
   
 
Affymetrix Core
 
$
58,937
   
$
65,247
 
eBioscience
   
19,008
     
-
 
Totals
 
$
77,945
   
$
65,247
 
Loss from operations:
               
Affymetrix Core
 
$
(7,841
)
 
$
(3,352
)
eBioscience
   
(4,365
)
   
-
 
Totals
 
$
(12,206
)
 
$
(3,352
)

NOTE 14—RELATED PARTY TRANSACTIONS
In December 2011, the Company entered into an agreement under which it assigned one patent application and related know-how to Cellular Research, Inc. ("Cellular Research"), a company founded by the Company's Chairman, Dr. Stephen P.A. Fodor. Dr. Fodor also owns a majority of the shares of Cellular Research. Pursuant to the agreement, Cellular Research shall pay single digit royalties to Affymetrix on sales of products covered by the assigned technology, and starting in December 2015, an annual minimum fee of $100,000. Affymetrix shall also have a right of first refusal to collaborate with Cellular Research for the development of certain new products and to supply arrays to Cellular Research under certain terms and conditions. As of March 31, 2013, no royalties had been earned pertaining to this agreement.
NOTE 15—RESTRUCTURING
In the fourth quarter of 2012, the Company initiated a cost reduction action that included workforce. During the three months ended March 31, 2013, approximately 100 employees were notified of their involuntary termination. The Company estimates that the total restructuring charge associated with the plan will be approximately $6.6 million, substantially all of which is compensation and benefits afforded to terminated employees. During the year ended December 31, 2012, $1.8 million of restructuring expense related to employees who were notified prior to the end of the year was recognized. During the three months ended March 31, 2013, the Company recognized $4.8 million in restructuring expense and made substantially all of the cash payments, except for $1.5 million which was recorded at March 31, 2013 in Accounts payable and accrued liabilities on the accompanying Condensed Consolidated Balance Sheets. No additional costs are expected to be incurred, and the Company anticipates the remaining cash payments will be made during the second quarter of 2013.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of Operations as of March 31, 2013 and for the three months ended March 31, 2013 and 2012 should be read in conjunction with our financial statements and accompanying notes thereto included in this Quarterly Report on Form 10-Q and with the Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2012.
All statements in this quarterly report that are not historical are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act as amended, including statements regarding our strategic initiatives, anticipated cost savings, return to profitability and integration of and synergies related to eBioscience, as well as all other statements regarding our "goals," "expectations," "beliefs," "intentions," "strategies" or the like. 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. Actual results or business conditions may differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, our capacity to identify and capitalize upon emerging market opportunities; risks relating to our ability to acquire new businesses and technologies and successfully integrate and realize the anticipated strategic benefits and cost savings or other synergies thereof, including our acquisition of eBioscience, in a cost-effective manner while minimizing the disruption to our business; risks that eBioscience's future performance may not be consistent with its historical performance; risks relating to our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness; risks relating to our ability to develop and successfully commercialize new products and services; uncertainties related to cost and pricing of Affymetrix products; fluctuations in overall capital spending in the academic and biotechnology sectors; changes in government funding policies; our dependence on collaborative partners; the size and structure of our current sales, technology and technical support organizations; uncertainties relating to our suppliers and manufacturing processes; risks relating to our ability to achieve and sustain higher levels of revenue, higher gross margins and reduced operating expenses; uncertainties relating to technological approaches; global credit and financial market conditions; personnel retention; uncertainties relating to the FDA and other regulatory approvals; competition; risks relating to intellectual property of others and the uncertainties of patent protection and litigation; volatility of the market price of our common stock; unpredictable fluctuations in quarterly revenues; and the risk factors disclosed under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012. We expressly disclaim any obligation or undertaking 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, except as required by law.
OVERVIEW
We are a leading provider of life science tools and molecular diagnostic products that enable parallel analysis of biological systems at the gene, protein and cell level. We sell our products to genomic research centers, academic institutions, government and private laboratories, as well as pharmaceutical, diagnostic and biotechnology companies. Over 48,000 peer-reviewed papers have been published based on work using our products. We have approximately 1,100 employees worldwide and maintain sales and distribution operations across the United States, Europe, Latin America and Asia.
Reportable Operating Segments
Our operations consist of two reportable operating segments, Affymetrix Core and eBioscience. During the three months ended March 31, 2013, Affymetrix Core accounted for approximately 76% of total revenue and eBioscience accounted for approximately 24% of total revenue.
Affymetrix Core is divided into four business units with each business unit having its own marketing groups to better serve customers and respond quickly to the market needs. In addition, the business units share research, development and common corporate services that provide capital, infrastructure, resources and functional support, allowing them to focus on core technological strengths to compete and innovate in their markets. Affymetrix Core manufacturing operations are based on platforms that are used to produce various Affymetrix Core products that serve multiple applications and markets. The following describes the four business units that form Affymetrix Core:
·
Expression: This business unit markets the Company's GeneChip gene expression products and services, and the QuantiGene® line of low-to-mid-plex RNA measurement products.
·
Genetic Analysis and Clinical Applications: This business unit markets the Company's genotyping products, such as the Axiom® product line, and arrays with clinical research applications, such as the CytoScan® cytogenetics arrays.
·
Life Science Reagents: This business unit sells reagents, enzymes, purification kits and biochemicals used by life science researchers.
·
Corporate: This business unit is comprised primarily of incidental revenue from royalty arrangements and field revenue from services provided to customers of the Company.
Acquired in 2012, eBioscience is operated as a separate business unit with its own research, marketing and manufacturing groups:
·
eBioscience: This reportable segment specializes in the development, manufacturing, marketing and distribution of research tools in the areas of flow cytometry, immunoassays, microscopic imaging and other protein-based analyses.
All of our business units sell their products through our Global Commercial Organization comprised of sales, field application and engineering support, and marketing personnel. We market and distribute our products directly to customers in North America, Japan and major European markets. In these markets, we have our own sales, service and application support personnel responsible for expanding and managing their respective customer bases. In other markets, such as Mexico, India, the Middle East and Asia Pacific, including the People's Republic of China, we sell our products principally through third party distributors that specialize in life science supply. For molecular diagnostic and industrial applications market opportunities, we supply our partners with arrays and instruments, which they incorporate into diagnostic products and assume the primary commercialization responsibilities.
See Note 13. "Segment and Geographic Information" for more information on our reportable operating segments.
Overview of the First Quarter of 2013
We have faced declining financial performance over the past several years. Traditionally, a significant portion of our business was in the well-established gene expression business where our GeneChip® Expression product line comprised more than half of our revenue as we concentrated on selling these products in the basic research market focused on discovery research. Declining sales and intense competition from newer technologies such as next generation sequencing in this business has led to decreasing revenue annually since 2007.
Affymetrix Core reported revenue of $58.9 million for the three months ended March 31, 2013, as compared to $65.2 million during the same period in 2012. The decrease was primarily due to a $9.4 million decline in our Expression business unit revenue compared to the same period in 2012 across all regions, particularly in Japan, due to a challenging business environment. This decrease was partially offset by a $2.9 million increase in our Genetic Analysis and Clinical Applications business unit as a result of increased volume of sales in our Cytogenetics line of products which has been steadily increasing beginning in 2012 and our Axiom® products that more than doubled compared to the three months ended March 31, 2012.
Since Frank Witney became our President and Chief Executive Officer in July 2011, we continue to focus areas from a dependency on our Expression business unit to a more diversified portfolio with broader revenue stream capabilities that can reach into the growing markets for translational medicine and molecular diagnostics. Excluding eBioscience, revenue from this business unit was approximately 39% of our business in the first quarter of 2013 as compared to 50% in the same period of 2012 while revenue from our Genetic Analysis and Clinical Applications business unit was 37% as compared to 29%.
As we progress through 2013, we continue to execute on a strategy developed by Dr. Witney and our management team where we will realign our product portfolio, stabilize our core business and position our company for growth and increasing profitability. We expect this transformation to take several years, and have categorized this plan into three phases.
·
Phase 1 (2011-2012) –Portfolio Realignment. During this phase, we reorganized ourselves into business units to sharpen our business focus based on target markets. We also launched CytoScan®, our growing cytogenetic microarray product line, grew our Axiom genotyping platform aggressively and acquired eBioscience. We believe these actions will lead to a stabilization of our core business and the realignment of our product portfolio will position us for growth.
·
Phase II (2013-2014) – Profitability, Strengthen Balance Sheet, Development of Newer Product Lines. In the beginning of 2013, we communicated a corporate restructuring with a goal of accelerating our path to profitability. The corporate restructuring is expected to result in annualized savings of approximately $25 million based on 2013 run rates, of which $5 million is expected to be in cost of goods sold. Our priorities for this phase will be to achieve profitability, repay our senior secured debt, successfully commercialize our newer product lines (CytoScan®, Axiom® and QuantiGene® lines, as well as our eBioscience products) and invest in new product offerings. In addition, we will train and refocus our global commercial organization to expand our reach to customers in the translational medicine, molecular diagnostics and applied markets.
·
Phase III (2015 -2016) – Strategic Flexibility, Expansion of Product Lines; Growth. Our goal is to have a strong balance sheet in this phase that will provide us with the flexibility to make strategic acquisitions. In addition, we aim to grow revenues with developed product lines and new product offerings in the translational medicine and molecular diagnostic markets.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Condensed Consolidated Financial Statements, which we have prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management has discussed the development, selection and disclosure of significant estimates with the Audit Committee of our Board of Directors. Actual results may differ from these estimates under different assumptions or conditions.
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements. For a description of accounting changes and recent accounting standards, including the expected dates of adoption and estimated effects, if any, refer to Note 1. "Summary of Significant Accounting Policies" in the Notes to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q. During the three months ended March 31, 2013, there have been no significant changes in our critical accounting policies and estimates compared to the disclosures in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2012.
RESULTS OF OPERATIONS
The following discussion compares the historical results of operations for the three months ended March 31, 2013 and 2012.
REVENUE
The components of revenue are as follows:
Dollars in thousands
 
Three Months Ended
   
Dollar
   
Percentage
 
 
March 31,
   
change
   
change
 
 
2013
   
2012
   
from 2012
   
from 2012
 
Consumables
 
$
68,125
   
$
53,788
   
$
14,337
     
27
%
Instruments
   
3,432
     
4,703
     
(1,271
)
   
(27
)
Product sales
   
71,557
     
58,491
     
13,066
     
22
 
Services and other revenue
   
6,388
     
6,756
     
(368
)
   
(5
)
Total revenue
 
$
77,945
   
$
65,247
     
12,698
     
19
%

Excluding first quarter revenue from eBioscience of $19.0 million, total product sales decreased $5.9 million in the three months ended March 31, 2013 as compared to the same period in 2012. The decrease was primarily due to lower-than-expected revenue of $9.4 million in our Expression business unit across all regions, particularly in Japan, due to a challenging business environment. This decrease was partially offset by a $2.9 million increase in our Genetic Analysis and Clinical Applications business unit as a result of increased volume of sales in our Cytogenetics line of products which has been steadily increasing beginning in 2012 and our Axiom® product that more than doubled compared to the three months ended March 31, 2012. Instrument revenue decreased due to lower pricing.
Services and other revenue decreased slightly for the three months ended March 31, 2013 as compared to 2012 due to lower services revenue partially offset by higher royalty revenue.
TOTAL REVENUE BY BUSINESS UNIT
The following table summarizes revenue by business unit:
Dollars in thousands
 
Three Months Ended
   
Dollar
   
Percentage
 
 
March 31,
   
change
   
change
 
 
2013
   
2012
   
from 2012
   
from 2012
 
Expression
 
$
22,964
   
$
32,315
   
$
(9,351
)
   
(29
)%
Genetic analysis and clinical applications
   
21,752
     
18,830
     
2,922
     
16
 
Life science reagents
   
8,308
     
8,201
     
107
     
1
 
Corporate
   
5,913
     
5,901
     
12
     
0
 
eBioscience
   
19,008
     
-
     
19,008
     
100
 
Total product sales
 
$
77,945
   
$
65,247
   
$
12,698
     
19
%

Percentage of revenue
 
Three Months Ended
 
 
March 31,
 
 
2013
   
2012
 
Expression
   
29
%
   
50
%
Genetic analysis and clinical applications
   
28
     
29
 
Life science reagents
   
11
     
12
 
Corporate
   
8
     
9
 
eBioscience
   
24
     
-
 
Total product sales
   
100
%
   
100
%

Expression  During the three months ended March 31, 2013, Expression revenue decreased by $9.4 million primarily due to a decline in Genechip revenue of $8.3 million, which was driven by a lower volume of sales on our in vitro transcription (IVT) arrays primarily in Japan, decreased instrument sales of $0.6 million and lower revenue from Panomics of $0.5 million.
Genetic Analysis and Clinical Applications  Genetic Analysis and Clinical Applications revenue increased for the three months ended March 31, 2013 as compared to the same period in 2012, primarily due to $2.1 million and $5.2 million increases in revenue on our Cytogenetics and Axiom® products, respectively, partially offset by a decline in sales of our SNP 6.0 arrays of $2.8 million and lower instrument sales of $0.7 million.
Life Science Reagents  For the three months ended March 31, 2013, Life Science Reagents revenue increased slightly as compared to the same period in 2012.
Corporate Corporate revenue remained flat between the three months ended March 31, 2013 and 2012. Field service revenue was down but was offset by an increase in royalty revenue.
GROSS MARGIN
Dollars in thousands
 
Three Months Ended
   
Dollar/Point
 
 
March 31,
   
change from
 
 
2013
   
2012
   
2012
 
Total gross margin on product sales
 
$
37,124
   
$
34,926
   
$
2,198
 
Total gross margin on services and other revenue
   
2,881
     
2,977
     
(96
)
 
                       
Product gross margin as a percentage of products sales
   
52
%
   
60
%
   
(8
)
 
                       
Service and other revenue gross margin as a percentage of services and other revenue
   
45
%
   
44
%
   
1
 

Excluding eBioscience product gross margin of $7.2 million or 38%, that includes $4.6 million of amortization of inventory step-up in fair value, product gross margin decreased by $5.0 million or 3 basis points during the three months ended March 31, 2013 as compared to same period in 2012 primarily due to lower product pricing and a mix shift to lower margin products off-set by headcount reduction savings following our most recent restructuring effort and favorable cost absorption.

RESEARCH AND DEVELOPMENT EXPENSES

Dollars in thousands
 
Three Months Ended
   
Dollar
   
Percentage
 
 
March 31,
   
change
   
change
 
 
2013
   
2012
   
from 2012
   
from 2012
 
Research and development
 
$
12,248
   
$
13,331
   
$
(1,083
)
   
(8
)%

Excluding eBioscience expenses of $2.2 million, the decrease in research and development expenses for the three months ended March 31, 2013 as compared to the same period in 2012 was primarily due to savings on headcount-related costs of $1.6 million, lower spending on supplies and equipment of $0.5 million and consulting and purchased services of $0.4 million. Additionally, allocated costs associated with IT and facilities spending decreased by $0.9 million during the period as compared to 2012.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Dollars in thousands
 
Three Months Ended
   
Dollar
   
Percentage
 
 
March 31,
   
change
   
change
 
 
2013
   
2012
   
from 2012
   
from 2012
 
Selling, general and administrative
 
$
35,121
   
$
27,924
   
$
7,197
     
26
%

Excluding eBioscience expenses of $9.1 million, the decrease in selling, general and administrative expenses in the three months ended March 31, 2013 as compared to the same period in 2012 was primarily due to less non-recurring acquisition- and integration-related costs incurred during 2013 as compared to the prior year of $0.8 million. Additionally, for the three months ended March 31, 2013, we recognized lower headcount-related and variable compensation costs of $0.5 million, incurred less spending on IT and facilities costs of $0.5 million and marketing and travel costs of $0.3 million. These decreases were partially offset by higher legal services expenses of $0.4 million.
RESTRUCTURING EXPENSES
During the three months ended March 31, 2013, we recognized $4.9 million in restructuring charges due to a cost reduction action that included workforce initiated during the year ended December 31, 2012. We estimate that the total restructuring charge associated with the plan will be approximately $6.6 million, substantially all of which is compensation and benefits afforded to terminated employees. We do not expect any further material restructuring expenses for the remainder of 2013.

INTEREST INCOME AND OTHER, NET

Dollars in thousands
 
Three Months Ended
   
Dollar
   
Percentage
 
 
March 31,
   
change
   
change
 
 
2013
   
2012
   
from 2012
   
from 2012
 
Interest income
 
$
(16
)
 
$
298
   
$
(314
)
   
(105
)%
Realized income (loss) on equity investments, net
   
67
     
44
     
23
     
(52
)
Currency loss, net
   
(593
)
   
(318
)
   
(275
)
   
(86
)
Other
   
884
     
2
     
882
     
44,100
 
Total interest income and other, net
 
$
342
   
$
26
   
$
316
     
1,215
%

Interest income and other, net, in the three months ended March 31, 2013 increased as compared to the same period in 2012 primarily due to a gain of $0.7 million recognized on the release of accrued deferred rent associated with the exit of one of our San Diego properties. This increase was partially offset by lower interest income as a result of the sale of most of our available-for-sale securities during the eBioscience acquisition in the second quarter of fiscal 2012 and the remaining amounts in the first quarter of 2013. In addition, currency losses increased primarily due to the weakening of the U.S. dollar against other foreign currencies and the net results of our hedging activities.
We continue to monitor the liquidity and financing activities of strategic non-marketable investments to determine if any impairment exists. It is uncertain whether or not we will realize any long-term benefits associated with these strategic investments.
INTEREST EXPENSE
Dollars in thousands
 
Three Months Ended
   
Dollar
   
Percentage
 
 
March 31,
   
change
   
change
 
 
2013
   
2012
   
from 2012
   
from 2012
 
Interest expense
 
$
2,898
   
$
980
   
$
1,918
     
196
%

Interest expense increased during the three months ended March 31, 2013 as compared to the same periods in 2012 due to the interest costs on the debt obligations incurred in connection with the Acquisition partially offset by the redemption of the remaining aggregate principal amount of our 3.50% Notes in the first quarter of 2013.
INCOME TAX PROVISION
Dollars in thousands
 
Three Months Ended
   
Dollar
   
Percentage
 
 
March 31,
   
change
   
change
 
 
2013
   
2012
   
from 2012
   
from 2012
 
Income tax provision (benefit)
 
$
675
   
$
(89
)
 
$
764
     
(858
)%

In the first quarter of 2013, the provision for income tax primarily consists of a provision for foreign taxes. In the first quarter of 2012, the benefit for income tax primarily consists of a provision for foreign taxes offset by an income tax benefit provided within the intraperiod tax allocation rules.
Due to our history of cumulative operating losses, management concluded that, after considering all the available objective evidence, it is not more likely than not that all our net deferred tax assets will be realized. Accordingly, all of our U.S. deferred tax assets continue to be subject to a valuation allowance as of March 31, 2013.
As of March 31, 2013, there have been no material changes to our total amount of unrecognized tax benefits.
LIQUIDITY AND CAPITAL RESOURCES
Historically, we have financed our operations primarily through product sales; borrowings under credit arrangements; sales of equity and debt securities such as our 4.00% Notes, collaborative agreements; interest income; and licensing of our technology.
Our cash outflows have generally been as follows: cash used in operating activities such as research and development programs, sales and marketing activity, compensation and benefits of our employees and other working capital needs; cash paid for acquisitions; cash paid for litigation activity and settlements; and cash used for the payment of principal on debt obligations and repurchases of our convertible notes as well as interest payments on our long-term debt obligations.
As of March 31, 2013, we had cash and cash equivalents of approximately $38.2 million. During the three months ended March 31, 2013, we liquidated our portfolio of available-for-sale securities for $9.4 million in cash proceeds. We anticipate that our existing capital resources along with the cash to be generated from operations will enable us to maintain currently planned operations, debt repayments or convertible notes repurchases, and capital expenditures for the foreseeable future. These expectations are based on our current operating and financing plans, which are subject to change, and therefore we could require further funding. Factors that may cause us to require additional funding may include, but are not limited to: costs associated with defending third party claims; adverse ruling in any of our current litigation proceedings; investments required to commercialize our products; investments required to upgrade our older product lines; a decline in cash generated by sales of our products and services; our ability to maintain existing collaborative and customer arrangements and establish and maintain new collaboration and customer arrangements; arrangements that we may enter into in connection with future acquisitions or depositions; the progress of our research and development programs; initiation or expansion of research programs and collaborations; the costs involved in preparing, filing, prosecuting and enforcing intellectual property rights; the purchase of patent licenses; and other factors.
In 2012, we completed our acquisition of eBioscience for approximately $307.8 million, representing the purchase price of $314.9 million less $7.1 million cash transferred from eBioscience. The Acquisition was financed through a combination of cash on hand, the liquidation of available-for-sale securities, the proceeds, net of debt issuance costs, from our Term Loan of $80.5 million provided under our Senior Secured Credit Facility and the proceeds from the issuance, net of underwriting fees, of our 4.00% Notes of $101.1 million.
As part of the terms of the Senior Secured Credit Facility, we are required to meet certain financial and other negative covenants. After a significant restructuring and lower-than-expected revenues in the first quarter of 2013, we and the lenders amended the Senior Secured Credit Facility to (1) provide limited waiver of defaults arising from our failure to comply with the senior leverage ratio and total leverage ratio as of March 31, 2013; (2) amend the covenants to increase the amount of restructuring and integration charges in the trailing 12 months that we can add back in the calculation of EBITDAO for purposes of determining the total leverage and senior leverage ratios for the first three quarters of 2013; and (3) increase both our total leverage to EBITDAO ratio and our senior leverage to EBITDAO ratio for the first three quarters of 2013. Except as described above, as of March 31, 2013, we were in compliance with the covenants. Refer to Note 9. "Long-Term Debt Obligations" for further details regarding the Term Loan, our Senior Secured Credit Facility and the 4.00% Notes.
From time to time, we may seek to retire, repurchase or exchange common stock or convertible notes in open market purchases, privately negotiated transactions dependent on market conditions, liquidity, and contractual obligations and other factors. We did not retire, repurchase or exchange any of our common stock during the three months ended March 31, 2013. During the first quarter of 2013, we redeemed the remaining outstanding aggregate principal of our 3.50% Notes at par plus unpaid interest.
Cashflow (in thousands)
 
Three Months Ended
 
 
March 31,
 
 
2013
   
2012
 
Net cash provided by operating activities
 
$
11,369
   
$
(1,300
)
Net cash provided by (used in) investing activities
   
7,725
     
(1,905
)
Net cash used in financing activities
   
(6,991
)
   
(91,768
)
Effect of foreign currency translation on cash and cash equivalents
   
(278
)
   
74
 
Net increase (decrease) in cash and cash equivalents
 
$
11,825
   
$
(94,899
)

Operating Activities
Net cash provided by operating activities for the three months ended March 31, 2013 was comprised of net loss of $15.4 million, non-cash charges of $17.7 million and a decrease in operating assets of $9.1 million. Adjustments for non-cash expenses include depreciation and amortization expense of $10.3 million, amortization expense related to the inventory step-up in fair value of $4.6 million, share-based compensation expense of $1.8 million and an income tax expense of $1.5 million. Additionally, we received prepayments totaling approximately $13.4 million that are included in the cash balances at March 31, 2013.
Investing Activities
During the first quarter of 2013, we sold our remaining available-for-sale securities for $9.4 million in cash proceeds and spent $1.1 million on capital expenditures.
Financing Activities
During the first quarter of 2013, we redeemed our 3.50% Notes for $3.9 million, including unpaid accrued interest, and made a payment of $3.2 million on our Term Loan. In addition to certain mandatory payments, from time to time, we also may make early payments on the outstanding principal amount of our Term Loan.
Other financing activities generally consist of stock option exercise activity under our employee stock plan. Cash used in the issuance of stock under our employee stock plan, net of treasury shares withheld for taxes, was $0.1 million for the three months ended March 31, 2013.
OFF-BALANCE SHEET ARRANGEMENTS AND AGGREGATE CONTRACTUAL OBLIGATIONS
As of March 31, 2013, we had no off-balance sheet arrangements. Other than the debt obligations related to the Acquisition disclosed in Note 9. "Long-Term Debt Obligations" and the redemption of the remaining outstanding aggregate principal balance of our 3.50% Notes during the first quarter of 2013, there have been no significant changes to our aggregate contractual obligations as compared to the disclosures in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2012.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Rate Risk
We derive a portion of our revenues in foreign currencies, predominantly in Europe and Japan. In addition, a portion of our assets are held in nonfunctional currencies of our subsidiaries. We use currency forward contracts to manage a portion of the currency exposures created from our activities denominated in foreign currencies. Our hedging program is designed to reduce, but does not entirely eliminate, the impact of currency exchange rate movements. See Note 2. "Summary of Significant Accounting Policies – Derivative Instruments" in the Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2012 for further information.
Interest Rate Risk
In addition to our market risk discloses in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2012, we also face interest rate risk relating to the increase or decrease in the amount of interest we must pay on our outstanding debt instruments. In 2012, we entered into a Senior Secured Credit Facility, which provides for a Term Loan and revolving credit facility. As further explained in Note 9. "Long-Term Debt Obligations," outstanding borrowings under the Senior Secured Credit Facility bear interest at variable interest rates and therefore the interest we pay will fluctuate as changes occur in certain benchmark interest rates. As of March 31, 2013, we had borrowed a total of $85.0 million under the Term Loan provided under the Senior Secured Credit Facility. Under the Credit Agreement, we are required to maintain derivative contracts to protect against fluctuations in interest rates with respect to at least 35% of the aggregate principal amount of the Term Loan then outstanding and such derivative contracts shall provide for not less than a three year term. Accordingly, we entered into an interest rate swap (the "Interest Rate Swap") for which the notional amount was originally set at $27.0 million, with quarterly reduction to the notional amount consistent with the mandatory amortization schedule of the Term Loan. The Interest Rate Swap calls for quarterly fixed rate payments of 1.70% of the notional amount in exchange for a variable rate receipts equal to a 3-month LIBOR rate with a floor of 1.50%. The Interest Rate Swap terminates on June 25, 2015. We do not believe a hypothetical 10% increase in interest rates as of March 31, 2013 would have had a material impact on our interest expense.
ITEM 4. CONTROLS AND PROCEDURES
(a) Disclosure controls and procedures.
Affymetrix's management carried out an evaluation, as required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)), as of the end of our last fiscal quarter. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q, such that the information relating to Affymetrix and its consolidated subsidiaries required to be disclosed in our Exchange Act reports filed with the SEC (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to Affymetrix's management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in internal control over financial reporting.
Affymetrix's management carried out an evaluation, as required by Rule 13a-15(d) of the Exchange Act, with the participation of our Chief Executive Officer and our Chief Financial Officer, of changes in Affymetrix's internal control over financial reporting. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that there were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information pertaining to legal proceedings can be found in Note 11. "Legal Proceedings" to our Condensed Consolidated Financial Statements elsewhere in this Quarterly Report on Form 10-Q, and is incorporated by reference herein.
ITEM 1A. RISK FACTORS
Risks Related to Our Business
Risks Related to the Growth of Our Business
If our GeneChip expression business continues to decline significantly and if we do not continually develop and commercialize new or enhanced products and services, our business may continue to decline rather than grow.
Our GeneChip expression business has been declining at a significant rate over the past several years, and we have to stabilize our expression business and grow the other parts of our business in order to return the whole business to growth. Our GeneChip expression business faces intense competition from sequencing technologies and we believe it will continue to decline significantly for the foreseeable future and we cannot assure you that we will stabilize this business readily. Our success will depend in large part on our continual, timely development and commercialization of new or enhanced products and services that address evolving market requirements and are attractive to customers. The life science and clinical diagnostic research markets are characterized by rapid and significant technological changes, frequent new product introductions and enhancements, evolving industry standards and changing customer needs. Standardization of tools and systems for genetic research is still ongoing and we cannot assure you that our products will emerge as the standard for genetic research. Other companies may introduce new technologies, techniques, products or services that render our products or services obsolete or uneconomical. If we do not appropriately innovate and invest in new technologies, then our technologies will become dated and our customers could move to new technologies offered by our competitors.
As a result, we are continually looking to develop, license or acquire new or enhanced technologies, products and services to further broaden and deepen our offerings. Some factors affecting market acceptance of our products and services:
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availability, quality and price as compared to competitive technologies, products and services;
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the functionality of new and existing products and services, and whether they address market requirements;
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the timing of introduction of our technologies, products and services as compared to competitive technologies, products and services;
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the existence of product defects;
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scientists' and customers' opinions of the utility of our products and services and our ability to incorporate their feedback into future products and services;
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citation of our products in published research; and
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general trends in life science and clinical diagnostics research and life science informatics software development.
Our new or enhanced technologies, products or services may not be accepted by customers in our target markets. For example, once we have developed or obtained a new technology, we may fail to successfully commercialize new products and services based on that technology, particularly to the extent that our new products and services compete with established technologies or the products and services of more established competitors. Risks relating to product adoptions include the inability to accurately forecast demand and difficulties in managing different sales and support requirements due to the type or complexity of the new products.
Further, many of our current and potential customers have limited budgets. Accordingly, we cannot assure you that the successful introduction of new or enhanced products or services will not adversely affect sales of our current products and services or that customers that currently purchase our products or services will increase their aggregate spending as a result of the introduction of new products and services.
Emerging opportunities in molecular diagnostics may not develop as quickly as we expect and we depend, in part, on the efforts of our partners to be successful.
The clinical applications of our technologies for diagnosing and enabling informed disease management options in the treatment of disease is an emerging opportunity in molecular diagnostics. At this time, we cannot be certain that molecular diagnostic markets will develop as quickly as we expect. Although we believe that there will be clinical applications of our technologies that will be utilized for diagnosing and enabling informed disease management options in the treatment of disease, there can be no certainty of the technical or commercial success our technologies will achieve in such markets.
Our success in the molecular diagnostics market depends, in part, on our collaborative relationships and the ability of our collaborative partners to achieve regulatory approval for such products in the United States and in overseas markets and successfully market and sell products using our technologies.
Our growth depends, in part, on our ability to acquire new businesses and technologies and successfully integrate acquisitions, which may absorb significant resources and may not be successful.
As part of our strategy to develop and identify new technologies, products and services, we have acquired and may continue to acquire new businesses and technologies. Our integration of the operations of acquired businesses requires significant efforts, including the coordination of information technologies, research and development, sales and marketing, operations, manufacturing and finance. In particular, the success of our acquisition of eBioscience will depend, in part, on our ability to successfully integrate eBioscience's business and operations and fully realize the anticipated benefits and synergies from combining our businesses and eBioscience. Such anticipated benefits and synergies of the Acquisition may not be realized fully or at all or may take longer to realize than expected, which could materially adversely affect our business, results of operations and financial condition. Our efforts to successfully integrate acquisitions may result in additional expenses and divert significant amounts of management's time from other projects.
Our failure to manage successfully and coordinate the growth of the combined company could also have an adverse impact on our business. In addition, there is no guarantee that businesses we acquire will become profitable or remain so. If our acquisitions do not meet our initial expectations, we may record impairment charges.
Factors that will affect the success of our acquisitions include:
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our ability to retain key employees of the acquired company;
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the performance of the acquired business, technology, product or service;
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our ability to integrate operations, financial and other systems;
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the ability of the combined company to achieve synergies among its constituent companies, such as increasing sales of the combined company's products and services, achieving expected cost savings and effectively combining technologies to develop new products and services;
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any disruption in order fulfillment or loss of sales due to integration processes, including relationships with suppliers or distributors;
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the presence or absence of adequate internal controls and/or significant fraud in the financial systems of acquired companies;
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any decrease in customer and distributor loyalty and product orders caused by dissatisfaction with the combined companies' product lines and sales and marketing practices, including price increases; and
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our assumption of known contingent liabilities that are realized, known liabilities that prove greater than anticipated, or unknown liabilities that come to light, to the extent that the realization of any of these liabilities increases our expenses or adversely affects our business or financial position.
Any difficulties and costs associated with the integration of eBioscience could negatively affect our results of operations and ability to execute our strategy.
If we experience difficulties in integrating eBioscience with our existing operations or are not able to achieve the anticipated benefits and synergies of the Acquisition, our business and results of operations could be negatively affected. In addition, it is possible that the ongoing integration process could result in the loss of key employees, errors or delays in systems implementation, the disruption of our ongoing business or the acquired business or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with customers and employees or to achieve the anticipated benefits and synergies of the Acquisition. Integration efforts also may divert management attention and resources. In addition, we will incur transaction fees and costs related to formulating and implementing integration plans. For example, pursuant to certain of our agreements with a collaborative partner, we will be required to migrate certain eBioscience products to incorporate our collaborative partner's technologies. We continue to assess the magnitude of these costs and additional unanticipated costs may be incurred in the integration of eBioscience. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies or synergies related to the integration of the businesses, should allow us to offset incremental transaction and acquisition-related costs over time, this net benefit may not be achieved in the near term, or at all.
Risks Related to our Indebtedness
Our indebtedness could materially adversely affect our business, financial condition and results of operations.
We funded the Acquisition, in part, by incurring a substantial amount of indebtedness from the Term Loan provided under our Senior Secured Credit Facility and issuance of the 4.00% Notes. Refer to Note 9. "Long Term Debt Obligations" in this Quarterly Report on Form 10-Q for further information regarding the Term Loan, the Senior Secured Credit Facility and the 4.00% Notes.
This substantial amount of indebtedness could materially adversely affect us, including by decreasing our business flexibility and increasing our borrowing costs. The indebtedness we incurred in connection with the Acquisition is expected to significantly increase our interest expense, leverage and debt service requirements. Increased levels of indebtedness may reduce funds available for our investment in product development as well as capital expenditures and other activities, increase our borrowing costs and create competitive disadvantages for us relative to other companies with lower debt levels.
In addition, the agreements governing the Senior Secured Credit Facility contain restrictive covenants imposing operating and financial restrictions on us, including restrictions that may limit our ability to finance future operations or capital needs or to engage in other business activities. See the risk factor below entitled "We may not be able to finance future needs or adapt our business plan to changes because of restrictions placed on us by our Senior Secured Credit Facility and future instruments governing our indebtedness." In April 2013, following a restructuring and lower than expected revenues in the first quarter of 2013, we and the Lenders amended the Senior Secured Credit Facility to (1) provide a limited waiver of defaults arising from our failure to comply with the senior leverage ratio and total leverage ratio as of March 31, 2013; (2) amend the covenants to increase our leverage ratios under the Senior Credit Facility. Refer to Note 9. "Long-Term Debt Obligations" for further details regarding this amendment. If our revenue continues to decline, we may have to make further amendments to the Senior Secured Credit Facility and we cannot assure you that the Lenders will agree to amend the Senior Secured Credit Facility in such situations and if they do, whether they will require us to pay significant consideration for such amendment.
In addition, our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt. We may also incur expenditures that are outside of our control, such as costs associated with legal proceedings brought by other parties, or costs resulting from compliance with changes in laws. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
If an event of default occurs under the Senior Secured Credit Facility, the 4.00% Notes, or any other debt financing agreement, we may be required to immediately repay all outstanding borrowings, together with accrued interest and other fees. We may not be able to repay all amounts due in the event these amounts are declared due upon an event of default.
In addition, despite our current consolidated debt levels, we and our subsidiaries may be able to incur substantial additional debt in the future, subject to the restrictions contained in our debt instruments, including our Senior Secured Credit Facility.
We may not be able to finance future needs or adapt our business plan to changes because of restrictions placed on us by the Senior Secured Credit Facility and future instruments governing our indebtedness.
The terms of our Senior Secured Credit Facility include various covenants that limit our ability, and that of our subsidiaries, to, among other things:
· incur additional debt, including guarantees by us or our subsidiaries;
· make investments, pay dividends on our capital stock, redeem or repurchase our capital stock, redeem or repurchase the notes or any subordinated obligations;
· create liens;
· make capital expenditures;
· dispose of assets;
· make acquisitions;
· create or permit restrictions on the ability of our subsidiaries to pay dividends or make other distributions to us;
· engage in transactions with affiliates;
· engage in sale and leaseback transactions; and
· consolidate or merge with or into other companies or sell all or substantially all of our assets.
Our ability to comply with covenants contained in the Senior Secured Credit Facility and any future agreements governing other indebtedness to which we are or may become a party may be affected by events beyond our control, including prevailing economic, financial and industry conditions. The Senior Secured Credit Facility will require us to comply with financial performance covenants, including, without limitation, a minimum fixed charge coverage ratio, maximum senior leverage multiple and maximum total leverage multiple. Additionally, the Senior Secured Credit Facility contains numerous affirmative covenants, including covenants regarding payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. Any additional indebtedness we incur in the future may subject us to further covenants.
Our failure to comply with these covenants could result in a default under the agreements governing the relevant indebtedness. In addition, unless cured or waived, the default could result in an acceleration under our other instruments that contain cross-acceleration or cross-default provisions, which could require us to repay or repurchase indebtedness, together with accrued interest, prior to the date it otherwise is due and that could adversely affect our financial condition. If a default occurs under the Senior Secured Credit Facility, the lenders could cause all of the outstanding debt obligations under the facility to become due and payable, which would result in a default under our 4.00% Notes and could lead to an acceleration of obligations related to such notes. Upon a default or cross-default, the agent, at the direction of some or all of the lenders under the Senior Secured Credit Facility, could foreclose against the collateral. Even if we are able to comply with all of the applicable covenants, the restrictions on our ability to manage our business in our sole discretion could adversely affect our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities that we believe would be beneficial to us.
Risks Related to Our Sales
We face significant competition, and our failure to compete effectively could adversely affect our sales and results of operations.
We compete with companies that develop, manufacture and market genetic analysis tools for the life science and clinical healthcare markets. We face significant competition as our competitors and new companies develop new, improved or more economical products, services and technologies.
The market for our products and services is highly competitive, has high barriers to entry and has several other large companies with significant market share. For example, companies such as Illumina, Inc., Agilent Technologies and Life Technologies Corporation have products for genetic analysis that are directly competitive with certain of our products. In addition, Illumina, Inc., Life Technologies Corporation, Roche Diagnostics and Complete Genomics, Inc. also offer DNA sequencing technology which we do not offer. As the costs of DNA sequencing fall, we will face increased competition in certain of our existing and potential markets. We also face competition from established diagnostic companies such as Beckman Coulter, Becton, Dickinson and Company, bioMérieux, Celera Diagnostics, Johnson & Johnson, Gen-Probe Incorporated and Roche Diagnostics, which have made strategic commitments to diagnostics, have financial and other resources to invest in new technologies, and have substantial intellectual property portfolios, substantial experience in new product development and regulatory expertise. In addition, our collaborative partners may compete with us.
Many of our current and potential competitors have significantly greater financial, technical, marketing and other resources than we do. In addition, many current and potential competitors have greater name recognition, more extensive customer bases and access to proprietary genetic content.
Our eBioscience segment competes in the life science research market with companies such as Becton, Dickinson and Company, Abcam plc, Life Technologies Corporation and Danaher Corporation/Beckman Coulter. A number of competitors employ bundled arrangements in which customers pay for consumable products (such as reagent test kits), services and the related instruments under a single arrangement, including arrangements where the customer commits to purchase a minimum volume of consumable products annually. Since we do not currently produce instruments for this market, and bundled arrangements can allow competitors to offer lower prices for competing products, customer demand for these bundled arrangements could lead to loss of market share or force us to supply products at a discount.
Reduction or delay in research and development budgets and government funding may adversely impact our sales.
We expect that our revenue in the foreseeable future, including anticipated revenue from our eBioscience segment, will be derived from products and services provided to pharmaceutical and biotechnology companies, as well as a relatively small number of academic, governmental and other research institutions. Our operating results may fluctuate substantially due to reductions and delays in research and development expenditures by these customers.
Factors that could affect the spending levels of our customers include:
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changes in government programs, including available funding, which support research and development expenditures by companies and research institutions;
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weakness in the global economy and changing market conditions that affect our customers;
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changes in the extent to which the pharmaceutical industry may use genetic information and genetic testing as a methodology for drug discovery and development;
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changes in the regulatory environment affecting life science companies and life science research;
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impact of consolidation within the pharmaceutical industry; and
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cost reduction initiatives of customers.
Budgets in the research-use-only market have been particularly challenged in recent periods, which we believe has had an adverse effect on us, including our eBioscience segment. A significant or prolonged change in research funding, particularly with respect to the U.S. National Institutes of Health, including funding reductions that may result from scheduled automatic federal budget sequestration provisions, could have an adverse impact on future revenues and results of operations.
As we implement our strategy to expand into new markets, the size and structure of our current sales, marketing and technical support organizations may limit our ability to sell our products and services.
As we implement our strategy to expand into new markets, we may not be able to establish a sales, marketing and technical support organization sufficient to sell, market and support all of our new products, or to cover all of the regions that we target globally. To assist our sales and support activities, we have entered into distribution agreements through certain distributors, principally in markets outside of North America and Europe. In addition, we may enter into distribution arrangements with respect to some of our products that we believe will be better served in such arrangements than our current sales and marketing organizations. We have less control over other third parties on whom we rely for sales, marketing and technical support. In addition, these third parties may decide to develop and sell competitive products or otherwise become our competitors, which could harm our business.
Consolidation trends in both our market and many of our customers' markets have increased competition.
There has been a trend toward industry consolidation in our markets for the past several years. We expect this trend toward industry consolidation to continue as companies attempt to strengthen or hold their market positions in an evolving industry and as companies are acquired or are unable to continue operations. We believe that industry consolidation may result in stronger competitors that are better able to compete as sole-source vendors for customers. This could lead to more variability in operating results and could harm our business.
Additionally, there has been a trend toward consolidation in many of the customer markets we sell to, in particular the pharmaceutical industry. Consolidation in our customer markets results in increased competition for important market segments and fewer available accounts, and larger consolidated customers may be able to exert increased pricing pressure on companies in our market.
If we are unable to maintain our relationships with collaborative partners and licensors, we may have difficulty developing and selling our products and services.
Our commercial success depends, in part, on our ability to develop and maintain collaborative relationships and licenses with key companies as well as with key academic researchers. In particular, we depend on third parties for in-licensed technology and components for a variety of our product lines. We collaborate with a number of instrumentation and reagent companies, including Beckman Coulter, CapitalBio Corporation, Genisphere LLC, Hamilton Robotics, Life Technologies Corporation, Luminex Corporation, Siemens Medical Solutions Diagnostics, Takara Bio Inc., New England Biolabs, Inc. and Qiagen GmbH. Some of these collaborators, like Life Technologies Corporation, Takara Bio Inc., New England Biolabs, Inc. and Luminex Corporation, are currently sole suppliers of components of some of our reagent kits but they are also our competitors. Relying on our collaborative relationships is risky to our future success because:
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our partners may develop technologies or components competitive with our products and services;
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our existing collaborations may preclude us from entering into additional future arrangements or impact the integration of acquired businesses and technologies;
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our partners may not obtain regulatory approvals necessary to continue the collaborations in a timely manner;
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some of our agreements may terminate prematurely due to disagreements between us and our partners or licensors;
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our partners may not devote sufficient resources to the development and sale of our products and services;
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our partners may be unable to provide the resources required for us to progress in the collaboration on a timely basis;
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our collaborations may be unsuccessful; or
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some of our agreements have expired and we may not be able to negotiate future collaborative arrangements or renew current licenses on acceptable terms.
In addition, our eBioscience segment relies on licensing as a basis for many of its products and intellectual property, and the ability to maintain and renew current licenses as well as license new technologies from third parties is and will continue to be important such unit's ability to offer and introduce products. The ability to retain and gain access to technologies necessary to develop new products will depend, in part, on our ability to convince third parties that our combined company can successfully commercialize the technologies we seek to license. The inability to maintain or to acquire any third-party licenses, or integrate the related third-party technologies into these products, could result in delays in our product developments and enhancements. There can be no assurance that we will be able to continue to successfully identify new products developed by others in the life science research and clinical healthcare markets or otherwise and, if identified, to negotiate license agreements on commercially reasonable terms, if at all.
Risks Related to the Manufacturing of Our Products
We depend on a limited number of suppliers. We will be unable to launch or commercialize our products in a timely manner if our suppliers are unable to meet our requirements or if shipments from these suppliers are delayed or interrupted.
We outsource the manufacturing of our instruments to a limited number of suppliers. Some of our instruments and other key parts of our product lines, including components of our manufacturing equipment and certain raw materials used in the manufacture of our products are currently only available from a single supplier. Therefore, we depend on our suppliers to supply our instruments, or components of our products, in required volumes, at appropriate quality and reliability levels, and in compliance with regulatory requirements on a timely basis. If supplies from these vendors do not meet our requirements, or were delayed or interrupted for any reason, we would not be able to commercialize our products successfully or in a timely fashion, and our business could be adversely impacted.
Our business is dependent on our ability to forecast our needs for components and products in our product lines and our suppliers' ability to deliver such components and products in time to meet critical manufacturing and product release schedules. Our business could be adversely affected, for example, if suppliers fail to meet product release schedules, if we experience supply constraints, if we fail to negotiate favorable pricing or if we experience any other interruption or delay in the supply chain which interferes with our ability to manufacture our products or manage our inventory levels.
We may lose customers or sales if we are unable to meet customer demand for our products on a timely and cost-effective basis, or if we are unable to ensure the proper performance and quality of our products.
We produce our products in an innovative and complicated manufacturing process which has the potential for significant variability in manufacturing yields. We have encountered, and may in the future encounter, difficulties in manufacturing our products and, due to the complexity of our products and our manufacturing process, we may experience delays in the manufacture of our products or fail to ensure their proper performance or quality. As we develop new and enhanced products, we must be able to resolve in a timely, cost-effective manner manufacturing issues that may arise from time to time.
We base our manufacturing capabilities on our forecasted product mix for the quarter. If the actual product mix varies significantly from our forecast, we may not be able to fill some orders during that quarter, which could adversely impact our financial results. Difficulties in meeting customer, collaborator and internal demand could also cause us to lose customers or require us to delay new product introductions, which could in turn result in reduced demand for our products.
We rely on internal quality control procedures to verify our manufacturing processes. Due to the complexity of our products and manufacturing process, however, it is possible that products that do not meet all of our performance specifications may not be identified before they are shipped. If our products do not consistently meet our customers' performance expectations, demand for our products will decline. In addition, we do not maintain any backup manufacturing capabilities for the production of our products. Any interruption in our ability to continue operations at our existing manufacturing facilities could delay our ability to develop or sell our products, which could result in lost revenue and seriously harm our business, financial condition and results of operations.
We may need to adjust our manufacturing capacity based on business requirements or improvements made to our technological capabilities and there are risks associated with such adjustment.
If demand for our products is reduced or if we implement technologies that increase the density or yields of our wafers, our manufacturing capacity could be under-utilized and some of our long-lived assets, including facilities and equipment, may be impaired, which would increase our expenses. In addition, factory planning decisions may shorten the useful lives of long-lived assets including facilities and equipment, and cause us to accelerate depreciation. These changes in demand for our products, and changes in our customers' product needs, could have a variety of negative effects on our competitive position and our financial results, and, in certain cases, may reduce our revenue, increase our costs, lower our gross margin percentage or require us to recognize impairments of our assets. In addition, if demand for our products is reduced or we fail to accurately forecast demand, we could be required to write down inventory since certain of our products have a limited shelf life, which would have a negative impact on our gross margin.
We have in the past, and may in the future, adjust our manufacturing capacity based on business requirements, which may include the rationalization of our facilities, including the abandonment of long-lived manufacturing assets and additional charges related to a reduction in capacity. Manufacturing and product quality issues may arise as we launch new products in our Singapore, Ohio, San Diego and Vienna facilities and rely increasingly upon manufacturing by third parties. We may lose customers if we are unable to manufacture products or if we experience delays in the manufacture of our products as a result of this transition.
We may not be able to deliver acceptable products to our customers due to the rapidly evolving nature of genetic sequence information upon which our products are based.
The genetic sequence information upon which we rely to develop and manufacture our products is contained in a variety of databases throughout the world. These databases are rapidly expanding and evolving. In addition, the accuracy of these databases and resulting genetic research is dependent on various scientific interpretations and it is not expected that global genetic research efforts will result in standardized genetic sequence databases for particular genomes in the near future.
Although we have implemented ongoing internal quality control efforts to help ensure the quality and accuracy of our products, the fundamental nature of our products requires us to rely on genetic sequence databases and scientific interpretations which are continuously evolving. As a result, these variables may cause us to develop and manufacture products that incorporate sequence errors or ambiguities. The magnitude and importance of these errors will depend upon multiple and complex factors that would be considered in determining the appropriate actions required to remedy any inaccuracies. Our inability to timely deliver acceptable products as a result of these factors would likely adversely affect our relationship with customers, and could have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Our Operations
We may not achieve sustained profitability.
Prior to 2002, we incurred losses each year since our inception, and we reported losses in 2006, from 2008 through 2012 and for first quarter of 2013. As a result, we had an accumulated deficit of approximately $506.1 million as of March 31, 2013. Our ability to achieve sustained profitability will depend, in part, on the rate of growth, if any, of our revenue and on the level of our expenses. In 2012 and the first quarter of 2013, our business was affected by a drop in the volume of sales of our in-vitro transcription arrays in our Expression business that was partially offset by an increase in our Cytogenetics and Axiom products in our Genetic Analysis and Clinical Applications business. This led to an overall decrease in revenue as compared to the same prior-year period. There can be no assurance that our revenue will not continue to decrease in future periods. We announced a corporate restructuring program to reduce our costs, however, there can be no assurance that the anticipated cost savings will materialize. We expect to continue incurring significant expenses related to research and development, sales and marketing efforts to commercialize our products, litigation and non-cash stock based compensation, and we expect to continue to experience fluctuations in our operating results. If our revenue grows more slowly than we anticipate, or if our operating expenses are above what we expect or cannot be reduced in the event of lower revenue, we may not become profitable on a sustained basis, or at all.
If we do not attract and retain key employees, our business could be impaired.
To be successful, we must attract and retain qualified scientific, engineering, manufacturing, sales, marketing and management personnel. To expand our research, product development and sales efforts we need additional people skilled in areas such as bioinformatics, organic chemistry, information services, regulatory affairs, manufacturing, sales, marketing and technical support. Competition for these people is intense, and our compensation arrangements, such as our equity award programs, may not always be successful in attracting new employees and retaining and motivating existing employees. For example, our stock price has been volatile in recent years, resulting in a significant number of stock options granted to our employees having a strike price that is higher than the current trading price of our common stock. In addition, following the Acquisition, in order to retain and incentivize key eBioscience employee as we integrate the business, we granted certain employees performance-based restricted stock units ("PRSUs") as further described in Note 5. "Stockholders' Equity and Share-Based Compensation Expense"; we cannot be assured that these equity awards will be successful in retaining and incentivizing such employees. If we are unable to hire, train and retain a sufficient number of qualified employees, we will not be able to expand our business or our business could be adversely affected.
We also rely on our scientific advisors and consultants to assist us in formulating our research, development and commercialization strategy. All of these individuals are engaged by other employers and have commitments to other entities that may limit their availability to us.
Due to the international nature of our business, political or economic changes or other factors could harm our business.
A significant amount of our revenue is currently generated from sales outside the United States. Although such transactions are denominated in both U.S. dollars and foreign currencies, our future revenue, gross margin, expenses and financial condition are still affected by such factors as changes in foreign currency exchange rates; unexpected changes in, or impositions of, legislative or regulatory requirements, including export and trade barriers and taxes; longer payment cycles and greater difficulty in accounts receivable collection.
We also are subject to general geopolitical risks in connection with international operations, such as political, social and economic instability, including austerity measures, potential hostilities, epidemics and changes in diplomatic and trade relationships. We cannot assure investors that one or more of the foregoing factors will not have a material adverse effect on our business, financial condition and operating results or require us to modify our current business practices.
As we expand our development and commercialization activities outside of the United States, we will be subject to an increased risk of inadvertently conducting activities in a manner that violates the U.S. Foreign Corrupt Practices Act and similar laws. If that occurs, we may be subject to civil or criminal penalties which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
We are subject to the U.S. Foreign Corrupt Practices Act ("FCPA"), which prohibits corporations and individuals from paying, offering to pay, or authorizing the payment of anything of value to any foreign government official, government staff member, political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity. We are also subject to the UK Anti-Bribery Act, which prohibits both domestic and international bribery, as well as bribery across both public and private sectors.
In the course of establishing and expanding our commercial operations and seeking regulatory approvals outside of the United States, we will need to establish and expand business relationships with various third parties and we will interact more frequently with foreign officials, including regulatory authorities. Expanded programs to maintain compliance with such laws will be costly and may not be effective. Any interactions with any such parties or individuals where compensation is provided that are found to be in violation of such laws could result in substantial fines and penalties and could materially harm our business. Furthermore, any finding of a violation under one country's laws may increase the likelihood that we will be prosecuted and be found to have violated another country's laws. If our business practices outside the United States are found to be in violation of the FCPA, UK Anti-Bribery Act or other similar law, we may be subject to significant civil and criminal penalties which could have a material adverse effect on our financial condition and results of operations.
Our effective tax rate may vary significantly.
Our operations are subject to income and transaction taxes in the United States and in multiple foreign jurisdictions. Estimates and judgments are required in determining our worldwide provision for income taxes. Some of these estimates are based on interpretations of existing tax laws or regulations. The ultimate amount of tax liability may be uncertain as a result.
Changes in overall levels and the geographic mix of pretax earnings may adversely impact our effective tax rate. Certain jurisdictions have lower tax rates, and the amount of earnings in these jurisdictions may fluctuate. If we do not have profitable operations in these jurisdictions, our effective tax rate could be adversely impacted. Changes in tax laws, regulatory requirements, our treasury plans, and applicability of tax holidays and incentive programs in the countries in which we operate could have a material impact on our tax provision. Tax authorities may challenge the allocation of profits between our subsidiaries and conformance with requirements of tax holidays and incentive programs and we may not prevail in any such challenge. If we were not to prevail, we could be subject to higher tax rates or double tax.
Estimates are required in determining any valuation allowance to be recorded against our net deferred tax assets. Changes in the amount of valuation allowance required may significantly impact our financial results of operations. Changes in other categories of earnings such as discontinued operations and other comprehensive income may affect our tax provision allocated to continuing operations.
In the normal course of business, we are subject to examination by taxing authorities in the U.S. and multiple foreign jurisdictions.
Failure in our information technology systems could disrupt our operations and cause the loss of customers or business opportunities.
Information technology ("IT") systems are used extensively in virtually all aspects of our business, including sales forecast, order fulfillment and billing, customer service, logistics and management of data from running samples on our products. Our success depends, in part, on the continued and uninterrupted performance of our IT systems. IT systems may be vulnerable to damage from a variety of sources, including telecommunications or network failures, human acts and natural disasters. Moreover, despite the security measures we have implemented, our IT systems may be subject to physical or electronic break-ins, computer viruses and similar disruptive problems. We also have taken precautionary measures to prevent unanticipated problems that could affect our IT systems. Nevertheless, we may experience damages to our systems, and system failures and interruptions.
If we experience systems problems, they may interrupt our ability to operate and adversely affect our reputation and result in a loss of customers and revenues.
Risks Related to Our Investments
Our strategic equity investments may result in losses.
We periodically make strategic equity investments in various public and private companies with businesses or technologies that may complement our business. The market values of these strategic equity investments may fluctuate due to market conditions and other conditions over which we have no control. Other-than-temporary declines in the market price and valuations of the securities that we hold in other companies have required us to record losses relative to our ownership interest. This could result in future charges to our earnings. It is uncertain whether or not we will realize any long-term benefits associated with these strategic investments.
Risks Related to Government Regulation and Litigation
We and our customers are subject to various government regulations, and we may incur significant expenses to comply with, and experience delays in our product commercialization as a result of, these regulations.
The FDA has jurisdiction over the commercialization of medical devices, including in vitro diagnostic test kits and the reagents and instrumentation used in these tests. In vitro diagnostic tests, reagents, and instruments may be subject to pre-market review and post-market controls by the FDA. Certain in vitro diagnostic products must also be approved by the regulatory agencies of foreign governments or jurisdictions before the product can be sold outside the United States. Commercialization of our and our collaborative partners' in vitro diagnostic products outside of the research environment may depend upon successful completion of clinical trials. Clinical development is a long, expensive and uncertain process and we do not know whether we, or any of our collaborative partners, will be permitted to undertake clinical trials of any potential in vitro diagnostic products. It may take us or our collaborative partners many years to complete any such testing, and failure can occur at any stage. Delays or rejections of potential products may be encountered based on changes in regulatory policy during the period of product development and regulatory agency review. Moreover, if and when our projects reach clinical trials, we, or our collaborative partners, may decide to discontinue development of any or all of these projects at any time for commercial, scientific or other reasons. Any of the foregoing matters could have a material adverse effect on our business, financial condition and results of operations.

Many of our products are labeled for "research use only." Products intended for research use only are not subject to clearance or approval by the FDA. However, research use only products may fall under the FDA's jurisdiction if these are used for clinical rather than research purposes. Even when a product is exempted from FDA clearance or approval, the FDA may impose restrictions as to the types of customers to which we can market and sell our products. Such restrictions may materially and adversely affect our business, financial condition and results of operations.
The FDA, the U.S. Department of Health and Human Services and foreign government regulators are increasingly focused on genetic analysis tools, including the use of arrays, which are labeled for research use only, by clinical laboratories in laboratory-developed tests ("LDTs") offered by these laboratories, including labs certified under the Clinical Laboratory Improvement Amendments ("CLIA"). We cannot predict the extent of the FDA's future efforts in regulation and enforcement policies with respect to the sale and use of arrays for the development of LDTs by CLIA-certified laboratories. If regulations or enforcement policies restrict our customers' development of LDTs using our products labeled for research use only, or if we otherwise are required to obtain FDA premarket clearance or approval prior to commercializing these products, our ability to generate revenue from the sale of our products may be delayed or otherwise adversely affected. Moreover, our failure to comply with governmental rules and regulations related to our products could cause us to incur significant adverse publicity, subject us to investigations and notices of non-compliance or lead to fines or restrictions upon our ability to sell our products. We also may be at risk for liability related to government reimbursement of tests involving the use of our products if it is determined that these tests require FDA-clearance or approval and no such clearance or approval has been obtained.
Medical device laws and regulations are also in effect in many countries, ranging from comprehensive device approval requirements to requests for product data or certifications. The number and scope of these requirements are increasing. We may not be able to obtain regulatory approvals in such countries or may incur significant costs in obtaining or maintaining our foreign regulatory approvals. In addition, the export by us of certain of our products which have not yet been cleared for domestic commercial distribution may be subject to FDA or other export restrictions.
We have agreements relating to the sale of our products to government entities and, as a result, we are subject to various statutes and regulations that apply to companies doing business with the government. A failure to comply with these regulations might result in suspension of these contracts or administrative or other penalties, and could have a material adverse effect on our ability to compete for future government grants, contracts and programs.
Healthcare reform and restrictions on reimbursements may limit our returns on molecular diagnostic products that we may develop independently or with our collaborators.
We are currently collaborating with our partners to develop diagnostic and therapeutic products. The ability of our collaborators to commercialize such products may depend, in part, on the extent to which reimbursement for these products will be available under U.S. and foreign regulations that govern reimbursement for clinical testing services by government authorities, private health insurers and other organizations. In the United States, third-party payer price resistance, the trend towards managed health care and the implementation of the Patient Protection and Affordable Care Act of 2010 could reduce payment rates for health care products and services, adversely affecting the profits of our customers and collaborative partners and reducing our future royalties. Under Medicare rules, diagnostic tests must be ordered by a physician who is treating the beneficiary and who uses the test results in patient management. Under this rule, some Medicare contractors may deny coverage for a test, even if the test has been cleared or approved by the FDA, without proof, as determined sufficient by the contractor, that the test is useful in patient management.
We face risks related to handling of hazardous materials and other regulations governing environmental safety.
Our operations are subject to complex and stringent environmental, health, safety and other governmental laws and regulations that both public officials and private individuals may seek to enforce. Our activities that are subject to these regulations include, among other things, our use of hazardous and radioactive materials and the generation, transportation and storage of waste. We could discover that we or an acquired business is not in material compliance. Existing laws and regulations may also be revised or reinterpreted, or new laws and regulations may become applicable to us, whether retroactively or prospectively, that may have a negative effect on our business and results of operations. It is also impossible to eliminate completely the risk of accidental environmental contamination or injury to individuals. In such an event, we could be liable for any damages that result, which could adversely affect our business.
We may be exposed to liability due to product defects.
The risk of product liability claims is inherent in the testing, manufacturing, marketing and sale of human diagnostic and therapeutic products and we may be subjected to such claims. We have voluntarily recalled products in the past. We may seek to acquire additional insurance for clinical or product liability risks. We may not be able to obtain such insurance or general product liability insurance on acceptable terms or in sufficient amounts. A product liability claim or recall could have a serious adverse effect on our business, financial condition and results of operations.
Ethical, legal and social concerns surrounding the use of genetic information could reduce demand for our products.
Genetic testing has raised ethical issues regarding privacy and the appropriate uses of the resulting information. For these reasons, governmental authorities may call for limits on or regulation of the use of genetic testing or prohibit testing for genetic predisposition to certain conditions, particularly for those that have no known cure. Similarly, such concerns may lead individuals to refuse to use genetics tests even if permissible. Any of these scenarios could reduce the potential markets for our molecular diagnostic products, which could have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Our Intellectual Property
We may be unable to effectively protect or enforce our intellectual property, which could harm our competitive position.
Maintaining a strong patent position is critical to our business. Patent law relating to the scope of claims in the technology fields in which we operate is uncertain, so we cannot be assured the patent rights we have or may obtain will be valuable. Others have filed, and in the future are likely to file, patent applications that are similar or identical to ours or those of our licensors. To determine the priority of inventions, we may have to participate in interference proceedings declared by the United States Patent and Trademark Office that could result in substantial costs in legal fees and could substantially affect the scope of our patent protection. We cannot be assured our patent applications will have priority over those filed by others. Also, our intellectual property may be subject to significant administrative and litigation proceedings. In addition, we may acquire businesses, which may not have developed or maintained a similarly robust patent position. For example, our eBioscience does not have a patent portfolio at the current time, so we must rely on non-patent rights, including third-party licenses that relate to such business operations.
Legal actions to enforce our patent rights can be expensive and may involve the diversion of significant management time. In addition, these legal actions could be unsuccessful and could also result in the invalidation of our patents or a finding that they are unenforceable. We may or may not choose to pursue litigation or interferences against those that have infringed on our patents, or used them without authorization, due to the associated expense and time commitment of monitoring these activities. If we fail to protect or to enforce our intellectual property rights successfully, our competitive position could suffer, which could harm our results of operations.
In addition to patent protection, we also rely upon copyright and trade secret protection, as well as non-disclosure agreements with our employees, consultants and third-parties, to protect our confidential and proprietary information. Such measures may not provide adequate protection for our proprietary information.
Litigation or other proceedings or third-party claims of intellectual property infringement could require us to spend significant time and money and could prevent us from selling our products or services or impact our stock price.
Third parties have asserted and may in the future assert that we are employing their proprietary technology without authorization. As we launch new products and enter new markets, we expect that competitors will claim that our products infringe their intellectual property rights as part of business strategies designed to impede our successful commercialization and entry into new markets. We are currently engaged in litigation with third parties who allege that we have infringed their intellectual property rights. See Note 11. "Legal Proceedings" found in this Quarterly Report on 10-Q for further information. In addition, we are aware of third-party patents that may relate to our technology. We routinely receive notices claiming infringement from third parties as well as invitations to take licenses under third-party patents. Third parties may have obtained, and may in the future obtain, patents allowing them to claim that the use of our technologies infringes these patents.
We could incur substantial costs and divert the attention of our management and technical personnel in defending ourselves against any of these claims. Any adverse ruling or perception of an adverse ruling in defending ourselves against these claims could have a material adverse impact on our cash position and stock price. Furthermore, parties making claims against us may be able to obtain injunctive or other relief, which could block our ability to develop, commercialize and sell products, and could result in the award of substantial damages against us. In the event of a successful claim of infringement against us, we may be required to pay damages and obtain one or more licenses from third parties, or be prohibited from selling certain products, all of which will have a material adverse impact on our cash position and business and financial condition.
In addition, we may be unable to obtain these licenses at a reasonable cost, if at all. We could therefore incur substantial costs related to royalty payments for licenses obtained from third parties, which could negatively affect our gross margins. Moreover, we could encounter delays in product introductions while we attempt to develop alternative methods or products. Defense of any lawsuit or failure to obtain any of these licenses on favorable terms could prevent us from commercializing products, and the prohibition of sale of any of our products could materially affect our ability to grow and maintain profitability.
Risks Related to Our Common Stock
The price of our common stock historically has been volatile. This volatility may affect the price at which you could sell the common stock you receive upon conversion, and the sale of substantial amounts of our common stock could adversely affect the price of our common stock.
The market price for our common stock has varied between a high of $5.50 on June 18, 2012, and a low of $2.96 on November 16, 2012 in the twelve-month period ending on March 31, 2013. Our stock price is likely to continue to be volatile and subject to significant price and volume fluctuations in response to market and other factors, including those listed in this "Risk Factors" section and other, unknown factors. Our stock price also may be affected by comments by securities analysts regarding our business or prospects, our issuance of common stock or other equity securities, our inability to meet analysts' expectations, general fluctuations in the stock market or in the stock prices of our industry peers or our customers and general conditions and publicity regarding the genomics, biotechnology, pharmaceutical or life science industries. This volatility may affect the price at which you could sell the common stock you receive upon conversion of your notes.
In addition, the sale of substantial amounts of our common stock could adversely impact its price. As of March 31, 2013, we had outstanding approximately 71.1 million shares of our common stock and options to purchase approximately 6.0 million shares of our common stock (of which approximately 3.2 million were exercisable as of that date). We also had outstanding approximately 3.9 million shares underlying restricted stock awards and restricted stock units as of March 31, 2013. As of March 31, 2013, we also had outstanding $105.0 million aggregate principal amount of our 4.00% Notes, which are convertible into shares of our common stock. We have reserved a total of approximately 13.1 million shares of our common stock to satisfy the settlement obligations of such notes. The sale or the availability for sale of a large number of shares of our common stock in the public market could cause the price of our common stock to decline.
Volatility in the stock price of other companies often has led to securities class action litigation against those companies. Any future securities litigation against us could result in substantial costs and divert management's attention and resources, which could seriously harm our business, financial condition and results of operations.
Our quarterly results have historically fluctuated significantly and may continue to do so. Failure to meet financial expectations may disappoint securities analysts or investors and result in a decline in our stock price.
Our revenue and operating results may fluctuate significantly due, in part, to factors that are beyond our control and which we cannot predict. The timing of our customers' orders may fluctuate from quarter to quarter. Historically, we have experienced customer ordering patterns for instrumentation and consumables in which the majority of the shipments occur in the last month of the quarter. These ordering patterns limit management's ability to accurately forecast our future revenue or product mix. Additionally, license revenue may also be unpredictable and fluctuates due to the timing of payments of non-recurring licensing fees. Because our expenses are largely fixed in the short to medium term, any material shortfall in revenue may cause us to experience material losses.
Because of this difficulty in predicting future performance, our operating results may fall below our own expectations and the expectations of securities analysts or investors in some future quarter or quarters. Our failure in the past to meet these expectations has adversely affected the market price of our common stock and may continue to do so.
In addition to factors that affect the spending levels of our customers described above, additional factors could cause our operating results to fluctuate, including:
·
competition;
·
our inability to produce products in sufficient quantities and with appropriate quality;
·
the frequency of experiments conducted by our customers;
·
our customers' inventory of products;
·
the receipt of relatively large orders with short lead times; and
·
our customers' expectations as to how long it takes us to fill future orders.
In addition, integrating operations, financial and other systems of acquired businesses, including those in connection with our acquisition of eBioscience, may compound the difficulty of predicting our future performance, for example by decreasing our ability to forecast customer demand and manage our inventory levels, and may therefore increase the fluctuation of our operating results.
Delaware law and our charter documents may impede or discourage a takeover, which could cause the market price of our common stock to decline.
We are a Delaware corporation, and the anti-takeover provisions of Delaware law impose various impediments to the ability of a third party to acquire control of us, even if a change in control would be beneficial to our existing stockholders. Our charter and bylaws contain provisions relating to issuance of preferred stock, limitations on written consents, special meetings of stockholders and advance notification procedures for stockholder proposals. In addition, we are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, unless certain conditions are met.
These and other provisions of our charter documents and Delaware law could prevent or deter mergers, takeovers or other business combinations involving us, discourage potential acquirers from making tender offers for our common stock, or discourage proxy contests for changes in our management, any of which, under certain circumstances, could depress the market price of our common stock and the value of the notes.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
On March 29, 2013, we entered into a separation agreement with our form General Counsel, John F. Runkel, which is filed as Exhibit 10.49 to this quarterly report. In addition, on March 22, 2013, we entered into a three-month consulting agreement with Mr. Runkel for $4,000 per month for providing advice on various legal matters.
ITEM 6. EXHIBITS
Exhibit
Number
 
Description of Document
 
 
 
10.47
 
Offer Letter from the Company to David Weber dated December 2, 2011.
10.48
 
Consulting Agreement between the Company and John F. Runkel, Jr. dated March 21, 2013.
10.49
 
Separation Agreement between the Company and John F. Runkel, Jr. dated March 29, 2013.
10.50
 
Third Amendment and Limited Waiver to Credit Agreement dated April 8, 2013.
31.1
 
Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2
 
Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32
 
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
EX-101.INS
 
XBRL Instance Document(2)
EX-101.SCH
 
XBRL Taxonomy Extension Schema Document(2)
EX-101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document(2)
EX-101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document(2)
EX-101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document(2)
EX-101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document(2)

(1)            Incorporated by reference to Registrant's Registration Statement on Form S-8 as filed on June 29, 2012 (File No. 333-182456)
(2)            Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
‡ Management contract, compensatory plan, contract or arrangement


SIGNATURES
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, thereunto duly authorized.
 
By:
/s/ TIMOTHY C. BARABE
 
Name:
Timothy C. Barabe
 
Title:
Executive Vice President and Chief Financial Officer
 
 
 
May 1, 2013
 
 
 
 
 
 
 
Duly Authorized Officer and Principal Financial
 
 
And Accounting Officer



45
EX-10.50 2 ex10-50.htm EX-10.50

EXHIBIT 10.50
 
THIRD AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT
THIS THIRD AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT (this "Agreement") is entered into as of April 8, 2013, by and among AFFYMETRIX, INC., a Delaware corporation (the "Borrower"), the other Credit Parties signatory hereto, GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, "GE Capital"), for itself and as agent for the Lenders (in such capacity, the "Agent"), and the Lenders signatory hereto.  Unless otherwise specified herein, capitalized terms used in this Agreement shall have the meanings ascribed to them in the Credit Agreement (as hereinafter defined), as amended.
                                                                                                                             R E C I T A L S:
 
WHEREAS, Borrower, the other Credit Parties party thereto, the Agent and the Lenders entered into that certain Credit Agreement, dated as of June 25, 2012 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the "Credit Agreement");
WHEREAS, the Events of Default set forth on Schedule A hereto (such Events of Default, the "Specified Defaults") have occurred and are continuing or may potentially have occurred and be continuing; and
WHEREAS, the Credit Parties have requested that the Agent and the Lenders party hereto waive the Specified Defaults and amend certain provisions of the Credit Agreement, and the Agent and each Lender party hereto agree to such waiver and amendments upon the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual agreements set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.  Amendments.  Effective as of the Effective Time (as defined below):
(a)            Section 6.2 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:
"6.2    Leverage Ratio.  The Credit Parties shall not permit the Leverage Ratio as of any date set forth below to be greater than the maximum ratio set forth in the table below opposite such date:
Date                                              Maximum Leverage Ratio
September 30, 2012                                              4.75:1.00
December 31, 2012                                               4.50:1.00
March 31, 2013                                                     4.50:1.00
June 30, 2013                                                        4.75:1.00
September 30, 2013                                              4.50:1.00
December 31, 2013                                               4.25:1.00
March 31, 2014                                                     4.25:1.00
June 30, 2014                                                        4.00:1.00
September 30, 2014                                              4.00:1.00
December 31, 2014                                               3.75:1.00
March 31, 2015                                                     3.75:1.00
June 30, 2015 and the                                          3.50:1.00
last day of each Fiscal
Quarter thereafter
"Leverage Ratio" shall be calculated in the manner set forth in Exhibit 4.2(b)."
(b)            Section 6.3 of the Credit Agreement is hereby amended and restated to read in its entirety as follows:
"6.3    Senior Leverage Ratio.  The Credit Parties shall not permit the Senior Leverage Ratio as of any date set forth below to be greater than the maximum ratio set forth in the table below opposite such date:

                             Date
                             September 30, 2012
                             December 31, 2012
                             March 31, 2013
                             June 30, 2013
                             September 30, 2013 December 31, 2013
                             March 31, 2014
                             June 30, 2014 and the
                             last day of each Fiscal
                             Quarter thereafter
Senior Maximum Leverage Ratio
2.00:1.00
1.80:1.00
1.80:1.00
1.80:1.00
1.75:1.00
1.75:1.00
1.60:1.00
1.50:1.00
 "Senior Leverage Ratio" shall be calculated in the manner set forth in Exhibit 4.2(b)."
(c)            Exhibit 1.8(e) of the Credit Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 1.8(e) attached hereto.
(d)            Exhibit 4.2(b) of the Credit Agreement is hereby amended and restated to read in its entirety as set forth on Exhibit 4.2(b) attached hereto.
2.  Limited Waiver.  Effective as of the Effective Time, as long as, after giving effect to the amendments set forth in this Agreement, (i) the Credit Parties are in compliance with the financial covenant set forth in Section 6.2 of the Credit Agreement for the measurement period ending on March 31, 2013 and (ii) the Credit Parties are in compliance with the financial covenant set forth in Section 6.3 of the Credit Agreement for the measurement period ending on March 31, 2013, the Agent and each Lender party hereto hereby waive the Specified Defaults; provided, that the foregoing waiver shall be limited precisely as written and shall not be deemed or otherwise construed to constitute a waiver of any other Default or Event of Default which does not constitute a Specified Default now existing or hereafter arising.
3.  Conditions.  This Agreement shall be effective at the time (the "Effective Time") that all of the following conditions precedent have been met as determined by the Agent in its sole discretion:

(a)            Agent shall have received an executed signature page to this Agreement from each Credit Party, the Agent and the Required Lenders; and
(b)            Agent shall have received, on behalf of each Lender signatory to this Agreement, payment of a non-refundable amendment fee in an amount equal to 0.15% multiplied by the sum of such Lender's Revolving Loan Commitments and the unpaid principal balance of the Term Loans held by such Lender, which amendment fee shall be earned in full on the date hereof and shall be non-refundable once paid.
4.  Representations and Warranties of Credit Parties.  In order to induce the Agent and the Required Lenders to enter into this Agreement, each Credit Party represents and warrants to Agent and each Lender (which representations and warranties shall survive the execution and delivery of this Agreement), that:
(a)  the execution, delivery and performance by each Credit Party of this Agreement has been duly authorized by all necessary corporate action and this Agreement is a legal, valid and binding obligation of such Credit Party enforceable against such Credit Party in accordance  with  its  terms,  except  as  such  enforceability  may  be  limited  by  applicable bankruptcy, insolvency, reorganization, receivership, moratorium and similar Laws relating to or affecting the enforceability of creditors' rights generally, and except that the availability of equitable remedies is subject to the discretion of the courts (regardless of whether enforcement is sought in a proceeding at law or in equity);
(b)  upon the effectiveness of this Agreement, all of the representations and warranties contained in the Credit Agreement and in the other Loan Documents (other than those which speak expressly only as of an earlier date) are true and correct in all material respects on and as of the date of the effectiveness of this Agreement after giving effect to this Agreement and the transactions contemplated hereby;
(c)  neither the execution, delivery or performance of this Agreement by each Credit Party nor the consummation of the transactions contemplated hereby or thereby does or shall contravene, result in a breach of, or violate (i) any provision of such Credit Party's certificate or articles of incorporation or bylaws, or other organizational documents, (ii) any law or regulation, or any order or decree of any court or government instrumentality, or (iii) any indenture, mortgage, deed of trust, lease, agreement or other instrument to which such Credit Party or any of its Subsidiaries is a party or by which such Credit Party or any of its Subsidiaries or any of their property is bound, except in any such case to the extent such conflict or breach has been waived by a written waiver document, a copy of which has been delivered to Agent on or before the date hereof or which could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect; and
(d)  no Default or Event of Default exists or will result after giving effect to this Agreement and the transactions contemplated hereby.
5.  Counterparts; Facsimile Signature.  This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Signature pages may be detached from multiple separate counterpart and attached to a single counterpart.  Delivery of an executed signature page of this Agreement by facsimile transmission or Electronic Transmission shall be as effective as delivery of a manually executed counterpart hereof.
6.  Continuing Effect of the Credit Agreement.  Except as expressly set forth herein, this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Lenders or the Agent under the Credit Agreement and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement, all of which are ratified and affirmed in all respects and shall continue in full force and effect.  Nothing herein shall be deemed to entitle the Credit Parties to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement in similar or different circumstances.  This Agreement shall apply and be effective only with respect to the provisions of the Credit Agreement specifically referred to herein.  After the effectiveness of this Agreement, any reference to the Credit Agreement shall mean the Credit Agreement as modified hereby. This Agreement shall constitute a Loan Document.
7.  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
8.  Captions.  The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.
9.  Reaffirmation.  The Credit Parties signatory hereto hereby reaffirm their guaranties of the Obligations and reaffirm that the Obligations are and continue to be secured by the security interest granted by the Credit Parties in favor of the Agent under the Guaranty and Security Agreement and all of the terms, conditions, provisions, agreements, requirements, promises, obligations, duties, covenants and representations of the Credit Parties under such documents and agreements entered into with respect to the obligations under the Credit Agreement are incorporated herein by reference and are hereby ratified and affirmed in all respects by the Credit Parties.  Each Credit Party acknowledges that all references to "Credit Agreement" and "Obligations" in the Loan Documents shall take into account the provisions of this Agreement and be a reference to the "Credit Agreement" and the "Obligations" as amended hereby.
                                                                                                           (signature pages follow)

IN WITNESS WHEREOF, the Parties hereto have cause this Agreement to be duly executed and delivered by their duly authorized officers as of the day and year first above written.
AFFYMETRIX, INC.

By:        /s/Timothy Barabe
Name: Timothy Barabe
Title: Executive Vice President and
Chief Financial Officer

USB CORPORATION

By:        /s/Timothy Barabe
Name: Timothy Barabe
Title: Chief Financial Officer

ANATRACE, INC.

By:        /s/Timothy Barabe
Name: Timothy Barabe
Title: Chief Financial Officer

EBIOSCIENCE HOLDING COMPANY, INC.

By:        /s/Timothy Barabe
Name: Timothy Barabe
Title: Vice President

EBIOSCIENCE, INC.

By:        /s/Timothy Barabe
Name: Timothy Barabe
Title: Vice President

[Signature Page to Third Amendment and Limited Waiver to Credit Agreement]


GENERAL ELECTRIC CAPITAL CORPRATION
as Agent

By:        /s/Andrew D. Moore
Name: Andrew D. Moore
Title: Authorized Signatory

[Signature Page to Third Amendment and Limited Waiver to Credit Agreement]

Schedule A

Specified Defaults

1.
the potential Event of Default under Section 7.1(c) of the Credit Agreement arising from the failure of the Credit Parties to comply with the financial covenant set forth in Section 6.2 of the Credit Agreement for the measurement period ending on March 31, 2013; and
2.
the Event of Default under Section 7.1(c) of the Credit Agreement arising from the failure of the Credit Parties to comply with the financial covenant set forth in Section 6.3 of the Credit Agreement for the measurement period ending on March 31, 2013.

                                                          Exhibit 1.8(e)

                                                          [see attached]

                                                         EXHIBIT 1.8(e)
FORM OF EXCESS CASH FLOW CERTIFICATE
AFFYMETRIX, INC.
 
Date: _______________, 20__

This Excess Cash Flow Certificate (this "Certificate") is given by Affymetrix, Inc., a Delaware corporation (the "Borrower"), pursuant to subsection 1.8(e) of that certain Credit Agreement, dated as of June 25, 2012, by and among the Borrower, the other Credit Parties, General Electric Capital Corporation, as Agent, and the Lenders (as such agreement may be amended,  restated,  supplemented  or  otherwise  modified  from  time  to  time,  the "Credit Agreement"). Capitalized terms used herein without definition shall have the meanings set forth in the Credit Agreement.
The officer executing this Certificate is a Responsible Officer of the Borrower and as such is duly authorized to execute and deliver this Certificate on behalf of the Borrower.  By executing this Certificate, such officer hereby certifies to Agent, Lenders and L/C Issuers, on behalf of the Borrower, that:
(a) set forth on Exhibit A hereto is a correct calculation of Excess Cash Flow of the Credit Parties and their Subsidiaries for the year ended [December 31, 20__] and a correct calculation of the required prepayment of
$__________________; and
(b) the calculation set forth on Exhibit A hereto is based on the audited financial statements which have been delivered to Agent in accordance with subsection 4.1(a) of the Credit Agreement.

                                                                                        [Signature Page Follows]

IN WITNESS WHEREOF, the Borrower has caused this Certificate to be executed by one of its Responsible Officers as of the date first written above.
AFFYMETRIX, INC.

By: ___________________________
Name: ___________________________
Title: ___________________________
                                                                                                         [Signature Page to Excess Cash Flow Certificate]

EXHIBIT A
TO
EXCESS CASH FLOW CERTIFICATE

Excess Cash Flow is defined as follows
$___________
Less:             Scheduled principal payments with respectto Indebtedness actually paid in cash
$___________
Net Interest Expense (per Exhibit 4.2(b) of the Credit Agreement) actually paid in cash
$___________
Increase in Working Capital (defined below)
$___________
All cash losses (less cash gains) in respect of Rate Contracts deducted in calculating net income (or loss) for such period
$___________
All non-cash losses or expenses (or plus non-cash income or gain) included or deducted in calculating net income (or loss) for such period including, without limitation, any non-cash loss or expense (or income or gain) due to the application of FASB ASC 815-10 regarding hedging activity, FASB ASC 350 regarding impairment of goodwill, FASB ASC 480-10 regarding accounting for financial instruments with debt and equity characteristics, non-cash foreign currency exchange losses (or plus gains)  and non-cash expenses deducted as a result of any grant of Stock or Stock Equivalents to employees, officers or directors, but excluding any non-cash loss or expense (a) that is an accrual of a reserve for a cash expenditure or payment to be made, or anticipated to be made, in a future period or (b) relating to a write-down, write off or reserve with respect to Accounts and Inventory except to the extent such write-down, write off or reserve is related to a one-time GAAP-driven write-up of the inventory of Bender MedSystems, Inc. and the inventory of eBioscience Holding Company, Inc. and its Subsidiaries, in each case from cost-based to FMV-based as determined by an independent valuation analysis
$___________
Fees and expenses incurred in connection with the negotiation, execution and delivery on the Closing Date of the Loan Documents and Related Agreements and consummation on the Closing Date of the Related Transactions, to the extent (i) deducted in the calculation of net income (or loss) for such period, (ii) such fees and expenses do not exceed $12,500,000 in the aggregate in any period of four consecutive Fiscal Quarters and (iii) disclosed to Agent
$___________
Fees, settlement costs and expenses incurred in connection with any litigation involving Borrower or any of its Subsidiaries, to the extent (i) deducted in the calculation of net income (or loss) for such period, (ii) such fees and expenses do not exceed $5,000,000 in the aggregate in any period of four consecutive Fiscal Quarters and (iii) disclosed to Agent
$___________
Fees and expenses incurred in connection with Acquisitions (other than the Acquisitions on the Closing Date) and Dispositions (other than Dispositions permitted pursuant to Section 5.2(g) of the Credit Agreement) (in each case, whether or not successful), to the extent (i) deducted in the calculation of net income (or loss) for such period, (ii) such fees and expenses do not exceed $5,000,000 in the aggregate in any period of four consecutive Fiscal Quarters and (iii) disclosed to Agent
$___________
Fees and expenses incurred in connection with severance costs, relocation costs, integration and facilities opening and closing costs, signing costs, retention or completion bonuses, transition costs and restructuring charges or reserves (including restructuring costs related to acquisition after the date hereof and to closure and/or consolidation of facilities), to the extent (i) deducted in the calculation of net income (or loss) for such period, (ii) such fees and expenses do not exceed $7,000,000 in the aggregate in any period of four consecutive Fiscal Quarters (provided, however, that such fees and expenses may be equal to an amount not greater than $11,000,000 for any date of measurement occurring on or after March 31, 2013 and on or prior to September 30, 2013 and (iii) disclosed to Agent
$___________
Plus:                    Decrease in Working Capital
$___________
Excess Cash Flow
[50%/25%/0%]*
Prepayment percent
$___________
Subtotal:
$___________
Minus:                    Voluntary prepayments of Term Loans
$___________
Prepayment amount
$___________

[*Refer to Section 1.8(e) of the Credit Agreement for a determination of the applicable prepayment percentage]
                                                                                                 Beg. of Period                                          End of Period
Current assets:                                                                     $___________                                        $__________
Less (to the extent included in current
assets):
Cash                                                                    $___________                                        $__________
Cash Equivalents                                              $___________                                        $__________
Adjusted current assets                                                    $___________                                        $__________
Current liabilities:                                                                $___________                                        $__________
Less (to the extent included in current
Liabilities):

Revolving Loans                                               $___________                                        $__________
Swing Loans                                                      $___________                                        $__________
Current portion of Indebtedness                   $___________                                        $__________
Adjusted current liabilities                                                $___________                                        $__________
Working Capital (adjusted current assets
minus adjusted current liabilities)                                     $___________                                        $__________
Decrease (Increase) in Working Capital (beginning of period minus end of period Working Capital)  $__________

To the extent Holdings or any of its Subsidiaries consummates an acquisition during such period, Beginning of Period Working Capital shall be recalculated on a proforma basis to include Working Capital acquired in such acquisition.


                                              Exhibit 4.2(b)

                                              [see attached]



                                                        EXHIBIT 4.2(b)
                     FORM OF COMPLIANCE CERTIFICATE
                                                 AFFYMETRIX, INC.
                                                       Date: _______________, 20__
This Compliance Certificate (this "Certificate") is given by Affymetrix, Inc., a Delaware corporation (the "Borrower"), pursuant to subsection 4.2(b) of that certain Credit Agreement, dated as of June 25, 2012, by and among the Borrower, the other Credit Parties, General Electric Capital Corporation, as Agent, and the Lenders (as such agreement may be amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"). Capitalized terms used herein without definition shall have the meanings set forth in the Credit Agreement.
The officer executing this Certificate is a Responsible Officer of the Borrower and as such is duly authorized to execute and deliver this Certificate on behalf of the Borrower. By executing this Certificate, such officer hereby certifies to Agent, the Lenders and the L/C Issuer, on behalf of the Borrower, that:
(a)            the financial statements delivered with this Certificate in accordance with subsection 4.1(a) and/or 4.1(b) of the Credit Agreement are correct and complete and fairly present, in all material respects, in accordance with GAAP the financial position and the results of operations of the Borrower and its Subsidiaries as of the dates of and for the periods covered by such financial statements (subject, in the case of interim financial statements, to normal yearend adjustments and the absence of footnote disclosure);
(b)            to the best of such officer's knowledge, each Credit Party and each of their Subsidiaries, during the period covered by such financial statements, has observed and performed all of their respective covenants and other agreements in the Credit Agreement and the other Loan Documents to be observed or performed by them, and such officer does not have knowledge of any Default or Event of Default [except as specified on the written attachment hereto];
(c)            Exhibit A hereto is a correct calculation of each of the financial covenants contained in Article VI of the Credit Agreement; and
(d)          since the Closing Date and except as disclosed in prior Compliance Certificates delivered to Agent, no Credit Party and no Subsidiary of any Credit Party has:



(i) changed its legal name, identity, jurisdiction of incorporation, organization or formation or organizational structure or formed or acquired any Subsidiary except as follows: ____________________________________;
(ii) acquired the assets of, or merged or consolidated with or into, any Person, except as follows: _________________________________________________; or
(iii) changed its address or otherwise relocated, acquired fee simple title  to  any  real  property  or  entered  into  any  real  property  leases,  except  as  follows: ___________________________________________________.

Note:  Unless otherwise specified, all financial covenants are calculated for the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP and all calculations are without duplication.
                                                       [Signature Page Follows]



IN WITNESS WHEREOF, the Borrower has caused this Certificate to be executed by one of its Responsible Officers as of the date first above written.
AFFYMETRIX, INC.

By: ___________________________
Name: ___________________________
Title: ___________________________

                                                           [Signature Page to Compliance Certificate]

                                                     EXHIBIT A TO
                                                             COMPLIANCE CERTIFICATE
 
Covenant 6.1 Capital Expenditure Limit
 

For purposes of Covenant 6.1, Capital Expenditures are defined as follows:
The aggregate of all expenditures and obligations, for the relevant test period set forth in Section 6.1 of the Credit Agreement, which should be capitalized under GAAP
$___________
Less:       Net Proceeds from Dispositions and/or Events of Loss which a Credit Party is permitted to reinvest pursuant to subsection 1.8(c) and which are included above
$___________
To the extent included above, expenditures financed with cash proceeds from issuances of Stock or Stock Equivalents (other than Disqualified Stock)
$___________
To the extent included above, all insurance proceeds and condemnation awards received on account of any Event of Loss to the extent any such amounts are actually applied to repair or reconstruct the damaged Property or Property affected by the condemnation or taking in connection with such Event of Loss
$___________
To the extent included above, amounts paid as the purchase price for a Target in a Permitted Acquisition
$___________
Capital Expenditures
$___________
Permitted Capital Expenditures
$___________
In Compliance
Yes/No
 



Covenant 6.2 Leverage Ratio

Leverage Ratio is defined as follows:
 
Average of the sum of the aggregate balance of outstanding Revolving Loans and Swing Loans as of the last day of each month in the twelve month (or shorter period commencing on the Closing Date) period ended on the date of measurement
$_________  _
Plus:       L/C Reimbursement Obligations as of date of measurement, whether or not then due and payable
$_________  _
Outstanding principal balance of the Term Loan as of date of measurement
$________  __
Principal portion of Capital Lease Obligations and Indebtedness secured by purchase money Liens as of date of measurement
$________  __
Indebtedness evidenced by Convertible Notes as of date of measurement
$________  __
Earnouts (valued in accordance with GAAP)
$__________ 
Without duplication, all other Funded Indebtedness of Holdings and its Subsidiaries as of date of measurement

$_________  _
Indebtedness
$________  __
Adjusted EBITDA for the twelve month period ending on the date of measurement (per Exhibit B)
$___________
Leverage Ratio (Indebtedness (from above) divided by Adjusted EBITDA)
____________
Maximum Leverage Ratio
____________
In Compliance
Yes/No



Covenant 6.3 Senior Leverage Ratio

Senior Leverage Ratio is defined as follows:
 
Indebtedness (per Covenant 6.2)
$___________
Less:          Without duplication, Subordinated Indebtedness, Convertible Notes and Permitted Convertible Note Refinancings
$___________
Senior Indebtedness
$___________
Adjusted EBITDA for the twelve month period ending on the date of measurement (per Exhibit B)
$___________
Senior Leverage Ratio (Senior Indebtedness (from above) divided by Adjusted EBITDA)
____________
Maximum Senior Leverage Ratio
____________
In Compliance
Yes/No


Covenant 6.4 Fixed Charge Coverage

Fixed Charge Coverage is defined as follows:
 
Cash Flow (per Exhibit B)
$_____     ____
Fixed Charges:1
 
Net Interest Expense (per Exhibit B)
$_______     __
Plus:            Scheduled principal payments of Indebtedness (other than the Convertible Notes) during such period
$________     _
Restricted Payments described in subsection 5.11(b) paid in cash during such period
$_______     __
Fixed Charges
$_______     __
Fixed Charge Coverage (Cash Flow divided by Fixed Charges)
______  __     _
Required Fixed Charge Coverage
_______  _     _
In Compliance
Yes/No



1            For purposes of calculating Fixed Charge Coverage Ratio as of any date on or prior to June 30, 2013, Fixed Charges shall be calculated as follows:
 
a.            Net Interest Expense shall be calculated in accordance with Exhibit B.
 
b.             Scheduled principal payments of (i) the Term Loan shall be deemed to be $8,500,000 for each such measurement period, (ii) Prior Indebtedness shall be deemed to be zero for each such measurement period and (iii) all other Indebtedness shall be calculated using the actual amounts in respect thereof during each such measurement period.
 
c.            Restricted Payments described in subsection 5.11(b) of the Credit Agreement shall be calculated using the actual amounts paid in cash in respect thereof during each such measurement period.
1            For purposes of calculating Fixed Charge Coverage Ratio as of any date on or prior to June 30, 2013, Fixed Charges shall be calculated as follows:

a.            Net Interest Expense shall be calculated in accordance with Exhibit B.
b.            Scheduled principal payments of (i) the Term Loan shall be deemed to be $8,500,000 for each such measurement period, (ii) Prior Indebtedness shall be deemed to be zero for each such measurement period and (iii) all other Indebtedness shall be calculated using the actual amounts in respect thereof during each such measurement period.

c.            Restricted Payments described in subsection 5.11(b) of the Credit Agreement shall be calculated using the actual amounts paid in cash in respect thereof during each such measurement period.

EXHIBIT B TO
COMPLIANCE CERTIFICATE
Calculation of EBITDA
 
EBITDA is defined as follows:
 
Net income (or loss) for the applicable period of measurement of the Borrower and its Subsidiaries on a consolidated basis determined in accordance with GAAP, but excluding: (a) the income (or loss) of any Person which is not a Subsidiary of the Borrower, except to the extent of the amount of dividends or other distributions actually paid to the Borrower or any of its Subsidiaries in cash by such Person during such period and the payment of dividends or similar distributions by that Person is not at the time prohibited by operation of the terms of its charter or of any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Person; (b) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries or that Person's assets are acquired by the Borrower or any of its Subsidiaries; (c) the proceeds of any life insurance policy; (d) gains or losses from the sale, exchange, transfer or other disposition of Property or assets not in the Ordinary Course of Business of the Borrower and its Subsidiaries, and related tax effects in accordance with GAAP; and (e) any other extraordinary gains or losses of the Borrower or its Subsidiaries, and related tax effects in accordance with GAAP
$___________
Plus:       All amounts deducted in calculating net income (or loss) for depreciation or amortization for such period
$___________
Interest expense (less interest income) deducted in calculating net income (or loss) for such period
$___________
All taxes on or measured by income to the extent deducted in calculating net income (or loss) for such period
$___    _____
All losses (less gains) in respect of Rate Contracts deducted in calculating net income (or loss) for such period
$__   _______
All non-cash losses or expenses (or minus non-cash income or gain) included or deducted in calculating net income (or loss) for such period including, without limitation, any non-cash loss or expense (or income or gain) due to the application of FASB ASC 815-10 regarding hedging activity, FASB ASC 350 regarding impairment of goodwill, FASB ASC 480-10 regarding accounting for financial instruments with debt and equity characteristics, non-cash foreign currency exchange losses (or minus gains)  and non-cash expenses deducted as a result of any grant of Stock or Stock Equivalents to employees, officers or directors, but excluding any non-cash loss or expense (a) that is an accrual of a reserve for a cash expenditure or payment to be made, or anticipated to be made, in a future period or (b) relating to a write-down, write off or reserve with respect to Accounts and Inventory except to the extent such write-down, write off or reserve is related to a one-time GAAP-driven write-up of the inventory of Bender MedSystems, Inc. and the inventory of eBioscience Holding Company, Inc. and its Subsidiaries, in each case from cost-based to FMV-based as determined by an independent valuation analysis
$_______    _
Fees and expenses incurred in connection with the negotiation, execution and delivery on the Closing Date of the Loan Documents and Related Agreements and consummation on the Closing Date of the Related Transactions, to the extent (i) deducted in the calculation of net income (or loss) for such period, (ii) such fees and expenses do not exceed $12,500,000 in the aggregate in any period of four consecutive Fiscal Quarters and (iii) disclosed to Agent
$_______    _
Fees, settlement costs and expenses incurred in connection with any litigation involving Borrower or any of its Subsidiaries, to the extent (i) deducted in the calculation of net income (or loss) for such period, (ii) such fees and expenses do not exceed $5,000,000 in the aggregate in any period of four consecutive Fiscal Quarters and (iii) disclosed to Agent
$_______    _
Fees and expenses incurred in connection with Acquisitions (other than the Acquisitions on the Closing Date) and Dispositions (other than Dispositions permitted pursuant to Section 5.2(g) of the Credit Agreement) (in each case, whether or not successful), to the extent (i) deducted in the calculation of net income (or loss) for such period, (ii) such fees and expenses do not exceed $5,000,000 in the aggregate in any period of four consecutive Fiscal Quarters and (iii) disclosed to Agent
$______   ___
Fees and expenses incurred in connection with severance costs, relocation costs, integration and facilities opening and closing costs, signing costs, retention or completion bonuses, transition costs and restructuring charges or reserves (including restructuring costs related to acquisition after the date hereof and to closure and/or consolidation of facilities), to the extent (i) deducted in the calculation of net income (or loss) for such period, (ii) such fees and expenses do not exceed $7,000,000 in the aggregate in any period of four consecutive Fiscal Quarters (provided, however, that such fees and expenses may be equal to an amount not greater than $11,000,000 for any date of measurement occurring on or after March 31, 2013 and on or prior to September 30, 2013) and (iii) disclosed to Agent
$_____   ____
EBITDA2
$________


2 EBITDA for any period set forth below shall be deemed to equal the amount set forth below for such period:

Period and EBITDA:
Calendar quarter ending September 30, 2011: $15,050,000
Calendar quarter ending December 31, 2011: $9,990,000
Calendar quarter ending March 31, 2012: $13,570,000
Calendar quarter ending June 30, 2012: The sum, without duplication, of the EBITDA of the Borrower and the Acquired Business for such calendar quarter
 

Calculation of Adjusted EBITDA
 
EBITDA for the applicable period of measurement
$______   ____
Plus:   with respect to any Target owned, directly or indirectly, by the Credit Parties for which the total consideration paid or payable (including without limitation, all transaction costs, assumed Indebtedness and Liabilities incurred, assumed or reflected on a consolidated balance sheet of the Credit Parties and their Subsidiaries after giving effect to such Acquisition and the maximum amount of all deferred payments, including earnouts but excluding any Stock of the Borrower) was greater than or equal to $3,000,000 and for which the Agent has received financial statements pursuant to subsection 4.1(b) for less than twelve (12) months, Pro Forma EBITDA allocated to each month prior to the acquisition thereof included in the trailing twelve (12) month period for which Adjusted EBITDA is being calculated;
$_______   ___
Minus: with respect to any Material Disposition consummated within the period in question, positive EBITDA (if any) attributable to the Subsidiary, profit centers, or other asset which is the subject of such Material Disposition from the beginning of such period until the date of consummation of such Material Disposition
$________   __
Adjusted EBITDA
$__________

"Pro Forma EBITDA" means, with respect to any Target, EBITDA for such Target for the most recent twelve (12) month period preceding the acquisition thereof, adjusted by verifiable expense reductions, including excess owner compensation, if any, which are expected to be realized, in each case calculated on month by month basis by the Credit Parties and consented to by the Agent and Required Lenders. [Note: If more than one Target has been acquired, attach calculations of Pro Forma EBITDA for each Target]

"Material Disposition" means any Disposition for which the total consideration received by the Borrower or any of its Subsidiaries (including, without limitation, all transaction costs, transferred Indebtedness and Liabilities repaid, transferred or no longer reflected on a consolidated balance sheet of the Credit Parties and their Subsidiaries after giving effect to such Disposition and the maximum amount of all deferred payments, including earnouts) exceeds $3,000,000.
 

 

Calculation of Cash Flow
EBITDA for the applicable period of measurement
$___   _______
Less:    Unfinanced Capital Expenditures (per Exhibit B)
$____   ______
Taxes on or measured by income paid or payable in cash during such period1
$_____     ____
Cash Flow (used in calculation of Excess Cash Flow and Fixed Charge Coverage)2
$_______   ___

1 Taxes on or measured by income paid or required to be paid in cash ("Cash Taxes") (a) for the measurement period ending on September  30, 2012, shall equal Cash Taxes during the period from July 1, 2012 through September 30, 2012 multiplied by 4.0, (b) for the measurement period ending on December 31, 2012, shall equal Cash Taxes during the period from July 1, 2012 through December 31, 2012 multiplied by 2.0, and (c) for the measurement period ending on March 31, 2013, shall equal Cash Taxes during the period from July 1, 2012 through March 31, 2013 multiplied by 1.33.
2 Unfinanced Capital Expenditures for any period below shall be deemed to equal the amount set forth below for such period:
 
Period                                                                                                                                Unfinanced Capital Expenditures
 
Calendar quarter ending September 30, 2011                             $1,856,000
Calendar quarter ending December 31, 2011                               $5,104,000
Calendar quarter ending March 31, 2012                                        $2,782,000
Calendar quarter ending June 30, 2012                                             The sum, without duplication, of the Unfinanced Capital Expenditures of the Borrower and the Acquired Business for such calendar quarter


Calculation of Net Interest Expense
Net Interest Expense1:
 
Gross interest expense for such period paid or required to be paid in cash (including all commissions, discounts, fees and other charges in connection with letters of credit and similar instruments and net amounts paid or payable and/or received or receivable under permitted Rate Contracts in respect of interest rates) for Holdings and its Subsidiaries on a consolidated basis
$___     ______
Less:            Interest income for such period
$_____     ____
Net Interest Expense (used in calculation of Fixed Charge Coverage and Excess Cash Flow)
$_______     __

1            Net Interest Expense (a) for the measurement period ending on September  30, 2012, shall equal Net Interest Expense during the period from July 1, 2012 through September 30, 2012 multiplied by 4.0, (b) for the measurement period ending on December 31, 2012, shall equal Net Interest Expense during the period from July 1, 2012 through December 31, 2012 multiplied by 2.0, and (c) for the measurement period ending on March 31, 2013, shall equal Net Interest Expense during the period from July 1, 2012 through March 31, 2013 multiplied by 1.33.

Calculation of Unfinanced Capital Expenditures
The aggregate of all expenditures and other obligations for the twelve month period ending on the last day of the month covered by such financial statements which should be capitalized under GAAP
$___________
Less:      Net Proceeds from Dispositions and/or Events of Loss which a Credit Party is permitted to reinvest pursuant to subsection 1.8(c) and which are included above
$____  ______
To the extent included above, expenditures financed with cash proceeds from issuances of Stock or Stock Equivalents (other than Disqualified Stock)
$___________
To the extent included above, all insurance proceeds and condemnation awards received on account of any Event of Loss to the extent any such amounts are actually applied to repair or reconstruct the damaged Property or Property affected by the condemnation or taking in connection with such Event of Loss
$___________
To the extent included above, amounts paid as the purchase price for a Target in a Permitted Acquisition
$___________
Capital Expenditures
$___________
Less:      Portion of Capital Expenditures financed under Capital Leases or other Indebtedness (Indebtedness, for this purpose, does not include drawings under the Revolving Loan Commitment)
$___________
Unfinanced Capital Expenditures (used in calculation of Cash Flow)
$___________
EX-10.47 3 ex10-47.htm EX-10.47
EXHIBIT 10.47
December 2, 2011
 
David Weber
110 El Granada Blvd.
El Granada, CA 94018
 
Dear David,
 
It is our pleasure to offer you the position of Senior Vice President, Global Commercial Operations with Affymetrix.  We are excited about the experience and potential you bring to our company. You will report directly to Frank Witney, and be based in the Santa Clara, CA office.
 
You will be classified as an exempt employee with an annual salary of $330,000.00, payable bi-weekly at $12,692.31.  In this position you will be eligible to participate in group medical, dental, life insurance and 401 (k) plans.
 
You will be eligible to participate in the Affymetrix Annual Bonus Program with an award level targeted at 50 percent of annual base salary.  The Board of Directors determines each year whether to fund the Bonus Program and the extent to which it will be funded. The amount of any such bonus will depend on corporate achievement - financial performance and corporate goals - and your individual goal achievement.  For employees with a start date on or after October 1st, you will be ineligible to participate in this program for this calendar year.  However, your full participation will begin January 1st of next year.
 
Additionally, we will recommend to the Compensation Committee of the Board of Directors of Affymetrix that you be granted two equity awards.

·
First, an option to purchase 90,000 shares of common stock of Affymetrix.  These stock options will vest 25% per year over a four (4) year period beginning on the grant date, and will be granted (and, therefore priced) when approved by the Compensation Committee.

·
Second, a grant of restricted stock units (RSU's) representing 25,000 shares of common stock of Affymetrix.  These RSU's will be granted when approved by the Compensation Committee. These shares will vest 25% per year over a four (4) year period beginning on the grant date, provided that you continue to be an employee of Affymetrix on such anniversary dates.
 
The terms of these equity awards will be governed in all respects by the terms of the applicable Affymetrix equity incentive plans and the equity award agreements that will be provided to you after commencement of your employment.

Federal Immigration Law requires that all employers verify each individual's eligibility to work in the United States, including U.S. citizens.  Your employment offer is contingent upon your providing satisfactory proof of identity and authorization to work in the United States.  Please bring the appropriate original documentation on your first day of work. A list of acceptable 1-9 documentation is attached for your review.
 
Two additional conditions of employment are that you sign a copy of the company's Confidentiality and Nondisclosure Agreement and the satisfactory completion of reference and background checks.
 
By accepting our offer of employment you certify your understanding that your employment will be on an at will basis and that neither you nor any Company representative has entered into a contract regarding the terms or duration of your employment. The only exceptions to this will be made in writing by the CEO of Affymetrix.
 
To indicate your acceptance of this offer and subject to the above contingencies, please fax or scan a signed copy of this letter and the Background Consent Form and return them within 3 days of receipt to Camellia Ngo, who can be reached by fax at (408) 731-5855, via email at Camellia_Ngo@Affymetrix.com, or by phone at (408) 731-5625.  If all the above conditions are satisfied, we anticipate that your employment will commence on December 12, 2011.
 
David, we look forward to you joining the Affymetrix team!

Sincerely,

/s/Camellia Ngo
Camellia Ngo
Senior Vice President, Human Resources
Offer Acceptance:

/s/ David Weber

December 12, 2011
Anticipated Start Date

December 3, 2011
Offer Acceptance Date
EX-10.48 4 ex10-48.htm EX-10.48
EXHIBIT 10.48


CONSULTING AGREEMENT

John F. Runkel, Jr. ("Consultant"), with offices at 640 W. Santa Inez Avenue, Hillsborough, CA  94010 and Affymetrix, Inc. ("Affymetrix"), a Delaware corporation whose principal office is located at  3420 Central Expressway, Santa Clara, CA  95051, enter into the following agreement ("Agreement").

1.
Work Scope.  Consultant shall provide consulting services based on Consultant's expertise and knowledge on an independent contractor basis, as described in Exhibit A.

2.
Ownership of Work Product.  The work product ("Work Product") produced by Consultant under this Agreement and all proprietary rights therein shall be and are the property of Affymetrix.  Consultant will assign and does hereby assign to Affymetrix all patents, copyrights, trademarks, and trade secrets conceived or first reduced to practice pursuant to this Agreement. Work Product includes (but is not limited to) inventions, discoveries, compounds, reports, memoranda, drawings, computer programs, devices, models, or other materials of any nature, or information relating to any of the foregoing, which are or were generated in connection with the work scope described in this Agreement, including the Exhibits attached hereto.  Consultant will cooperate with Affymetrix in the enforcement and protection of Affymetrix's rights.

3.
Licenses. Work Product does not include (a) work performed exclusively on Consultant's own time, using exclusively his/her own resources, which does not utilize any knowledge or skill gained while performing the services required under this Agreement for Affymetrix, or (b) pre-existing technology owned by Consultant prior to the effective date of this Agreement. However, Consultant hereby grants a non-exclusive, worldwide, royalty free right to make, have made, use, sell, offer to sell, import, lease, distribute, reproduce, modify, display, perform and disclose such technology in association with the Work Product.

4.
Delivery and Acceptance.  Items to be delivered (if any) to Affymetrix under this Agreement, (the "Deliverables") are described in the Exhibits attached hereto.  Delivery will be deemed completed upon receipt and written acceptance of Deliverables by the designated employee of Affymetrix.  Affymetrix shall have the right to inspect the Deliverables before it accepts them.  This right of inspection shall extend for a period of thirty (30) days following Affymetrix's receipt of the Deliverables.


5.
Compensation.

a.
Affymetrix will pay Consultant for the performance of the services identified in Exhibit A, which is based on the fair market value of such services resulting from arms-length negotiations between the parties.  Consultant shall invoice Affymetrix monthly on a time and material basis.  The invoices will be paid thirty (30) days upon Affymetrix's receipt of accurate invoice.  The total amount of charges for the work hereunder shall not exceed $12,000 without the prior written permission of Affymetrix.  Consultant will maintain true and complete records in connection with the services and all transactions related thereto, and shall permit Affymetrix to make an audit of all such records.
 
b.
Affymetrix will reimburse the Consultant for all reasonable and necessary out-of-pocket business expenses incurred by Consultant in performing the services during the term of this Agreement; provided that (i) Consultant obtains advance written approval from Affymetrix, (ii) Consultant submits original receipts for such expenses, and (iii) such expenses comply with Affymetrix's Policy on Interactions with Healthcare Professionals and other Affymetrix travel and expense policies, as they may be amended from time to time at Affymetrix's reasonable discretion. 

c.
Consultant will be responsible for Consultant's own income tax reporting and payments and Affymetrix will have no obligation to withhold income taxes or FICA taxes from the compensation paid to the Consultant, or to pay any employer payroll taxes for the benefit of Consultant or Consultant's employees associated with the compensation paid to Consultant.

6.
Consultant's Contact.  Consultant will work with and will receive instructions from Affymetrix through Siang Chin.


7.
Confidentiality.

a.
Obligation to Hold Proprietary Information in Confidence.  Both parties understand that certain information Consultant may receive from Affymetrix, or that Consultant may develop under this Agreement, will be Proprietary Information to Affymetrix.  Such information includes but is not limited to (i) the fact that Affymetrix is conducting research in any particular area or intends to develop or market any product, (ii) the terms of this Agreement or any agreement Affymetrix may have (or may be negotiating) with any third party, (iii) non-public information concerning the business or finances of Affymetrix, and (iv) any other information the disclosure of which might harm or destroy a competitive advantage of Affymetrix (all of (i) through (iv) shall be referred to as "Proprietary Information".  Consultant shall not, either during or subsequent to the term of this Agreement, directly or indirectly, disclose any Proprietary Information of Affymetrix, nor shall Consultant copy or use any Proprietary Information, except for the purpose of carrying out this Agreement.  Consultant shall not, either during or subsequent to the term of this Agreement, directly or indirectly publish any such information without prior written authorization from Affymetrix.  Consultant shall not perform services for direct competitors of Affymetrix during the term or for six (6) months following the termination of this Agreement.  Consultant understands and agrees that his/her obligation to hold the Proprietary Information of Affymetrix confidence survives the termination of this Agreement.

b.
Consultant's Employees.  Consultant shall have a written agreement with each of its employees who will be exposed to the Proprietary Information requiring them to comply with Consultant's obligations with respect to Proprietary Information.

c.
Release of Burden to Hold Information Confidential.  This Agreement shall impose no obligation upon Consultant with respect to any information which (i) the Consultant is authorized by Affymetrix in writing to disclose; (ii) becomes publicly available through no fault or omission on Consultant's part; (iii) is subsequently rightfully furnished to the Consultant by a third party without restriction on disclosure; or (iv) is rightfully known by Consultant as shown by written records in existence at the time of receiving such information.


8.
Consultant's Representations and Warranties.

a.
Consultant represents that the Work Product and Deliverables produced under this Agreement are the sole product of Consultant's own efforts; that Consultant is the owner and proprietor of all applicable rights in said Work Product and Deliverables; and that the use and disclosure of the Work Product and Deliverables will not infringe upon or violate any patent, copyright trade secret, or other property right of any third party.  Consultant hereby assigns Consultant's rights in any Work Product and Deliverables to Affymetrix. Consultant represents that Consultant possesses the right to enter into and to perform this Agreement and that there are no liens or encumbrances against any of the Work Product or Deliverables which would be inconsistent with the rights granted to Affymetrix hereunder.  Consultant represents and warrants that the execution, delivery and performance of and compliance with this Agreement will not conflict with (i) the policies of Consultant's employer and any institution Consultant is affiliated with and (ii) the provisions of any contract Consultant is a party to.

9.
Independent Contractor.  Consultant acknowledges that he/she is being retained by Affymetrix only for the limited services set forth in this Agreement.  Consultant shall at all times operate as and have the status of an independent contractor and shall not act as or be an agent or employee of Affymetrix.  As such, Consultant acknowledges the terms and conditions of his/her independent contractor relationship with Affymetrix will include the following:

a.
Consultant understands that Consultant is not authorized to incur any expenses on behalf of Affymetrix. Consultant is solely responsible for all expenses incurred for the services he/she will provide pursuant to this Agreement.

b.
Consultant shall not subcontract or assign this Agreement or any part hereof without Affymetrix's prior written consent.  Any such subcontract or assignment without such consent shall be void.

c.
Consultant shall maintain appropriate worker's compensation and/or liability insurance and shall provide evidence of such insurance upon request.

d.
Consultant shall be responsible for payment of all applicable taxes in respect of the compensation paid hereunder and shall provide evidence of such payment upon request.  Consultant understands that Affymetrix will not deduct or withhold from his/her compensation for applicable taxes.

e.
Consultant shall be present and available for consultation at Affymetrix's Santa Clara facility during regular business hours as requested, unless otherwise specified in an attachment to this agreement.

f.
Consultant understands and agrees that he/she is responsible for exercising care in selecting employees and ensuring that such employees comply with all applicable federal and state laws.

g.
Consultant understands and agrees that no unauthorized aliens as defined in the Immigration Reform and Control Act of 1986 shall perform work for Affymetrix pursuant to this Agreement.

h.
Consultant will abide by all Affymetrix safety rules.  If Affymetrix determines that safety training is required, Affymetrix may require the Consultant to attend a safety course prior to working with the medical technology product, at Affymetrix's cost.  Consultant will read and understand all relevant Affymetrix safety procedure manuals.

10.
Noninterference with Business.  During and for a period of two years immediately following the termination or expiration of this Agreement, Consultant agrees not to interfere with the business of Affymetrix in any manner, including, without limitation, soliciting or inducing any employee or independent contractor to terminate or breach an employment, contractual or other relationship with Affymetrix.
 
11.
Termination. The initial term of this Agreement shall be for three (3) months, from April 1, 2013 to June 30, 2013, which may be extended upon written agreement of the parties.  Either party may terminate this agreement at any time upon thirty (30) days written notice of termination.  Upon termination of this Agreement for any reason, Consultant shall immediately deliver to Affymetrix all written documentation, including all copies, concerning Proprietary Information, shall make no further use of such information, and shall make reasonable efforts to assure no further use of such information by Consultant's employees, agents or contractors.  In the event any of the Consultant's, employees, agents or contractors are terminated, Consultant shall recover any such materials and information and make reasonable efforts to assure no further use of such information by such person.

12.
Compliance with Laws.
 
a.
General: Consultant shall comply fully with all applicable federal, state and local laws in the performance of this Agreement.  Consultant represents and warrants that neither Consultant nor any employee or contractor of Consultant providing services is excluded from participation in any Federal health care programs (as defined in 42 U.S.C. Section 1320a-7b(f)) or debarred from federal procurement or nonprocurement programs.   Consultant further represents and warrants that Consultant and any employee or contractor of Consultant providing services pursuant to this Agreement has a current license to practice his/her/its profession in good standing and has obtained all necessary permissions from third parties relating to the services, and that Consultant's performance of the services will not violate any of Consultant's agreements with or obligations to any third party.  Consultant should also be required to notify Affymetrix immediately in the event that Consultant or any employee or contractor of Consultant providing services pursuant to this Agreement is excluded from any Federal health care programs, or is under investigation that could lead to such exclusion.

b.
Equal Employment Opportunity, Affirmative Action & Notice of Employee Rights: Any provision which is required to be a part of this order by virtue of any such law, regulation, rule or order is incorporated herein by reference:  including but not limited to Executive Order 11246, as amended; Section 503 of the Rehabilitation Act of 1973, as amended (29 U.S.C. 793); Section 402 of the Vietnam Era Veterans Readjustment Assistance Act of 1974, as amended (38 U.S.C. 4212), and their respective implementing regulations at 41 CFR Chapter 60; Executive Order 13496 (Notification of Employee Rights Under Federal Labor Laws) 29 CFR Part 471, Appendix A to Subpart A."
 
c.
Small Business Plan Requirements: Affymetrix is a government contractor and is subject to the requirements of FAR section 52.219. Pursuant to FAR 52.219.9, If Consultant (i) is not considered a Small Business (as the term is defined in section 3 of the Small Business Act) and (ii) is providing goods or services under this Agreement in an amount greater than or equal to $500,000, and (iii) is subcontracting a portion of the goods or services from a third party, Consultant agrees to submit to Affymetrix a Small Business Plan or letter stating that Consultant does not have a Small Business Plan and listing the approximate dollar amount to be subcontracted.
 
d.
Export Control: Consultant agrees that it will comply with all applicable export control laws.
 
13.
 
 Miscellaneous.
a.
The parties expressly agree that the services contracted for do not exceed those which are reasonably necessary to accomplish the commercially reasonable business purpose of the parties and that the parties agree that no remuneration for referring business will be paid under the contract, nor shall the contract be construed as an offer to induce the referral of patients or the purchase, lease, order or recommendation of any item or service.
 
b.
This Agreement, together with all exhibits hereto, constitutes the entire agreement of the parties and supersedes any prior or contemporaneous oral or written agreements or understandings between the parties.  Consultant represents that in entering into this Agreement Consultant has not relied on any previous oral or implied representations, inducements or understandings of any kind or nature.
 
c.
The following sections shall survive the termination of this Agreement: Sections 2, 3, 7, 8, and 10.

d.
The validity, construction and performance of this Agreement shall be governed by the substantive law of the State of California, and the United States of America, excluding that body of law related to choice of law.  Any action or proceeding brought to enforce the terms of this Agreement shall be brought in the County of Santa Clara, State of California (if under State law) or the Northern District of California (if under Federal law). Consultant consents to personal jurisdiction before such courts.  If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, the remaining provisions shall remain in full force and effect.  Consultant understands and agrees that the disclosure or improper use of Affymetrix proprietary information will cause irreparable harm for which there is no adequate remedy at law.
 
e.
The parties agree that any and all disputes, claims or controversies arising out of or relating to these Terms and Conditions that are not resolved by mutual agreement shall be submitted to final and binding arbitration before JAMS, or its successor, pursuant to the United States Arbitration Act, 9 U.S.C. Sec. 1 et seq. The arbitration shall take place in Santa Clara, California, unless the parties otherwise agree in writing. Within fourteen (14) days thereafter, the arbitrator shall arrive at a final decision, which shall be reduced to writing, signed by the arbitrator, and mailed to each of the parties and their legal counsel. All decisions of the arbitrator shall be final, binding and conclusive on the parties and shall constitute the only method of resolving disputes or matters subject to arbitration pursuant to this Agreement; provided, however, nothing shall prohibit the parties from seeking injunctive relief and/or other equitable remedies in a court of competent jurisdiction. The arbitrator or a court of appropriate jurisdiction may issue a writ of execution to enforce the arbitrator's judgment. Judgment may be entered upon such a decision in accordance with applicable law in any court having jurisdiction thereof.

f.
No waiver, amendment or modification of any provisions of this Agreement shall be effective unless in writing and signed by the party against whom such waiver, amendment or modification is sought to be enforced. No failure or delay by either party is exercising any right, power or remedy under this Agreement shall operate as a waiver of any such right, power or remedy.
 
g.
The headings contained herein are for the convenience of reference only and are not intended to define, limit, expand, or describe the scope of intent of any Section or other provision in this Agreement.
 
h.
Each party has had an opportunity to review this Agreement.  Therefore the normal rule of construction that any ambiguity or uncertainty in any writing shall be interpreted against the party drafting the writing shall not apply to any action on this Agreement.
 

i.
Consultant understands and acknowledges that discrimination and harassment based upon such factors as race, ethnicity, national origin, gender, sexual orientation, age, or religion is unlawful.  Consultant has read and understands and agrees to abide by Affymetrix' EEO/Harassment policy, including the reporting provisions.  Consultant further represents that to the extent any of its agents, employees or principals undertakes any assignment with Affymetrix, such agent, employee or principal will similarly agree to abide by Affymetrix' EEO/Harassment policy





This Agreement will be effective as of the date first signed below.

Consultant:

By:                         /s/ John F. Runkel, Jr.  

Name:                  John F. Runkel, Jr.

Title:                    __________________________  

Date:                  March 21, 2013

Tax I.D. Number: ___________________  


Affymetrix, Inc.

By:                        /s/ Siang Chin  

Name:              Siang Chin

Title:         VP, Legal  

Date:                  March 22, 2013



Exhibit A

Statement of Work


Compensation:  $4,000 per month for eight (8) hours of consulting time, starting April 2013.  Payment is due within five (5) business days after the end of each month.

Work Plan:  Legal advice on various matters.


EX-10.49 5 ex10-49.htm EX-10.49
EXHIBIT 10.49

March 29, 2013

John Runkel
640 W. Santa Inez
Hillsborough, CA 94010

Re: Separation Agreement

Dear John:

This letter, upon your signature, will constitute the Separation Agreement (this "Agreement") between you and Affymetrix, Inc. ("Affymetrix"), on the terms of your separation from employment with Affymetrix.
1.                      Termination Date. This is to inform you that your employment is terminated, effective 3/29/2013  (hereinafter "Termination Date").

2.                      Final salary; COBRA. Regardless of whether you accept this Agreement, you will be paid on or before your Termination Date the balance of your earned salary.
As of your Termination Date, you will no longer be eligible to participate in any of Affymetrix's benefit or compensation plans, except as provided by law or the terms of the applicable plans.  Information regarding your rights to continuation of your health insurance coverage under the terms of COBRA will be sent to you under separate cover. To the extent that you have such rights, nothing in this Agreement will impair them.

3.                      At-Will Employment. Your employment remains at-will and nothing contained in this Separation Agreement is intended to create or imply any contrary policy. Either you or the company may terminate your employment at any time, with or without cause or notice. If, however, the Company terminates your employment before the Termination Date for reasons other than Cause (as defined below), you will remain eligible for Severance, payment of your COBRA premiums (unless you are or become eligible for other health insurance benefits at the expense of another employer), and outplacement services. If you are terminated for Cause, you will receive only your unpaid wages through termination, any accrued and unused vacation, any notice pay and any ESPP contributions withheld thus far for the current purchase period (if applicable), subject to standard payroll deductions and withholdings. For purposes of this Separation Agreement, termination for "Cause" shall mean termination because of: (a) an act by you that constitutes misconduct; (b) a breech by you of a provision of this Separation Agreement; (c) a violation by you of any law or regulation relating to the business of Affymetrix; (d) a failure or refusal to perform the duties assigned to you; or (e) a breach of the Confidentiality and Invention Agreement. In the event of early termination (by either you or the Company for any reason), all benefits will terminate.
4.                     Status as of Termination Date; return of company property; payment of amounts owed on corporate credit card; reimbursement of expenses. As of your Termination Date, you will no longer represent to anyone that you are still an employee of Affymetrix and will not say or do anything purporting to bind Affymetrix or any of its affiliates. As of your Termination Date, you will return to Affymetrix any building key, security pass, or other access or identification cards (including any business cards) and any company property that is currently in your possession, including any documents, credit cards, computer equipment and mobile phones.  By no later than ten days after your Termination Date, you will clear all expense accounts and pay all amounts owed on any corporate credit card(s) that Affymetrix previously issued to you. Affymetrix will reimburse you in accordance with its existing policies for any legitimate expenses you incurred on company business prior to the effective date of your termination.
5.                     Severance benefits. In consideration of your acceptance of this Agreement, Affymetrix will provide to you the following severance benefits:
a. Payable ten business days after the effective date of this Agreement; 12 months base pay less customary payroll deductions; and

b. Payment of your COBRA premium for the first 12 months if you elect COBRA and are eligible for coverage.

Additionally, you agree that the severance benefits to be paid under this Agreement are due solely from the Company and that Insperity PEO Services, L.P., formerly known as Administaff Companies II, L.P.  ("Insperity") has no obligation to pay the severance benefits even though payment may be processed through Insperity.
6.                      Release of claims.

a.                     On behalf of yourself and your representatives, agents, heirs and assigns, you waive, release, discharge and promise never to assert any and all claims, liabilities or obligations of every kind and nature, whether known or unknown, suspected or unsuspected that you ever had, now have or might have as of the effective date of this Agreement against Affymetrix, its predecessors, subsidiaries, related entities, officers, directors, shareholders, owners, agents, attorneys, employees, successors, or assigns. These released claims include, without limitation, any claims arising from or related to your employment with Affymetrix and the termination of your employment with Affymetrix. The released claims also specifically include, without limitation, any claims arising under any federal, state and local statutory or common law, Title VII of the Civil Rights Act, the federal Age Discrimination in Employment Act, the California Fair Employment and Housing Act, the Americans With Disabilities Act, the Older Workers Benefit Protection Act, the Family & Medical Leave Act, the Employee Retirement Income Security Act, the law of contract and tort, the federal WARN Act and its California counterpart, the California Constitution and the California Labor Code, and all claims for compensation, bonuses, severance pay, sick pay, vacation pay, stock, expenses, costs and attorney's fees
b.               You also waive and release and promise never to assert any such claims, even if you do not now know or believe that you have such claims. You therefore waive your rights under section 1542 of the Civil Code of California, which states:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
7.                    Confidentiality of company information. You acknowledge that in connection with your employment with Affymetrix you have received certain trade secrets, and non-public, confidential and proprietary business, financial and other information concerning Affymetrix, its customers, affiliates, and the like. You will maintain as confidential all such information, including all business plans, financial statements, budgets, projections, marketing information, customer lists, prospective customer information, technology, know-how, and intellectual property, whether in written, oral or other form. You agree that the foregoing information is strictly confidential, and will not disclose this information to any third parties or make use of it in any way.
8.                    Mutual Non-disparagement. Each party will not disparage the other party,  and in the case of Affymetrix, any of its affiliates, related entities or any past or present officers, directors or employees of Affymetrix, and will not say or do anything that damages or impairs in any way the business organization, goodwill, or reputation of the other party and in the case of Affymetrix, any of its affiliates or related entities.

9.                    Cooperation with information requests by Affymetrix. Upon request by Affymetrix, you will cooperate to the extent necessary to protect the interests of Affymetrix or any of its subsidiaries, affiliates, or other related entities, including without limitation, in providing any information that you have about Affymetrix's business and its operations and/or in providing truthful testimony as a witness or declarant in connection with any potential future litigation which may arise as to which you have any relevant information.
10.                  Non-solicitation. You acknowledge that Affymetrix has certain valuable and proprietary information which amounts to a protected "trade secret" under applicable state laws.  You agree that you will not misuse, misappropriate or disclose any such trade secrets in order to solicit, divert, or take away customers, affiliates, contracts or employees from Affymetrix.
11.                  Remedies in event of breach. In the event that you breach any of your obligations under this Agreement or as otherwise imposed by law, Affymetrix will be entitled to immediate return of any and all benefits paid to you under this Agreement and to obtain injunctive relief and all other relief provided by law or equity.  All other duties and obligations under this Agreement, however, including your waivers and releases, will remain in full force and effect.
12.                  Arbitration. The parties agree that any and all disputes arising out of this Agreement or the matters herein released, including all disputes arising out of your employment with Affymetrix, the termination of your employment, or any other related matter will be resolved by final and binding arbitration under the Employment Dispute Resolution Rules of the American Arbitration Association. This arbitration remedy will be exclusive.  To invoke the arbitration remedy, the complaining party must give notice in writing to the other party and to the American Arbitration Association of his or its intention to arbitrate within the statute of limitations applicable to the controversy and must first submit the matter to a non-binding mediation before a mediator agreed upon by the parties. The arbitrator will have the authority to grant the same remedies that could be awarded by a court of competent jurisdiction. The arbitrator will issue findings of fact and conclusions of law supporting the award. Any arbitration will be held in Santa Clara.
13.                  Integrated agreement. Except as set forth in this Agreement, there are no representations, promises, agreements or understandings between you and Affymetrix about or pertaining to the separation of your employment with Affymetrix, or Affymetrix's obligations to you with respect to your employment or any other matter mentioned above. This Separation Agreement therefore supersedes any prior written or oral representations, promises, agreements and understandings regarding any the subject matter of this Agreement.
14.                  Governing law. This Agreement will in all respects be interpreted and governed under the laws of the State of California.
15.                  Severability. If any provision of this Agreement is determined by an arbitrator or court of competent jurisdiction to be invalid, unenforceable or void, such provision shall be enforced to the extent permitted by law and the remainder of this Agreement shall remain in full force and effect.
16.                  Consideration and acceptance of Agreement; Effective Date of Agreement. You have 45 days to consider and accept the terms of this Agreement (although you may accept it at any time within those 45 days). Once signed, please send the Agreement to the attention of Anna Gregorio, HR Representative, at Affymetrix's address shown on this first page of this Agreement.  The date of your signature will constitute the "effective date" of this Agreement.
17.                  Age Discrimination Claims. You acknowledge that the release of claims under the Age Discrimination in Employment Act ("ADEA") is subject to special waiver protection.  Therefore, in accordance with that section, you specifically agree that you knowingly and voluntarily release and waive any rights or claims of discrimination under the ADEA.  In particular, you represent and acknowledge that you understand the following: (a)  you are not waiving rights or claims for age discrimination under the ADEA that may arise after the date you sign this Release; (b) you are waiving rights or claims for age discrimination under the ADEA in exchange for the payments described herein; (c) you will be given an opportunity to consider fully the terms of this Release for forty five (45) days, although you are not required to wait forty five (45) days before signing this Release; (d) you have been advised to consult with an attorney of your choosing before signing this Release; (e) you understand you have seven (7) days after you sign this Release in which to revoke this Release, which can be done by sending a certified letter to that effect to Affymetrix. If you do not revoke during the seven day revocation period, this Agreement will take effect on the eighth (8th) day after the date you the sign the Agreement.
18.                  Compensation. As of the date of your signature below, you believe that you have received all wages, salary, compensation and benefits owed to by Affymetrix and that (other than the severance referenced herein) you do not believe that any further compensation is owed to you. As of the date of your signature below, you have no employment-related claims pending against Affymetrix and have no intention of commencing such claims in the future.  You further acknowledge that you have not assigned any claims arising out of your employment to any third party.

We wish you every success in your future endeavors.
Sincerely,

/s/Camellia Ngo

Camellia Ngo
SVP, Human Resources
Affymetrix, Inc.

By signing this letter, I acknowledge that I have carefully reviewed and considered this Separation Agreement; that I fully understand all of its terms; and that I voluntarily agree to them.




Date: March 29, 2013                                                                                                   /s/John F. Runkel, Jr.
            John Runkel
EX-31.1 6 ex31-1.htm EX-31.1
EXHIBIT 31.1

Certification of Chief Executive Officer
Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

I, Frank Witney, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Affymetrix, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 1, 2013
/s/ FRANK WITNEY
 
Name:
Frank Witney
 
Title:
Director, President and Chief Executive Officer
EX-31.2 7 ex31-2.htm EX-31.2
EXHIBIT 31.2

Certification of Chief Financial Officer
Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

I, Timothy C. Barabe, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Affymetrix, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 1, 2013
/s/ TIMOTHY C. BARABE
 
Name:
Timothy C. Barabe
 
Title:
Executive Vice President and Chief Financial Officer
EX-32 8 ex-32.htm EX-32
EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF SARBANES-OXLEY ACT OF 2002

The certification set forth below is being submitted in connection with this Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 (the "Report") for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Each of the undersigned certifies that, to his knowledge:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Affymetrix, Inc.

May 1, 2013
/s/ FRANK WITNEY
 
Name:
Frank Witney
 
Title:
Director, President and Chief Executive Officer
 
 
 
 
 
 
 
/S/ TIMOTHY C. BARABE
 
Name:
Timothy C. Barabe
 
Title:
Executive Vice President and Chief Financial Officer

This certification accompanying the Report is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities such Section, and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before, on or after the date of the Report), irrespective of any general incorporation language contained in such filing.
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Ending AOCI Balance Ending AOCI Balance Net of tax amount of reclassification adjustments from other comprehensive income (loss) during the period. Reclassification From Accumulated Other Comprehensive Income Current Period Net Of Tax Net of tax amount of other comprehensive income (loss) during the period before reclassification adjustments. Other Comprehensive Income Loss Before Reclassifications Net Of Tax Other comprehensive income loss before reclassifications, net of tax Beginning balance of accumulated OCI. Beginning AOCI Balance Beginning AOCI Balance Accumulated change, net of tax, in accumulated gains and losses from derivative instruments designated and qualifying as the effective portion of cash flow hedges. Includes an entity's share of an equity investee's Increase or Decrease in deferred hedging gains or losses. 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Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized Thirteen PRSU Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, 2013 Expected PRSUs to be achieved in the future granted, issued in 2013 Expected PRSUs Granted, 2013, to be Achieved Grant date fair value of PRSUs granted, issued in 2013 Share-based compensation arrangement by share-based payment award, options, Grants in Period, Grant Date Intrinsic Value Thirteen PRSU Share-based compensation arrangement by share-based payment award, options, Grants in Period, Grant Date Intrinsic Value, 2013 Net number of share options (or share units) granted during the period for PRSUs, issued in 2013. Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures Thirteen PRSU Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures, 2013 Weighted average period over which unrecognized compensation is expected to be recognized for equity-based compensation plans, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. For Restricted Stock only. Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition, Restricted Stock Weighted-average term of unrecognized share-based compensation expense, Restricted Stock Weighted average period over which unrecognized compensation is expected to be recognized for equity-based compensation plans, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. For Stock Options only. Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition, Stock Options Weighted-average term of unrecognized share-based compensation expense, Stock Options Expected term of share-based compensation awards, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days for ESPP. Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term ESPP Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term for ESPP The estimated measure of the percentage by which a share price is expected to fluctuate during a period. Volatility also may be defined as a probability-weighted measure of the dispersion of returns about the mean. The volatility of a share price is the standard deviation of the continuously compounded rates of return on the share over a specified period. That is the same as the standard deviation of the differences in the natural logarithms of the stock prices plus dividends, if any, over the period for ESPP. Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate ESPP Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate for ESPP The estimated dividend rate (a percentage of the share price) to be paid (expected dividends) to holders of the underlying shares over the option's term for ESPP. Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate for ESPP Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate for ESPP The risk-free interest rate assumption that is used in valuing an option on its own shares for ESPP plan. Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate ESPP Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate for ESPP Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology ESPP [Abstract] Represents the expense related to ESPP recognized during the period arising from equity-based compensation arrangements (for example, shares of stock, unit, stock options or other equity instruments) with employees, directors and certain consultants qualifying for treatment as employees. Allocated Share-based Compensation Expense ESPP Allocated Share-based Compensation Expense Number of employees participating in ESPP as of balance sheet date Number of Participants in ESPP Number of participants in ESPP This element represents the look-back period for employee stock purchase plan. Maximum Look Back Period for Employee Stock Purchase Plan Look-back period for ESPP Number of months in a purchase period that results in a look-back for determining purchase price in the ESPP Number of Months in Each Purchase Period Number of months in each purchase period Number of purchase periods per offering period. ESPP Number of Purchase Periods Per Offering Period ESPP number of purchase periods per offering period Offering period. ESPP Offering period ESPP offering period Purchase consideration as a percentage of market value. ESPP Purchase Consideration as Percentage of Market Value ESPP purchase consideration as percentage of market value (in hundredths) Aggregate number of common shares reserved for future issuance related to ESPP Common Stock, Capital Shares Reserved for Future Issuance ESPP Shares reserve for issuance under Employee stock purchase plan (in shares) As of the balance sheet date, the aggregate unrecognized cost of equity-based PRSUs granted, 2012, made to employees under equity-based compensation awards that have yet to vest. 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Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures Twelve PRSU PRSUs granted, 2012 As of the balance sheet date, the aggregate unrecognized cost of equity-based PRSUs made to CEO under equity-based compensation awards that have yet to vest. 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Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures PRSU 2011 CEO PRSU grants: Grants in period, Net of forfeitures (in shares) Share Based Compensation Arrangement By Share Based Payment Award Options Aggregate Intrinsic Value [Abstract] Aggregate Intrinsic Value [Abstract] Stock option plan activity [Abstract] Term of historical trend considered to derive expected term. Term of historical trend The cash inflow from the issuance of a long-term debt instrument which can be exchanged for a specified amount of another security, typically the entity's common stock, at the option of the issuer or the holder. Proceeds from Convertible Debt 4.00 Net proceeds from 4.00% convertible senior notes Interest expense related to 3.50% convertible debt instruments which has been recognized for the period, including the contractual interest coupon and amortization of the debt discount, if any. Debt Instrument, 3.50% Convertible, Interest Expense Debt Instrument, 3.50% Convertible, Interest Expense Paid With Repurchase The cash outflow from the repurchase of a long-term debt instrument which can be exchanged for a specified amount of another security, typically the entity's common stock, at the option of the issuer or the holder, including any accrued interest. Repurchase of Convertible Debt, including accrued interest Repurchase of Aggregate Principal Amount of Convertible Notes Repurchase of Aggregate Principal Amount of Convertible Notes Aggregate principal amount of senior convertible notes repurchased Interest expense related to 4.00% convertible debt instruments which has been recognized for the period, including the contractual interest coupon and amortization of the debt discount, if any. Debt Instrument400 Convertible Interest Expense Debt Instrument, 4.00% Convertible, Interest Expense Percentage of principal amount that the redemption price will be equal to. Percentage of Principal Amount That The Redemption Price Will Be Equal To Number of trading days to trigger measurement period within date Company provides notice of redemption Number of Trading Days to Trigger Measurement Period Within Date Company Provides Notice of Redemption Number of trading days to trigger measurement period within date company provides notice of redemption Number of consecutive trading days on which trading price is examined for triggering of conversion Number Of Consecutive Trading Days On Which Trading Price Is Examined For Triggering Of Conversion Number of consecutive trading days on which trading price is examined for triggering of conversion The number of consecutive trading days the Company's common stock has been above the threshold for conversion Number of Consecutive Trading Days Within Measurement Period Number of consecutive trading days within measurement period Conversion triggering common stock trading price as a percentage of price last reported in Measurement period converted at conversion rate. Percentage Company's common stock has been above conversion price Percentage of common stock above conversion price (in hundredths) Date on which the 4.00% Notes will become redeemable Date Which Convertible Notes Will Become Redeemable Date on which convertible notes will become redeemable The number of shares of common stock if the 4.00% Notes are converted. Maximum number of shares upon conversion of the 4.00% Notes The ratio applied to the debt for purposes of determining the number of shares of the equity security into which the debt will be converted. Debt Instrument, Convertible, Conversion Ratio1 Debt Instrument, Convertible, Shares per $1,000 principal amount of 4.00% Convertible Senior Notes Amortization period of debt issuance costs for Convertible Notes Amortization Period For Debt Issuance Cost Convertible Notes Amortization period for debt issuance cost related to convertible notes 4.00% Interest rate stated in the contractual debt agreement. Fourinterest Rate Stated Percentage 4.00%, Interest Rate, Stated Percentage Amount of debt issuance costs (for example, but not limited to, legal, accounting, broker, and regulatory fees) for 4.00% Convertible Notes. Debt Issuance Cost Four Notes 5-year maturity schedule for Term Loan Long-term Debt, Fiscal Year Maturity Term Loan [Abstract] Amount of debt issuance costs (for example, but not limited to, legal, accounting, broker, and regulatory fees) for Term Loan. Debt Issuance Cost - Term Loan Debt issuance cost related to term loan Tabular disclosure of number of shares reserved for future issuance. Schedule of reserved shares [Table Text Block] Reserved shares The portion of gains and losses (net) on derivative instruments designated and qualifying as hedging instruments representing the amount, if any, excluded from the assessment of hedge effectiveness. Derivative Instruments, Gain (Loss) Recognized in Income, Amount Excluded from Effectiveness Testing, Net Derivative Instruments, Gain (Loss) Recognized in Income, Amount Excluded from Effectiveness Testing, Net Primary financial statement caption in which reported facts about interest income and other revenue not separately disclosed have been included. Interest Income and Other [Member] Period for maturity of debt instruments. Debt Instrument Maturity Period Maturity period The net result for the period of deducting operating expenses from operating revenues by reportable operating segments. Operating Income (Loss) by Reportable Operating Segment Segment Reporting Information, Loss from Operations for Reportable Segment The acquisition of eBioscience, a privately-held company that specializes in the development, manufacturing, marketing and distribution of research tools in the areas of flow cytometry, immunoassays, microscopic imaging and other protein-based analyses, that were completed during the period. eBioscience [Member] A component of an enterprise representing facts about an entire consolidated business entity disaggregated by business or economic activities. Affymetrix Core [Member] Legal expenses incurred in connection with intellectual property and patents. Legal Expenses Associated with Administrative Proceedings Significant costs incurred in connection with administrative proceedings The amount of expense recognized in the current period that reflects the allocation of the costs of fair value step-up in inventory over the expected benefit period of such assets. This element applies only to the fair value step-up in inventory used in the production of goods. Cost of goods sold inventory step-up, amortization Inventory step-up in fair value related to acquisition, unamortized portion Inventory, Step Up Adjustment Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Includes current and noncurrent Inventory Total, Net Total Total amount borrowed as of the balance sheet date, including the current and noncurrent portions, of collateralized debt obligations (with maturities initially due after one year or beyond the operating cycle, if longer). Such obligations include mortgage loans, chattel loans, and any other borrowings secured by assets of the borrower. Total amount borrowed as of balance sheet date Amount of term loan borrowed as of balance sheet date This element represents the portion of the balance sheet assertion valued at fair value by the entity whether such amount is presented as a separate caption or as a parenthetical disclosure. Additionally, this element may be used in connection with the fair value disclosures required in the footnote disclosures to the financial statements. The element may be used in both the balance sheet and disclosure in the same submission. Fair value of 3.50% convertible debt at the balance sheet date. 4.00% Convertible Debt, Fair Value Disclosures Interest rate stated in the contractual debt agreement. Debt Instrument, 4.00% Interest Rate, Stated Percentage Assets or liabilities, including financial instruments classified in shareholders' equity, measured at fair value and categorized within level 3 of the fair value hierarchy. Fair Value, Inputs, Level 3 Debt and equity securities which are issued by a foreign corporate entity with a promise of repayment. Foreign debt and equity securities are issuance by corporate not within the country of domicile of the entity. Foreign Corporate Debt And Equity Securities [Member] Foreign corporate debt and equity securities [Member] This category includes information about obligations and securities issued by Non US Government Corporations and Agencies. Non U S Government Obligations And Agency Securities [Member] Foreign government obligations and agency securities [Member] The component of income tax expense for the period representing the increase (decrease) in the entity's deferred tax assets pertaining to continuing operations. Change in deferred tax assets The aggregate amount of noncash, equity-based employee remuneration. This may include the value of stock or unit options, amortization of restricted stock or units, and adjustment for officers' compensation. As noncash, this element is an add back when calculating net cash generated by operating activities using the indirect method. This also includes the expense related to the accelerated vesting of eBioscience stock options Share-based Compensation including acquisition Share-based compensation including acquisition Net of tax amount of unrealized holding gain (loss) on available-for-sale securities and non-marketable investments. Other Comprehensive Income (Loss), Available-for-sale Securities and Non-Marketable Investments Adjustment, Net of Tax Unrealized change in available-for-sale and non-marketable securities The amount of expense recognized in the current period that reflects the allocation of the costs of inventory over the expected benefit period. Cost of Goods Sold, Amortization of Inventory Amortization of Inventory Step-Up in Fair value The consolidated profit or loss for the period, net of income taxes, attributable to eBioscience-specific Net Income Loss Bioscience Specific Net Loss, eBioscience specific Total revenue from sale of goods and services rendered during the reporting period, in the normal course of business, reduced by sales returns and allowances, and sales discounts for eBioscience only. Revenue Nete Bioscience Specific Revenue, Net, eBioscience specific Restructuring charges unpaid at balance sheet date Restructuring and Related Cost, Unpaid Balance Minimum royalty payment paid by related party starting in December 2015. Revenue earned during the period from the leasing or otherwise lending to a third party the entity's rights or title to certain property. Royalty revenue is derived from a percentage or stated amount of sales proceeds or revenue generated by the third party using the entity's property. Examples of property from which royalties may be derived include patents and oil and mineral rights. 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bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Amortized</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Unrealized</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" 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bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">6,775</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">54</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">6,829</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 52%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">U.S. corporate debt</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">651</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td 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right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">664</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 2px; width: 52%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Foreign corporate debt and equity securities</div></div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,837</div></div></td><td 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style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,873</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 52%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Total available-for-sale securities</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">9,263</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">103</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">9,366</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div> 0 0 0 0 6775000 651000 1837000 9263000 9395000 99000 <div><div style="text-align: left; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt; font-weight: bold;">NOTE 1&#8212;SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</div><div style="text-align: left; font-style: italic; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Basis of Presentation</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. The condensed consolidated financial statements include the accounts of Affymetrix, Inc. and its wholly owned subsidiaries ("Affymetrix" or the "Company"). All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring entries) considered necessary for a fair presentation have been included.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying Condensed Consolidated Balance Sheet as of March 31, 2013, and the Condensed Consolidated Statements of Operations, Comprehensive Loss and Cash Flows for the three months ended March 31, 2013 and 2012 are unaudited. The Condensed Consolidated Balance Sheet as of December 31, 2012 was derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 1, 2013. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and the accompanying notes to those financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">There have been no material changes to the Company's significant accounting policies as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 except as otherwise described below:</div><div style="text-align: left; font-style: italic; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Comprehensive (Loss) Income</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Comprehensive income (loss) is comprised of net loss and other comprehensive (loss) income. Other comprehensive (loss) income includes foreign currency translation adjustments, unrealized gains and losses on the Company's available-for-sale securities that are excluded from net loss and unrealized gains and losses on cash flow hedges. Total comprehensive (loss) income has been disclosed in the accompanying Condensed Consolidated Statements of Comprehensive Loss.</div><div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">During the three months ended March 31, 2013, the Company adopted Accounting Standards Update ("ASU") 2013-02, <font style="font-style: italic; font-family: 'Times New Roman', serif; font-size: 10pt;">Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income</font> which requires filers to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net loss. 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vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Reclassification</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">(Decrease)</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; 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width: 1.1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1.1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 10.1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">2,069</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1.1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1.1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; padding-bottom: 2px; width: 1.1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; padding-bottom: 2px; width: 10.1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(983</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1.1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1.53%; vertical-align: bottom;"><div>&#160;(2)</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1.1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 10.1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,118</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1.1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 46.1%; vertical-align: bottom;"><div><div style="text-align: left; 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vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 10.1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(1,232</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1.1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1.1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1.1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 10.1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(1,082</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1.1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1.53%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1.1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 10.1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">3,988</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1.1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div><div style="text-align: left; font-family: 'Times New Roman', serif; margin-bottom: 10pt; color: #000000; font-size: 10pt;">(1) Net gain recognized in Interest income and other, net.<br />(2) Net gain recognized in Revenue, except for $0.2 million gain that was recognized in Interest income and other, net due to hedging ineffectiveness. See Note 3. "Financial Instruments&#8211;Derivative Financial Instruments" for further information.</div></div></div> <div><div style="text-align: left; background-color: #ffffff; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt; font-weight: bold;">NOTE 2&#8212;ACQUISITION</div><div style="text-align: left; background-color: #ffffff; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; color: #000000; font-size: 10pt;">On June 25, 2012 (the "Acquisition Date"), pursuant to the terms of an Amended and Restated Agreement and Plan of Merger (the "Acquisition Agreement"), a wholly-owned subsidiary of the Company merged with and into eBioscience, Inc. ("eBioscience") with eBioscience surviving as a wholly-owned subsidiary of the Company (the "Acquisition"). eBioscience specializes in the development, manufacturing, marketing and distribution of research tools in the areas of flow cytometry, immunoassays, microscopic imaging and other protein-based analyses.</div><div style="text-align: left; background-color: #ffffff; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; color: #000000; font-size: 10pt;">The results of operations of the acquired eBioscience business and the fair values of the assets acquired and liabilities assumed have been included in the accompanying Consolidated Financial Statements since the Acquisition. For the three months ended March 31, 2013, the Company recorded $19.0 million in revenue and recognized a net loss of $3.9 million from eBioscience. No amounts were recognized from eBioscience during the three months ended March 31, 2012. The Company considered the eBioscience fair value analysis to be final as of December 31, 2012.</div></div> 37496000 25671000 201937000 107038000 11825000 -94899000 711000 710000 -17751000 -4283000 105000000 105000000 0 3855000 34433000 23565000 3507000 3779000 90151000 68599000 <div><div style="text-align: left; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt; font-weight: bold;">NOTE 9&#8212;LONG-TERM DEBT OBLIGATIONS</div><div style="text-align: left; font-style: italic; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Term Loan</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">On June 25, 2012, the Company entered into a credit agreement (the "Credit Agreement") by, and among, Affymetrix and its domestic subsidiaries, and General Electric Capital Corporation ("GE Capital"), Silicon Valley Bank and other financial institutions party thereto from time to time (collectively, the "Lenders"), as well as certain securities affiliates of the Lenders. The Credit Agreement provides for the Term Loan in an aggregate principal amount of $85.0 million and a revolving credit facility in an aggregate principal amount of $15.0 million (the "Revolving Credit Facility" and, together with the Term Loan, the "Senior Secured Credit Facility"), each with a term of five years. As of March 31, 2013, the Company had borrowed a total of $85.0 million under the Term Loan which was used to finance a portion of the Acquisition.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">At the option of the Company (subject to certain limitations), borrowings under the Credit Agreement bear interest at either a base rate or at the London Interbank Offered Rate ("LIBOR"), plus, in each case, an applicable margin. Under the Base Rate Option, interest will be at the base rate plus 4.00% per annum, calculated on the basis of the actual number of days elapsed in a year of 365 or 366 days (as applicable) and payable quarterly in arrears. The base rate will be equal to the greatest of (a) the rate last quoted by The Wall Street Journal (or another national publication selected by GE Capital) as the U.S. "Prime Rate," (b) the federal funds rate, plus 0.50% per annum and (c) LIBOR for an interest period of one month, plus 1.00% per annum. However, the base rate will not be less than a floor of 2.50% per annum. Under the LIBOR Option, interest will be determined based on interest periods to be selected by Affymetrix of one, two, three or six months (and, to the extent available to all relevant lenders, nine or 12 months) and will be equal to LIBOR, plus 5.00%, calculated based on the actual number of days elapsed in a 360-day year. However, LIBOR will be deemed not to be less than a floor of 1.50% per annum. Interest will be paid at the end of each interest period or, in the case of interest periods longer than three months, quarterly. In 2012, the Company entered into its Interest Rate Swap as required by the terms of the Credit Agreement with a third-party lending institution. Refer to Note 4. "Financial Instruments&#8211;Derivative Financial Instruments" for further information. At March 31, 2013, the applicable interest rate was approximately 6.50%.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The loans and other obligations under the Senior Secured Credit Facility are (i) guaranteed by substantially all of the Company's domestic subsidiaries (subject to certain exceptions and limitations) and (ii) secured by substantially all of the assets of Affymetrix and each guarantor (subject to certain exceptions and limitations).</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The Credit Agreement requires the Company to maintain a fixed charge coverage ratio of at least 1.5 to 1.0, a senior leverage ratio (which is the ratio of senior debt to trailing 12 months' earnings before interest, taxes, depreciation,&#160;amortization and other one-time items ("EBITDAO") not exceeding initially 2.00 to 1.00 and stepping down to 1.50 to 1.00; and a total leverage ratio (which is the ration of total debt to trailing 12 months' EBITDAO) not exceeding initially 4.75 to 1.00 and stepping down to 3.50 to 1.00. The Credit Agreement also includes other covenants, including negative covenants that, subject to certain exceptions, limit Affymetrix', and that of certain of its subsidiaries', ability to, among other things: (i) incur additional debt, including guarantees by the Company or its subsidiaries, (ii) make investments, pay dividends on capital stock, redeem or repurchase capital stock, redeem or repurchase the Company's senior convertible notes or any subordinated obligations, (iii) create liens and negative pledges, (iv) make capital expenditures, (v) dispose of assets, (vi) make acquisitions, (vii) create or permit restrictions on the ability of Affymetrix' subsidiaries to pay dividends or make distributions to Affymetrix, (viii) engage in transactions with affiliates, (ix) engage in sale and leaseback transactions, (x) consolidate or merge with or into other companies or sell all or substantially all the Company's assets and (xi) change their nature of business, their organizational documents or their accounting policies.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Following the restructuring activity discussed in Note 15. "Restructuring" and lower-than-expected revenue in the three months ended March 31, 2013, on April 8, 2013, the Company and the Lenders amended the Credit Agreement to provide a limited waiver and to amend certain covenants with respect to fiscal year 2013 (the "Amendment"). Under the Amendment, the Lenders agreed to waive any event of default arising from the failure of the Company to comply with the total leverage ratio and senior leverage ratio for the three months ended March 31, 2013. For the quarters ended March 31, 2013 through September 30, 2013, the definition of EBITDAO was amended to allow the add back of up to $11.0 million of trailing twelve month restructuring and integration charges in the calculation of EBITDAO compared to an add back of up to $7&#160;million prior to the Amendment. In addition, the quarterly senior leverage ratio was revised to not exceeding 1.80 to 1.00 for June 30, 2013 and September 30, 2013 compared to 1.75 to 1.00 for these periods prior to the Amendment. The total leverage multiple was revised to not exceeding 4.50 to 1.00, 4.75 to 1.00 and 4.50 to 1.00 for the quarters ending March 31, June 30 and September 30, 2013, respectively, as compared to the original total leverage ratio not exceeding 4.25 to 1.00 for each of these periods. As of March 31, 2013, except for the defaults pursuant to the Amendment, the Company was in compliance with the covenants.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The Company is required to make the following mandatory prepayments: (a) annual prepayments in an amount equal to 50% of excess cash flow (as defined in the Credit Agreement), subject to a leverage-based stepdown, (b) prepayments in an amount equal to 100% of the net cash proceeds of issuances or incurrences of debt obligations of Affymetrix and its subsidiaries (other than debt incurrences expressly permitted by the Credit Agreement), (c) prepayments in an amount equal to 100% of the net proceeds of asset sales in excess of $2.5 million annually (subject to certain reinvestment rights) and (d) prepayments in an amount equal to any indemnification payments or similar payments received under the Acquisition Agreement, subject to certain exclusions. During the three months ended March 31, 2013, the Company was not obligated to make any of the aforementioned mandatory prepayments.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The Credit Agreement also contains events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-default and cross-acceleration to other indebtedness in excess of specified amounts, monetary judgment defaults in excess of specified amounts, bankruptcy or insolvency, actual or asserted invalidity or impairment of any part of the credit documentation (including the failure of any lien on a material portion of the collateral to remain perfected) and change of ownership or control defaults. In addition, the occurrence of a "fundamental change" under the indenture governing the 4.00% Notes would be an event of default under the Credit Agreement. As of March 31, 2013, except for the defaults waived pursuant to the Amendment, the Company was in compliance with the covenants.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Additionally, the proceeds from the Term Loan are net of debt issuance costs of approximately $4.5 million which are being amortized using the effective interest method.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">As of March 31, 2013, the Company had an outstanding principal balance of $70.1 million and incurred $1.7 million in interest expense under the Senior Secured Credit Facility for the three months ended March 31, 2013.</div><div><div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The Term Loan is scheduled to amortize in quarterly installments in amounts resulting in an annual amortization of 10% during the first year, 15% during the second year, 15% during the third year, 20% during the fourth year and 40% during the fifth year after June 25, 2012. 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The net proceeds, after debt issuance costs totaling $3.9 million from the 4.00% Notes offering, were $101.1 million. The 4.00% Notes bear interest of 4.00% per year payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2013 until the maturity date of July 1, 2019, unless converted, redeemed or repurchased earlier. The debt issuance costs are being amortized over the effective life of the 4.00% Notes, which is 7 years.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Holders of the 4.00% Notes may convert their 4.00% Notes into shares of the Company's stock at their option any time prior to the close of business on the business day immediately preceding the maturity date. The 4.00% Notes are initially convertible into approximately 170.0319 shares of the Company's common stock per $1,000 principal amount of notes, which equates to 17,857,143 shares of common stock, or an initial conversion price of $5.88 per share of common stock. The conversion rate is subject to certain customary anti-dilution adjustments. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event in certain circumstances. Holders may also require the Company to repurchase for cash their notes upon certain fundamental changes.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">On or after July 1, 2017, the Company can redeem for cash all or part of the 4.00% Notes if the last reported sale price per share of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending within 5 trading days prior to the date on which the Company provides notice of redemption. 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vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Markets</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Inputs</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">(Level 1)</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">(Level 2)</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Total</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ccecff;"><td valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31, 2013:</div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 9pt; font-weight: bold;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 9pt; font-weight: bold;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 9pt; font-weight: bold;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Assets:</div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 4px; width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivative assets</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,321</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,321</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Liabilities:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivative liabilities</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">250</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">250</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">&#160;</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">December 31, 2012:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Assets:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">U.S. government obligations and agency securities</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">6,829</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">6,829</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">U.S. corporate debt</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">664</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">664</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 2px; width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Foreign corporate debt and equity securities</div></div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,873</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,873</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 4px; width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Total</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">9,366</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">9,366</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 4px; width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivative assets</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">842</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">842</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Liabilities:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivative liabilities</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">829</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">829</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div><div style="margin-bottom: 10pt;"><br /></div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The Company's Level 2 input assumptions are determined based on review of third-party sources.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The fair value of the Company's derivative assets and liabilities is determined based on the estimated consideration the Company would pay or receive to terminate these agreements on the reporting date. The derivative assets and liabilities are located in Other current assets and Accrued liabilities, respectively, in the accompanying Condensed Consolidated Balance Sheets.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">As of March 31, 2013 and December 31, 2012, the Company had no financial assets or liabilities measured on a recurring basis requiring Level 3 classification, including those that have unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets and liabilities.</div><div style="text-align: left; font-style: italic; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt; font-weight: bold;">Debt Obligations</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Debt obligations are not recorded at fair value on a recurring basis and are carried at amortized cost. The fair value of the 4.00% Convertible Senior Notes ("4.00% Notes") is based on quoted market prices at the balance sheet date and categorized within Level 1 of the fair value hierarchy. At March 31, 2013 and April 25, 2013, the fair value balances were approximately $109.2 million and $90.0 million, respectively. The fair value of the third-party financing ("Term Loan") approximated its carrying value and is categorized within Level 3 of the fair value hierarchy. At March 31, 2013, the fair value of the Term Loan was $70.1 million. See Note 9. "Debt Obligations" for further information on the Company's debt obligations.</div></div> <div><div style="text-align: left; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt; font-weight: bold;">NOTE 4&#8212;FINANCIAL INSTRUMENTS</div><div style="text-align: left; font-style: italic; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt; font-weight: bold;">Investments in Debt and Equity Securities</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The fair values of the Company's available-for-sale securities are based on quoted market prices and are included in cash and cash equivalents, available-for-sale securities&#8212;short-term and available-for-sale securities&#8212;long-term on the accompanying Condensed Consolidated Balance Sheets based on each respective security's maturity.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">During the three months ended March 31, 2013, the Company liquidated its entire portfolio of available-for-sale securities. The available-for-sale securities were sold for total cash consideration of $9.4 million and the resulting net gain on sale of $0.1 million was recognized in Interest income and other, net in the accompanying Condensed Consolidated Statements of Operations.</div><div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The following is a summary of available-for-sale securities as of December 31, 2012 (in thousands):</div><div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Gross</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Gross</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Amortized</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Unrealized</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Unrealized</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Cost</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Gains</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Losses</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Fair Value</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 52%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">U.S. government obligations and agency securities</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">6,775</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">54</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">6,829</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 52%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">U.S. corporate debt</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">651</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">13</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">664</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 2px; width: 52%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Foreign corporate debt and equity securities</div></div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,837</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">36</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,873</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 52%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Total available-for-sale securities</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">9,263</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">103</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">9,366</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div><div><br /></div><div style="text-align: left; font-style: italic; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt; font-weight: bold;">Non-Marketable Securities</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">As of March 31, 2013 and December 31, 2012, the carrying amounts of the Company's non-marketable securities, totaling $4.4 million&#160;for both years,&#160;equaled their estimated fair values. They consist primarily of an investment in a limited partnership investment fund who invests in companies in the life science industry and are located in the United States. The investments are initially valued at the purchase price and subsequently on the basis of inputs that market participants would use in pricing such investments. The portfolio of investments includes Level 1 publicly-traded equity securities and Level 3 equity securities and notes. There was no other-than-temporary impairment recognized during the three months ended March 31, 2013 and 2012. Net investment results are included in Interest income and other, net in the accompanying Condensed Consolidated Statements of Operations. Depending on market conditions, the Company may incur additional charges on this investment portfolio in the future.</div><div style="text-align: left; font-style: italic; font-family: 'Times New Roman', serif; margin-bottom: 12pt; font-size: 10pt; font-weight: bold;">Derivative Financial Instruments</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The Company derives a portion of its revenues in foreign currencies, predominantly in Europe and Japan, as part of its ongoing business operations. In addition, a portion of its assets is held in the nonfunctional currencies of its subsidiaries. The Company enters into foreign currency forward contracts to manage a portion of the volatility related to transactions that are denominated in foreign currencies. The Company's foreign currency forward contracts are entered into for periods consistent with the related underlying exposures and do not constitute positions that are independent of those exposures. The Company's accounting policies for these instruments are based on whether the instruments are classified as designated or non-designated hedging instruments. The Company recognizes derivatives on its accompanying Condensed Consolidated Balance Sheets at fair value. The effective portions of designated cash flow hedges are recorded in other comprehensive income ("OCI") until the hedged item is recognized in earnings. As of March 31, 2013, the Company's existing foreign currency forward exchange contracts mature within 12 months. The deferred amount related to the Company's derivatives currently recorded in OCI and expected to be recognized into earnings over the next 12 months is a net gain of $1.1 million. Derivatives that are not designated as hedging instruments and the ineffective portions of cash flow hedges are adjusted to fair value through earnings.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in OCI associated with such derivative instruments are reclassified immediately into operations through Interest income and other, net. Any subsequent changes in fair value of such derivative instruments are reflected in Interest income and other, net unless they are re-designated as hedges of other transactions. During the three months ended March 31, 2013, the Company recognized $0.2 million in net gains in Interest income and other, net, related to the loss of hedge designation on a portion of cash flow hedges related to the Japanese yen that were deemed ineffective due to lower-than-forecasted revenue from Japan. No additional hedges are deemed ineffective as of March 31, 2013. No cash flow hedges were de-designated during the three months ended March 31, 2012.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Under the Credit Agreement as defined in Note 9. "Long-Term Obligations", the Company is required to maintain derivative contracts to protect against fluctuations in interest rates with respect to at least 35% of the aggregate principal amount of the Term Loan, as defined in Note 9. "Long-Term Obligations," then outstanding, with such derivative contracts being required to have at least a three-year term. Accordingly, the Company has entered into an interest rate swap (the "Interest Rate Swap") for which the notional amount was originally set at $27.5 million, with quarterly reduction to the notional amount consistent with the mandatory amortization schedule of the Term Loan. The Interest Rate Swap calls for quarterly fixed rate payments of 1.70% of the notional amount in exchange for a variable rate quarterly receipts equal to a 3-month LIBOR rate with a floor of 1.50%. The Interest Rate Swap terminates on June 25, 2015.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The Company did not designate the Interest Rate Swap as a hedging instrument and will recognize adjustments to fair value through Interest and other income on the accompanying Condensed Consolidated Statements of Operations at each reporting date. As of March 31, 2013, the fair value of the Interest Rate Swap was $0.1 million.</div><div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">As of March 31, 2013 and December 31, 2012, the total notional values of the Company's derivative assets and liabilities were as follows (in thousands):</div><div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">December 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2013</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Euro</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">17,418</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">16,933</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Japanese yen</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">6,192</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">10,542</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff; height: 18px;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">British pound</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">4,419</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">4,278</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 2px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Interest rate swap</div></div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">27,519</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">27,519</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 4px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Total</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">55,548</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">59,272</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div><div><br /></div><div style="text-align: left; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Other than the Interest Rate Swap, the Company did not have any derivative assets or liabilities that were not designated or qualifying as hedges at either March 31, 2013 or December 31, 2012.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">As a result of the use of derivative instruments, the Company is exposed to the risk that the counterparties may be unable to meet the terms of the underlying agreements. To mitigate this risk, only contracts with carefully selected highly-rated major financial institutions are entered into. In the event of non-performance by these counterparties, the asset position carrying values of the financial instruments represent the maximum amount of loss that can be incurred; however, no losses as a result of counterparty defaults are expected. The Company does not require and is not required to pledge collateral for these financial instruments. The Company does not enter into derivative contracts for trading or speculative purposes and is not party to any leveraged derivative instruments.</div><div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The following table shows the Company's derivative assets and liabilities measured at fair value as reflected on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012 (in thousands):</div><div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">December 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Balance Sheet</div></div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2013</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Classification</div></div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivative assets:</div></div></td><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">&#160;&#160;&#160;</div></div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Foreign exchange contracts</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,321</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">842</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt;">&#160;Other current assets</div></div></td></tr><tr style="background-color: #cceeff; height: 13px;"><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivative liabilities:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">&#160;&#160;&#160;</div></div></td></tr><tr style="background-color: #ffffff; height: 12px;"><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Foreign exchange contracts</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">172</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">752</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt;">&#160;Accrued liabilities</div></div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Interest rate swap</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">78</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">77</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt;">&#160;Accrued liabilities</div></div></td></tr></table></div></div></div><div><br /></div><div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The following table shows the effect, net of tax, of the Company's derivative instruments on the accompanying Condensed Consolidated Statements of Operations and OCI for the three months ended March 31, 2013 and 2012 (in thousands):</div><div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="6" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Three Months Ended</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="6" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2013</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivatives in cash flow hedging relationships:</div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-left: 2%; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Net gain (loss) recognized in OCI, net of tax (1)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,086</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(516</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-left: 2%; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Net gain (loss) reclassified from accumulated OCI into Revenue, net of tax (2)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">825</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">518</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-left: 2%; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Net gain (loss) reclassified from accumulated OCI into Interest income and other, net, net of tax (3)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">158</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-left: 2%; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Net gain (loss) recognized in Interest income and other, net, net of tax (4)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">15</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">25</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivatives not designated as hedging relationships:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-left: 2%; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Net gain (loss) recognized in Interest income and other, net, net of tax (5)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">143</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(148</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td></tr></table></div></div><div><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="width: 100%; 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vertical-align: bottom;">&#160;</td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td colspan="10" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Accumulated Amortization</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td colspan="6" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Intangible Assets, Net</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div style="text-align: center; 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font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">December 31,</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">(Increase)/</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div style="text-align: center; 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vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">15,139</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="padding-bottom: 2px; width: 10%; vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt;">Variable</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 10%; vertical-align: bottom;"><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Total definite-lived intangible assets</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></td><td valign="bottom" style="border-bottom: #000000 4px double; 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width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Short-term portion</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">74,196</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">72,691</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 4px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; 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font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">11,772</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div><div style="margin-bottom: 10pt;"><br /></div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Inventory at March 31, 2013 includes unamortized fair value step-up in basis of $14.7 million as a result of the Acquisition. 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In addition, any adverse ruling could have a material adverse impact on the Company's cash flow and financial condition. The results of any litigation or any other legal proceedings are uncertain and as of the date of this report, the Company has not accrued any liability with respect to any of the litigation matters listed below:</div><div style="text-align: left; font-style: italic; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">E8 Pharmaceuticals LLC</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">On July 1, 2008, the Company was named as a defendant in a complaint filed by plaintiffs E8 Pharmaceuticals LLC and Massachusetts Institute of Technology ("MIT") in the United States District Court of Massachusetts. 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The Company will continue to vigorously defend against the plaintiffs' claims.</div><div style="text-align: left; font-style: italic; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">Enzo Litigation</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;"><font style="font-style: italic; font-family: 'Times New Roman', serif; font-size: 10pt;">Southern District of New York Case</font>: On October 28, 2003, Enzo Life Sciences, Inc., a wholly-owned subsidiary of Enzo Biochem, Inc. (collectively "Enzo"), filed a complaint against the Company that is pending in the United States District Court for the Southern District of New York for breach of contract, injunctive relief and declaratory judgment. The Enzo complaint relates to a 1998 distributorship agreement with Enzo under which the Company served as a non-exclusive distributor of certain reagent labeling kits supplied by Enzo. In its complaint, Enzo seeks monetary damages and an injunction against the Company from using, manufacturing or selling Enzo products and from inducing collaborators and customers to use Enzo products in violation of the 1998 agreement. Enzo also seeks the transfer of certain Affymetrix patents to Enzo.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">On November 10, 2003, the Company filed a complaint against Enzo in the United States District Court for the Southern District of New York for declaratory judgment, breach of contract and injunctive relief relating to the 1998 agreement. In its complaint, the Company alleges that Enzo has engaged in a pattern of wrongful conduct against it and other Enzo labeling reagent customers by, among other things, asserting improperly broad rights in its patent portfolio, improperly using the 1998 agreement and distributorship agreements with others in order to corner the market for non-radioactive labeling reagents, and improperly using the 1998 agreement to claim ownership rights to the Company's proprietary technology. The court has not set a trial date for these actions, but has advised the parties to clear time for trials at the end of 2013 or the beginning of 2014, to potentially try these actions as well as other related actions between Enzo and other third parties.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;"><font style="font-style: italic; font-family: 'Times New Roman', serif; font-size: 10pt;">Delaware Case</font>: On April 6, 2012, Enzo filed a complaint against the Company in the United States District Court for the District of Delaware. In the complaint, plaintiff alleges that Affymetrix is infringing U.S. Patent No. 7,064,197 by making and selling certain GeneChip&#174; products. The plaintiff seeks a preliminary and permanent injunction enjoining the Company from further infringement and unspecified monetary damages. The Company will vigorously defend against the plaintiff's case. 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width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">167</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">372</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Research and development</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">329</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">367</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 2px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Selling, general and administrative</div></div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,339</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,653</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Total share-based compensation expense</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,835</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">2,392</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div><div><br /></div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;"><font style="font-family: 'Times New Roman', serif; color: #000000; font-size: 10pt;">As of March 31, 2013, $13.1 million of total unrecognized share-based compensation expense related to non-vested awards is expected to be recognized over the respective vesting terms of each award through 2017. 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font-size: 10pt; font-weight: bold;">Three Months Ended</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="6" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2013</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Risk free interest rate</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.8</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1.0</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Expected dividend yield</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.0</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.0</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Expected volatility</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">68</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">67</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Expected option term (in years)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">4.6</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">4.6</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div><div style="margin-bottom: 10pt;"><br /></div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The risk free interest rate for periods within the contractual life of the Company's stock options is based on the U.S. Treasury yield curve in effect at the time of grant. The expected term is derived from an analysis of the Company's historical exercise trends over ten years. The expected volatility is based on a blend of historical and market&#8209;based implied volatility. Using the assumptions above, the weighted&#8209;average grant date fair value of options granted during the three months ended March 31, 2013 and 2012, was $2.09 and $2.38, respectively.</div><div style="text-align: left; font-style: italic; font-family: 'Times New Roman', serif; margin-bottom: 12pt; font-size: 10pt;">Performance-Based Awards</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;"><font style="font-family: 'Times New Roman', serif; color: #000000; font-size: 10pt;">In 2011, the Compensation Committee of the Company's Board of Directors approved a grant of performance-based restricted stock units ("PRSUs") under the Plan to the Company's Chief Executive Officer ("CEO") that is </font>earned annually in four equal tranches<font style="font-family: 'Times New Roman', serif; color: #000000; font-size: 10pt;"> based on his performance in the applicable fiscal year (the "Performance Period"). The PRSUs entitle the CEO to receive a certain number of shares of the Company's common stock based on the Company's satisfaction of certain financial and strategic performance goals as set and approved by the Board of Directors annually during the first quarter of the Company's fiscal year. Based on the achievement of the performance conditions during each Performance Period, the final settlement of the PRSU award will vest twelve months following the end of each Performance Period. The PRSU award will be forfeited if the performance goals are not met or if the executive officer is no longer employed at the vest date.</font></div><div style="background-color: #ffffff;"><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 12pt; color: #000000; font-size: 10pt;">The number of shares underlying the PRSUs that were granted to the CEO during 2011 totaled 0.2 million shares. As of March 31, 2013, performance conditions pertaining to 0.1 million shares of the PRSUs were achieved. The Company expects that an additional 0.1 million shares of the PRSUs, with a grant date fair value of $4.67 per PRSU, will vest with respect to the Performance Period ending December 31, 2013 and the fair value of such PRSU's is being amortized on a straight-line basis over the related service period. The total compensation cost related to PRSUs granted but not yet recognized was $0.3 million as of March 31, 2013.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 12pt; color: #000000; font-size: 10pt;">During July 2012, the Compensation Committee granted certain PRSUs following the acquisition of eBioscience referred to as an Acquisition Performance Share Program (the "Program"). The purpose of the Program is to align key management and senior leadership with stockholders' interests and to retain key employees. The measurement periods for the Program are the twelve month periods ended June 30, 2013 and June 30, 2014, respectively. Members of eBioscience management and other key employees are participating in the Program. Awards granted under the Program are granted in the form of performance shares pursuant to the terms of the Company's 2012 Inducement Plan. If pre-determined eBioscience specific performance goals are met, shares of stock will be granted to the recipient, vesting one month following the performance period representing the date of certification of achievement, contingent upon the recipient's continued service to the Company.</div><div style="text-align: left; text-indent: 36pt; font-family: inherit, 'Times New Roman'; margin-bottom: 12pt; color: #000000; font-size: 10pt;"><font style="font-family: 'Times New Roman', serif; font-size: 10pt;">In 2012, the Company awarded</font> 0.9 million PRSUs under the Program at a grant date fair value of $4.16 per PRSU and expects 66% of the PRSUs will vest. The fair value of the PRSUs is being amortized on a straight-line basis over the related service period. The total compensation cost related to PRSUs granted but not yet recognized was approximately $1.0&#160;million as of March 31, 2013.<br /></div></div><div style="background-color: #ffffff;"><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 12pt; color: #000000; font-size: 10pt;"><font style="font-family: inherit, 'Times New Roman'; font-size: 10pt;">During the first quarter of 2013, the Compensation Committee granted certain PRSUs following the most recent restructuring referred to as the 2013 Program. The purpose of the 2013 Program is to retain key employees. The measurement period for the 2013 Program is the twelve month period ended December 31, 2013 and the a</font>wards granted under the 2013 Program are granted in the form of performance shares pursuant to the terms of our 2000 Plan. Dependent on the level of achievement of pre-determined financial performance goals, shares of stock will vest in equal installments over two or four years. The level of achievement of financial performance will be assessed during the first quarter of fiscal 2014 after which the share of stock will be issued to the participants, contingent upon the recipient's continued service to the Company.</div><div style="text-align: left; text-indent: 36pt; font-family: inherit, 'Times New Roman'; margin-bottom: 12pt; color: #000000; font-size: 10pt;"><font style="font-family: 'Times New Roman', serif; font-size: 10pt;">In 2013, the Company awarded</font> 0.3 million PRSUs under the 2013 Program at a grant date fair value of $3.84 per PRSU and expects 85% of the PRSUs will vest. The fair value of the PRSUs is being amortized on a straight-line basis over the related service period. The total compensation cost related to PRSUs granted but not yet recognized was approximately $0.8 million as of March 31, 2013.</div></div><div style="text-align: left; font-style: italic; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt; font-weight: bold;">Employee Stock Purchase Plan</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">In August 2011, the Company's Board of Directors adopted the 2011 Employee Stock Purchase Plan ("ESPP") that was approved by the Company's stockholders on May 11, 2012. The ESPP reserved a total of 7.0 million shares of the Company's common stock for issuance under the plan and permits eligible employees to purchase common stock at a discount through payroll deductions.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The price at which stock is purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first day of the offering period or the last day of the purchase period, whichever is lower. The offering periods are twelve months and include two six month purchase periods that result in a look-back for determining the purchase price of up to 12 months. <font style="font-family: 'Times New Roman', serif; color: #000000; font-size: 10pt;">Employees can invest up to 15% of their gross compensation through payroll deductions. 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vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="6" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2013</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Risk free interest rate</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.1</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.1</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Expected dividend yield</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.0</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.0</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Expected volatility</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">52</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">67</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Expected term (in years)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.6</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.8</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div><div><br /></div></div> P4Y7M6D P4Y7M6D 71557000 58491000 77945000 65247000 <div><div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The Company provides for anticipated warranty costs at the time the associated product revenue is recognized. Product warranty costs are estimated based upon the Company's historical experience and the applicable warranty period. The Company periodically reviews the adequacy of its warranty reserve and adjusts, if necessary, the warranty percentage and accrual based on actual experience and estimated costs to be incurred. Information in regards to the changes in the Company's product warranty liability for the three months ended March 31, 2013 is as follows (in thousands):</div><div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 88%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Balance at December 31, 2012</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">802</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 2px; width: 88%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Additions charged to cost of product sales</div></div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">221</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 4px; width: 88%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Balance at March 31, 2013</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,023</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div></div> <div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The following table shows the Company's derivative assets and liabilities measured at fair value as reflected on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012 (in thousands):</div><div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">December 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Balance Sheet</div></div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2013</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Classification</div></div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivative assets:</div></div></td><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">&#160;&#160;&#160;</div></div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Foreign exchange contracts</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,321</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">842</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt;">&#160;Other current assets</div></div></td></tr><tr style="background-color: #cceeff; height: 13px;"><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivative liabilities:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">&#160;&#160;&#160;</div></div></td></tr><tr style="background-color: #ffffff; height: 12px;"><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Foreign exchange contracts</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">172</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">752</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt;">&#160;Accrued liabilities</div></div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Interest rate swap</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">78</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">77</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 38%; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt;">&#160;Accrued liabilities</div></div></td></tr></table></div></div></div> <div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2013 and December 31, 2012 (in thousands):</div><div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Quoted</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Significant</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Prices</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Other</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">In Active</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Observable</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Markets</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Inputs</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">(Level 1)</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">(Level 2)</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Total</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ccecff;"><td valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31, 2013:</div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 9pt; font-weight: bold;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 9pt; font-weight: bold;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 9pt; font-weight: bold;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Assets:</div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 4px; width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivative assets</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,321</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,321</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Liabilities:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivative liabilities</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">250</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">250</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">&#160;</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">December 31, 2012:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Assets:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">U.S. government obligations and agency securities</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">6,829</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">6,829</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">U.S. corporate debt</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">664</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">664</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 2px; width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Foreign corporate debt and equity securities</div></div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,873</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1,873</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 4px; width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Total</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">9,366</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">9,366</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 4px; width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivative assets</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">842</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">842</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 64%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Liabilities:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 64%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivative liabilities</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">829</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">829</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div> <div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The fair value of options was estimated at the date of grant using the Black Scholes Merton option pricing model with the following weighted&#8209;average assumptions:</div><div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="6" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Three Months Ended</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="6" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2013</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Risk free interest rate</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.8</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">1.0</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Expected dividend yield</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.0</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.0</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Expected volatility</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">68</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">67</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Expected option term (in years)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">4.6</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">4.6</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div> <div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">During the three months ended March 31, 2013 and 2012, the fair value of shares under the ESPP was estimated using the following assumptions:</div><div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="6" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Three Months Ended</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="6" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2013</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Risk free interest rate</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.1</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.1</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Expected dividend yield</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.0</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.0</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Expected volatility</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">52</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">67</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">%</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Expected term (in years)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.6</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">0.8</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div> <div><div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The Term Loan is scheduled to amortize in quarterly installments in amounts resulting in an annual amortization of 10% during the first year, 15% during the second year, 15% during the third year, 20% during the fourth year and 40% during the fifth year after June 25, 2012. The principal amount of unpaid maturities per the Credit Agreement is as follows (in thousands):</div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 88%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">2013, remainder thereof</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 88%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">2014</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">9,563</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 88%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">2015</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">13,813</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 88%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">2016</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">17,000</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 2px; width: 88%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">2017</div></div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">29,712</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 88%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Total</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">70,088</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div><div><br /></div></div> <div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">At March 31, 2013 and December 31, 2012, inventories consisted of the following (in thousands):</div><div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">December 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2013</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Raw materials</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">12,520</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">11,167</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Work-in-process</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">33,695</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">35,562</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 2px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Finished goods</div></div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">36,857</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">37,734</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Total</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">83,072</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">84,463</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">&#160;</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Short-term portion</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">74,196</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">72,691</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 4px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Long-term portion</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">8,876</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">11,772</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr></table></div></div></div> <div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The potential dilutive securities excluded from diluted earnings per common share were as follows (in thousands):</div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td colspan="6" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Three Months Ended March 31,</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;">&#160;</td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2013</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;">&#160;</td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Employee stock compensation plans</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">5,994</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">6,020</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Restricted stock subject to repurchase</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">3,861</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">2,469</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td></tr><tr style="background-color: #cceeff; height: 13px;"><td valign="bottom" style="padding-bottom: 2px; width: 76%; vertical-align: bottom;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Convertible notes</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">17,878</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">2,267</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;">&#160;</td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 76%; vertical-align: bottom;"><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Total</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">27,733</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">10,756</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;">&#160;</td></tr></table></div> <div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">The expected future annual amortization expense of the Company's intangible assets is as follows (in thousands):</div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="vertical-align: bottom;"></td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Amortization</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">For the Year Ending December 31,</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Expense</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;">&#160;</td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 88%; vertical-align: bottom;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">2013, remainder thereof</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">17,470</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 88%; vertical-align: bottom;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">2014</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">20,770</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 88%; vertical-align: bottom;"><div style="text-align: left; 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font-size: 10pt;">13,775</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 88%; vertical-align: bottom;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">2017</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">12,098</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 2px; width: 88%; vertical-align: bottom;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Thereafter</div></td><td valign="bottom" style="padding-bottom: 2px; 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font-size: 10pt;">$</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">145,785</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;">&#160;</td></tr></table></div> <div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;">As of March 31, 2013 and December 31, 2012, the total notional values of the Company's derivative assets and liabilities were as follows (in thousands):</div><div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; 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padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Euro</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">17,418</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">16,933</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; 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height: 18px;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 10pt; font-family: 'Times New Roman', serif; font-size: 10pt;">British pound</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">4,419</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; 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font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">December 31,</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Increase/</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">December 31,</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">(Increase)/</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">December 31,</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td><td valign="bottom" style="vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Average</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">(Decrease) (1)</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;">&#160;</td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2013</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; 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font-size: 10pt;">62,528</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></td><td valign="bottom" style="text-align: right; width: 7%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">59,790</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="width: 10%; vertical-align: bottom;"><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt;">12 years</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 10%; vertical-align: bottom;"><div style="text-align: left; font-family: 'Times New Roman', serif; 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vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 7%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">76,165</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 7%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(18,489</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; 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vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 7%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(1,261</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 7%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(4,270</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td><td valign="bottom" style="width: 1%; 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vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 7%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(615</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 7%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(1,400</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td><td valign="bottom" style="width: 1%; 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text-align: right; width: 7%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">376</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 7%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">81,532</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; 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font-size: 10pt;">5,374</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;">&#160;</td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></td><td valign="bottom" style="text-align: right; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(3,125</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td><td valign="bottom" style="vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></td><td valign="bottom" style="text-align: right; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; 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width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;">&#160;</td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;">&#160;</td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Affymetrix Core</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;">&#160;</td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(7,841</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; 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font-family: 'Times New Roman', serif; font-size: 10pt;">Derivatives in cash flow hedging relationships:</div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-left: 2%; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; 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font-size: 10pt;">(516</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-left: 2%; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Net gain (loss) reclassified from accumulated OCI into Revenue, net of tax (2)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">825</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">518</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-left: 2%; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Net gain (loss) reclassified from accumulated OCI into Interest income and other, net, net of tax (3)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">158</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-left: 2%; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Net gain (loss) recognized in Interest income and other, net, net of tax (4)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">15</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">25</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Derivatives not designated as hedging relationships:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-left: 2%; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Net gain (loss) recognized in Interest income and other, net, net of tax (5)</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">143</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(148</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td></tr></table></div></div><div><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td style="width: 18pt; vertical-align: top; align: right;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">(1)</div></td><td style="width: auto; vertical-align: top;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Net change in the fair value of the effective portion classified in OCI</div></td></tr></table></div><div><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td style="width: 18pt; vertical-align: top; align: right;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">(2)</div></td><td style="width: auto; vertical-align: top;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Effective portion classified as Revenue</div></td></tr></table></div><div><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td style="width: 18pt; vertical-align: top; align: right;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">(3)</div></td><td style="width: auto; vertical-align: top;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Ineffective portion classified as Interest income and other, net</div></td></tr></table></div><div><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td style="width: 18pt; vertical-align: top; align: right;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">(4)</div></td><td style="width: auto; vertical-align: top;"><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Amount excluded from effectiveness testing classified as Interest income and other, net</div></td></tr></table></div><div><table cellpadding="0" cellspacing="0" class="DSPFListTable" style="width: 100%; font-family: 'Times New Roman', Times, serif; margin-bottom: 10pt; font-size: 10pt;"><tr><td style="width: 18pt; vertical-align: top; align: right;"><div style="text-align: left; font-family: 'Times New Roman', Times, serif; margin-bottom: 10pt; font-size: 10pt; font-weight: normal;">(5)</div></td><td style="width: auto; vertical-align: top;"><div style="text-align: left; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt;"><font style="font-family: 'Times New Roman', Times, serif; font-size: 10pt;">Classified </font>in Interest and other, net</div></td></tr></table></div></div> 57338000 60563000 12750000 12713000 70088000 58937000 65247000 19008000 0 77945000 65247000 <div><div style="text-align: left; font-family: 'Times New Roman', serif; margin-bottom: 10pt; font-size: 10pt; font-weight: bold;">NOTE 13&#8212;SEGMENT AND GEOGRAPHIC INFORMATION</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 12pt; font-size: 10pt;">The Company reports segment information on the "management" approach which designates the internal reporting used by management for making decisions and assessing performance as the source of the Company's reportable segments. The Company has determined that its Chief Executive Officer is the Company's chief operating decision maker ("CODM") as he is responsible for reviewing and approving investments in the Company's technology platforms and manufacturing infrastructure. Prior to 2012, the Company was organized as one reportable operating segment. Subsequent to the Acquisition, the Company's business was reorganized into two reportable operating segments for financial reporting purposes, Affymetrix Core and eBioscience.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 12pt; font-size: 10pt;">In 2012, the Company reorganized its business in the following four business units: Expression, Genetic Analysis and Clinical Applications, Life Science Reagents and Corporate. The Expression business unit markets the Company's gene expression products and services, including in vitro transcription and other whole transcript arrays and QuantiGene line targeted at low-to-mid-plex products. The Genetic Analysis and Clinical Applications business unit markets the Company's genotyping and clinical arrays, including cytogenetics products. The Life Science Reagents business unit targets the life science reagent markets, marketing reagents, enzymes, purification kits and biochemicals used by life science researchers. The Corporate business unit is comprised primarily of revenue from royalty arrangements, and field revenue from services provided to customers by the Company. The Company determined that its manufacturing operations are centralized and based on platforms that are used to produce various products that serve multiple applications and markets. Additionally, the business units share research, development and common corporate services that provide capital, infrastructure and functional support. Based on the facts and circumstances, the Company concluded that the four business units represent one reportable operating segment, Affymetrix Core.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 12pt; font-size: 10pt;">The Company's other reportable operating segment, eBioscience, was acquired in the second quarter of 2012 and operates as a separate business unit. eBioscience specializes in the development, manufacturing, marketing and distribution of research tools in the areas of flow cytometry, immunoassays, microscopic imaging and other protein-based analyses. The Acquisition allows the Company to expand addressable markets and continue to diversify the business beyond genomics discovery into cell and protein analysis.</div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 12pt; font-size: 10pt;">The Company evaluates the performance of its reportable operating segments based on revenue and income (loss) from operations. Revenue is allocated to each business unit based on product codes excluding eBioscience whose business is primarily operated on a stand-alone basis.</div><div><div style="text-align: left; text-indent: 36pt; font-family: 'Times New Roman', serif; margin-bottom: 12pt; font-size: 10pt;">The following table shows revenue and income (loss) from operations by reportable operating segment for the three months ended March 31, 2013 and 2012 (in thousands):</div><div><table cellpadding="0" cellspacing="0" style="width: 100%; font-family: 'Times New Roman', Times, serif; font-size: 10pt;"><tr><td valign="bottom" style="vertical-align: bottom;"><div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="6" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">Three Months Ended</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="6" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">March 31,</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div></div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2013</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="border-bottom: #000000 2px solid; vertical-align: bottom;"><div><div style="text-align: center; font-family: 'Times New Roman', serif; font-size: 10pt; font-weight: bold;">2012</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Revenue:</div></div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="vertical-align: bottom;"><div>&#160;</div></td><td colspan="2" valign="bottom" style="vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;"></div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Affymetrix Core</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">58,937</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">65,247</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 2px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">eBioscience</div></div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">19,008</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 40pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Totals</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">77,945</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">65,247</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; font-family: 'Times New Roman', serif; font-size: 10pt;">Loss from operations:</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div>&#160;</div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Affymetrix Core</div></div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(7,841</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td><td valign="bottom" style="width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(3,352</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td></tr><tr style="background-color: #cceeff;"><td valign="bottom" style="padding-bottom: 2px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 20pt; font-family: 'Times New Roman', serif; font-size: 10pt;">eBioscience</div></div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(4,365</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td><td valign="bottom" style="padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: left; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 2px solid; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">-</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 2px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td></tr><tr style="background-color: #ffffff;"><td valign="bottom" style="padding-bottom: 4px; width: 76%; vertical-align: bottom;"><div><div style="text-align: left; text-indent: 40pt; font-family: 'Times New Roman', serif; font-size: 10pt;">Totals</div></div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(12,206</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td><td valign="bottom" style="padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div>&#160;</div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: left; width: 1%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">$</div></div></td><td valign="bottom" style="border-bottom: #000000 4px double; text-align: right; width: 9%; vertical-align: bottom;"><div><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">(3,352</div></div></td><td nowrap="nowrap" valign="bottom" style="text-align: left; padding-bottom: 4px; width: 1%; vertical-align: bottom;"><div style="font-family: 'Times New Roman', serif; font-size: 10pt;">)</div></td></tr></table></div></div></div> 35121000 27924000 105000000 105000000 P4Y 750 0.15 0.008 0.01 0.68 0.67 0 0 2.09 2.38 2000000 261307000 277171000 0 70919000 69977000 2249000 621000 1118000 3988000 0 -99000 -983000 -1082000 -3125000 -176000 2069000 -1232000 5374000 896000 32000 6302000 1298000 71000 76224000 76165000 17808000 3025000 81532000 254754000 76874000 76814000 17818000 3055000 81156000 255717000 772000 0.85 3.84 340000 P2Y3M18D P2Y8M12D P3M18D P9M18D 0.52 0.67 0 0 0.001 0.001 185000 308 P12M P6M 2 P12M 0.85 7000000 1047000 0.66 4.16 917000 273000 50000 4.67 85000 240000 P10Y 101062000 67000 3922000 1191000 1 5 30 20 1.3 2017-07-01 17857143 170.0319 P7Y 0.04 3900000 4500000 15000 25000 P5Y -7841000 -3352000 -4365000 0 -12206000 -3352000 0 4589000 14749000 83072000 84463000 85000000 109200000 93300000 0.04 0 0 1470000 44000 1835000 2392000 -275000 605000 4589000 0 3920000 0 19008000 0 1457000 100000 XML 15 R39.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE, Stock Options (Details) (USD $)
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Fair value of options estimated at the date of grant with weighted average assumptions [Abstract]    
Risk free interest rate (in hundredths) 0.80% 1.00%
Expected dividend yield (in hundredths) 0.00% 0.00%
Expected volatility (in hundredths) 68.00% 67.00%
Expected option term (in years) 4 years 7 months 6 days 4 years 7 months 6 days
Term of historical trend 10 years  
Weighted average grant date fair value of options granted (in dollars per share) $ 2.09 $ 2.38
XML 16 R54.htm IDEA: XBRL DOCUMENT v2.4.0.6
RESTRUCTURING (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Mar. 31, 2013
Dec. 31, 2012
RESTRUCTURING [Abstract]    
Restructuring and Related Cost, Number of Positions Eliminated 100  
Restructuring and Related Cost, Expected Cost $ 6,657  
Restructuring and Related Cost, Incurred Cost 4,842 1,809
Restructuring and Related Cost, Unpaid Balance $ 1,457  
XML 17 R48.htm IDEA: XBRL DOCUMENT v2.4.0.6
LONG-TERM DEBT OBLIGATIONS, Convertible Senior Notes (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Jun. 25, 2012
LONG-TERM DEBT OBLIGATIONS [Abstract]    
4.00% Convertible Senior Notes Aggregate Principal Amount $ 105,000 $ 105,000
Debt Issuance Cost Four Notes   3,900
Net proceeds from 4.00% convertible senior notes   101,062
4.00%, Interest Rate, Stated Percentage   4.00%
Amortization period for debt issuance cost related to convertible notes   7 years
Debt Instrument, Convertible, Shares per $1,000 principal amount of 4.00% Convertible Senior Notes   170
Maximum number of shares upon conversion of the 4.00% Notes   17,857,143
Conversion price of convertible debt   $ 5.88
Date on which convertible notes will become redeemable   Jul. 01, 2017
Percentage of common stock above conversion price (in hundredths)   130.00%
Number of consecutive trading days within measurement period   20
Number of consecutive trading days on which trading price is examined for triggering of conversion   30
Number of trading days to trigger measurement period within date company provides notice of redemption   5
Percentage of Principal Amount That The Redemption Price Will Be Equal To   100.00%
Debt Instrument, 4.00% Convertible, Interest Expense 1,191  
Repurchase of Convertible Debt, including accrued interest 3,922  
Debt Instrument, 3.50% Convertible, Interest Expense Paid With Repurchase $ 67  
XML 18 R46.htm IDEA: XBRL DOCUMENT v2.4.0.6
LONG-TERM DEBT OBLIGATIONS, Term Loan (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Jun. 25, 2012
LONG-TERM DEBT OBLIGATIONS [Abstract]    
Original aggregate principal amount of term loan   $ 85,000
Original revolving credit facility   15,000
Maturity period 5 years  
Amount of term loan borrowed as of balance sheet date 85,000  
Debt Instrument, Applicable Interest Rate (in hundredths) 6.50%  
Debt issuance cost related to term loan   4,500
Outstanding principal balance of term loan as of balance sheet date 70,088  
Interest expense incurred $ 1,702  
XML 19 R33.htm IDEA: XBRL DOCUMENT v2.4.0.6
FAIR VALUE MEASUREMENTS (Details) (USD $)
In Thousands, unless otherwise specified
Apr. 25, 2013
Mar. 31, 2013
Dec. 31, 2012
Mar. 31, 2012
Assets:        
Total     $ 9,366  
Derivative assets   1,321 842  
Liabilities:        
Derivative liabilities   250 829  
Fair Value, Inputs, Level 3   0   0
Debt Instrument, 4.00% Interest Rate, Stated Percentage   4.00%    
4.00% Convertible Debt, Fair Value Disclosures 93,300 109,200    
Term Loan, Fair Value Disclosure   70,088    
Quoted Prices In Active Markets (Level 1) [Member]
       
Assets:        
Total     0  
Derivative assets   0 0  
Liabilities:        
Derivative liabilities   0 0  
Significant Other Observable Inputs (Level 2) [Member]
       
Assets:        
Total     9,366  
Derivative assets   1,321 842  
Liabilities:        
Derivative liabilities   250 829  
U.S. government obligations and agency securities [Member]
       
Assets:        
Total     6,829  
U.S. government obligations and agency securities [Member] | Quoted Prices In Active Markets (Level 1) [Member]
       
Assets:        
Total     0  
U.S. government obligations and agency securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
       
Assets:        
Total     6,829  
U.S. corporate debt [Member]
       
Assets:        
Total     664  
U.S. corporate debt [Member] | Quoted Prices In Active Markets (Level 1) [Member]
       
Assets:        
Total     0  
U.S. corporate debt [Member] | Significant Other Observable Inputs (Level 2) [Member]
       
Assets:        
Total     664  
Foreign corporate debt and equity securities [Member]
       
Assets:        
Total     1,873  
Foreign corporate debt and equity securities [Member] | Quoted Prices In Active Markets (Level 1) [Member]
       
Assets:        
Total     0  
Foreign corporate debt and equity securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
       
Assets:        
Total     $ 1,873  
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INVENTORIES (Tables)
3 Months Ended
Mar. 31, 2013
INVENTORIES [Abstract]  
Inventories
At March 31, 2013 and December 31, 2012, inventories consisted of the following (in thousands):
 
March 31,
 
 
December 31,
 
 
2013
 
 
2012
 
Raw materials
 
$
12,520
 
 
$
11,167
 
Work-in-process
 
 
33,695
 
 
 
35,562
 
Finished goods
 
 
36,857
 
 
 
37,734
 
Total
 
$
83,072
 
 
$
84,463
 
 
 
 
 
 
 
 
 
 
Short-term portion
 
$
74,196
 
 
$
72,691
 
Long-term portion
 
$
8,876
 
 
$
11,772
 
XML 22 R50.htm IDEA: XBRL DOCUMENT v2.4.0.6
LEGAL PROCEEDINGS (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
LEGAL PROCEEDINGS [Abstract]  
Significant costs incurred in connection with administrative proceedings $ 0
XML 23 R42.htm IDEA: XBRL DOCUMENT v2.4.0.6
INVENTORIES (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Inventories [Abstract]    
Raw materials $ 12,520 $ 11,167
Work-in-process 33,695 35,562
Finished goods 36,857 37,734
Total 83,072 84,463
Inventory, Net-Short-Term Portion 74,196 72,691
Inventory, Net-Long-Term Portion $ 8,876 $ 11,772
XML 24 R37.htm IDEA: XBRL DOCUMENT v2.4.0.6
FINANCIAL INSTRUMENTS, Gain (Loss) by Hedging Relationship (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Effect of derivative instruments on statements of operations [Abstract]    
Net gain (loss) recognized in OCI, net of tax (1) $ 1,086 $ (516)
Net gain reclassified from accumulated OCI into income, net of tax (2) 825 518
Gain on Cash Flow Hedge Ineffectiveness 158 0
Derivative Instruments, Gain (Loss) Recognized in Income, Amount Excluded from Effectiveness Testing, Net 15 25
Net income (loss) recognized in other income and expense (4) $ 143 $ (148)
XML 25 R52.htm IDEA: XBRL DOCUMENT v2.4.0.6
SEGMENT AND GEOGRAPHIC INFORMATION, Revenue and Loss From Operations (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Segment Reporting Information [Line Items]    
Segment Reporting Information, Revenue for Reportable Segment $ 77,945 $ 65,247
Segment Reporting Information, Loss from Operations for Reportable Segment (12,206) (3,352)
Affymetrix Core [Member]
   
Segment Reporting Information [Line Items]    
Segment Reporting Information, Revenue for Reportable Segment 58,937 65,247
Segment Reporting Information, Loss from Operations for Reportable Segment (7,841) (3,352)
eBioscience [Member]
   
Segment Reporting Information [Line Items]    
Segment Reporting Information, Revenue for Reportable Segment 19,008 0
Segment Reporting Information, Loss from Operations for Reportable Segment $ (4,365) $ 0
XML 26 R47.htm IDEA: XBRL DOCUMENT v2.4.0.6
LONG-TERM DEBT OBLIGATIONS, Term Loan Maturities (Details) (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Long-term Debt, Fiscal Year Maturity Term Loan [Abstract]  
2013, remainder thereof $ 0
2014 9,563
2015 13,813
2016 17,000
2017 29,712
Total $ 70,088
XML 27 R9.htm IDEA: XBRL DOCUMENT v2.4.0.6
FINANCIAL INSTRUMENTS
3 Months Ended
Mar. 31, 2013
FINANCIAL INSTRUMENTS [Abstract]  
FINANCIAL INSTRUMENTS
NOTE 4—FINANCIAL INSTRUMENTS
Investments in Debt and Equity Securities
The fair values of the Company's available-for-sale securities are based on quoted market prices and are included in cash and cash equivalents, available-for-sale securities—short-term and available-for-sale securities—long-term on the accompanying Condensed Consolidated Balance Sheets based on each respective security's maturity.
During the three months ended March 31, 2013, the Company liquidated its entire portfolio of available-for-sale securities. The available-for-sale securities were sold for total cash consideration of $9.4 million and the resulting net gain on sale of $0.1 million was recognized in Interest income and other, net in the accompanying Condensed Consolidated Statements of Operations.
The following is a summary of available-for-sale securities as of December 31, 2012 (in thousands):
 
 
 
Gross
 
 
Gross
 
 
 
 
Amortized
 
 
Unrealized
 
 
Unrealized
 
 
 
 
Cost
 
 
Gains
 
 
Losses
 
 
Fair Value
 
U.S. government obligations and agency securities
 
$
6,775
 
 
$
54
 
 
$
-
 
 
$
6,829
 
U.S. corporate debt
 
 
651
 
 
 
13
 
 
 
-
 
 
 
664
 
Foreign corporate debt and equity securities
 
 
1,837
 
 
 
36
 
 
 
-
 
 
 
1,873
 
Total available-for-sale securities
 
$
9,263
 
 
$
103
 
 
$
-
 
 
$
9,366
 

Non-Marketable Securities
As of March 31, 2013 and December 31, 2012, the carrying amounts of the Company's non-marketable securities, totaling $4.4 million for both years, equaled their estimated fair values. They consist primarily of an investment in a limited partnership investment fund who invests in companies in the life science industry and are located in the United States. The investments are initially valued at the purchase price and subsequently on the basis of inputs that market participants would use in pricing such investments. The portfolio of investments includes Level 1 publicly-traded equity securities and Level 3 equity securities and notes. There was no other-than-temporary impairment recognized during the three months ended March 31, 2013 and 2012. Net investment results are included in Interest income and other, net in the accompanying Condensed Consolidated Statements of Operations. Depending on market conditions, the Company may incur additional charges on this investment portfolio in the future.
Derivative Financial Instruments
The Company derives a portion of its revenues in foreign currencies, predominantly in Europe and Japan, as part of its ongoing business operations. In addition, a portion of its assets is held in the nonfunctional currencies of its subsidiaries. The Company enters into foreign currency forward contracts to manage a portion of the volatility related to transactions that are denominated in foreign currencies. The Company's foreign currency forward contracts are entered into for periods consistent with the related underlying exposures and do not constitute positions that are independent of those exposures. The Company's accounting policies for these instruments are based on whether the instruments are classified as designated or non-designated hedging instruments. The Company recognizes derivatives on its accompanying Condensed Consolidated Balance Sheets at fair value. The effective portions of designated cash flow hedges are recorded in other comprehensive income ("OCI") until the hedged item is recognized in earnings. As of March 31, 2013, the Company's existing foreign currency forward exchange contracts mature within 12 months. The deferred amount related to the Company's derivatives currently recorded in OCI and expected to be recognized into earnings over the next 12 months is a net gain of $1.1 million. Derivatives that are not designated as hedging instruments and the ineffective portions of cash flow hedges are adjusted to fair value through earnings.
Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in OCI associated with such derivative instruments are reclassified immediately into operations through Interest income and other, net. Any subsequent changes in fair value of such derivative instruments are reflected in Interest income and other, net unless they are re-designated as hedges of other transactions. During the three months ended March 31, 2013, the Company recognized $0.2 million in net gains in Interest income and other, net, related to the loss of hedge designation on a portion of cash flow hedges related to the Japanese yen that were deemed ineffective due to lower-than-forecasted revenue from Japan. No additional hedges are deemed ineffective as of March 31, 2013. No cash flow hedges were de-designated during the three months ended March 31, 2012.
Under the Credit Agreement as defined in Note 9. "Long-Term Obligations", the Company is required to maintain derivative contracts to protect against fluctuations in interest rates with respect to at least 35% of the aggregate principal amount of the Term Loan, as defined in Note 9. "Long-Term Obligations," then outstanding, with such derivative contracts being required to have at least a three-year term. Accordingly, the Company has entered into an interest rate swap (the "Interest Rate Swap") for which the notional amount was originally set at $27.5 million, with quarterly reduction to the notional amount consistent with the mandatory amortization schedule of the Term Loan. The Interest Rate Swap calls for quarterly fixed rate payments of 1.70% of the notional amount in exchange for a variable rate quarterly receipts equal to a 3-month LIBOR rate with a floor of 1.50%. The Interest Rate Swap terminates on June 25, 2015.
The Company did not designate the Interest Rate Swap as a hedging instrument and will recognize adjustments to fair value through Interest and other income on the accompanying Condensed Consolidated Statements of Operations at each reporting date. As of March 31, 2013, the fair value of the Interest Rate Swap was $0.1 million.
As of March 31, 2013 and December 31, 2012, the total notional values of the Company's derivative assets and liabilities were as follows (in thousands):
 
March 31,
 
 
December 31,
 
 
2013
 
 
2012
 
Euro
 
$
17,418
 
 
$
16,933
 
Japanese yen
 
 
6,192
 
 
 
10,542
 
British pound
 
 
4,419
 
 
 
4,278
 
Interest rate swap
 
 
27,519
 
 
 
27,519
 
Total
 
$
55,548
 
 
$
59,272
 

Other than the Interest Rate Swap, the Company did not have any derivative assets or liabilities that were not designated or qualifying as hedges at either March 31, 2013 or December 31, 2012.
As a result of the use of derivative instruments, the Company is exposed to the risk that the counterparties may be unable to meet the terms of the underlying agreements. To mitigate this risk, only contracts with carefully selected highly-rated major financial institutions are entered into. In the event of non-performance by these counterparties, the asset position carrying values of the financial instruments represent the maximum amount of loss that can be incurred; however, no losses as a result of counterparty defaults are expected. The Company does not require and is not required to pledge collateral for these financial instruments. The Company does not enter into derivative contracts for trading or speculative purposes and is not party to any leveraged derivative instruments.
The following table shows the Company's derivative assets and liabilities measured at fair value as reflected on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012 (in thousands):
March 31,
December 31,
Balance Sheet
2013
2012
Classification
Derivative assets:
   
Foreign exchange contracts
$
1,321
$
842
 Other current assets
Derivative liabilities:
   
Foreign exchange contracts
172
752
 Accrued liabilities
Interest rate swap
78
77
 Accrued liabilities

The following table shows the effect, net of tax, of the Company's derivative instruments on the accompanying Condensed Consolidated Statements of Operations and OCI for the three months ended March 31, 2013 and 2012 (in thousands):
 
Three Months Ended
 
 
March 31,
 
 
 
2013
 
 
2012
 
Derivatives in cash flow hedging relationships:
 
 
 
 
Net gain (loss) recognized in OCI, net of tax (1)
 
$
1,086
 
 
$
(516
)
Net gain (loss) reclassified from accumulated OCI into Revenue, net of tax (2)
 
 
825
 
 
 
518
 
Net gain (loss) reclassified from accumulated OCI into Interest income and other, net, net of tax (3)
 
 
158
 
 
 
-
 
Net gain (loss) recognized in Interest income and other, net, net of tax (4)
 
 
15
 
 
 
25
 
Derivatives not designated as hedging relationships:
 
 
 
 
 
 
 
 
Net gain (loss) recognized in Interest income and other, net, net of tax (5)
 
 
143
 
 
 
(148
)
(1)
Net change in the fair value of the effective portion classified in OCI
(2)
Effective portion classified as Revenue
(3)
Ineffective portion classified as Interest income and other, net
(4)
Amount excluded from effectiveness testing classified as Interest income and other, net
(5)
Classified in Interest and other, net
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INVENTORIES, Fair Value Step-Up in Basis (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
INVENTORIES [Abstract]  
Inventory, Step Up Adjustment $ 14,749
Cost of goods sold inventory step-up, amortization $ 4,589

XML 31 R29.htm IDEA: XBRL DOCUMENT v2.4.0.6
NET LOSS PER COMMON SHARE (Tables)
3 Months Ended
Mar. 31, 2013
NET LOSS PER COMMON SHARE (Tables) [Abstract]  
Securities excluded from diluted earnings per common share on an actual outstanding basis
The potential dilutive securities excluded from diluted earnings per common share were as follows (in thousands):
 
Three Months Ended March 31,
 
 
2013
  
2012
 
Employee stock compensation plans
  
5,994
   
6,020
 
Restricted stock subject to repurchase
  
3,861
   
2,469
 
Convertible notes
  
17,878
   
2,267
 
Total
  
27,733
   
10,756
 
XML 32 R28.htm IDEA: XBRL DOCUMENT v2.4.0.6
LONG-TERM DEBT OBLIGATIONS (Tables)
3 Months Ended
Mar. 31, 2013
LONG-TERM DEBT OBLIGATIONS [Abstract]  
Schedule of Maturities of Long-term Debt
The Term Loan is scheduled to amortize in quarterly installments in amounts resulting in an annual amortization of 10% during the first year, 15% during the second year, 15% during the third year, 20% during the fourth year and 40% during the fifth year after June 25, 2012. The principal amount of unpaid maturities per the Credit Agreement is as follows (in thousands):
2013, remainder thereof
 
$
-
 
2014
 
 
9,563
 
2015
 
 
13,813
 
2016
 
 
17,000
 
2017
 
 
29,712
 
Total
 
$
70,088
 

XML 33 R44.htm IDEA: XBRL DOCUMENT v2.4.0.6
GOODWILL AND INTANGIBLE ASSETS (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Definite lived intangible assets [Abstract]  
Beginning Carrying Value Of Finite-Lived Intangible Assets $ 255,717
Finite-Lived Intangible Assets Acquired (963)
Ending Carrying Value Of Finite-Lived Intangible Assets 254,754
Finite-Lived Intangible Assets, Accumulated Amortization (102,999)
Amortization of Intangible Assets (5,970)
Finite-Lived Intangible Assets, Accumulated Amortization (108,969)
Finite-Lived Intangible Assets, Net, Beginning Balance 152,718
Finite-Lived Intangible Assets, Net, Ending Balance 145,785
Weighted Average Useful Life 12 years
Cumulative Translation Adjustment, Net of Tax, Period Increase (Decrease), Accumulated Amortization, Carrying Value 1,298
Cumulative Translation Adjustment, Net of Tax, Period Increase (Decrease), Accumulated Amortization 71
Expected future annual amortization expense [Abstract]  
2013, remainder thereof 17,470
2014 20,770
2015 14,628
2016 13,775
2017 12,098
Thereafter 67,044
Total 145,785
Schedule of Goodwill [Rollforward}  
Balance at December 31, 2012 159,736
Goodwill, Translation Adjustments (1,398)
Balance at December 31, 2012 158,338
Customer relationships [Member]
 
Definite lived intangible assets [Abstract]  
Beginning Carrying Value Of Finite-Lived Intangible Assets 76,874
Finite-Lived Intangible Assets Acquired (650)
Ending Carrying Value Of Finite-Lived Intangible Assets 76,224
Finite-Lived Intangible Assets, Accumulated Amortization (14,346)
Amortization of Intangible Assets (2,088)
Finite-Lived Intangible Assets, Accumulated Amortization (16,434)
Finite-Lived Intangible Assets, Net, Beginning Balance 62,528
Finite-Lived Intangible Assets, Net, Ending Balance 59,790
Expected future annual amortization expense [Abstract]  
Total 59,790
Developed technologies [Member]
 
Definite lived intangible assets [Abstract]  
Beginning Carrying Value Of Finite-Lived Intangible Assets 76,814
Finite-Lived Intangible Assets Acquired (649)
Ending Carrying Value Of Finite-Lived Intangible Assets 76,165
Finite-Lived Intangible Assets, Accumulated Amortization (18,489)
Amortization of Intangible Assets (1,983)
Finite-Lived Intangible Assets, Accumulated Amortization (20,472)
Finite-Lived Intangible Assets, Net, Beginning Balance 58,325
Finite-Lived Intangible Assets, Net, Ending Balance 55,693
Expected future annual amortization expense [Abstract]  
Total 55,693
Trademarks and tradenames [Member]
 
Definite lived intangible assets [Abstract]  
Beginning Carrying Value Of Finite-Lived Intangible Assets 17,818
Finite-Lived Intangible Assets Acquired (10)
Ending Carrying Value Of Finite-Lived Intangible Assets 17,808
Finite-Lived Intangible Assets, Accumulated Amortization (3,009)
Amortization of Intangible Assets (1,261)
Finite-Lived Intangible Assets, Accumulated Amortization (4,270)
Finite-Lived Intangible Assets, Net, Beginning Balance 14,809
Finite-Lived Intangible Assets, Net, Ending Balance 13,538
Expected future annual amortization expense [Abstract]  
Total 13,538
Other contractual agreements [Member]
 
Definite lived intangible assets [Abstract]  
Beginning Carrying Value Of Finite-Lived Intangible Assets 3,055
Finite-Lived Intangible Assets Acquired (30)
Ending Carrying Value Of Finite-Lived Intangible Assets 3,025
Finite-Lived Intangible Assets, Accumulated Amortization (785)
Amortization of Intangible Assets (615)
Finite-Lived Intangible Assets, Accumulated Amortization (1,400)
Finite-Lived Intangible Assets, Net, Beginning Balance 2,270
Finite-Lived Intangible Assets, Net, Ending Balance 1,625
Expected future annual amortization expense [Abstract]  
Total 1,625
Licenses [Member]
 
Definite lived intangible assets [Abstract]  
Beginning Carrying Value Of Finite-Lived Intangible Assets 81,156
Finite-Lived Intangible Assets Acquired 376
Ending Carrying Value Of Finite-Lived Intangible Assets 81,532
Finite-Lived Intangible Assets, Accumulated Amortization (66,370)
Amortization of Intangible Assets (23)
Finite-Lived Intangible Assets, Accumulated Amortization (66,393)
Finite-Lived Intangible Assets, Net, Beginning Balance 14,786
Finite-Lived Intangible Assets, Net, Ending Balance 15,139
Expected future annual amortization expense [Abstract]  
Total $ 15,139
XML 34 R30.htm IDEA: XBRL DOCUMENT v2.4.0.6
SEGMENT AND GEOGRAPHIC INFORMATION (Tables)
3 Months Ended
Mar. 31, 2013
SEGMENT AND GEOGRAPHIC INFORMATION [Abstract]  
Schedule of Segment Reporting Information, by Segment [Table Text Block]
The following table shows revenue and income (loss) from operations by reportable operating segment for the three months ended March 31, 2013 and 2012 (in thousands):
 
Three Months Ended
 
 
March 31,
 
 
2013
  
2012
 
Revenue:
 
  
 
Affymetrix Core
 
$
58,937
  
$
65,247
 
eBioscience
  
19,008
   
-
 
Totals
 
$
77,945
  
$
65,247
 
Loss from operations:
        
Affymetrix Core
 
$
(7,841
)
 
$
(3,352
)
eBioscience
  
(4,365
)
  
-
 
Totals
 
$
(12,206
)
 
$
(3,352
)
XML 35 R31.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Beginning AOCI Balance $ 6,302  
Other comprehensive income loss before reclassifications, net of tax (1,232)  
Reclassification From Accumulated Other Comprehensive Income Current Period Net Of Tax (1,082)  
Ending AOCI Balance 3,988  
Gain on Cash Flow Hedge Ineffectiveness 158 0
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax [Member]
   
Beginning AOCI Balance 5,374  
Other comprehensive income loss before reclassifications, net of tax (3,125)  
Reclassification From Accumulated Other Comprehensive Income Current Period Net Of Tax 0  
Ending AOCI Balance 2,249  
Accumulated Other Comprehensive Income Loss Available- For- Sale Securities And Non- Marketable Investments Adjustment Before Reclassification Adjustments Net Of Tax [Member]
   
Beginning AOCI Balance 896  
Other comprehensive income loss before reclassifications, net of tax (176)  
Reclassification From Accumulated Other Comprehensive Income Current Period Net Of Tax (99)  
Ending AOCI Balance 621  
Accumulated Other Comprehensive Income Loss Cumulative Changes In Net Gain Loss From Cash Flow Hedges Effect Net Of Tax [Member]
   
Beginning AOCI Balance 32  
Other comprehensive income loss before reclassifications, net of tax 2,069  
Reclassification From Accumulated Other Comprehensive Income Current Period Net Of Tax (983)  
Ending AOCI Balance $ 1,118  
XML 36 R8.htm IDEA: XBRL DOCUMENT v2.4.0.6
FAIR VALUE MEASUREMENTS
3 Months Ended
Mar. 31, 2013
FAIR VALUE MEASUREMENTS [Abstract]  
FAIR VALUE MEASUREMENTS
NOTE 3—FAIR VALUE
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.
A fair value hierarchy was established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value are as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2013 and December 31, 2012 (in thousands):
 
Quoted
 
 
Significant
 
 
 
 
Prices
 
 
Other
 
 
 
 
In Active
 
 
Observable
 
 
 
 
Markets
 
 
Inputs
 
 
 
 
(Level 1)
 
 
(Level 2)
 
 
Total
 
March 31, 2013:
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
Derivative assets
 
$
-
 
 
$
1,321
 
 
$
1,321
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Derivative liabilities
 
$
-
 
 
$
250
 
 
$
250
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012:
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government obligations and agency securities
 
$
-
 
 
$
6,829
 
 
$
6,829
 
U.S. corporate debt
 
 
-
 
 
 
664
 
 
 
664
 
Foreign corporate debt and equity securities
 
 
-
 
 
 
1,873
 
 
 
1,873
 
Total
 
$
-
 
 
$
9,366
 
 
$
9,366
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative assets
 
$
-
 
 
$
842
 
 
$
842
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Derivative liabilities
 
$
-
 
 
$
829
 
 
$
829
 

The Company's Level 2 input assumptions are determined based on review of third-party sources.
The fair value of the Company's derivative assets and liabilities is determined based on the estimated consideration the Company would pay or receive to terminate these agreements on the reporting date. The derivative assets and liabilities are located in Other current assets and Accrued liabilities, respectively, in the accompanying Condensed Consolidated Balance Sheets.
As of March 31, 2013 and December 31, 2012, the Company had no financial assets or liabilities measured on a recurring basis requiring Level 3 classification, including those that have unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets and liabilities.
Debt Obligations
Debt obligations are not recorded at fair value on a recurring basis and are carried at amortized cost. The fair value of the 4.00% Convertible Senior Notes ("4.00% Notes") is based on quoted market prices at the balance sheet date and categorized within Level 1 of the fair value hierarchy. At March 31, 2013 and April 25, 2013, the fair value balances were approximately $109.2 million and $90.0 million, respectively. The fair value of the third-party financing ("Term Loan") approximated its carrying value and is categorized within Level 3 of the fair value hierarchy. At March 31, 2013, the fair value of the Term Loan was $70.1 million. See Note 9. "Debt Obligations" for further information on the Company's debt obligations.
XML 37 R32.htm IDEA: XBRL DOCUMENT v2.4.0.6
ACQUISITION, Part I (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
ACQUISITION [Abstract]    
Revenue, Net, eBioscience specific $ 19,008 $ 0
Net Loss, eBioscience specific $ 3,920 $ 0
XML 38 R40.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE, Performance-Based Awards (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Stockholders Equity And Share Based Compensation Expense [Abstract]  
PRSU: Award requisite service period 4 years
2011 CEO PRSU grants: Grants in period, Net of forfeitures (in shares) 240
Actual 2011 CEO PRSU Grants Achieved 85
2011 CEO PRSU grants: Grant date intrinsic value achieved (in dollars per share) $ 4.67
Expected 2011 CEO PRSU grants to be achieved (in shares) 50
2011 CEO PRSU grants: Nonvested awards, Compensation cost not yet recognized $ 273
PRSUs granted, 2012 917
Share-based compensation arrangement by share-based payment award, options, Grants in Period, Grant Date Intrinsic Value PRSUs, 2012 $ 4.16
Expected PRSUs Granted, 2012, to be Achieved 66.00%
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not Yet Recognized PRSU, 2012 1,047
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures, 2013 340
Share-based compensation arrangement by share-based payment award, options, Grants in Period, Grant Date Intrinsic Value, 2013 $ 3.84
Expected PRSUs Granted, 2013, to be Achieved 85.00%
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, 2013 $ 772
XML 39 R53.htm IDEA: XBRL DOCUMENT v2.4.0.6
RELATED PARTY TRANSACTIONS (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
RELATED PARTY TRANSACTIONS [Abstract]  
Minimum royalty fee from related party $ 100
Royalties earned $ 0
XML 40 R2.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Mar. 31, 2013
Dec. 31, 2012
Current assets:    
Cash and cash equivalents $ 37,496 $ 25,671
Restricted cash 690 699
Available-for-sale securities-short-term portion 0 9,366
Accounts receivable, net 52,111 53,893
Inventories, net-short term portion 74,196 72,691
Deferred tax assets-short-term portion 317 359
Prepaid expenses and other current assets 10,076 10,126
Total current assets 174,886 172,805
Property and equipment, net 25,868 28,663
Inventory, Net-Long-Term Portion 8,876 11,772
Goodwill 158,338 159,736
Intangible assets, net 145,785 152,718
Deferred tax assets-long-term portion 1,916 3,394
Other long-term assets 13,707 15,206
Total assets 529,376 544,294
Current liabilities:    
Accounts payable and accrued liabilities 49,019 50,355
Convertible notes-short-term portion 0 3,855
Term loan-short-term portion 12,750 12,713
Deferred revenue-short-term portion 18,911 8,498
Total current liabilities 80,680 75,421
Deferred revenue-long-term portion 4,041 3,450
Other long-term liabilities 21,010 22,689
Convertible notes 105,000 105,000
Term loan-long-term portion 57,338 60,563
Stockholders' equity:    
Common stock 711 710
Additional paid-in capital 761,435 759,549
Accumulated other comprehensive income 3,988 6,302
Accumulated deficit (504,827) (489,390)
Total stockholders' equity 261,307 277,171
Total liabilities and stockholders' equity $ 529,376 $ 544,294
XML 41 R45.htm IDEA: XBRL DOCUMENT v2.4.0.6
WARRANTIES (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Changes in Entity's Product Warranty Liability [Abstract]  
Balance at beginning of the period $ 802
Additions charged to cost of product sales 221
Balance at the end of the period $ 1,023
XML 42 R6.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles ("GAAP") for complete financial statements. The condensed consolidated financial statements include the accounts of Affymetrix, Inc. and its wholly owned subsidiaries ("Affymetrix" or the "Company"). All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring entries) considered necessary for a fair presentation have been included.
Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying Condensed Consolidated Balance Sheet as of March 31, 2013, and the Condensed Consolidated Statements of Operations, Comprehensive Loss and Cash Flows for the three months ended March 31, 2013 and 2012 are unaudited. The Condensed Consolidated Balance Sheet as of December 31, 2012 was derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 1, 2013. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and the accompanying notes to those financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.
There have been no material changes to the Company's significant accounting policies as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 except as otherwise described below:
Comprehensive (Loss) Income
Comprehensive income (loss) is comprised of net loss and other comprehensive (loss) income. Other comprehensive (loss) income includes foreign currency translation adjustments, unrealized gains and losses on the Company's available-for-sale securities that are excluded from net loss and unrealized gains and losses on cash flow hedges. Total comprehensive (loss) income has been disclosed in the accompanying Condensed Consolidated Statements of Comprehensive Loss.
During the three months ended March 31, 2013, the Company adopted Accounting Standards Update ("ASU") 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income which requires filers to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net loss. The following table summarizes the components of accumulated other comprehensive income, net of tax, for the three months ended March 31, 2013 (in thousands):
 
December 31,
 
 
Increase/
 
 
Reclassification
 
 
March 31,
 
 
2012
 
 
(Decrease)
 
 
Adjustments
 
 
2013
 
Foreign currency translation adjustments
 
$
5,374
 
 
$
(3,125
)
 
$
-
 
 
$
2,249
 
Unrealized change in available-for-sale and non-marketable securities
 
 
896
 
 
 
(176
)
 
 
(99
)
 (1)
 
621
 
Unrealized change in cash flow hedges
 
 
32
 
 
 
2,069
 
 
 
(983
)
 (2)
 
1,118
 
Total accumulated other comprehensive income, net of tax
 
$
6,302
 
 
$
(1,232
)
 
$
(1,082
)
 
$
3,988
 
(1) Net gain recognized in Interest income and other, net.
(2) Net gain recognized in Revenue, except for $0.2 million gain that was recognized in Interest income and other, net due to hedging ineffectiveness. See Note 3. "Financial Instruments–Derivative Financial Instruments" for further information.
XML 43 R35.htm IDEA: XBRL DOCUMENT v2.4.0.6
FINANCIAL INSTRUMENTS, Non-Marketable Securities (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Dec. 31, 2012
FINANCIAL INSTRUMENTS [Abstract]      
Carrying value of non marketable securities after recording OTTI $ 4,361   $ 4,397
Recorded impairment charges on non marketable securities $ 0 $ 0  
XML 44 R22.htm IDEA: XBRL DOCUMENT v2.4.0.6
FAIR VALUE MEASUREMENTS (Tables)
3 Months Ended
Mar. 31, 2013
FAIR VALUE MEASUREMENTS [Abstract]  
Financial assets and liabilities measured at fair value on a recurring basis
The following table represents the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2013 and December 31, 2012 (in thousands):
 
Quoted
 
 
Significant
 
 
 
 
Prices
 
 
Other
 
 
 
 
In Active
 
 
Observable
 
 
 
 
Markets
 
 
Inputs
 
 
 
 
(Level 1)
 
 
(Level 2)
 
 
Total
 
March 31, 2013:
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
Derivative assets
 
$
-
 
 
$
1,321
 
 
$
1,321
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Derivative liabilities
 
$
-
 
 
$
250
 
 
$
250
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012:
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government obligations and agency securities
 
$
-
 
 
$
6,829
 
 
$
6,829
 
U.S. corporate debt
 
 
-
 
 
 
664
 
 
 
664
 
Foreign corporate debt and equity securities
 
 
-
 
 
 
1,873
 
 
 
1,873
 
Total
 
$
-
 
 
$
9,366
 
 
$
9,366
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative assets
 
$
-
 
 
$
842
 
 
$
842
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Derivative liabilities
 
$
-
 
 
$
829
 
 
$
829
 
XML 45 R36.htm IDEA: XBRL DOCUMENT v2.4.0.6
FINANCIAL INSTRUMENTS, Derivative Instruments (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Dec. 31, 2012
FINANCIAL INSTRUMENTS [Abstract]      
Maximum existing foreign currency forward exchange contracts maturity period 12 months    
Maximum expected period to recognized deferred amount into earnings 12 months    
Expected deferred amount to be recognized in OCI $ 1,118    
Gain on cash flow ineffectiveness 158 0  
Description of Interest Rate Derivative Instruments Not Designated as Hedging Instruments Activities Accordingly, the Company has entered into an interest rate swap (the "Interest Rate Swap") for which the notional amount was originally set at $27.5 million, with quarterly reduction to the notional amount consistent with the mandatory amortization schedule of the Term Loan. The Interest Rate Swap calls for quarterly fixed rate payments of 1.70% of the notional amount in exchange for a variable rate quarterly receipts equal to a 3-month LIBOR rate with a floor of 1.50%. The Interest Rate Swap terminates on June 25, 2015.    
Notional Amount of Interest Rate Derivative Instruments Not Designated as Hedging Instruments 27,519    
Interest Rate Derivative Instruments Not Designated as Hedging Instruments, Liability at Fair Value 78    
Notional values of the Company's foreign currency forward contracts [Abstract]      
Contracts Qualifying as Hedges 55,548   59,272
Other Current Assets [Member] | Foreign Exchange Contract [Member]
     
Derivative Assets [Abstract]      
Derivative Asset, Fair Value, Gross Asset 1,321   842
Accrued expenses [Member] | Foreign Exchange Contract [Member]
     
Derivative Liabilities [Abstract]      
Derivative Liability, Fair Value, Gross Liability 172   752
Accrued expenses [Member] | Interest Rate Swap [Member]
     
Derivative Liabilities [Abstract]      
Derivative Liability, Fair Value, Gross Liability 78   77
Euro [Member}
     
Notional values of the Company's foreign currency forward contracts [Abstract]      
Contracts Qualifying as Hedges 17,418   16,933
Japanese yen [Member]
     
Notional values of the Company's foreign currency forward contracts [Abstract]      
Contracts Qualifying as Hedges 6,192   10,542
British pound [Member]
     
Notional values of the Company's foreign currency forward contracts [Abstract]      
Contracts Qualifying as Hedges 4,419   4,278
Swap [Member]
     
Notional values of the Company's foreign currency forward contracts [Abstract]      
Contracts Qualifying as Hedges $ 27,519   $ 27,519
XML 46 R24.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE (Tables)
3 Months Ended
Mar. 31, 2013
Stockholders Equity And Share Based Compensation Expense [Abstract]  
Share-based compensation expense
The Company recognized share-based compensation expense as follows (in thousands):
 
Three Months Ended
 
 
March 31,
 
 
2013
 
 
2012
 
Costs of product sales
 
$
167
 
 
$
372
 
Research and development
 
 
329
 
 
 
367
 
Selling, general and administrative
 
 
1,339
 
 
 
1,653
 
Total share-based compensation expense
 
$
1,835
 
 
$
2,392
 
Fair value of options estimated at the date of grant with weighted-average assumptions
The fair value of options was estimated at the date of grant using the Black Scholes Merton option pricing model with the following weighted‑average assumptions:
 
Three Months Ended
 
 
March 31,
 
 
2013
 
 
2012
 
Risk free interest rate
 
 
0.8
%
 
 
1.0
%
Expected dividend yield
 
 
0.0
%
 
 
0.0
%
Expected volatility
 
 
68
%
 
 
67
%
Expected option term (in years)
 
 
4.6
 
 
 
4.6
 
Assumptions Used to Value Employees Stock Purchase Rights
During the three months ended March 31, 2013 and 2012, the fair value of shares under the ESPP was estimated using the following assumptions:
 
Three Months Ended
 
 
March 31,
 
 
2013
 
 
2012
 
Risk free interest rate
 
 
0.1
%
 
 
0.1
%
Expected dividend yield
 
 
0.0
%
 
 
0.0
%
Expected volatility
 
 
52
%
 
 
67
%
Expected term (in years)
 
 
0.6
 
 
 
0.8
 
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XML 48 R7.htm IDEA: XBRL DOCUMENT v2.4.0.6
ACQUISITION
3 Months Ended
Mar. 31, 2013
ACQUISITION [Abstract]  
ACQUISITION
NOTE 2—ACQUISITION
On June 25, 2012 (the "Acquisition Date"), pursuant to the terms of an Amended and Restated Agreement and Plan of Merger (the "Acquisition Agreement"), a wholly-owned subsidiary of the Company merged with and into eBioscience, Inc. ("eBioscience") with eBioscience surviving as a wholly-owned subsidiary of the Company (the "Acquisition"). eBioscience specializes in the development, manufacturing, marketing and distribution of research tools in the areas of flow cytometry, immunoassays, microscopic imaging and other protein-based analyses.
The results of operations of the acquired eBioscience business and the fair values of the assets acquired and liabilities assumed have been included in the accompanying Consolidated Financial Statements since the Acquisition. For the three months ended March 31, 2013, the Company recorded $19.0 million in revenue and recognized a net loss of $3.9 million from eBioscience. No amounts were recognized from eBioscience during the three months ended March 31, 2012. The Company considered the eBioscience fair value analysis to be final as of December 31, 2012.
XML 49 R3.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
REVENUE:    
Product sales $ 71,557 $ 58,491
Services and Other 6,388 6,756
Total revenue 77,945 65,247
COSTS AND EXPENSES:    
Cost of product sales 34,433 23,565
Cost of services and other 3,507 3,779
Research and development 12,248 13,331
Selling, general and administrative 35,121 27,924
Restructuring charges 4,842 0
Total costs and expenses 90,151 68,599
Loss from operations (12,206) (3,352)
Interest income and other, net 342 26
Interest expense 2,898 980
Loss before income taxes (14,762) (4,306)
Income tax provision (benefit) 675 (89)
Net loss $ (15,437) $ (4,217)
Basic and diluted net loss per common share (in dollars per share) $ (0.22) $ (0.06)
Shares used in computing basic and diluted net loss per common share (in shares) 70,919 69,977
XML 50 R17.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAXES
3 Months Ended
Mar. 31, 2013
INCOME TAXES [Abstract]  
INCOME TAXES
NOTE 12—INCOME TAXES
The provision for income tax for the first quarter of 2013 was approximately $0.7 million which primarily consists of a provision for foreign taxes.
Due to the Company's history of cumulative operating losses, management concluded that, after considering all the available objective evidence, it is not more likely than not that all the Company's net deferred tax assets will be realized. Accordingly, all of the U.S. deferred tax assets continue to be subject to a valuation allowance as of March 31, 2013.
As of March 31, 2013, there have been no material changes to the total amount of unrecognized tax benefits.
XML 51 R1.htm IDEA: XBRL DOCUMENT v2.4.0.6
Document and Entity Information (USD $)
3 Months Ended
Mar. 31, 2013
Apr. 25, 2013
Dec. 31, 2012
Document and Entity Information [Abstract]      
Entity Registrant Name AFFYMETRIX INC    
Entity Central Index Key 0000913077    
Current Fiscal Year End Date --12-31    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Filer Category Accelerated Filer    
Entity Public Float     $ 327,619,125
Entity Common Stock, Shares Outstanding   71,098,356  
Document Fiscal Year Focus 2013    
Document Fiscal Period Focus Q1    
Document Type 10-Q    
Amendment Flag false    
Document Period End Date Mar. 31, 2013    
XML 52 R18.htm IDEA: XBRL DOCUMENT v2.4.0.6
SEGMENT AND GEOGRAPHIC INFORMATION
3 Months Ended
Mar. 31, 2013
SEGMENT AND GEOGRAPHIC INFORMATION [Abstract]  
SEGMENT AND GEOGRAPHIC INFORMATION
NOTE 13—SEGMENT AND GEOGRAPHIC INFORMATION
The Company reports segment information on the "management" approach which designates the internal reporting used by management for making decisions and assessing performance as the source of the Company's reportable segments. The Company has determined that its Chief Executive Officer is the Company's chief operating decision maker ("CODM") as he is responsible for reviewing and approving investments in the Company's technology platforms and manufacturing infrastructure. Prior to 2012, the Company was organized as one reportable operating segment. Subsequent to the Acquisition, the Company's business was reorganized into two reportable operating segments for financial reporting purposes, Affymetrix Core and eBioscience.
In 2012, the Company reorganized its business in the following four business units: Expression, Genetic Analysis and Clinical Applications, Life Science Reagents and Corporate. The Expression business unit markets the Company's gene expression products and services, including in vitro transcription and other whole transcript arrays and QuantiGene line targeted at low-to-mid-plex products. The Genetic Analysis and Clinical Applications business unit markets the Company's genotyping and clinical arrays, including cytogenetics products. The Life Science Reagents business unit targets the life science reagent markets, marketing reagents, enzymes, purification kits and biochemicals used by life science researchers. The Corporate business unit is comprised primarily of revenue from royalty arrangements, and field revenue from services provided to customers by the Company. The Company determined that its manufacturing operations are centralized and based on platforms that are used to produce various products that serve multiple applications and markets. Additionally, the business units share research, development and common corporate services that provide capital, infrastructure and functional support. Based on the facts and circumstances, the Company concluded that the four business units represent one reportable operating segment, Affymetrix Core.
The Company's other reportable operating segment, eBioscience, was acquired in the second quarter of 2012 and operates as a separate business unit. eBioscience specializes in the development, manufacturing, marketing and distribution of research tools in the areas of flow cytometry, immunoassays, microscopic imaging and other protein-based analyses. The Acquisition allows the Company to expand addressable markets and continue to diversify the business beyond genomics discovery into cell and protein analysis.
The Company evaluates the performance of its reportable operating segments based on revenue and income (loss) from operations. Revenue is allocated to each business unit based on product codes excluding eBioscience whose business is primarily operated on a stand-alone basis.
The following table shows revenue and income (loss) from operations by reportable operating segment for the three months ended March 31, 2013 and 2012 (in thousands):
 
Three Months Ended
 
 
March 31,
 
 
2013
 
 
2012
 
Revenue:
 
 
 
 
Affymetrix Core
 
$
58,937
 
 
$
65,247
 
eBioscience
 
 
19,008
 
 
 
-
 
Totals
 
$
77,945
 
 
$
65,247
 
Loss from operations:
 
 
 
 
 
 
 
 
Affymetrix Core
 
$
(7,841
)
 
$
(3,352
)
eBioscience
 
 
(4,365
)
 
 
-
 
Totals
 
$
(12,206
)
 
$
(3,352
)
XML 53 R4.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS    
Net loss $ (15,437) $ (4,217)
Other comprehensive (loss) income, net of tax [Abstract]    
Foreign currency translation adjustment (3,125) (155)
Unrealized change in available-for-sale and non-marketable securities (275) 605
Unrealized change in cash flow hedges 1,086 (516)
Net change in other comprehensive income (loss), net of tax (2,314) (66)
Comprehensive loss $ (17,751) $ (4,283)
XML 54 R12.htm IDEA: XBRL DOCUMENT v2.4.0.6
GOODWILL AND INTANGIBLE ASSETS
3 Months Ended
Mar. 31, 2013
GOODWILL AND INTANGIBLE ASSETS [Abstract]  
GOODWILL AND INTANGIBLE ASSETS
NOTE 7—GOODWILL AND INTANGIBLE ASSETS
The gross carrying amounts and net book values of the Company's definite-lived intangible assets are as follows (in thousands):
 
Carrying Value, Gross
  
Accumulated Amortization
  
Intangible Assets, Net
 
Weighted
 
December 31,
  
Increase/
  
March 31,
  
December 31,
  
(Increase)/
  
March 31,
  
December 31,
  
March 31,
 
Average
 
2012
  
(Decrease) (1)
  
2013
  
2012
  
Decrease (2)
  
2013
  
2012
  
2013
 
Useful Life
Customer relationships
 
$
76,874
  
$
(650
)
 
$
76,224
  
$
(14,346
)
 
$
(2,088
)
 
$
(16,434
)
 
$
62,528
  
$
59,790
 
12 years
Developed technologies
  
76,814
   
(649
)
  
76,165
   
(18,489
)
  
(1,983
)
  
(20,472
)
  
58,325
   
55,693
 
12 years
Trademarks and tradenames
  
17,818
   
(10
)
  
17,808
   
(3,009
)
  
(1,261
)
  
(4,270
)
  
14,809
   
13,538
 
5 years
Other contractual agreements
  
3,055
   
(30
)
  
3,025
   
(785
)
  
(615
)
  
(1,400
)
  
2,270
   
1,625
 
2 years
Licenses
  
81,156
   
376
   
81,532
   
(66,370
)
  
(23
)
  
(66,393
)
  
14,786
   
15,139
 
Variable
Total definite-lived intangible assets
 
$
255,717
  
$
(963
)
 
$
254,754
  
$
(102,999
)
 
$
(5,970
)
 
$
(108,969
)
 
$
152,718
  
$
145,785
 
(1)
Includes a decrease in carrying value of $1.3 million related to foreign currency translation
(2)
Includes a decrease in accumulated amortization of $0.1 million related to foreign currency translation
The expected future annual amortization expense of the Company's intangible assets is as follows (in thousands):
 
Amortization
 
For the Year Ending December 31,
 
Expense
 
2013, remainder thereof
 
$
17,470
 
2014
  
20,770
 
2015
  
14,628
 
2016
  
13,775
 
2017
  
12,098
 
Thereafter
  
67,044
 
Total
 
$
145,785
 

Change in the Company's goodwill at March 31, 2013 is as follows (in thousands):
Balance at December 31, 2012
 
$
159,736
 
Effects of foreign currency change
  
(1,398
)
Balance at March 31, 2013
 
$
158,338
 
XML 55 R11.htm IDEA: XBRL DOCUMENT v2.4.0.6
INVENTORIES
3 Months Ended
Mar. 31, 2013
INVENTORIES [Abstract]  
INVENTORIES
NOTE 6—INVENTORIES
At March 31, 2013 and December 31, 2012, inventories consisted of the following (in thousands):
 
March 31,
 
 
December 31,
 
 
2013
 
 
2012
 
Raw materials
 
$
12,520
 
 
$
11,167
 
Work-in-process
 
 
33,695
 
 
 
35,562
 
Finished goods
 
 
36,857
 
 
 
37,734
 
Total
 
$
83,072
 
 
$
84,463
 
 
 
 
 
 
 
 
 
 
Short-term portion
 
$
74,196
 
 
$
72,691
 
Long-term portion
 
$
8,876
 
 
$
11,772
 

Inventory at March 31, 2013 includes unamortized fair value step-up in basis of $14.7 million as a result of the Acquisition. Amortization expense on the fair value step-up during the three months ended March 31, 2013 was $4.6 million.
XML 56 R23.htm IDEA: XBRL DOCUMENT v2.4.0.6
FINANCIAL INSTRUMENTS (Tables)
3 Months Ended
Mar. 31, 2013
FINANCIAL INSTRUMENTS [Abstract]  
Summary of available-for-sale securities
The following is a summary of available-for-sale securities as of December 31, 2012 (in thousands):
 
 
 
Gross
 
 
Gross
 
 
 
 
Amortized
 
 
Unrealized
 
 
Unrealized
 
 
 
 
Cost
 
 
Gains
 
 
Losses
 
 
Fair Value
 
U.S. government obligations and agency securities
 
$
6,775
 
 
$
54
 
 
$
-
 
 
$
6,829
 
U.S. corporate debt
 
 
651
 
 
 
13
 
 
 
-
 
 
 
664
 
Foreign corporate debt and equity securities
 
 
1,837
 
 
 
36
 
 
 
-
 
 
 
1,873
 
Total available-for-sale securities
 
$
9,263
 
 
$
103
 
 
$
-
 
 
$
9,366
 
Notional values of entity's foreign currency forward contracts mature within 12 months
As of March 31, 2013 and December 31, 2012, the total notional values of the Company's derivative assets and liabilities were as follows (in thousands):
 
March 31,
 
 
December 31,
 
 
2013
 
 
2012
 
Euro
 
$
17,418
 
 
$
16,933
 
Japanese yen
 
 
6,192
 
 
 
10,542
 
British pound
 
 
4,419
 
 
 
4,278
 
Interest rate swap
 
 
27,519
 
 
 
27,519
 
Total
 
$
55,548
 
 
$
59,272
 
Entity's foreign currency derivatives measured at fair value
The following table shows the Company's derivative assets and liabilities measured at fair value as reflected on the accompanying Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012 (in thousands):
March 31,
December 31,
Balance Sheet
2013
2012
Classification
Derivative assets:
   
Foreign exchange contracts
$
1,321
$
842
 Other current assets
Derivative liabilities:
   
Foreign exchange contracts
172
752
 Accrued liabilities
Interest rate swap
78
77
 Accrued liabilities
Effect of entity's derivative instruments, net of tax, on Condensed Statements of Operations
The following table shows the effect, net of tax, of the Company's derivative instruments on the accompanying Condensed Consolidated Statements of Operations and OCI for the three months ended March 31, 2013 and 2012 (in thousands):
 
Three Months Ended
 
 
March 31,
 
 
 
2013
 
 
2012
 
Derivatives in cash flow hedging relationships:
 
 
 
 
Net gain (loss) recognized in OCI, net of tax (1)
 
$
1,086
 
 
$
(516
)
Net gain (loss) reclassified from accumulated OCI into Revenue, net of tax (2)
 
 
825
 
 
 
518
 
Net gain (loss) reclassified from accumulated OCI into Interest income and other, net, net of tax (3)
 
 
158
 
 
 
-
 
Net gain (loss) recognized in Interest income and other, net, net of tax (4)
 
 
15
 
 
 
25
 
Derivatives not designated as hedging relationships:
 
 
 
 
 
 
 
 
Net gain (loss) recognized in Interest income and other, net, net of tax (5)
 
 
143
 
 
 
(148
)
(1)
Net change in the fair value of the effective portion classified in OCI
(2)
Effective portion classified as Revenue
(3)
Ineffective portion classified as Interest income and other, net
(4)
Amount excluded from effectiveness testing classified as Interest income and other, net
(5)
Classified in Interest and other, net
XML 57 R19.htm IDEA: XBRL DOCUMENT v2.4.0.6
RELATED PARTY TRANSACTIONS
3 Months Ended
Mar. 31, 2013
RELATED PARTY TRANSACTIONS [Abstract]  
RELATED PARTY TRANSACTIONS
NOTE 14—RELATED PARTY TRANSACTIONS
In December 2011, the Company entered into an agreement under which it assigned one patent application and related know-how to Cellular Research, Inc. ("Cellular Research"), a company founded by the Company's Chairman, Dr. Stephen P.A. Fodor. Dr. Fodor also owns a majority of the shares of Cellular Research. Pursuant to the agreement, Cellular Research shall pay single digit royalties to Affymetrix on sales of products covered by the assigned technology, and starting in December 2015, an annual minimum fee of $100,000. Affymetrix shall also have a right of first refusal to collaborate with Cellular Research for the development of certain new products and to supply arrays to Cellular Research under certain terms and conditions. As of March 31, 2013, no royalties had been earned pertaining to this agreement.
XML 58 R15.htm IDEA: XBRL DOCUMENT v2.4.0.6
NET LOSS PER COMMON SHARE
3 Months Ended
Mar. 31, 2013
NET LOSS PER COMMON SHARE (Tables) [Abstract]  
NET LOSS PER COMMON SHARE [Text Block]
NOTE 10—NET LOSS PER COMMON SHARE
Basic net loss per common share is calculated using the weighted‑average number of common shares outstanding during the period less the weighted‑average shares subject to repurchase. Diluted net loss per common share gives effect to dilutive common stock subject to repurchase, stock options (calculated based on the treasury stock method), shares under the Company's ESPP and convertible debt (calculated using an as-if-converted method). Potentially dilutive securities are excluded from shares used in computing diluted net loss per common share if their effect would be anti-dilutive.
The potential dilutive securities excluded from diluted earnings per common share were as follows (in thousands):
 
Three Months Ended March 31,
 
 
2013
  
2012
 
Employee stock compensation plans
  
5,994
   
6,020
 
Restricted stock subject to repurchase
  
3,861
   
2,469
 
Convertible notes
  
17,878
   
2,267
 
Total
  
27,733
   
10,756
 
XML 59 R13.htm IDEA: XBRL DOCUMENT v2.4.0.6
WARRANTIES
3 Months Ended
Mar. 31, 2013
WARRANTIES [Abstract]  
WARRANTIES
NOTE 8—WARRANTIES
The Company provides for anticipated warranty costs at the time the associated product revenue is recognized. Product warranty costs are estimated based upon the Company's historical experience and the applicable warranty period. The Company periodically reviews the adequacy of its warranty reserve and adjusts, if necessary, the warranty percentage and accrual based on actual experience and estimated costs to be incurred. Information in regards to the changes in the Company's product warranty liability for the three months ended March 31, 2013 is as follows (in thousands):
Balance at December 31, 2012
 
$
802
 
Additions charged to cost of product sales
  
221
 
Balance at March 31, 2013
 
$
1,023
 
XML 60 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
LONG-TERM DEBT OBLIGATIONS
3 Months Ended
Mar. 31, 2013
LONG-TERM DEBT OBLIGATIONS [Abstract]  
LONG-TERM DEBT OBLIGATIONS
NOTE 9—LONG-TERM DEBT OBLIGATIONS
Term Loan
On June 25, 2012, the Company entered into a credit agreement (the "Credit Agreement") by, and among, Affymetrix and its domestic subsidiaries, and General Electric Capital Corporation ("GE Capital"), Silicon Valley Bank and other financial institutions party thereto from time to time (collectively, the "Lenders"), as well as certain securities affiliates of the Lenders. The Credit Agreement provides for the Term Loan in an aggregate principal amount of $85.0 million and a revolving credit facility in an aggregate principal amount of $15.0 million (the "Revolving Credit Facility" and, together with the Term Loan, the "Senior Secured Credit Facility"), each with a term of five years. As of March 31, 2013, the Company had borrowed a total of $85.0 million under the Term Loan which was used to finance a portion of the Acquisition.
At the option of the Company (subject to certain limitations), borrowings under the Credit Agreement bear interest at either a base rate or at the London Interbank Offered Rate ("LIBOR"), plus, in each case, an applicable margin. Under the Base Rate Option, interest will be at the base rate plus 4.00% per annum, calculated on the basis of the actual number of days elapsed in a year of 365 or 366 days (as applicable) and payable quarterly in arrears. The base rate will be equal to the greatest of (a) the rate last quoted by The Wall Street Journal (or another national publication selected by GE Capital) as the U.S. "Prime Rate," (b) the federal funds rate, plus 0.50% per annum and (c) LIBOR for an interest period of one month, plus 1.00% per annum. However, the base rate will not be less than a floor of 2.50% per annum. Under the LIBOR Option, interest will be determined based on interest periods to be selected by Affymetrix of one, two, three or six months (and, to the extent available to all relevant lenders, nine or 12 months) and will be equal to LIBOR, plus 5.00%, calculated based on the actual number of days elapsed in a 360-day year. However, LIBOR will be deemed not to be less than a floor of 1.50% per annum. Interest will be paid at the end of each interest period or, in the case of interest periods longer than three months, quarterly. In 2012, the Company entered into its Interest Rate Swap as required by the terms of the Credit Agreement with a third-party lending institution. Refer to Note 4. "Financial Instruments–Derivative Financial Instruments" for further information. At March 31, 2013, the applicable interest rate was approximately 6.50%.
The loans and other obligations under the Senior Secured Credit Facility are (i) guaranteed by substantially all of the Company's domestic subsidiaries (subject to certain exceptions and limitations) and (ii) secured by substantially all of the assets of Affymetrix and each guarantor (subject to certain exceptions and limitations).
The Credit Agreement requires the Company to maintain a fixed charge coverage ratio of at least 1.5 to 1.0, a senior leverage ratio (which is the ratio of senior debt to trailing 12 months' earnings before interest, taxes, depreciation, amortization and other one-time items ("EBITDAO") not exceeding initially 2.00 to 1.00 and stepping down to 1.50 to 1.00; and a total leverage ratio (which is the ration of total debt to trailing 12 months' EBITDAO) not exceeding initially 4.75 to 1.00 and stepping down to 3.50 to 1.00. The Credit Agreement also includes other covenants, including negative covenants that, subject to certain exceptions, limit Affymetrix', and that of certain of its subsidiaries', ability to, among other things: (i) incur additional debt, including guarantees by the Company or its subsidiaries, (ii) make investments, pay dividends on capital stock, redeem or repurchase capital stock, redeem or repurchase the Company's senior convertible notes or any subordinated obligations, (iii) create liens and negative pledges, (iv) make capital expenditures, (v) dispose of assets, (vi) make acquisitions, (vii) create or permit restrictions on the ability of Affymetrix' subsidiaries to pay dividends or make distributions to Affymetrix, (viii) engage in transactions with affiliates, (ix) engage in sale and leaseback transactions, (x) consolidate or merge with or into other companies or sell all or substantially all the Company's assets and (xi) change their nature of business, their organizational documents or their accounting policies.
Following the restructuring activity discussed in Note 15. "Restructuring" and lower-than-expected revenue in the three months ended March 31, 2013, on April 8, 2013, the Company and the Lenders amended the Credit Agreement to provide a limited waiver and to amend certain covenants with respect to fiscal year 2013 (the "Amendment"). Under the Amendment, the Lenders agreed to waive any event of default arising from the failure of the Company to comply with the total leverage ratio and senior leverage ratio for the three months ended March 31, 2013. For the quarters ended March 31, 2013 through September 30, 2013, the definition of EBITDAO was amended to allow the add back of up to $11.0 million of trailing twelve month restructuring and integration charges in the calculation of EBITDAO compared to an add back of up to $7 million prior to the Amendment. In addition, the quarterly senior leverage ratio was revised to not exceeding 1.80 to 1.00 for June 30, 2013 and September 30, 2013 compared to 1.75 to 1.00 for these periods prior to the Amendment. The total leverage multiple was revised to not exceeding 4.50 to 1.00, 4.75 to 1.00 and 4.50 to 1.00 for the quarters ending March 31, June 30 and September 30, 2013, respectively, as compared to the original total leverage ratio not exceeding 4.25 to 1.00 for each of these periods. As of March 31, 2013, except for the defaults pursuant to the Amendment, the Company was in compliance with the covenants.
The Company is required to make the following mandatory prepayments: (a) annual prepayments in an amount equal to 50% of excess cash flow (as defined in the Credit Agreement), subject to a leverage-based stepdown, (b) prepayments in an amount equal to 100% of the net cash proceeds of issuances or incurrences of debt obligations of Affymetrix and its subsidiaries (other than debt incurrences expressly permitted by the Credit Agreement), (c) prepayments in an amount equal to 100% of the net proceeds of asset sales in excess of $2.5 million annually (subject to certain reinvestment rights) and (d) prepayments in an amount equal to any indemnification payments or similar payments received under the Acquisition Agreement, subject to certain exclusions. During the three months ended March 31, 2013, the Company was not obligated to make any of the aforementioned mandatory prepayments.
The Credit Agreement also contains events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-default and cross-acceleration to other indebtedness in excess of specified amounts, monetary judgment defaults in excess of specified amounts, bankruptcy or insolvency, actual or asserted invalidity or impairment of any part of the credit documentation (including the failure of any lien on a material portion of the collateral to remain perfected) and change of ownership or control defaults. In addition, the occurrence of a "fundamental change" under the indenture governing the 4.00% Notes would be an event of default under the Credit Agreement. As of March 31, 2013, except for the defaults waived pursuant to the Amendment, the Company was in compliance with the covenants.
Additionally, the proceeds from the Term Loan are net of debt issuance costs of approximately $4.5 million which are being amortized using the effective interest method.
As of March 31, 2013, the Company had an outstanding principal balance of $70.1 million and incurred $1.7 million in interest expense under the Senior Secured Credit Facility for the three months ended March 31, 2013.
The Term Loan is scheduled to amortize in quarterly installments in amounts resulting in an annual amortization of 10% during the first year, 15% during the second year, 15% during the third year, 20% during the fourth year and 40% during the fifth year after June 25, 2012. The principal amount of unpaid maturities per the Credit Agreement is as follows (in thousands):
2013, remainder thereof
$
-
2014
9,563
2015
13,813
2016
17,000
2017
29,712
Total
$
70,088

4.00% Convertible Senior Notes
On June 25, 2012, the Company issued $105.0 million principal amount of 4.00% Convertible Senior Notes due July 1, 2019. The net proceeds, after debt issuance costs totaling $3.9 million from the 4.00% Notes offering, were $101.1 million. The 4.00% Notes bear interest of 4.00% per year payable semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2013 until the maturity date of July 1, 2019, unless converted, redeemed or repurchased earlier. The debt issuance costs are being amortized over the effective life of the 4.00% Notes, which is 7 years.
Holders of the 4.00% Notes may convert their 4.00% Notes into shares of the Company's stock at their option any time prior to the close of business on the business day immediately preceding the maturity date. The 4.00% Notes are initially convertible into approximately 170.0319 shares of the Company's common stock per $1,000 principal amount of notes, which equates to 17,857,143 shares of common stock, or an initial conversion price of $5.88 per share of common stock. The conversion rate is subject to certain customary anti-dilution adjustments. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its notes in connection with such a corporate event in certain circumstances. Holders may also require the Company to repurchase for cash their notes upon certain fundamental changes.
On or after July 1, 2017, the Company can redeem for cash all or part of the 4.00% Notes if the last reported sale price per share of the Company's common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending within 5 trading days prior to the date on which the Company provides notice of redemption. The redemption price will be equal to 100% of the principal amount of the 4.00% Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
As of March 31, 2013, outstanding balance on the 4.00% Notes was $105.0 million and interest incurred for the three months ended March 31, 2013 was $1.2 million.
3.50% Senior Convertible Notes
During the three months ended March 31, 2013, the Company redeemed its remaining outstanding 3.50% Senior Convertible Notes for $3.9 million in total cash consideration, including accrued interest of $0.1 million. The notes were redeemed at par and the related deferred financing costs were written off.
XML 61 R16.htm IDEA: XBRL DOCUMENT v2.4.0.6
LEGAL PROCEEDINGS
3 Months Ended
Mar. 31, 2013
LEGAL PROCEEDINGS [Abstract]  
LEGAL PROCEEDINGS
NOTE 11—LEGAL PROCEEDINGS
The Company has been in the past, and continues to be, a party to litigation which has consumed, and may continue to consume, substantial financial and managerial resources. The Company could incur substantial costs and divert attention of management and technical personnel in defending against litigation, and any adverse ruling or perception of an adverse ruling could have a material adverse impact on the Company's stock price. In addition, any adverse ruling could have a material adverse impact on the Company's cash flow and financial condition. The results of any litigation or any other legal proceedings are uncertain and as of the date of this report, the Company has not accrued any liability with respect to any of the litigation matters listed below:
E8 Pharmaceuticals LLC
On July 1, 2008, the Company was named as a defendant in a complaint filed by plaintiffs E8 Pharmaceuticals LLC and Massachusetts Institute of Technology ("MIT") in the United States District Court of Massachusetts. In the complaint, the plaintiffs allege that the Company is infringing one patent owned by MIT and licensed to E8 Pharmaceuticals by making and selling the Company's GeneChip® products to customers and teaching its customers how to use the products. The plaintiffs seek a permanent injunction enjoining the Company from further infringement, unspecified monetary damages, enhanced damages pursuant to 35 U.S.C. §284, costs, attorneys' fees and other relief as the court deems just and proper. On September 4, 2012, the District Court issued its ruling construing key claims of the patent at issue. The parties thereafter stipulated to the dismissal of plaintiff's claims and in September, the District Court dismissed the lawsuit in its entirety. On September 26, 2012, the plaintiffs filed an appeal with the United States Court of Appeals for the Federal Circuit appealing the District Court's dismissal of the lawsuit. The Company will continue to vigorously defend against the plaintiffs' claims.
Enzo Litigation
Southern District of New York Case: On October 28, 2003, Enzo Life Sciences, Inc., a wholly-owned subsidiary of Enzo Biochem, Inc. (collectively "Enzo"), filed a complaint against the Company that is pending in the United States District Court for the Southern District of New York for breach of contract, injunctive relief and declaratory judgment. The Enzo complaint relates to a 1998 distributorship agreement with Enzo under which the Company served as a non-exclusive distributor of certain reagent labeling kits supplied by Enzo. In its complaint, Enzo seeks monetary damages and an injunction against the Company from using, manufacturing or selling Enzo products and from inducing collaborators and customers to use Enzo products in violation of the 1998 agreement. Enzo also seeks the transfer of certain Affymetrix patents to Enzo.
On November 10, 2003, the Company filed a complaint against Enzo in the United States District Court for the Southern District of New York for declaratory judgment, breach of contract and injunctive relief relating to the 1998 agreement. In its complaint, the Company alleges that Enzo has engaged in a pattern of wrongful conduct against it and other Enzo labeling reagent customers by, among other things, asserting improperly broad rights in its patent portfolio, improperly using the 1998 agreement and distributorship agreements with others in order to corner the market for non-radioactive labeling reagents, and improperly using the 1998 agreement to claim ownership rights to the Company's proprietary technology. The court has not set a trial date for these actions, but has advised the parties to clear time for trials at the end of 2013 or the beginning of 2014, to potentially try these actions as well as other related actions between Enzo and other third parties.
Delaware Case: On April 6, 2012, Enzo filed a complaint against the Company in the United States District Court for the District of Delaware. In the complaint, plaintiff alleges that Affymetrix is infringing U.S. Patent No. 7,064,197 by making and selling certain GeneChip® products. The plaintiff seeks a preliminary and permanent injunction enjoining the Company from further infringement and unspecified monetary damages. The Company will vigorously defend against the plaintiff's case. No trial date is set for this action.
Administrative Proceedings
The Company's intellectual property is subject to a number of significant administrative actions. These proceedings could result in the Company's patent protection being significantly modified or reduced, and the incurrence of significant costs and the consumption of substantial managerial resources. For the three months ended March 31, 2013, the Company did not incur significant costs in connection with administrative proceedings.
XML 62 R34.htm IDEA: XBRL DOCUMENT v2.4.0.6
FINANCIAL INSTRUMENTS, Available-For-Sale Securities (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Dec. 31, 2012
FINANCIAL INSTRUMENTS [Abstract]    
Available-for-sale securities, gross realized gains (losses), sale proceeds $ 9,395  
Maximum realized gains on available for sale securities 99  
Summary of available-for-sale securities [Abstract]    
Amortized Cost   9,263
Gross Unrealized Gains   103
Gross Unrealized Losses   0
Fair Value   9,366
U.S. government obligations and agency securities [Member]
   
Summary of available-for-sale securities [Abstract]    
Amortized Cost   6,775
Gross Unrealized Gains   54
Gross Unrealized Losses   0
Fair Value   6,829
U.S. corporate debt [Member]
   
Summary of available-for-sale securities [Abstract]    
Amortized Cost   651
Gross Unrealized Gains   13
Gross Unrealized Losses   0
Fair Value   664
Foreign corporate debt and equity securities [Member]
   
Summary of available-for-sale securities [Abstract]    
Amortized Cost   1,837
Gross Unrealized Gains   36
Gross Unrealized Losses   0
Fair Value   $ 1,873
XML 63 R51.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAXES, Loss Before Taxes (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
INCOME TAXES [Abstract]    
Income Tax Expense (Benefit) $ 675 $ (89)
Unrecognized Tax Benefits, Period Increase (Decrease) $ 0  
XML 64 R21.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
3 Months Ended
Mar. 31, 2013
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]  
Components of accumulated other comprehensive income, net of tax
During the three months ended March 31, 2013, the Company adopted Accounting Standards Update ("ASU") 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income which requires filers to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net loss. The following table summarizes the components of accumulated other comprehensive income, net of tax, for the three months ended March 31, 2013 (in thousands):
 
December 31,
  
Increase/
  
Reclassification
  
March 31,
 
 
2012
  
(Decrease)
  
Adjustments
  
2013
 
Foreign currency translation adjustments
 
$
5,374
  
$
(3,125
)
 
$
-
  
$
2,249
 
Unrealized change in available-for-sale and non-marketable securities
  
896
   
(176
)
  
(99
)
 (1) 
621
 
Unrealized change in cash flow hedges
  
32
   
2,069
   
(983
)
 (2) 
1,118
 
Total accumulated other comprehensive income, net of tax
 
$
6,302
  
$
(1,232
)
 
$
(1,082
)
 
$
3,988
 
(1) Net gain recognized in Interest income and other, net.
(2) Net gain recognized in Revenue, except for $0.2 million gain that was recognized in Interest income and other, net due to hedging ineffectiveness. See Note 3. "Financial Instruments–Derivative Financial Instruments" for further information.
XML 65 R26.htm IDEA: XBRL DOCUMENT v2.4.0.6
GOODWILL AND INTANGIBLE ASSETS (Tables)
3 Months Ended
Mar. 31, 2013
GOODWILL AND INTANGIBLE ASSETS [Abstract]  
Definite lived intangible assets
The gross carrying amounts and net book values of the Company's definite-lived intangible assets are as follows (in thousands):
 
Carrying Value, Gross
  
Accumulated Amortization
  
Intangible Assets, Net
 
Weighted
 
December 31,
  
Increase/
  
March 31,
  
December 31,
  
(Increase)/
  
March 31,
  
December 31,
  
March 31,
 
Average
 
2012
  
(Decrease) (1)
  
2013
  
2012
  
Decrease (2)
  
2013
  
2012
  
2013
 
Useful Life
Customer relationships
 
$
76,874
  
$
(650
)
 
$
76,224
  
$
(14,346
)
 
$
(2,088
)
 
$
(16,434
)
 
$
62,528
  
$
59,790
 
12 years
Developed technologies
  
76,814
   
(649
)
  
76,165
   
(18,489
)
  
(1,983
)
  
(20,472
)
  
58,325
   
55,693
 
12 years
Trademarks and tradenames
  
17,818
   
(10
)
  
17,808
   
(3,009
)
  
(1,261
)
  
(4,270
)
  
14,809
   
13,538
 
5 years
Other contractual agreements
  
3,055
   
(30
)
  
3,025
   
(785
)
  
(615
)
  
(1,400
)
  
2,270
   
1,625
 
2 years
Licenses
  
81,156
   
376
   
81,532
   
(66,370
)
  
(23
)
  
(66,393
)
  
14,786
   
15,139
 
Variable
Total definite-lived intangible assets
 
$
255,717
  
$
(963
)
 
$
254,754
  
$
(102,999
)
 
$
(5,970
)
 
$
(108,969
)
 
$
152,718
  
$
145,785
 
(1)
Includes a decrease in carrying value of $1.3 million related to foreign currency translation
(2)
Includes a decrease in accumulated amortization of $0.1 million related to foreign currency translation
Expected future annual amortization expense
The expected future annual amortization expense of the Company's intangible assets is as follows (in thousands):
 
Amortization
 
For the Year Ending December 31,
 
Expense
 
2013, remainder thereof
 
$
17,470
 
2014
  
20,770
 
2015
  
14,628
 
2016
  
13,775
 
2017
  
12,098
 
Thereafter
  
67,044
 
Total
 
$
145,785
 
Schedule of Goodwill
Change in the Company's goodwill at March 31, 2013 is as follows (in thousands):
Balance at December 31, 2012
 
$
159,736
 
Effects of foreign currency change
  
(1,398
)
Balance at March 31, 2013
 
$
158,338
 
XML 66 R49.htm IDEA: XBRL DOCUMENT v2.4.0.6
NET LOSS PER COMMON SHARE (Details)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 27,733 10,756
Employee Stock Compensation Plans [Member]
   
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 5,994 6,020
Restricted Stock Awards (RSAs) [Member]
   
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 3,861 2,469
Convertible Notes [Member]
   
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 17,878 2,267
XML 67 R41.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE, Employee Stock Purchase Plan (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Stockholders Equity And Share Based Compensation Expense [Abstract]    
Shares reserve for issuance under Employee stock purchase plan (in shares) 7,000,000  
ESPP purchase consideration as percentage of market value (in hundredths) 85.00%  
ESPP offering period 12 months  
ESPP number of purchase periods per offering period 2  
Number of months in each purchase period 6 months  
Look-back period for ESPP 12 months  
Percentage of gross compensation through payroll deductions employees can invest (in hundredths) 15.00%  
Number of shares of common stock employee permitted to purchase (in shares) 750  
Number of participants in ESPP 308  
Allocated Share-based Compensation Expense $ 185  
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology ESPP [Abstract]    
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate for ESPP 0.10% 0.10%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate for ESPP 0.00% 0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate for ESPP 52.00% 67.00%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term for ESPP 3 months 18 days 9 months 18 days
XML 68 R5.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES [Abstract]    
Net loss $ (15,437) $ (4,217)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities    
Depreciation and amortization 10,316 7,162
Amortization of Inventory Step-Up in Fair value 4,589 0
Share-based compensation including acquisition 1,835 2,392
Change in deferred tax assets 1,470 44
Other noncash income (expense) (490) (118)
Changes in operating assets and liabilities [Abstract]    
Accounts receivable, net 1,164 (769)
Inventories (3,728) 1,306
Prepaid expenses and other assets 1,027 1,944
Accounts payable and accrued liabilities 908 (9,170)
Deferred revenue 11,035 (449)
Other long-term liabilities (1,320) 575
Net cash provided by (used in) operating activities 11,369 (1,300)
CASH FLOWS FROM INVESTING ACTIVITIES [Abstract]    
Capital expenditures (1,104) (1,388)
Purchase of non-marketable investment (200) 0
Proceeds from sales of available-for-sale securities 9,364 95
Proceeds from maturities of available-for-sale securities 0 388
Purchase of technology rights (335) (1,000)
Net cash provided by (used in) investing activities 7,725 (1,905)
CASH FLOWS FROM FINANCING ACTIVITIES [Abstract]    
Issuance of common stock, net 52 (154)
Repurchase of convertible notes (3,855) (91,614)
Payments of Term Loan (3,188) 0
Net cash used in financing activities (6,991) (91,768)
Effect of exchange rate changes on cash and cash equivalents (278) 74
Net increase (decrease) in cash and cash equivalents 11,825 (94,899)
Cash and cash equivalents at beginning of year 25,671 201,937
Cash and cash equivalents at end of year $ 37,496 $ 107,038
XML 69 R10.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE
3 Months Ended
Mar. 31, 2013
Stockholders Equity And Share Based Compensation Expense [Abstract]  
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE
NOTE 5—STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE
Share-based Compensation Plans
The Company has a share-based compensation program, most recently, the 2000 Amended and Restated Equity Incentive Plan (the "Plan"), that provides the Board of Directors broad discretion in creating equity incentives for employees, officers, directors and consultants. This program includes incentive and non-qualified stock options and non-vested stock awards (also known as restricted stock) granted under various stock plans. As of March 31, 2013, the Company had approximately 5.1 million shares of common stock reserved for future issuance under its share-based compensation plans including 2.0 million shares of common stock authorized for issuance under the Company's 2012 Inducement Plan that was adopted by the Board of Directors in June 2012. New shares are issued as a result of stock option exercises, restricted stock units vesting and restricted stock award grants.
The Company recognized share-based compensation expense as follows (in thousands):
 
Three Months Ended
 
 
March 31,
 
 
2013
 
 
2012
 
Costs of product sales
 
$
167
 
 
$
372
 
Research and development
 
 
329
 
 
 
367
 
Selling, general and administrative
 
 
1,339
 
 
 
1,653
 
Total share-based compensation expense
 
$
1,835
 
 
$
2,392
 

As of March 31, 2013, $13.1 million of total unrecognized share-based compensation expense related to non-vested awards is expected to be recognized over the respective vesting terms of each award through 2017. The weighted‑average terms of the unrecognized share-based compensation expense are 2.7 years for stock options and 2.3 years for restricted stock.
Stock Options
The fair value of options was estimated at the date of grant using the Black Scholes Merton option pricing model with the following weighted‑average assumptions:
 
Three Months Ended
 
 
March 31,
 
 
2013
 
 
2012
 
Risk free interest rate
 
 
0.8
%
 
 
1.0
%
Expected dividend yield
 
 
0.0
%
 
 
0.0
%
Expected volatility
 
 
68
%
 
 
67
%
Expected option term (in years)
 
 
4.6
 
 
 
4.6
 

The risk free interest rate for periods within the contractual life of the Company's stock options is based on the U.S. Treasury yield curve in effect at the time of grant. The expected term is derived from an analysis of the Company's historical exercise trends over ten years. The expected volatility is based on a blend of historical and market‑based implied volatility. Using the assumptions above, the weighted‑average grant date fair value of options granted during the three months ended March 31, 2013 and 2012, was $2.09 and $2.38, respectively.
Performance-Based Awards
In 2011, the Compensation Committee of the Company's Board of Directors approved a grant of performance-based restricted stock units ("PRSUs") under the Plan to the Company's Chief Executive Officer ("CEO") that is earned annually in four equal tranches based on his performance in the applicable fiscal year (the "Performance Period"). The PRSUs entitle the CEO to receive a certain number of shares of the Company's common stock based on the Company's satisfaction of certain financial and strategic performance goals as set and approved by the Board of Directors annually during the first quarter of the Company's fiscal year. Based on the achievement of the performance conditions during each Performance Period, the final settlement of the PRSU award will vest twelve months following the end of each Performance Period. The PRSU award will be forfeited if the performance goals are not met or if the executive officer is no longer employed at the vest date.
The number of shares underlying the PRSUs that were granted to the CEO during 2011 totaled 0.2 million shares. As of March 31, 2013, performance conditions pertaining to 0.1 million shares of the PRSUs were achieved. The Company expects that an additional 0.1 million shares of the PRSUs, with a grant date fair value of $4.67 per PRSU, will vest with respect to the Performance Period ending December 31, 2013 and the fair value of such PRSU's is being amortized on a straight-line basis over the related service period. The total compensation cost related to PRSUs granted but not yet recognized was $0.3 million as of March 31, 2013.
During July 2012, the Compensation Committee granted certain PRSUs following the acquisition of eBioscience referred to as an Acquisition Performance Share Program (the "Program"). The purpose of the Program is to align key management and senior leadership with stockholders' interests and to retain key employees. The measurement periods for the Program are the twelve month periods ended June 30, 2013 and June 30, 2014, respectively. Members of eBioscience management and other key employees are participating in the Program. Awards granted under the Program are granted in the form of performance shares pursuant to the terms of the Company's 2012 Inducement Plan. If pre-determined eBioscience specific performance goals are met, shares of stock will be granted to the recipient, vesting one month following the performance period representing the date of certification of achievement, contingent upon the recipient's continued service to the Company.
In 2012, the Company awarded 0.9 million PRSUs under the Program at a grant date fair value of $4.16 per PRSU and expects 66% of the PRSUs will vest. The fair value of the PRSUs is being amortized on a straight-line basis over the related service period. The total compensation cost related to PRSUs granted but not yet recognized was approximately $1.0 million as of March 31, 2013.
During the first quarter of 2013, the Compensation Committee granted certain PRSUs following the most recent restructuring referred to as the 2013 Program. The purpose of the 2013 Program is to retain key employees. The measurement period for the 2013 Program is the twelve month period ended December 31, 2013 and the awards granted under the 2013 Program are granted in the form of performance shares pursuant to the terms of our 2000 Plan. Dependent on the level of achievement of pre-determined financial performance goals, shares of stock will vest in equal installments over two or four years. The level of achievement of financial performance will be assessed during the first quarter of fiscal 2014 after which the share of stock will be issued to the participants, contingent upon the recipient's continued service to the Company.
In 2013, the Company awarded 0.3 million PRSUs under the 2013 Program at a grant date fair value of $3.84 per PRSU and expects 85% of the PRSUs will vest. The fair value of the PRSUs is being amortized on a straight-line basis over the related service period. The total compensation cost related to PRSUs granted but not yet recognized was approximately $0.8 million as of March 31, 2013.
Employee Stock Purchase Plan
In August 2011, the Company's Board of Directors adopted the 2011 Employee Stock Purchase Plan ("ESPP") that was approved by the Company's stockholders on May 11, 2012. The ESPP reserved a total of 7.0 million shares of the Company's common stock for issuance under the plan and permits eligible employees to purchase common stock at a discount through payroll deductions.
The price at which stock is purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first day of the offering period or the last day of the purchase period, whichever is lower. The offering periods are twelve months and include two six month purchase periods that result in a look-back for determining the purchase price of up to 12 months. Employees can invest up to 15% of their gross compensation through payroll deductions. In no event would an employee be permitted to purchase more than 750 shares of common stock during any six-month purchase period. The initial offering period commenced in November 2011. As of March 31, 2013, there were 308 participants in the plan. Included in total share-based compensation cost for the three months ended March 31, 2013 was $0.2 million, related to the ESPP.
During the three months ended March 31, 2013 and 2012, the fair value of shares under the ESPP was estimated using the following assumptions:
 
Three Months Ended
 
 
March 31,
 
 
2013
 
 
2012
 
Risk free interest rate
 
 
0.1
%
 
 
0.1
%
Expected dividend yield
 
 
0.0
%
 
 
0.0
%
Expected volatility
 
 
52
%
 
 
67
%
Expected term (in years)
 
 
0.6
 
 
 
0.8
 

XML 70 R27.htm IDEA: XBRL DOCUMENT v2.4.0.6
WARRANTIES (Tables)
3 Months Ended
Mar. 31, 2013
WARRANTIES [Abstract]  
Changes in entity's product warranty liability
The Company provides for anticipated warranty costs at the time the associated product revenue is recognized. Product warranty costs are estimated based upon the Company's historical experience and the applicable warranty period. The Company periodically reviews the adequacy of its warranty reserve and adjusts, if necessary, the warranty percentage and accrual based on actual experience and estimated costs to be incurred. Information in regards to the changes in the Company's product warranty liability for the three months ended March 31, 2013 is as follows (in thousands):
Balance at December 31, 2012
 
$
802
 
Additions charged to cost of product sales
 
 
221
 
Balance at March 31, 2013
 
$
1,023
 
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STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE, Stock Plans and Share-Based Compensation (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Stockholders Equity And Share Based Compensation Expense [Abstract]    
Common stock reserved for future issuance (in shares) 5,097  
Common Stock, Capital Shares Reserved for Future Issuance 2012 Inducement 2,000  
Recognized share-based compensation expense [Abstract]    
Total stock-based compensation expense $ 1,835 $ 2,392
Unrecognized share-based compensation expense 13,133  
Weighted-average term of unrecognized share-based compensation expense, Stock Options 2 years 8 months 12 days  
Weighted-average term of unrecognized share-based compensation expense, Restricted Stock 2 years 3 months 18 days  
Costs of sales [Member]
   
Recognized share-based compensation expense [Abstract]    
Total stock-based compensation expense 167 372
Research and development [Member]
   
Recognized share-based compensation expense [Abstract]    
Total stock-based compensation expense 329 367
Selling, general and administrative [Member]
   
Recognized share-based compensation expense [Abstract]    
Total stock-based compensation expense $ 1,339 $ 1,653
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RESTRUCTURING
3 Months Ended
Mar. 31, 2013
RESTRUCTURING [Abstract]  
RESTRUCTURING [Text Block]
NOTE 15—RESTRUCTURING
In the fourth quarter of 2012, the Company initiated a cost reduction action that included workforce. During the three months ended March 31, 2013, approximately 100 employees were notified of their involuntary termination. The Company estimates that the total restructuring charge associated with the plan will be approximately $6.6 million, substantially all of which is compensation and benefits afforded to terminated employees. During the year ended December 31, 2012, $1.8 million of restructuring expense related to employees who were notified prior to the end of the year was recognized. During the three months ended March 31, 2013, the Company recognized $4.8 million in restructuring expense and made substantially all of the cash payments, except for $1.5 million which was recorded at March 31, 2013 in Accounts payable and accrued liabilities on the accompanying Condensed Consolidated Balance Sheets. No additional costs are expected to be incurred, and the Company anticipates the remaining cash payments will be made during the second quarter of 2013.