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 SEPTEMBER 30, 2014

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 October 27, 2014: 73,583,589

AFFYMETRIX, INC.

TABLE OF CONTENTS

		Page No.
PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets at September 30, 2014 and December 31, 2013	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2014 and 2013	4
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2014 and 2013	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
PART II. OTHER INFORMATION		30
Item 1.	Legal Proceedings	30
Item1A.	Risk Factors	30
Item 2.	Mine Safety Disclosures	30
Item 3.	Other Information	30
Item 4.	Exhibits	30
SIGNATURES		31

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AFFYMETRIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	September 30, 2014			December 31, 2013
	(Unaudited)			(Note 1)
ASSETS:
Current assets:
Cash and cash equivalents	$	68,327		$	57,128
Accounts receivable, net	46,037			50,862
Inventories, net—short-term portion	51,674			58,059
Deferred tax assets—short-term portion	1,974			767
Prepaid expenses and other current assets	8,964			8,920
Total current assets	176,976			175,736
Property and equipment, net	16,137			18,671
Inventories, net—long-term portion	6,098			5,972
Goodwill	157,962			161,595
Intangible assets, net	112,339			131,108
Deferred tax assets—long-term portion	344			355
Other long-term assets	10,699			11,074
Total assets	$	480,555		$	504,511
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Accounts payable and accrued liabilities	$	47,806		$	45,534
Current portion of long-term debt	4,000			12,750
Deferred revenue—short-term portion	12,953			18,660
Total current liabilities	64,759			76,944
Deferred revenue—long-term portion	2,524			2,824
Convertible notes	105,000			105,000
Term loan—long-term portion	19,950			26,700
Other long-term liabilities	20,445			21,496
Total liabilities	212,678			232,964
Stockholders’ equity:
Common stock	736			723
Additional paid-in capital	778,393			768,149
Accumulated other comprehensive income	3,466			8,392
Accumulated deficit	(514,718		)	(505,717		)
Total stockholders’ equity	267,877			271,547
Total liabilities and stockholders’ equity	$	480,555		$	504,511

See accompanying Notes to the Condensed Consolidated Financial Statements

3

AFFYMETRIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2014			2013			2014			2013
REVENUE:
Product sales	$	78,069		$	74,776		$	227,644		$	220,505
Services and other	9,017			5,578			27,845			17,258
Total revenue	87,086			80,354			255,489			237,763
COSTS AND EXPENSES:
Cost of product sales	29,140			32,600			89,211			100,621
Cost of services and other	6,426			3,915			19,358			11,128
Research and development	12,926			11,478			37,443			35,686
Selling, general and administrative	33,718			33,646			108,546			102,286
Litigation settlement	—			—			5,100			—
Restructuring charges	—			(2		)	—			4,484
Total costs and expenses	82,210			81,637			259,658			254,205
Income (loss) from operations	4,876			(1,283		)	(4,169		)	(16,442		)
Other (expense) income, net	(1,008		)	68			703			501
Interest expense	1,595			2,652			4,972			8,274
Income (loss) before income taxes	2,273			(3,867		)	(8,438		)	(24,215		)
Income tax (benefit) provision	(111		)	289			563			1,485
Net income (loss)	$	2,384		$	(4,156	)	$	(9,001	)	$	(25,700	)
Basic net income (loss) per common share	$	0.03		$	(0.06	)	$	(0.12	)	$	(0.36	)
Diluted net income (loss) per common share	$	0.03		$	(0.06	)	$	(0.12	)	$	(0.36	)
Shares used in computing basic net income (loss) per common share	73,413			71,600			72,955			71,227
Shares used in computing diluted net income (loss) per common share	76,315			71,600			72,955			71,227

See accompanying Notes to the Condensed Consolidated Financial Statements

4

AFFYMETRIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2014			2013			2014			2013
Net income (loss)	$	2,384		$	(4,156	)	$	(9,001	)	$	(25,700	)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment	(6,500		)	3,051			(6,958		)	1,194
Unrealized change in available-for-sale and non-marketable securities (net of tax of $(25) and $230 for the three and nine months ended September 30, 2014, respectively; net of $0 tax in each of the three and nine months ended September 30, 2013)	(195		)	426			226			98
Unrealized change in cash flow hedges (net of tax of $154 for the three and nine months ended September 30, 2014; net of $0 tax in each of the three and nine months ended September 30, 2013)	1,328			(1,363		)	1,806			(638		)
Net change in other comprehensive (loss) income, net of tax	(5,367		)	2,114			(4,926		)	654
Comprehensive loss	$	(2,983	)	$	(2,042	)	$	(13,927	)	$	(25,046	)

See accompanying Notes to the Condensed Consolidated Financial Statements

5

AFFYMETRIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(9,001	)	$	(25,700	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	23,745			30,039
Amortization of inventory step-up in fair value	4,666			11,980
Share-based compensation	9,436			5,109
Deferred tax, net	(1,475		)	(212		)
(Gain) loss on sales of securities	(1,684		)	205
Other non-cash transactions	575			2,931
Changes in operating assets and liabilities:
Accounts receivable, net	4,432			4,816
Inventories	75			536
Prepaid expenses and other assets	(317		)	(1,051		)
Accounts payable and accrued liabilities	4,229			(6,036		)
Deferred revenue	(5,985		)	10,656
Other long-term liabilities	(364		)	(1,088		)
Net cash provided by operating activities	28,332			32,185
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities	2,162			9,364
Proceeds on sale of fixed assets	109			—
Capital expenditures	(4,310		)	(3,000		)
Purchase of non-marketable investment	—			(200		)
Purchase of technology rights	—			(624		)
Net cash (used in) provided by investing activities	(2,039		)	5,540
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net	821			318
Repayments of long-term debt	(15,500		)	(9,563		)
Bond and loan issuance costs	—			(228		)
Repurchase of 3.50% senior convertible notes	—			(3,855		)
Net cash used in financing activities	(14,679		)	(13,328		)
Effect of exchange rate changes on cash and cash equivalents	(415		)	83
Net increase in cash and cash equivalents	11,199			24,480
Cash and cash equivalents at beginning of period	57,128			25,671
Cash and cash equivalents at end of period	$	68,327		$	50,151

See accompanying Notes to the Condensed Consolidated Financial Statements

6

AFFYMETRIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2014

(UNAUDITED)

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") 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 GAAP for complete financial statements. The unaudited 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.

Interim financial results are not necessarily indicative of results anticipated for the full year. These unaudited financial statements should be read in conjunction with the Company's audited financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013, from which the balance sheet information as of that date and as included herein was derived.

The preparation of 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. Actual results could differ from those estimates.

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, 2013.

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net loss and other comprehensive income (loss) (“OCI”). OCI includes foreign currency translation adjustments, unrealized gains and losses on the Company's non-marketable securities that are excluded from net loss and unrealized gains and losses on cash flow hedges. Total comprehensive loss has been disclosed in the Company's Condensed Consolidated Statements of Comprehensive Loss.

The following table summarizes the amounts reclassified out of accumulated other comprehensive income, net of tax, for the nine months ended September 30, 2014 (in thousands):

	December 31, 2013			(Decrease)/ Increase			Reclassification Adjustments			September 30, 2014
Foreign currency translation adjustment	$	7,784		$	(6,958	)	$	—		$	826
Unrealized change in non-marketable securities	1,373			226			—			1,599
Unrealized change in cash flow hedges	(765		)	1,849			(43		)	1,041
Total accumulated other comprehensive income, net of tax	$	8,392		$	(4,883	)	$	(43	)	$	3,466

Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15). ASU 2014-15 requires

7

management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. In doing so, companies will have reduced diversity in the timing and content of footnote disclosures than under today’s guidance. ASU 2014-15 is effective for the Company in the first quarter of 2016 with early adoption permitted. The Company does not believe the impact of adopting ASU 2014-15 on its consolidated financial statements will be material.

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09) to provide guidance on revenue recognition. ASU 2014-09 requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for the Company in the first quarter of 2017. Early adoption is not permitted. Upon adoption, ASU 2014-09 can be applied retrospectively to all periods presented or only to the most current period presented with the cumulative effect of changes reflected in the opening balance of retained earnings in the most current period presented. The Company is currently evaluating the impact of adopting ASU 2014-09 on its consolidated financial statements.

NOTE 2—FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of September 30, 2014 and December 31, 2013, the assets and liabilities measured at fair value consisted of the following (in thousands):

	September 30, 2014						December 31, 2013
	Fair Value Measurements Using Input Types						Fair Value Measurements Using Input Types
	Level 2		Level 3		Total		Level 2		Level 3		Total
Assets:
Derivative assets	$	1,037	$	—	$	1,037	$	185	$	—	$	185
Non-marketable securities	—		4,516		4,516		—		4,383		4,383
Total assets	$	1,037	$	4,516	$	5,553	$	185	$	4,383	$	4,568
Liabilities:
Derivatives liabilities	$	—	$	—	$	—	$	938	$	—	$	938

Derivative financial instruments

The Company's derivative financial instruments are measured at fair value on a recurring basis utilizing Level 2 inputs as 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 Prepaid expenses and other current assets and Accounts payable and accrued expenses, respectively, in the accompanying Condensed Consolidated Balance Sheets.

Non-Marketable Securities

The Company believes the carrying amounts of its non-marketable securities approximated their fair values at the dates presented above. These non-marketable securities consist of an investment in a limited partnership investment fund that invests in companies in the life science industry and are located in the United States. The investments were initially valued at 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.

During the year ended December 31, 2013, other-than-temporary impairment charges of $0.5 million were recognized on the Company's non-marketable securities. There was no other-than-temporary impairment during the nine

8

months ended September 30, 2014. Net investment losses are included in Other (expense) income, net in the accompanying Consolidated Statements of Operations. Depending on market conditions, the Company may incur additional charges on this investment in the future.

The following table summarizes the change in the fair value of the Company's non-marketable securities during the nine months ended September 30, 2014 (in thousands).

Balance as of December 31, 2013	$	4,383
Sales	(2,162		)
Realized gain	1,700
Unrealized gain	595
Balance as of September 30, 2014	$	4,516

Liabilities Measured at Fair Value on a Nonrecurring Basis

Long-term debt obligations as discussed in Note 7, "Long-Term Debt Obligations", are not measured at fair value on a recurring basis and are carried at amortized cost. The Company believes the fair values of the Term Loan approximates its carrying values, or amortized cost, due to the short-term nature of these obligations and the market rates of interest rates they bear. Such inputs are classified as Level 3 of the fair value hierarchy. The fair value of the Company’s 4.00% Notes is based on quoted market prices as of the respective balance sheet date, and therefore is classified as Level 1 of the fair value hierarchy. As of September 30, 2014, the fair value of the Company’s 4.00% Notes was approximately $166.4 million.

NOTE 3—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 are held in the foreign 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.

In accordance with the terms of the Credit Agreement as defined in Note 7, "Long-Term Debt Obligations", the Company had previously maintained an interest rate swap (the "Interest Rate Swap"). In July 2014, the Company amended the terms of the Credit Agreement such that the interest rate swap is no longer required. Accordingly, the Company settled the Interest Rate Swap on September 30, 2014.

The Company is exposed to the risk that the counterparties to its hedges may be unable to meet the terms of these agreements. To mitigate the 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 foreign currency forward contracts for trading or speculative purposes and is not party to any leveraged derivative instruments.

As of September 30, 2014 and December 31, 2013, the total notional values of the Company’s derivative assets and liabilities were as follows (in thousands):

	September 30, 2014		December 31, 2013
Euro	$	12,374	$	21,990
Japanese Yen	3,907		4,588
British Pound	2,650		5,653
Interest rate swap	—		10,307
Total	$	18,931	$	42,538

9

The Company records all derivative on the accompanying Condensed Consolidated Balance sheets at fair value. The following table shows the Company’s derivatives as of September 30, 2014 and December 31, 2013 (in thousands):

	September 30, 2014		December 31, 2013		Balance Sheet Classification
Derivative assets:
Foreign exchange contracts	$	1,037	$	185	Prepaid expenses and other current assets
Derivative liabilities:
Foreign exchange contracts	—		927		Accounts payable and accrued liabilities
Interest rate swap	—		11		Other long-term liabilities

The effective portions of designated cash flow hedges are recorded in OCI until the hedged item is recognized in operations. Derivatives that are not designated as hedging instruments and the ineffective portions of cash flow hedges are adjusted to fair value through operations.

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 associated with such derivative instruments are reclassified immediately into operations through Other (expense) income, net on the Condensed Consolidated Statements of Operations. Any subsequent changes in fair value of such derivative instruments are reflected in Other (expense) income, net unless they are re-designated as hedges of other transactions.

As of December 31, 2013, the Interest Rate Swap was not designated as a hedging relationship. All other derivative assets and liabilities were designated as hedging relationships as of September 30, 2014 and December 31, 2013.

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 and ninemonths endedSeptember 30, 2014and 2013 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Derivatives in cash flow hedging relationships:
Net loss recognized in OCI	$	(1,327	)	$	(1,363	)	$	(1,806	)	$	(638	)
Net gain (loss) reclassified from accumulated OCI into Revenue	732			(13		)	(26		)	1,068
Net (loss) gain reclassified from accumulated OCI into Other (expense) income, net	—			—			(17		)	158
Net (loss) gain recognized in Other (expense) income, net	(1		)	18			—			63
Derivatives not designated as hedging relationships:
Net gain (loss) recognized in Other (expense) income, net	2			(185		)	14			(37		)

As of September 30, 2014, the deferred amount recorded in OCI related to the Company's derivatives recorded is a net gain of $1.0 million and is expected to be recognized into earnings over the next12 months.

NOTE 4—STOCKHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION EXPENSE

Share-based Compensation Plans

10

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 September 30, 2014, the Company had approximately 4.7 million shares of common stock reserved for future issuance under its share-based compensation plans. 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 September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Costs of product sales	$	687	$	223	$	1,884	$	651
Research and development	599		340		1,743		906
Selling, general and administrative	1,877		1,436		5,809		3,552
Total share-based compensation expense	$	3,163	$	1,999	$	9,436	$	5,109

As of September 30, 2014, $16.3 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 2018. The weighted‑average terms of the unrecognized share-based compensation expense are 2.3 years for stock options and 2.1 years for restricted stock.

Performance-Based Awards

The Company's share-based awards program includes performance-based restricted stock awards ("PRSUs") that vest based upon the achievement of certain performance criteria and a service vesting criteria following the achievement of performance criteria. Performance criteria include various operational criteria of the Company such as revenues, earnings before interest, taxes, depreciation and amortization, product launches, and similar criteria, either on a Company-wide or business unit specific basis. The service vesting criteria ranges from six months to four years. The Company recognizes the fair value of these awards to the extent the achievement of the related performance criteria is estimated to be probable. If a performance criteria is subsequently determined to not be probable of achievement, any related expense is reversed in the period such determination is made. Conversely, if a performance criteria is not currently expected to be achieved but is later determined to be probable of achievement, a “catch-up” entry is recorded in the period such determination is made for the expense that would have been recognized had the performance criteria been probable of achievement since the grant of the award.

As of September 30, 2014, there were 807,350 PRSUs outstanding with an average grant date fair value of $6.70 per PRSU. The Company expects that it is probable that 695,199 of these PRSUs will vest and that the related unrecognized stock compensation expense of $2.3 million will be recognized over the next 4 years. Changes in the Company’s assessment of the probability of achievement of performance criteria could have a material effect on the results of operations in future periods. There were no material changes in estimate related to the probability of vesting or recognition of expense related to PRSUs during either of the periods ended September 30, 2014 or 2013.

For additional information concerning the Company's share-based compensation plans, including performance-based awards programs, see Note 13, "Stockholders' Equity and Share-Based Compensation Expense", to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

NOTE 5—INVENTORIES

At September 30, 2014 and December 31, 2013, inventories, net consisted of the following (in thousands):

11

	September 30, 2014		December 31, 2013
Raw materials	$	11,169	$	11,587
Work-in-process	18,497		22,139
Finished goods	28,106		30,305
Total	$	57,772	$	64,031
Short-term portion	$	51,674	$	58,059
Long-term portion	$	6,098	$	5,972

Inventory at December 31, 2013 includes $4.7 million, net of fair value step-up in basis that was recognized when the Company acquired eBioscience in 2012. Amortization expense related to the fair value step-up during the nine months ended September 30, 2014 and 2013 was approximately $4.7 million and $12.0 million, respectively. The inventory fair value step-up was fully amortized as of June 30, 2014.

NOTE 6—WARRANTIES

The Company provides for anticipated warranty costs at the time the associated product revenue is recognized. Accrued warranties are included in accounts payable and accrued liabilities in the accompanying Condensed Consolidated Balance Sheets. 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. Changes to the Company’s product warranty liability for the nine months ended September 30, 2014 are as follows (in thousands):

Balance at December 31, 2013	$	1,697
Additions charged to cost of product sales	482
Repairs and replacements	(893		)
Adjustments	(183		)
Balance at September 30, 2014	$	1,103

NOTE 7—LONG-TERM DEBT OBLIGATIONS

The following table summarizes the carrying amount of the Company's borrowings (in thousands):

	September 30, 2014		December 31, 2013
Term loan	$	23,950	$	29,450
Revolving credit facility	—		10,000
Convertible notes	105,000		105,000
Total debt	128,950		144,450
Less: current portion of long-term debt	4,000		12,750
Total long-term debt	$	124,950	$	131,700

Term Loan and Revolving Credit Facility

On June 25, 2012, in conjunction with the acquisition of eBioscience, Inc., the Company entered into a five year $100.0 million Senior Secured Credit Facility credit agreement (the “Credit Agreement”). The Credit Agreement provided for a 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.

12

On October 17, 2013 the Company refinanced its Senior Secured Credit Facility and entered into the Fourth Amendment to Credit Agreement (the "Fourth Amendment"). The Fourth Amendment provided, among other things, for term loan in the aggregate principal amount of $38.0 million and revolving loan commitments in the aggregate principal amount of $10.0 million, each with a term of five years. The Company borrowed a total of $38.0 million under the Term Loan and $10.0 million under the revolving loan upon refinancing.

On July 28, 2014, the Company entered into the Fifth Amendment to Credit Agreement (the "Fifth Amendment" and the Credit Agreement as so amended, the "Amended Credit Agreement"). The Fifth Amendment provides, among other things, for (1) an uncommitted incremental term loan facility in an aggregate amount not to exceed $50.0 million and (2) the reduction of interest rate margins. As of September 30, 2014, the applicable interest rate was approximately 3.13%.

At the option of the Company (subject to certain limitations), borrowings under the Amended 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 1.5% to 1.75% dependent on the senior leverage ratio then in effect calculated on the basis of the actual number of days elapsed in a 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 described in the Amended Credit Agreement) as the U.S. “Prime Rate,” (b) the federal funds rate, plus 0.50% per annum or (c) LIBOR for an interest period of one month, plus 1.00% 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 years) and will be equal to LIBOR plus 2.50% and 2.75% dependent on the senior leverage ratio then in effect, calculated based on the actual number of days elapsed in a 360-day year. Interest will be paid at the end of each interest period or in the case of interest periods longer than three months, quarterly.

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 Amended Credit Agreement requires the Company to maintain an interest coverage ratio of at least 3.5 to 1.0 and a senior leverage ratio not exceeding initially 1.75 to 1.00 and stepping down to 1.20 to 1.00. The Amended 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.

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 Amended Credit Agreement), subject to leverage-based step-downs, (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.

The Amended 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% Convertible Notes would be an event of default under the Amended Credit Agreement. As of September 30, 2014, the Company was in compliance with the covenants.

The proceeds received on June 25, 2012 from the original Term Loan were net of debt issuance costs of approximately $4.5 million being amortized over the 5-year term of the Senior Secured Credit Facility. Following the

13

refinancing under the Fourth Amendment, the Company wrote off unamortized debt issuance costs of $2.5 million associated with the original Term Loan, and received proceeds on October 17, 2013 from the new Term Loan and Revolver, net of debt issuance costs of approximately $0.8 million that amortize on the effective interest rate method beginning October 17, 2013.

As of September 30, 2014, the Company had an outstanding principal balance of approximately $24.0 million under the Term Loan and incurred $0.4 million and $1.4 million in interest expense under the Senior Secured Credit Facility for the three and nine months ended September 30, 2014, respectively. There were no amounts outstanding under the Revolving Credit Facility as of June 30, 2014.

Quarterly, principal payments are due under the Term Loan, which amortizes such that 10% of the outstanding principal is due during the first four years and the remaining 60% is due in the fifth year, including any remaining principal balance and any outstanding revolver balance at such time. The principal amount of unpaid maturities per the Amended Credit Agreement is as follows (in thousands):

2014, remainder thereof	$	—
2015	—
2016	—
2017	1,150
2018	22,800
Total	$	23,950

The Company intends to continue making quarterly payments during 2014 and reclassified $4.0 million as current on the accompanying Condensed Consolidated Balance Sheet as of September 30, 2014.

4.00% Convertible Senior Notes

On June 25, 2012, the Company issued $105.0 million principal amount of 4.00% Convertible Senior Notes ("4.00% Convertible Notes") due July 1, 2019. The net proceeds, after debt issuance costs totaling $3.9 million from the 4.00% Convertible Notes offering, were $101.1 million. The 4.00% Convertible 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% Convertible Notes, which is 7 years.

Holders of the 4.00% Convertible Notes may convert their 4.00% Convertible 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% Convertible 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% Convertible 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% Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

As of September 30, 2014, the outstanding balance on the 4.00% Convertible Notes was $105.0 million and interest incurred for the three and nine months ended September 30, 2014 was $1.2 million and $3.6 million, respectively.

14

NOTE 8—NET LOSS PER COMMON SHARE

Basic earnings 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 earnings per common share, if any, gives effect to dilutive common stock subject to repurchase, stock options (calculated based on the treasury stock method), shares purchased under the employee stock purchase plan and convertible debt (calculated using an as-if-converted method).

The following table sets forth a reconciliation of basic and diluted net income (loss) per common share (in thousands except per common share amounts):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
Net income (loss)	$	2,384	$	(4,156	)	$	(9,001	)	$	(25,700	)
Add effect of dilutive securities:
Interest on convertible notes	—		—			—			—
Adjusted net income (loss)	$	2,384	$	(4,156	)	$	(9,001	)	$	(25,700	)
Shares used in computing basic net income (loss) per common share	73,413		71,600			72,955			71,227
Add effect of dilutive securities:
Employee stock compensation plans	1,170		—			—			—
Common stock subject to repurchase	1,732		—			—			—
Convertible notes	—		—			—			—
Shares used in computing diluted net income (loss) per common share	76,315		71,600			72,955			71,227
Basic net income (loss) per common share	$	0.03	$	(0.06	)	$	(0.12	)	$	(0.36	)
Diluted net income (loss) per common share	$	0.03	$	(0.06	)	$	(0.12	)	$	(0.36	)

The potential dilutive securities excluded from diluted net income (loss) per common share were as follows (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Employee stock options	3,283	5,364	4,452	5,364
Employee stock purchase plan	174	—	88	—
Restricted stock and restricted stock units	1,918	3,252	3,650	3,252
Convertible notes	17,857	17,857	17,857	17,864
Total	23,232	26,473	26,047	26,480

NOTE 9—COMMITMENTS AND CONTINGENCIES

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 the attention of management and technical personnel in defending against litigation, and any adverse ruling or perception of an

15

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 flows 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:

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. 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. On April 22, 2014, the Company entered into a settlement agreement with Enzo with respect to these two lawsuits. Pursuant to the agreement the Company agreed to pay Enzo $5.1 million and recorded the litigation settlement charge within the results of operations in the first three months of 2014. The settlement agreement does not include the Delaware Case described below.

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 nine months ended September 30, 2014 and 2013, the Company did not incur significant costs in connection with administrative proceedings.

Leases

In June 2014, the Company entered into two leases for premises located in San Diego, California (the “Leases”). The Leases cover premises totaling approximately 82,759 rentable square feet. Subject to the completion of tenant improvements, both Leases are expected to commence in August 2015 and expire in March 2023.

On August 26, 2014, the Company extended its two leases for 26111 and 26101 Miles Road, Warrensville Heights, Ohio 44128 for three years commencing on April 1, 2015 and terminating on March 31, 2018. In addition, the Company has two options to extend these leases for an additional three year period with respect to each option.

Future minimum lease obligations, net of sublease income, as of September 30, 2014 under the two leases mentioned above are as follows (in thousands):

For the Year Ending December 31,	Amount
2014, remainder thereof	$	—
2015	376
2016	2,008
2017	2,639
2018	2,524
Thereafter	11,242
Total	$	18,789

16

NOTE 10—INCOME TAXES

During the three and nine months ended September 30, 2014, the Company recognized an income tax benefit of $0.1 million and a provision of $0.6 million, respectively. The benefit for income taxes during the three months ended September 30, 2014 primarily consists of an income tax benefit of $0.2 million resulting from a reduction in valuation allowance for net deferred tax assets arising from other comprehensive income recorded in accordance with intraperiod tax allocation guidance, and an income tax benefit of $0.2 million related to the effective settlements of unrecognized tax benefits, offset by foreign taxes. The provision for income taxes during the nine months ended September 30, 2014 primarily consists of foreign taxes, offset by an income tax benefit of $0.3 million resulting from a reduction in valuation allowance for net deferred tax assets arising from other comprehensive income recorded in accordance with intraperiod tax allocation guidance, and an income tax benefit of $0.6 million related to the lapses of statutes of limitations as well as effective settlements of unrecognized tax benefits.

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 Company's U.S. deferred tax assets continue to be subject to a valuation allowance as of September 30, 2014.

As of September 30, 2014, the total amount of unrecognized tax benefits decreased by approximately $0.3 million as compared to December 31, 2013, primarily due to the lapses of statutes of limitations and effective settlements of unrecognized tax benefits. As a result of settlements of ongoing tax examinations and/or expiration of statues of limitations without the assessment of additional income taxes, the amount of unrecognized tax benefits that could be recognized in earnings in the next 12 months could range from zero to approximately $1.3 million.

NOTE 11—SEGMENT 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.  The Company is organized in two reportable segments: Affymetrix Core and eBioscience.

Affymetrix Core is divided into four business units, with each business unit having its own strategic Marketing and Research and Development groups to better serve customers and respond quickly to the market needs.  Affymetrix Core manufacturing operations are based on platforms that are used to produce various Affymetrix products that serve multiple applications and markets and similar customer and economic characteristics. Additionally, the business units share certain research, development and common corporate services that provide capital, infrastructure and functional support. As such, the Company has concluded that the four business units represent one reportable operating segment. 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;

• Genetic Analysis and Clinical Applications: This business unit markets the Company's rapidly growing Axiom® genotyping product line, as well as products with clinical diagnostic and research applications including the CytoScan® and OncoScan products, as well as the ViewRNA in-situ hybridization platform for clinical translational research. In addition, the business unit is responsible for development and marketing of the Powered-by-Affymetrix (PbA) clinical partnering and licensing program which enables third-party diagnostic companies to access and develop DNA and RNA-based diagnostic tests on Affymetrix technology platforms. This business unit also markets the CytoScan Dx product, the recently FDA approved microarray system for post natal diagnostics of children with developmental delays and intellectual disabilities;

• Life Science Reagents: This business unit sells reagents, enzymes, purification kits and biochemicals used by life science researchers and other tool provider businesses, including those developing and marketing Next Generation Sequencing products and molecular diagnostics; and

17

• Corporate: This business unit is comprised primarily of incidental revenue from royalty arrangements and field revenue from field-services provided to customers of the Company.

The eBioscience business unit operates with its own manufacturing, research and marketing groups. The eBioscience business unit does utilize certain Corporate functions such as finance, legal and human resources. This reportable segment specializes in the areas of flow cytometry reagents, immunoassays, microscopic imaging, other protein-based analyses, QuantiGene single and multiplex RNA solution assays (not including the QuantiGeneRNA View in-situ hybridization platform) and Procarta multiplex immunoassay product lines.

eBioscience began integrating the development and marketing of the QuantiGene (excluding the ViewRNA in-situ hybridization platform) and Procarta product lines during 2013 with full integration in 2014. These products were previously reported by the Expression Business Unit of the Affymetrix Core reportable segment.  Accordingly, segment information for prior periods has been restated to reflect these changes for purposes of comparability. 

The Company evaluates the performance of its reportable segments based on revenue and income (loss) from operations. Revenue is allocated to each business unit based on product codes. The eBioscience business is operated on a stand-alone basis.

The following table shows revenue and loss from operations by reportable operating segment for the three and nine months ended September 30, 2014 and 2013 (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
Revenue:
Affymetrix Core	$	64,645	$	58,178		$	186,177		$	171,335
eBioscience	22,441		22,176			69,312			66,428
Totals	$	87,086	$	80,354		$	255,489		$	237,763
Income (loss) from operations:
Affymetrix Core	$	3,139	$	686		$	(3,595	)	$	(7,103	)
eBioscience	1,737		(1,969		)	(574		)	(9,339		)
Totals	$	4,876	$	(1,283	)	$	(4,169	)	$	(16,442	)

NOTE 12—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 September 30, 2014, no significant royalties have been earned from this agreement.

NOTE 13—RESTRUCTURING

During the fourth quarter of 2012, the Company initiated a cost reduction action that included downsizing its workforce to realign the Company's organization to support its strategy to stabilize its core business and position the Company for growth. Restructuring charges of $4.5 million were recognized during the first half of 2013. The restructuring activities were completed in the second quarter of 2013.

18

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 September 30, 2014 and for the three and nine months ended September 30, 2014 and 2013 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, 2013.

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 Food & Drug Administration (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 this Annual Report on Form 10-K for the year ended December 31, 2013. 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 provider of life science and molecular diagnostic products that enable parallel analysis of biological systems at the gene, protein and cell level. We sell our products to life science research centers, academic institutions, government and private laboratories, as well as pharmaceutical, diagnostic and biotechnology companies. Over 65,000 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 Segments

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. The Company is organized in two reportable segments: Affymetrix Core and eBioscience.

Affymetrix Core is divided into four business units, with each business unit having its own strategic Marketing and Research and Development groups to better serve customers and respond quickly to the market needs. Affymetrix Core manufacturing operations are based on platforms that are used to produce various Affymetrix products that serve multiple applications and markets. Additionally, the business units share certain research, development and common corporate services that provide capital, infrastructure and functional support, and have similar customers and economic

19

characteristics. As such, the Company has concluded that the four business units represent one reportable operating segment. 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;

• Genetic Analysis and Clinical Applications: This business unit markets the Company's rapidly growing Axiom® genotyping product line, as well as products with clinical diagnostic and research applications including the CytoScan® Dx and OncoScan products, as well as the ViewRNA in-situ hybridization platform for clinical translational research. In addition, the business unit is responsible for development and marketing of the PbA clinical partnering and licensing program which enables third-party diagnostic companies to access and develop DNA and RNA-based diagnostic tests on Affymetrix technology platforms. This business unit also markets the CytoScan Dx product, the recently FDA approved microarray system for post natal diagnostics of children with developmental delays and intellectual disabilities;

• Life Science Reagents: This business unit sells reagents, enzymes, purification kits and biochemicals used by life science researchers and other tool provider businesses, including those developing and marketing Next Generation Sequencing products and molecular diagnostics; and

• Corporate: This business unit is comprised primarily of incidental revenue from royalty arrangements and field revenue from field-services provided to customers of the Company.

The eBioscience business unit operates with its own manufacturing, research and marketing groups. The eBioscience business unit does utilize certain Corporate functions such as finance, legal and human resources. This reportable segment specializes in the areas of flow cytometry reagents, immunoassays, microscopic imaging, other protein-based analyses, QuantiGene single and multiplex RNA solution assays (not including the QuantiGeneRNA View in-situ hybridization platform) and Procarta multiplex immunoassay product lines.

Effective 2014, the Genetic Analysis and Clinical Applications Business Unit market the ViewRNA in-situ hybridization platform for clinical translational research of RNA in tissue sections that was previously part of the Expression Business Unit. In addition, eBioscience began integrating the development and marketing of the remaining QuantiGene (excluding the ViewRNA in-situ hybridization platform) and Procarta product lines during 2013 with full integration in 2014. These products were also previously reported by the Expression Business Unit.  Accordingly, segment information for prior periods has been restated to reflect these changes for purposes of comparability. 

All of our business units sell their products through our Global Commercial Organization comprised of sales, field application and service 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, Brazil, the Middle East and Asia Pacific, including China, we sell our products principally, through third party distributors that specialize in life science supply. In China and Brazil, we are investing in local management, sales, service and application support. In certain of these markets we also have focused and dedicated sales, service and application support as well to increase the reach and effectiveness of our distributors. For certain molecular diagnostic and industrial applications market opportunities, we supply our PbA partners with arrays, assays, reagents and instruments, which they incorporate into diagnostic products and assume the primary commercialization responsibilities.

See Note 11, "Segment Information", of the accompanying condensed consolidated financial statements for more information on our reportable operating segments.

Overview of the third quarter of 2014 and strategic initiatives

Traditionally, a significant portion of our revenue came from the well-established gene expression business, specifically our GeneChip® Expression product line and our legacy genotyping products, and we concentrated on selling these products in the basic research market focused on discovery activities. Declining sales and intense competition from newer technologies such as next generation sequencing in the gene expression business led to decreasing gene expression revenue and our legacy genotyping products also experienced declines due to competition and shifting customer priorities.

20

Since Frank Witney became our President and Chief Executive Officer in July 2011, we have begun shifting our resources and focus from a dependency on our Expression business unit products to a more diversified portfolio with broader and growing revenue streams that reach into the growing markets for translational medicine, molecular diagnostics and applied sciences.     Revenue from the Expression business unit was reduced to approximately 21% of total revenue in the third quarter of 2014 as compared to 27% in the same period of 2013 while revenue from our Genetic Analysis and Clinical Applications business unit increased to 40% of total revenue in the third quarter of 2014 as compared to 30% in the same period of 2013. Our eBioscience business was approximately 26% and 28% of our consolidated revenue for the third quarter of 2014 and 2013, respectively.

As we progress through 2014, we continue to focus on the strategy developed by Dr. Witney and the management team where we continue to 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 and acquired eBioscience. Through eBioscience, we now offer flow cytometry reagents and immunoassay products which, aligned with our new product introductions, enable us to broaden our reach into the translational medicine, applied, and molecular diagnostics markets. We believe these actions have and will promote stabilization of our core business and the realignment of our product portfolio has positioned us for growth.

• Phase II (2013-2014) – Profitability, Strengthen Balance Sheet, Development of Newer Product Lines. In the beginning of 2013, we implemented a corporate restructuring with a goal of accelerating our path to profitability. Our priorities for this phase are to achieve profitability, pay down a significant portion of our senior secured debt, successfully commercialize our newer product lines (for example, CytoScan®, Axiom®, OncoScan^TM, Human Transcriptome Array and QuantiGene® View RNA lines, as well as our eBioscience products) and invest in new product offerings. In addition, we are training and refocusing 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. In this phase, our goal is to have well established growing product lines in translational medicine, clinical diagnostics and applied science such as Ag Bio. We also intend to have a strong balance sheet that will provide us with strategic flexibility.

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 are believed 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. 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 and nine months ended September 30, 2014, 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, 2013 except for the following.

21

RESULTS OF OPERATIONS

The following discussion compares the historical results of operations for the three and nine months ended September 30, 2014 and 2013.

REVENUE

	Three Months Ended September 30,				$ Change			% Change	Nine Months Ended September 30,				$ Change			% Change
	2014		2013						2014		2013
Total revenue ($ in thousands):
Consumables	$	73,709	$	72,005	$	1,704		2%	$	216,196	$	210,105	$	6,091		3%
Instruments	4,360		2,771		1,589			57%	11,448		10,400		1,048			10%
Product sales	78,069		74,776		3,293			4%	227,644		220,505		7,139			3%
Services and other revenue	9,017		5,578		3,439			62%	27,845		17,258		10,587			61%
Total revenue	$	87,086	$	80,354	$	6,732		8%	$	255,489	$	237,763	$	17,726		7%
Segment revenue ($ in thousands):
Affymetrix Core:
Expression	$	18,236	$	21,340	$	(3,104	)	(15)%	$	53,888	$	61,214	$	(7,326	)	(12)%
Genetic analysis and clinical applications	34,838		24,337		10,501			43%	99,292		70,194		29,098			41%
Life science reagents	6,440		7,756		(1,316		)	(17)%	20,234		24,356		(4,122		)	(17)%
Corporate	5,131		4,745		386			8%	12,763		15,571		(2,808		)	(18)%
Total Affymetrix Core	64,645		58,178		6,467			11%	186,177		171,335		14,842			9%
eBioscience	22,441		22,176		265			1%	69,312		66,428		2,884			4%
Total revenue	$	87,086	$	80,354	$	6,732		8%	$	255,489	$	237,763	$	17,726		7%
Segment revenue (% of revenue):
	2014		2013						2014		2013
Expression	21%		27%						21%		26%
Genetic analysis and clinical applications	40%		30%						39%		30%
Life science reagents	7%		9%						8%		10%
Corporate	6%		6%						5%		6%
Total Affymetrix Core	74%		72%						73%		72%
eBioscience	26%		28%						27%		28%
Total revenue	100%		100%						100%		100%

Product sales

For the three months ended September 30, 2014, total product sales increased $3.3 million as compared to the same period in 2013. The increase was primarily due to higher volume of Cytogenetics, Axiom, and ProCarta Plex products. These increases were partially offset by a decline in our legacy in vitro transcription (IVT) expression product sales and a decrease

22

in revenue of $1.3 million due to the divestiture of our Anatrace-branded reagents in October of 2013. Instrument revenue increased due to a higher volume of genotyping instrument sales.

For the nine months ended September 30, 2014, total product sales increased $7.1 million as compared to the same period in 2013. The increase was primarily due to higher revenues from our Cytogenetics, Axiom® and ProCarta Plex product lines. These increases were partially offset by a decline in our legacy in vitro transcription (IVT) expression product sales and a decrease in revenue of $4.3 million due to the divestiture of our Anatrace-branded reagents in October of 2013.

Services and other revenue

For the three months ended September 30, 2014, services and other revenue increased $3.4 million as compared to the same period in 2013, primarily due to increased Axiom genotyping services of $3.4 million.

For the nine months ended September 30, 2014, services and other revenue increased $10.6 million as compared to the same period in 2013, primarily due to increased Axiom genotyping services of $10.2 million and OncoScan services of $0.6 million. These increases were partially offset by lower royalties and licensing revenue of $0.6 million.

Expression

For the three months ended September 30, 2014, Expression revenue decreased $3.1 million as compared to the same period in 2013, primarily due to lower IVT sales of $1.9 million, lower Gene array sales of $0.5 million, and lower Whole Transcriptome (WT) product sales of $0.4 million.

For the nine months ended September 30, 2014, Expression revenue decreased $7.3 million as compared to the same period in 2013, primarily due to lower IVT sales of $7.0 million, lower Gene Array product sales of $1.2 million, and lower Expression instrument sales of $0.6 million, partially offset by higher sales of Exon and HTA products of $0.8 million.

Genetic Analysis and Clinical Applications

For the three months ended September 30, 2014, Genetic Analysis and Clinical Applications revenue increased $10.5 million as compared to the same period in 2013, primarily due to increased Axiom® product sales and services of $6.1 million, increased Cytogenetics product sales of $1.6 million, increased instrument sales of $1.4 million, increased sales to PbA partners of $1.1 million, and increased OncoScan^TM product sales and services of $0.7 million, partially offset by a decline in sales of our legacy genotyping product SNP 6.0 of $0.6 million.

For the nine months ended September 30, 2014, Genetic Analysis and Clinical Applications revenue increased $29.1 million as compared to the same period in 2013, primarily due to increased Axiom® product sales and services of $17.4 million, increased CytoScan® sales of $5.1 million, increased OncoScan^TM product sales and services of $3.1 million, and increased instrument sales of $1.6 million, partially offset by a decline in sales of our legacy genotyping product SNP 6.0 of $1.0 million.

Life Science Reagents

For the three and nine months ended September 30, 2014, Life Science Reagents revenue decreased $1.3 million and $4.1 million, respectively, as compared to the same periods in 2013, primarily due to the divestiture of our Anatrace-branded reagents in October of 2013.

Corporate

For the three months ended September 30, 2014, Corporate revenue increased $0.4 million, as compared to the same period in 2013, primarily due to a net realized gain from designated cash flow hedges.

For the nine months ended September 30, 2014, Corporate revenue decreased $2.8 million, as compared to the same period in 2013, primarily due to a decrease in royalty and license revenue and a decrease in net realized gain from designated cash flow hedges.

23

eBioscience

For the three and nine months ended September 30, 2014, eBioscience revenue increased $0.3 million and $2.9 million, respectively, as compared to the same periods in 2013, primarily due to higher volume of ProCarta Plex product sales.

GROSS MARGIN

Dollars in thousands	Three Months Ended September 30,						$/Point Change			Nine Months Ended September 30,						$/Point Change
	2014			2013						2014			2013
Total gross profit on product sales	$	48,929		$	42,176		$	6,753		$	138,433		$	119,884		$	18,549
Total gross profit on services and other revenue	2,591			1,663			928			8,487			6,130			2,357
Product gross margin	63		%	56		%	7			61		%	54		%	7
Service and other revenue gross margin	29		%	30		%	(1		)	30		%	36		%	(6		)

Product gross profit

For the three months ended September 30, 2014, product gross profit increased $6.8 million as compared to the same period in 2013. Product gross profit increased $2.9 million due to the completion of amortization for the step-up in inventory fair value that was recognized when we acquired eBioscience in 2012. The increase is also due to higher sales of $2.1 million as compared to the same period in 2013, and lower inventory reserve of $0.6 million and impact of an inventory write-off for a quality issue in the same period in 2013 of $0.5 million.

For the nine months ended September 30, 2014, product gross profit increased $18.5 million as compared to the same period in 2013. Product gross profit increased $9.1 million due to increased sales, favorable factory absorption on higher manufacturing volume to support increased sales, and cost savings impact of material in-sourcing projects. Product gross profit increased due to the decline in amortization of step-up in inventory fair value that was recognized when we acquired eBioscience in 2012 and was fully amortized as of June 30, 2014. Product gross profit for the first nine month of 2014 included $4.7 million of amortization of step-up in inventory fair value compared to $12.0 million in the same period of 2013. The increase is also due to lower Instrument and Array replacements and higher returned material authorization (RMA) recoveries of $1.3 million and the impact of an inventory write-off for a quality issue in the same period in 2013 of $0.5 million.

Service and other gross profit

For the three months ended September 30, 2014, service gross profit increased $0.9 million as compared to the same period in 2013, due to the favorable impact of revenue recognized from a large biobank project in the third quarter of 2014.

For the nine months ended September 30, 2014, service gross profit increased $2.4 million as compared to the same period in 2013, due to the favorable impact of revenue recognized from a large biobank project in the first nine months of 2014, partially offset by a decrease in royalty and license revenue.

OPERATING EXPENSES

Dollars in thousands	Three Months Ended September 30,					$ Change		% Change	Nine Months Ended September 30,				$ Change			% Change
	2014		2013						2014		2013
Research and development	$	12,926	$	11,478		$	1,448	13%	$	37,443	$	35,686	$	1,757		5%
Selling, general and administrative expenses	33,718		33,646			72		0%	108,546		102,286		6,260			6%
Litigation settlement	—		—			—		0%	5,100		—		5,100			100%
Restructuring charges	—		(2		)	2		(100)%	—		4,484		(4,484		)	(100)%

24

Research and development Research and development expense increased $1.4 million and $1.8 million for the three and nine months ended September 30, 2014, respectively, as compared to the same periods in 2013. The increases are primarily due to increased variable compensation and consulting services related to the development of our new instrument, partially offset by lower spending of supplies.

Selling, general and administrative Selling, general and administrative expenses increased $0.1 million for the three months ended September 30, 2014 as compared to the same period in 2013. The increase is primarily related to increases in compensation and benefits due to headcount increases and additional legal fees incurred during the current period primarily related to litigation, offset by lower depreciation expense as certain fixed assets have been fully depreciated. Selling, general and administrative expenses increased $6.3 million for the nine months ended September 30, 2014 as compared to the same period in 2013. The increases are primarily due to increases in compensation and benefits due to increased headcount, increased variable compensation, and additional legal fees incurred during the current periods primarily related to on-going Enzo litigation activities.

Litigation settlement On April 22, 2014, the Company entered into a settlement agreement with Enzo with respect to our dispute with Enzo Life Sciences, Inc. brought in the Southern District Court of New York. Pursuant to the agreement the Company agreed to pay Enzo $5.1 million as consideration for both parties agreeing to release each other from all liabilities and claims arising under both lawsuits. As the settlement related to past claims with no ongoing benefit, these costs were recognized during the first three months of 2014 when the amount was determined to be probable and estimable.

Restructuring charges During the fourth quarter of 2012, the Company initiated a cost reduction action that included workforce reductions to realign the Company's organization to support its strategy to stabilize its core business and position the Company for growth. Restructuring charges of $4.5 million were recognized during the first half of 2013. The restructuring activities were completed in the second quarter of 2013.

OPERATING INCOME (LOSS)

Management evaluates business segment performance based on revenue and income (loss) from operations. The following table presents operating income (loss) for each reportable segment and a reconciliation of our segment operating income (loss) to income (loss) before income taxes:

Dollars in thousands	Three Months Ended September 30,						$ Change			% Change	Nine Months Ended September 30,						$ Change			% Change
	2014			2013							2014			2013
Operating loss:
Affymetrix Core	$	3,139		$	686		$	2,453		(358)%	$	(3,595	)	$	(7,103	)	$	3,508		49%
eBioscience	1,737			(1,969		)	3,706			188%	(574		)	(9,339		)	8,765			94%
Total operating income (loss)	$	4,876		$	(1,283	)	$	6,159		480%	$	(4,169	)	$	(16,442	)	$	12,273		75%
Reconciliation to loss before income taxes :
Other (expense) income, net	(1,008		)	$	68		$	(1,076	)	(1,582)%	$	703		$	501		$	202		40%
Interest expense	1,595			2,652			(1,057		)	40%	4,972			8,274			(3,302		)	40%
Income (loss) before income taxes	$	2,273		$	(3,867	)	$	6,140		159%	$	(8,438	)	$	(24,215	)	$	15,777		65%

Other (expense) income, net Other (expense) income, net, decreased $1.1 million for the three months ended September 30, 2014 as compared to the same period in 2013. The decrease is primarily due to currency losses, partially offset by an additional gain related to the liquidation of certain investments recorded in the third quarter of 2014. Other (expense) income, net, increased $0.2 million for the nine months ended September 30, 2014 as compared to the same period in 2013. The increase is primarily due to the gains recorded in the first nine months of 2014 related to the liquidation of non-marketable securities, partially offset by currency losses.

25

Interest expense Interest expense decreased $1.1 million and $3.3 million for the three and nine months ended September 30, 2014, respectively, as compared to the same periods in 2013. The decreases are due to a combination of lower outstanding borrowings in the third quarter and the first nine months of 2014 as well as lower interest rates following the refinance of our Senior Secured Credit Facility in October 2013 and the modification in July 2014.

INCOME TAX PROVISION

Dollars in thousands	Three Months Ended September 30,					$ Change			% Change	Nine Months Ended September 30,				$ Change			% Change
	2014			2013						2014		2013
Income tax (benefit) provision	$	(111	)	$	289	$	(400	)	138%	$	563	$	1,485	$	(922	)	62	%

During the three and nine months ended September 30, 2014, the Company recognized an income tax benefit of $0.1 million and a provision of $0.6 million, respectively. The benefit for income taxes during the three months ended September 30, 2014 primarily consists of an income tax benefit of $0.2 million resulting from a reduction in valuation allowance for net deferred tax assets arising from other comprehensive income recorded in accordance with intraperiod tax allocation guidance, and an income tax benefit of $0.2 million related to the effective settlements of unrecognized tax benefits, offset by foreign taxes. The provision for income taxes during the nine months ended September 30, 2014 primarily consists of foreign taxes, offset by an income tax benefit of $0.3 million resulting from a reduction in valuation allowance for net deferred tax assets arising from other comprehensive income recorded in accordance with intraperiod tax allocation guidance, and an income tax benefit of $0.6 million related to the lapses of statutes of limitations as well as effective settlements of unrecognized tax benefits.

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 Company's U.S. deferred tax assets continue to be subject to a valuation allowance as of September 30, 2014.

As of September 30, 2014, the total amount of our unrecognized tax benefits has decreased by approximately $0.3 million as compared to December 31, 2013, primarily due to the lapses of statutes of limitations. As a result of settlements of ongoing tax examinations and/or expiration of statues of limitations without the assessment of additional income taxes, the amount of unrecognized tax benefits that could be recognized in earnings in the next 12 months could range from zero to approximately $1.3 million.

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% Convertible Notes; collaborative agreements; 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 activities, 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 September 30, 2014, we had cash and cash equivalents of approximately $68.3 million. 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, 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; an 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 dispositions; the progress of our research and development programs; initiation or expansion of research programs and collaborations; the

26

costs involved in preparing, filing, prosecuting and enforcing intellectual property rights; the purchase of patent licenses; and other factors.

During the nine months ended September 30, 2014, we prepaid $15.5 million of our senior secured debt with cash provided by operations. In July 2014, we entered into the Fifth Amendment, which provides, among other things, for (1) an uncommitted incremental term loan facility in an aggregate amount not to exceed $50.0 million and (2) the reduction of interest rate margins. As of September 30, 2014, the carrying amount of the senior secured debt was $24.0 million.

As part of the terms of the senior secured debt agreement, we are required to meet certain financial and other negative covenants. As of September 30, 2014, we were in compliance with the amended covenants. Refer to Note 7, “Long-Term Debt Obligations”, for further details regarding our Senior Secured Credit Facility and 4.00% Convertible 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 and nine months ended September 30, 2014.

Cashflow (in thousands)

	Nine Months Ended September 30,
	2014			2013
Net cash provided by operating activities	$	28,332		$	32,185
Net cash (used in) provided by investing activities	(2,039		)	5,540
Net cash used in financing activities	(14,679		)	(13,328		)

Operating Activities

Net cash provided by operating activities for the nine months ended September 30, 2014 was comprised of net loss of $9.0 million, non-cash charges of $35.3 million and an increase of $2.1 million related to changes in operating assets and liabilities. Adjustments for non-cash expenses include depreciation and amortization expense of $23.7 million, amortization expense related to inventory step-up in fair value of $4.7 million (which was fully amortized as of June 30, 2014), and share-based compensation expense of $9.4 million.

Net cash provided by operating activities for the nine months end September 30, 2013 was comprised of net loss of $25.7 million, non-cash charges of $50.1 million and a decrease of $7.8 million related to changes in operating assets and liabilities. Adjustments for non-cash expenses include depreciation and amortization expense of $30.0 million, amortization expense related to inventory step-up in fair value of $12.0 million, share-based compensation expense of $5.1 million.

Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2014 included proceeds from sale of non-marketable securities of $2.2 million and capital expenditures of $4.3 million.

Net cash provided by investing activities for the nine months ended September 30, 2013 included $9.4 million in cash proceeds resulting from the sale of our remaining available-for-sale securities, offset by $3.0 million spent on capital expenditures, $0.2 million of non-marketable investments purchase, and $0.6 million of technology rights purchase.

Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2014 included $15.5 million of early payments on the outstanding principal amount of borrowings under our Term Loan agreement.

Net cash used in financing activities for the nine months ended September 30, 2013 included $3.9 million in payments to repurchase our 3.50% Notes and $9.6 million in payments on the outstanding principal amount of our Term Loan.

27

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.

OFF-BALANCE SHEET ARRANGEMENTS AND AGGREGATE CONTRACTUAL OBLIGATIONS

As of September 30, 2014, we had no off-balance sheet arrangements. 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, 2013, except with respects to the prepayment of amounts owned under our Term Loan as discussed above and leases described below.

In June 2014, the Company entered into two leases for premises located in San Diego, California (the “Leases”). The Leases cover premises totaling approximately 82,759 rentable square feet. Subject to the completion of tenant improvements, both Leases are expected to commence in August 2015 and expire in March 2023.

On August 26, 2014, the Company extended its two leases for 26111 and 26101 Miles Road, Warrensville Heights, Ohio 44128 for three years commencing on April 1, 2015 and terminating on March 31, 2018. In addition, the Company has two options to extend these leases for an additional three year period with respect to each option.

Future minimum lease obligations, net of sublease income, as of September 30, 2014 under the two leases mentioned above are as follows (in thousands):

For the Year Ending December 31,	Amount
2014, remainder thereof	$	—
2015	376
2016	2,008
2017	2,639
2018	2,524
Thereafter	11,242
Total	$	18,789

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 1, "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, 2013 for further information.

Interest Rate Risk

We are exposed to market risk from changes in interest rates on long-term obligations. We have a combination of fixed and variable rate debt. Refer to Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2013. In October 2013, we refinanced $48.0 million under our Senior Secured Credit Facility. In July 2014, we entered into the Fifth Amendment, which provides, among other things, for (1) an uncommitted incremental term loan facility in an aggregate amount not to exceed $50.0 million and (2) the reduction of interest rate margins. Our interest rate risk relates primarily to U.S. dollar LIBOR-indexed borrowings.

A 100 basis point increase in interest rates on the current borrowings is not expected to have a material impact on our financial position, results of operations or cash flows since interest on our borrowings is not material to our overall financial position.

28

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 the fiscal quarter covered by this report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

29

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information pertaining to legal proceedings can be found in Note 9, "Commitments and Contingencies" 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

Our business is subject to various risks, including those described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, which we strongly encourage you to review. There have been no material changes from the risk factors disclosed in Item 1A of our Form 10-K.

ITEM 2. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 3. OTHER INFORMATION

None.

ITEM 4. EXHIBITS

Exhibit Number	Description of Document
10.57(1)	Addendum to the Lease Agreement between Miles Commerce Ltd. and the Company dated August 26m 2014 (26101 Miles Road, Warrensville Heights, OH).
10.58(1)	Addendum to the Lease Agreement between 26111 Miles Road Ltd. and the Company dated August 26m 2014 (26111 Miles Road, Warrensville Heights, OH).
31.1(1)	Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2(1)	Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32(1)	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) Filed herewith.

(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.

30

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/ GAVIN WOOD
	Name:	Gavin H. J. Wood
	Title:	Executive Vice President and Chief Financial Officer
October 30, 2014
		Duly Authorized Officer and Principal Financial And Accounting Officer

31

EX-10.57

ADDENDUM

26101 Miles Road, Warrensville Heights, Ohio 44128

THIS AGREEMENT OF LEASE EXTENSION, made as of this 26th day of August, 2014, by and between Miles Commerce Ltd., an Ohio limited liability company (hereinafter called “Landlord” and Affymetrix, Inc., a California corporation (hereinafter called “Tenant”).

WITNESSETH THAT:

1. Landlord and tenant mutually agree to an extension of the original lease whose term commenced April 1, 2010, on the same terms and conditions as therein noted, except for the terms and conditions noted below.

2. The term of this lease shall be extended for a period of three (3) years commencing April 1, 2015 and terminating March 31, 2018.

3. The rent during this extended term shall be at a yearly rate of ninety three thousand nine hundred thirty six dollars ($93,936.00) payable in monthly installments of Seven thousand eight hundred twenty eight dollars ($7,828.00) in advance upon the first of each and every calendar month.

4. Landlord agrees to maintain and repair the roof pay for all repairs of roof over the Premises, subject to Landlord’s approval, which shall not be unreasonably withheld, of the roofing contractor and bid. Landlord represents and warrants that the roof will be in good condition during the term of the lease and if the roof can no longer be repaired to good condition, Landlord agrees to install a new roof over the Premises, subject to Landlord’s approval, which shall not be unreasonably withheld, of the roofing contractor and bid.

5. Landlord grants Tenant an option to extend this lease for two additional terms of three (3) years each. The first additional term (April 1, 2018 to March 31, 2021) will be at the then existing rental rate. The second additional term (April 1, 2021 to March 31, 2024) will be at the then existing rental rate plus an increase based on the annual increases of the cost of living per year as measured by the consumer price index for all goods and services dating from April 1, 2015 as the base year.

IN WITNESS WHEREOF, this lese has been duly executed by Landlord and Tenant as of the day and year first above written.

Signed and acknowledged in the        LANDLORD:

presence of:

/s/ Illegible                /s/ Thomas A. Mann                

/s/Andrew B. Cohen                Thomas A. Mann on behalf of Robert

/s/ Illegible                    A. Mann, Elizabeth Rosenman and

Jeanne Newman

BEFORE ME, a Notary Public in and for said County and State, personally

Appeared Thomas A. Mann, who acknowledged that they did sign the foregoing instrument and that the same is their free act and deed.

IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at Thomas A. Mann___________________________, this 21^st day of August, 2014

.

s/ Suzanne J. Carr                

Notary Public

[Notary Seal]

Suzanne J. Carr

Notary Public of New Jersey

Commission Expires: 10/7/2015

STATE OF New Jersey        )

COUNTY OF Burlington        )    SS:

Signed and acknowledged in the        TENANT:

Presence of:    

AFFYMETRIX, INC.

/s/ Illegible                

/s/ Illegible                    by: /s/ Laurent R. Bellon            

its: Sr. Vice-President Global Operations

STATE OF Ohio            )            Approved as to Form

AFFX Legal Dept.

COUNTY OF Cuyahoga        )     SS:        By    SC    

BEFORE ME, a Notary Public in and for said County and State, personally

Appeared Laurent Bellon, who acknowledged that they did sign the foregoing instrument and that the same is their free act and deed.

IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at, Cuyahoga County, Ohio, this 26 day of 2014, 2014.

/s/ Susan D. Lodge                

Notary Public

[Notary Seal]

Susan D. Lodge

Resident Summit County

Notary Public, State of Ohio

My Commission Expires: 8/10/2016

EX-10.58

ADDENDUM

26111 Miles Road, Warrensville Heights, Ohio 44128

THIS AGREEMENT OF LEASE EXTENSION, made as of this 26th day of August, 2014, by and between 26111 Miles Road Ltd., an Ohio limited liability company (hereinafter called “Landlord” and Affymetrix, Inc., a California corporation (hereinafter called “Tenant”).

WITNESSETH THAT:

1. Landlord and tenant mutually agree to an extension of the original lease whose term commenced April 1, 2010, on the same terms and conditions as therein noted, except for the terms and conditions noted below.

2. The term of this lease shall be extended for a period of three (3) years commencing April 1, 2015 and terminating March 31, 2018.

3. The rent during this extended term shall be at a yearly rate of One hundred fifty one thousand five hundred twenty five dollars ($151,525.00) payable in monthly installments of Twelve thousand six hundred twenty seven dollars and eight cents ($12,627.08) in advance upon the first of each and every calendar month.

4. Landlord grants Tenant an option to extend this lease for two additional terms of three (3) years. The first additional term (April 1, 2018 to March 2021) will be at the then existing rental rate. The second additional term (April 1, 2021 to March 31, 2024) will be at the then existing rental plus an increase based on the annual increases of the cost of living per year as measured by the consumer price index for all goods and services dating from April 1, 2015 as the base year.

IN WITNESS WHEREOF, this lese has been duly executed by Landlord and Tenant as of the day and year first above written.

Signed and acknowledged in the        LANDLORD:

presence of:

/s/ Illegible                /s/ Thomas A. Mann                

/s/Andrew B. Cohen                Thomas A. Mann on behalf of Robert

/s/ Illegible                    A. Mann for 26111 Miles Rd. Ltd.

STATE OF New Jersey        )

COUNTY OF Burlington        )    SS:

BEFORE ME, a Notary Public in and for said County and State, personally

Appeared Thomas A. Mann, who acknowledged that they did sign the foregoing instrument and that the same is their free act and deed.

IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at, Thomas A. Mann___________________________, this 21^st day of August, 2014.

/s/ Suzanne J. Carr                

Notary Public

[Notary Seal]

Suzanne J. Carr

Notary Public of New Jersey

Commission Expires: 10/7/2015

Signed and acknowledged in the        TENANT:

Presence of:    

AFFYMETRIX, INC.

/s/ Illegible                

/s/ Illegible                    by: /s/ Laurent R. Bellon            

its: Sr. Vice-President Global Operations

STATE OF Ohio            )            Approved as to Form

AFFX Legal Dept.

COUNTY OF Cuyahoga        )     SS:        By    SC    

BEFORE ME, a Notary Public in and for said County and State, personally

Appeared Laurent Bellon, who acknowledged that they did sign the foregoing instrument and that the same is their free act and deed.

IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal at, Cuyahoga County, Ohio, this 26 day of 2014, 2014.

/s/ Susan D. Lodge                

Notary Public

[Notary Seal]

Susan D. Lodge

Resident Summit County

Notary Public, State of Ohio

My Commission Expires: 8/10/2016

EX-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.

October 30, 2014	/s/ FRANK WITNEY
	Name:	Frank Witney
	Title:	Director, President and Chief Executive Officer

EX-31.2

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

I, Gavin Wood, 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.

October 30, 2014	/s/ GAVIN WOOD
	Name:	Gavin H. J. Wood
	Title:	Executive Vice President and Chief Financial Officer

EX-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 September 30, 2014 (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.

October 30, 2014	/s/ FRANK WITNEY
	Name:	Frank Witney
	Title:	Director, President and Chief Executive Officer
	/S/ GAVIN WOOD
	Name:	Gavin H. J. Wood
	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.

XML

STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE Share-based Compensation Plans Narrative (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Common stock reserved for future issuance (in shares)	4.7
Unrecognized share-based compensation expense	$ 16.3
Weighted-average term of unrecognized share-based compensation expense, Stock Options	2 years 3 months 29 days
Weighted-average term of unrecognized share-based compensation expense, Restricted Stock	2 years 1 month 17 days

XML

RELATED PARTY TRANSACTIONS (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Related Party Transactions [Abstract]
Minimum royalty fee from related party	$ 100,000

XML

LONG-TERM DEBT OBLIGATIONS, Convertible Senior Notes (Details) (4.00% Convertible Senior Notes, USD $)	0 Months Ended		3 Months Ended	9 Months Ended
	Jul. 25, 2012	Jun. 25, 2012	Sep. 30, 2014	Sep. 30, 2014
4.00% Convertible Senior Notes
Debt Instrument [Line Items]
Senior Notes		$ 105,000,000.0	$ 105,000,000	$ 105,000,000
Debt Instrument, Interest Rate, Stated Percentage		4.00%
Debt issuance costs		3,900,000
Net proceeds from issuance of 4.00% convertible senior notes		101,100,000
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	170.0319
Aggregate principal amount of senior convertible notes repurchased		1,000
Maximum number of shares upon conversion of the 4.00% Notes		17,857,143
Debt Instrument, Convertible, Conversion Price		$ 5.88
Percentage of common stock above conversion price (in hundredths)		130.00%
Number of consecutive trading days within measurement period		20 days
Number of consecutive trading days on which trading price is examined for triggering of conversion		30 days
Number of trading days to trigger measurement period within date company provides notice of redemption		5 days
Percentage of Principal Amount That The Redemption Price Will Be Equal To		100.00%
Debt Instrument, 4.00% Convertible, Interest Expense			$ 1,200,000	$ 3,600,000

XML

RESTRUCTURING (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Restructuring and Related Activities [Abstract]
Restructuring and related cost, expected cost	$ 4.5

XML

LONG-TERM DEBT OBLIGATIONS, Term Loan and Revolving Credit Facility Narrative (Details) (USD $)	0 Months Ended	3 Months Ended	9 Months Ended				0 Months Ended									0 Months Ended			0 Months Ended		0 Months Ended			1 Months Ended				1 Months Ended		0 Months Ended		1 Months Ended
	Jun. 25, 2012	Sep. 30, 2014	Sep. 30, 2014	Jul. 28, 2014	Dec. 31, 2013	Sep. 30, 2014 4.00% Convertible Senior Notes	Oct. 17, 2013 Base Rate [Member] Minimum [Member]	Oct. 17, 2013 Base Rate [Member] Maximum [Member]	Oct. 17, 2013 London Interbank Offered Rate (LIBOR) [Member] Debt Instrument, Redemption, Period One [Member]	Oct. 17, 2013 London Interbank Offered Rate (LIBOR) [Member] Debt Instrument, Redemption, Period Two [Member]	Oct. 17, 2013 London Interbank Offered Rate (LIBOR) [Member] Debt Instrument, Redemption, Period Three [Member]	Oct. 17, 2013 London Interbank Offered Rate (LIBOR) [Member] Debt Instrument, Redemption, Period Four [Member]	Oct. 17, 2013 London Interbank Offered Rate (LIBOR) [Member] Minimum [Member]	Oct. 17, 2013 London Interbank Offered Rate (LIBOR) [Member] Maximum [Member]	Jun. 25, 2012 Term Loan and Revolving Credit Facility [Member]	Jun. 25, 2012 Term Loan [Member]	Sep. 30, 2014 Term Loan [Member]	Oct. 17, 2013 Term Loan [Member]	Oct. 17, 2013 Revolving Credit Facility [Member]	Jun. 25, 2012 Revolving Credit Facility [Member]	Jun. 25, 2012 Refinanced Term Loan [Member]	Oct. 17, 2013 Refinanced Term Loan [Member]	Jun. 25, 2012 Senior Secured Credit Facility [Member]	Oct. 31, 2013 Senior Secured Credit Facility [Member] Interest Period Option 1 [Member]	Oct. 31, 2013 Senior Secured Credit Facility [Member] Interest Period Option 2 [Member]	Oct. 31, 2013 Senior Secured Credit Facility [Member] Minimum [Member]	Oct. 17, 2013 Senior Secured Credit Facility [Member] Minimum [Member]	Oct. 31, 2013 Senior Secured Credit Facility [Member] Maximum [Member]	Oct. 17, 2013 Senior Secured Credit Facility [Member] Maximum [Member]	Oct. 17, 2013 Senior Secured Credit Facility [Member] Federal Funds Rate [Member]	Oct. 17, 2013 Senior Secured Credit Facility [Member] London Interbank Offered Rate (LIBOR) [Member]	Oct. 31, 2013 Senior Secured Credit Facility [Member] London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Current portion of long-term debt		$ 4,000,000	$ 4,000,000		$ 12,750,000
Debt term																5 years			5 years
Face amount															100,000,000.0	85,000,000.0			10,000,000.0			38,000,000.0
Original revolving credit facility																				15,000,000.0
Debt outstanding																		38,000,000	10,000,000
Basis spread on variable rate							1.50%	1.75%					2.50%	2.75%																0.50%	1.00%
Number of days in a year used to calculate rate																										365 days		366 days				360 days
Sum of LIBOR interest period																															1 month
Sum of LIBOR interest period advance determination									1 month	2 months	3 months	6 months
Term of debt used to determine interest rate																								9 years	12 years
Interest rate at period end		3.13%	3.13%
Uncommitted incremental term loan facility capacity				50,000,000
Interest coverage ratio																											3.5
Senior leverage ratio																											1.20		1.75
Minimum prepayment percentage of excess cash flow																							50.00%
Minimum prepayment percentage of net cash proceeds of issuances or incurrences of debt obligations																							100.00%
Minimum prepayment percentage of net proceeds of asset sales over threshold amount																							100.00%
Net proceeds of asset sales threshold to trigger prepayment																							2,500,000
Debt Instrument, Interest Rate, Stated Percentage						4.00%
Debt-related covenants			As of September 30, 2014, the Company was in compliance with the covenants.
Debt issuance cost related to term loan	4,500,000
Amortization period For debt issuance cost term loan	5 years
Debt issuance cost																2,500,000					800,000
Outstanding principal balance of term loan as of balance sheet date		24,000,000	24,000,000
Interest expense incurred		400,000	1,400,000
Outstanding balance under revolving credit facility		$ 0	$ 0
Annual amortization year one																	10.00%
Amortization year two																	10.00%
Amortization year three																	10.00%
Amortization year four																	10.00%
Amortization year five and after																	60.00%

XML

FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other-than-temporary impairment charges	$ 0	$ 500,000
4.00% Convertible Senior Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	4.00%
Convertible debt fair value	$ 166,400,000

XML

INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Inventories

At September 30, 2014 and December 31, 2013, inventories, net consisted of the following (in thousands):

	September 30, 2014		December 31, 2013
Raw materials	$	11,169	$	11,587
Work-in-process	18,497		22,139
Finished goods	28,106		30,305
Total	$	57,772	$	64,031
Short-term portion	$	51,674	$	58,059
Long-term portion	$	6,098	$	5,972

XML

NET LOSS PER COMMON SHARE, Schedule of Potentially Antidilutive Securities (Details) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	23,232	26,473	26,047	26,480
Employee stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	3,283	5,364	4,452	5,364
Employee stock purchase plan [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	174	0	88	0
Restricted stock and restricted stock units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	1,918	3,252	3,650	3,252
Convertible notes [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities	17,857	17,857	17,857	17,864

XML

INVENTORIES (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Inventories [Abstract]
Raw materials	$ 11,169	$ 11,587
Work-in-process	18,497	22,139
Finished goods	28,106	30,305
Total	57,772	64,031
Short-term portion	51,674	58,059
Long-term portion	$ 6,098	$ 5,972

XML

DERIVATIVE FINANCIAL INSTRUMENTS Entity's foreign currency derivatives measured at fair value (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Foreign exchange contracts [Member] | Prepaid expenses and other current assets [Member]
Derivative [Line Items]
Derivative assets:	$ 1,037	$ 185
Foreign exchange contracts [Member] | Accounts payable and accrued liabilities [Member]
Derivative [Line Items]
Derivative liabilities:		927
Interest rate swap [Member] | Accounts payable and accrued liabilities [Member]
Derivative [Line Items]
Derivative liabilities:		$ 11

XML

INCOME TAXES (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Tax Contingency [Line Items]
Income tax expense (benefit)	$ (111,000)	$ 289,000	$ 563,000	$ 1,485,000
Change in valuation allowance	200,000		300,000
Tax benefits related to the lapses of statues of limitations	200,000		600,000
Unrecognized tax benefits, period increase			300,000
Minimum [Member]
Income Tax Contingency [Line Items]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Estimated Range of Change, Upper Bound	0		0
Maximum [Member]
Income Tax Contingency [Line Items]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Estimated Range of Change, Upper Bound	$ 1,300,000		$ 1,300,000

XML

LONG-TERM DEBT OBLIGATIONS, Term Loan Maturities (Details) (Secured Debt [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Secured Debt [Member]
Debt Instrument [Line Items]
2014, remainder thereof	$ 0
2015	0
2016	0
2017	1,150
2018	22,800
Total debt	$ 23,950

XML

FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of September 30, 2014 and December 31, 2013, the assets and liabilities measured at fair value consisted of the following (in thousands):

	September 30, 2014						December 31, 2013
	Fair Value Measurements Using Input Types						Fair Value Measurements Using Input Types
	Level 2		Level 3		Total		Level 2		Level 3		Total
Assets:
Derivative assets	$	1,037	$	—	$	1,037	$	185	$	—	$	185
Non-marketable securities	—		4,516		4,516		—		4,383		4,383
Total assets	$	1,037	$	4,516	$	5,553	$	185	$	4,383	$	4,568
Liabilities:
Derivatives liabilities	$	—	$	—	$	—	$	938	$	—	$	938

Derivative financial instruments

The Company's derivative financial instruments are measured at fair value on a recurring basis utilizing Level 2 inputs as 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 Prepaid expenses and other current assets and Accounts payable and accrued expenses, respectively, in the accompanying Condensed Consolidated Balance Sheets.

Non-Marketable Securities

The Company believes the carrying amounts of its non-marketable securities approximated their fair values at the dates presented above. These non-marketable securities consist of an investment in a limited partnership investment fund that invests in companies in the life science industry and are located in the United States. The investments were initially valued at 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.

During the year ended December 31, 2013, other-than-temporary impairment charges of $0.5 million were recognized on the Company's non-marketable securities. There was no other-than-temporary impairment during the nine months ended September 30, 2014. Net investment losses are included in Other (expense) income, net in the accompanying Consolidated Statements of Operations. Depending on market conditions, the Company may incur additional charges on this investment in the future.

The following table summarizes the change in the fair value of the Company's non-marketable securities during the nine months ended September 30, 2014 (in thousands).

Balance as of December 31, 2013	$	4,383
Sales	(2,162		)
Realized gain	1,700
Unrealized gain	595
Balance as of September 30, 2014	$	4,516

Liabilities Measured at Fair Value on a Nonrecurring Basis

Long-term debt obligations as discussed in Note 7, "Long-Term Debt Obligations", are not measured at fair value on a recurring basis and are carried at amortized cost. The Company believes the fair values of the Term Loan approximates its carrying values, or amortized cost, due to the short-term nature of these obligations and the market rates of interest rates they bear. Such inputs are classified as Level 3 of the fair value hierarchy. The fair value of the Company’s 4.00% Notes is based on quoted market prices as of the respective balance sheet date, and therefore is classified as Level 1 of the fair value hierarchy. As of September 30, 2014, the fair value of the Company’s 4.00% Notes was approximately $166.4 million.

XML

INVENTORIES, Fair Value Step-Up in Basis (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Inventory Disclosure [Abstract]
Inventory, Step Up Adjustment			$ 4,700,000
Amortization of inventory step-up in fair value	$ 4,666,000	$ 11,980,000

XML

COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Future minimum lease obligations, net of sublease income, as of September 30, 2014 under the two leases mentioned above are as follows (in thousands):

For the Year Ending December 31,	Amount
2014, remainder thereof	$	—
2015	376
2016	2,008
2017	2,639
2018	2,524
Thereafter	11,242
Total	$	18,789

XML

NET LOSS PER COMMON SHARE (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Schedule of basic and diluted earnings per share

The following table sets forth a reconciliation of basic and diluted net income (loss) per common share (in thousands except per common share amounts):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
Net income (loss)	$	2,384	$	(4,156	)	$	(9,001	)	$	(25,700	)
Add effect of dilutive securities:
Interest on convertible notes	—		—			—			—
Adjusted net income (loss)	$	2,384	$	(4,156	)	$	(9,001	)	$	(25,700	)
Shares used in computing basic net income (loss) per common share	73,413		71,600			72,955			71,227
Add effect of dilutive securities:
Employee stock compensation plans	1,170		—			—			—
Common stock subject to repurchase	1,732		—			—			—
Convertible notes	—		—			—			—
Shares used in computing diluted net income (loss) per common share	76,315		71,600			72,955			71,227
Basic net income (loss) per common share	$	0.03	$	(0.06	)	$	(0.12	)	$	(0.36	)
Diluted net income (loss) per common share	$	0.03	$	(0.06	)	$	(0.12	)	$	(0.36	)

Securities excluded from diluted earnings per common share on an actual outstanding basis

otential dilutive securities excluded from diluted net income (loss) per common share were as follows (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Employee stock options	3,283	5,364	4,452	5,364
Employee stock purchase plan	174	—	88	—
Restricted stock and restricted stock units	1,918	3,252	3,650	3,252
Convertible notes	17,857	17,857	17,857	17,864
Total	23,232	26,473	26,047	26,480

XML

WARRANTIES (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Changes in Entity's Product Warranty Liability [Abstract]
Product warranty, beginning balance	$ 1,697
Additions charged to cost of product sales	482
Repairs and replacements	(893)
Adjustments	(183)
Product warranty, ending balance	$ 1,103

XML

SEGMENT AND GEOGRAPHIC INFORMATION (Tables)

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The following table shows revenue and loss from operations by reportable operating segment for the three and nine months ended September 30, 2014 and 2013 (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
Revenue:
Affymetrix Core	$	64,645	$	58,178		$	186,177		$	171,335
eBioscience	22,441		22,176			69,312			66,428
Totals	$	87,086	$	80,354		$	255,489		$	237,763
Income (loss) from operations:
Affymetrix Core	$	3,139	$	686		$	(3,595	)	$	(7,103	)
eBioscience	1,737		(1,969		)	(574		)	(9,339		)
Totals	$	4,876	$	(1,283	)	$	(4,169	)	$	(16,442	)

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Total accumulated other comprehensive income, net of tax, beginning balance	$ 8,392
(Decrease)/ Increase	(4,883)
Total accumulated other comprehensive income, net of tax, ending balance	3,466
Foreign currency translation adjustment [Member]
Total accumulated other comprehensive income, net of tax, beginning balance	7,784
(Decrease)/ Increase	(6,958)
Total accumulated other comprehensive income, net of tax, ending balance	826
Unrealized change in non-marketable securities [Member]
Total accumulated other comprehensive income, net of tax, beginning balance	1,373
(Decrease)/ Increase	226
Total accumulated other comprehensive income, net of tax, ending balance	1,599
Unrealized change in cash flow hedges [Member]
Total accumulated other comprehensive income, net of tax, beginning balance	(765)
(Decrease)/ Increase	1,849
Total accumulated other comprehensive income, net of tax, ending balance	1,041
Reclassification Adjustments [Member]
Reclassification Adjustments	(43)
Reclassification Adjustments [Member] | Foreign currency translation adjustment [Member]
Reclassification Adjustments	0
Reclassification Adjustments [Member] | Unrealized change in non-marketable securities [Member]
Reclassification Adjustments	0
Reclassification Adjustments [Member] | Unrealized change in cash flow hedges [Member]
Reclassification Adjustments	$ (43)

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") 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 GAAP for complete financial statements. The unaudited 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.

Interim financial results are not necessarily indicative of results anticipated for the full year. These unaudited financial statements should be read in conjunction with the Company's audited financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013, from which the balance sheet information as of that date and as included herein was derived.

The preparation of 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. Actual results could differ from those estimates.

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, 2013.

Comprehensive Income (Loss)

Comprehensive income (loss) is comprised of net loss and other comprehensive income (loss) (“OCI”). OCI includes foreign currency translation adjustments, unrealized gains and losses on the Company's non-marketable securities that are excluded from net loss and unrealized gains and losses on cash flow hedges. Total comprehensive loss has been disclosed in the Company's Condensed Consolidated Statements of Comprehensive Loss.

The following table summarizes the amounts reclassified out of accumulated other comprehensive income, net of tax, for the nine months ended September 30, 2014 (in thousands):

	December 31, 2013			(Decrease)/ Increase			Reclassification Adjustments			September 30, 2014
Foreign currency translation adjustment	$	7,784		$	(6,958	)	$	—		$	826
Unrealized change in non-marketable securities	1,373			226			—			1,599
Unrealized change in cash flow hedges	(765		)	1,849			(43		)	1,041
Total accumulated other comprehensive income, net of tax	$	8,392		$	(4,883	)	$	(43	)	$	3,466

Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15). ASU 2014-15 requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. In doing so, companies will have reduced diversity in the timing and content of footnote disclosures than under today’s guidance. ASU 2014-15 is effective for the Company in the first quarter of 2016 with early adoption permitted. The Company does not believe the impact of adopting ASU 2014-15 on its consolidated financial statements will be material.

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09) to provide guidance on revenue recognition. ASU 2014-09 requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for the Company in the first quarter of 2017. Early adoption is not permitted. Upon adoption, ASU 2014-09 can be applied retrospectively to all periods presented or only to the most current period presented with the cumulative effect of changes reflected in the opening balance of retained earnings in the most current period presented. The Company is currently evaluating the impact of adopting ASU 2014-09 on its consolidated financial statements.

XML

FAIR VALUE MEASUREMENTS Schedule of Fair Value Hierarchy (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	$ 1,037	$ 185
Non-marketable securities	4,516	4,383
Total assets	5,553	4,568
Derivatives liabilities	0	938
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	1,037	185
Total assets	1,037	185
Derivatives liabilities	0	938
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Non-marketable securities	4,516	4,383
Total assets	$ 4,516	$ 4,383

XML

STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE Share-based Compensation Expense (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Recognized share-based compensation expense [Abstract]
Total stock-based compensation expense	$ 3,163	$ 1,999	$ 9,436	$ 5,109
Costs of product sales [Member]
Recognized share-based compensation expense [Abstract]
Total stock-based compensation expense	687	223	1,884	651
Research and development [Member]
Recognized share-based compensation expense [Abstract]
Total stock-based compensation expense	599	340	1,743	906
Selling, general and administrative [Member]
Recognized share-based compensation expense [Abstract]
Total stock-based compensation expense	$ 1,877	$ 1,436	$ 5,809	$ 3,552

XML

SEGMENT AND GEOGRAPHIC INFORMATION, Revenue and Loss From Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 segment	Sep. 30, 2013	Dec. 31, 2013 business_unit
Segment Reporting Information [Line Items]
Number of reportable segments			2
Number of business units					4
Income (loss) from operations:	$ 4,876	$ (1,283)	$ (4,169)	$ (16,442)
Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenue:	87,086	80,354	255,489	237,763
Income (loss) from operations:	4,876	(1,283)	(4,169)	(16,442)
Operating Segments [Member] | Affymetrix Core [Member]
Segment Reporting Information [Line Items]
Revenue:	64,645	58,178	186,177	171,335
Income (loss) from operations:	3,139	686	(3,595)	(7,103)
Operating Segments [Member] | eBioscience [Member]
Segment Reporting Information [Line Items]
Revenue:	22,441	22,176	69,312	66,428
Income (loss) from operations:	$ 1,737	$ (1,969)	$ (574)	$ (9,339)

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 68,327	$ 57,128
Accounts receivable, net	46,037	50,862
Inventories, net—short-term portion	51,674	58,059
Deferred tax assets—short-term portion	1,974	767
Prepaid expenses and other current assets	8,964	8,920
Total current assets	176,976	175,736
Property and equipment, net	16,137	18,671
Inventories, net—long-term portion	6,098	5,972
Goodwill	157,962	161,595
Intangible assets, net	112,339	131,108
Deferred tax assets—long-term portion	344	355
Other long-term assets	10,699	11,074
Total assets	480,555	504,511
Current liabilities:
Accounts payable and accrued liabilities	47,806	45,534
Current portion of long-term debt	4,000	12,750
Deferred revenue—short-term portion	12,953	18,660
Total current liabilities	64,759	76,944
Deferred revenue—long-term portion	2,524	2,824
Convertible notes	105,000	105,000
Term loan—long-term portion	19,950	26,700
Other long-term liabilities	20,445	21,496
Total liabilities	212,678	232,964
Stockholders’ equity:
Common stock	736	723
Additional paid-in capital	778,393	768,149
Accumulated other comprehensive income	3,466	8,392
Accumulated deficit	(514,718)	(505,717)
Total stockholders’ equity	267,877	271,547
Total liabilities and stockholders’ equity	$ 480,555	$ 504,511

XML

LONG-TERM DEBT OBLIGATIONS LONG-TERM DEBT OBLIGATIONS, Schedule of Debt (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Total debt	$ 128,950	$ 144,450
Less: current portion of long-term debt	4,000	12,750
Total long-term debt	124,950	131,700
Term Loan [Member]
Debt Instrument [Line Items]
Total debt	23,950	29,450
Line of Credit [Member]
Debt Instrument [Line Items]
Total debt	0	10,000
Convertible Debt [Member]
Debt Instrument [Line Items]
Total debt	$ 105,000	$ 105,000
4.00% Convertible Senior Notes
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	4.00%

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (9,001)	$ (25,700)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	23,745	30,039
Amortization of inventory step-up in fair value	4,666	11,980
Share-based compensation	9,436	5,109
Deferred tax, net	(1,475)	(212)
(Gain) loss on sales of securities	(1,684)	205
Other non-cash transactions	575	2,931
Changes in operating assets and liabilities:
Accounts receivable, net	4,432	4,816
Inventories	75	536
Prepaid expenses and other assets	(317)	(1,051)
Accounts payable and accrued liabilities	4,229	(6,036)
Deferred revenue	(5,985)	10,656
Other long-term liabilities	(364)	(1,088)
Net cash provided by operating activities	28,332	32,185
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities	2,162	9,364
Proceeds on sale of fixed assets	109	0
Capital expenditures	(4,310)	(3,000)
Purchase of non-marketable investment	0	(200)
Purchase of technology rights	0	(624)
Net cash (used in) provided by investing activities	(2,039)	5,540
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net	821	318
Repayments of long-term debt	(15,500)	(9,563)
Bond and loan issuance costs	0	(228)
Repurchase of 3.50% senior convertible notes	0	(3,855)
Net cash used in financing activities	(14,679)	(13,328)
Effect of exchange rate changes on cash and cash equivalents	(415)	83
Net increase in cash and cash equivalents	11,199	24,480
Cash and cash equivalents at beginning of period	57,128	25,671
Cash and cash equivalents at end of period	$ 68,327	$ 50,151

XML

Derivative Financial Instruments (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Expected deferred loss amount to be recognized in OCI	$ 1.0
Maximum expected period to recognized deferred amount into earnings	12 months

XML

FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Financial assets and liabilities measured at fair value on a recurring basis

As of September 30, 2014 and December 31, 2013, the assets and liabilities measured at fair value consisted of the following (in thousands):

	September 30, 2014						December 31, 2013
	Fair Value Measurements Using Input Types						Fair Value Measurements Using Input Types
	Level 2		Level 3		Total		Level 2		Level 3		Total
Assets:
Derivative assets	$	1,037	$	—	$	1,037	$	185	$	—	$	185
Non-marketable securities	—		4,516		4,516		—		4,383		4,383
Total assets	$	1,037	$	4,516	$	5,553	$	185	$	4,383	$	4,568
Liabilities:
Derivatives liabilities	$	—	$	—	$	—	$	938	$	—	$	938

Fair value of non-marketable securities

The following table summarizes the change in the fair value of the Company's non-marketable securities during the nine months ended September 30, 2014 (in thousands).

Balance as of December 31, 2013	$	4,383
Sales	(2,162		)
Realized gain	1,700
Unrealized gain	595
Balance as of September 30, 2014	$	4,516

XML

DERIVATIVE FINANCIAL INSTRUMENTS Schedule of Total Notional Values (Details) (Net Investment Hedging [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Derivative [Line Items]
Notional amount of derivative	$ 18,931	$ 42,538
Euro [Member]
Derivative [Line Items]
Notional amount of derivative	12,374	21,990
Japanese Yen [Member]
Derivative [Line Items]
Notional amount of derivative	3,907	4,588
British Pound [Member]
Derivative [Line Items]
Notional amount of derivative	2,650	5,653
Interest rate swap [Member]
Derivative [Line Items]
Notional amount of derivative	$ 0	$ 10,307

XML

STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based compensation expense

The Company recognized share-based compensation expense as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Costs of product sales	$	687	$	223	$	1,884	$	651
Research and development	599		340		1,743		906
Selling, general and administrative	1,877		1,436		5,809		3,552
Total share-based compensation expense	$	3,163	$	1,999	$	9,436	$	5,109

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (3.50% Senior Convertible Notes [Member])	Sep. 30, 2014
3.50% Senior Convertible Notes [Member]
Stated Rate on Senior Convertible Notes	3.50%

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
REVENUE:
Product sales	$ 78,069	$ 74,776	$ 227,644	$ 220,505
Services and other	9,017	5,578	27,845	17,258
Total revenue	87,086	80,354	255,489	237,763
COSTS AND EXPENSES:
Cost of product sales	29,140	32,600	89,211	100,621
Cost of services and other	6,426	3,915	19,358	11,128
Research and development	12,926	11,478	37,443	35,686
Selling, general and administrative	33,718	33,646	108,546	102,286
Litigation settlement	0	0	5,100	0
Restructuring charges	0	(2)	0	4,484
Total costs and expenses	82,210	81,637	259,658	254,205
Income (loss) from operations	4,876	(1,283)	(4,169)	(16,442)
Other (expense) income, net	(1,008)	68	703	501
Interest expense	1,595	2,652	4,972	8,274
Income (loss) before income taxes	2,273	(3,867)	(8,438)	(24,215)
Income tax (benefit) provision	(111)	289	563	1,485
Net income (loss)	$ 2,384	$ (4,156)	$ (9,001)	$ (25,700)
Basic net income (loss) per common share	$ 0.03	$ (0.06)	$ (0.12)	$ (0.36)
Diluted net income (loss) per common share	$ 0.03	$ (0.06)	$ (0.12)	$ (0.36)
Shares used in computing basic net income (loss) per common share	73,413	71,600	72,955	71,227
Shares used in computing diluted net income (loss) per common share	76,315	71,600	72,955	71,227

XML

INCOME TAXES

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

During the three and nine months ended September 30, 2014, the Company recognized an income tax benefit of $0.1 million and a provision of $0.6 million, respectively. The benefit for income taxes during the three months ended September 30, 2014 primarily consists of an income tax benefit of $0.2 million resulting from a reduction in valuation allowance for net deferred tax assets arising from other comprehensive income recorded in accordance with intraperiod tax allocation guidance, and an income tax benefit of $0.2 million related to the effective settlements of unrecognized tax benefits, offset by foreign taxes. The provision for income taxes during the nine months ended September 30, 2014 primarily consists of foreign taxes, offset by an income tax benefit of $0.3 million resulting from a reduction in valuation allowance for net deferred tax assets arising from other comprehensive income recorded in accordance with intraperiod tax allocation guidance, and an income tax benefit of $0.6 million related to the lapses of statutes of limitations as well as effective settlements of unrecognized tax benefits.

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 Company's U.S. deferred tax assets continue to be subject to a valuation allowance as of September 30, 2014.

As of September 30, 2014, the total amount of unrecognized tax benefits decreased by approximately $0.3 million as compared to December 31, 2013, primarily due to the lapses of statutes of limitations and effective settlements of unrecognized tax benefits. As a result of settlements of ongoing tax examinations and/or expiration of statues of limitations without the assessment of additional income taxes, the amount of unrecognized tax benefits that could be recognized in earnings in the next 12 months could range from zero to approximately $1.3 million.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 27, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	AFFYMETRIX INC
Entity Central Index Key	0000913077
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		73,583,589

XML

SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

SEGMENT INFORMATION

SEGMENT 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.  The Company is organized in two reportable segments: Affymetrix Core and eBioscience.

Affymetrix Core is divided into four business units, with each business unit having its own strategic Marketing and Research and Development groups to better serve customers and respond quickly to the market needs.  Affymetrix Core manufacturing operations are based on platforms that are used to produce various Affymetrix products that serve multiple applications and markets and similar customer and economic characteristics. Additionally, the business units share certain research, development and common corporate services that provide capital, infrastructure and functional support. As such, the Company has concluded that the four business units represent one reportable operating segment. 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;

• Genetic Analysis and Clinical Applications: This business unit markets the Company's rapidly growing Axiom® genotyping product line, as well as products with clinical diagnostic and research applications including the CytoScan® and OncoScan products, as well as the ViewRNA in-situ hybridization platform for clinical translational research. In addition, the business unit is responsible for development and marketing of the Powered-by-Affymetrix (PbA) clinical partnering and licensing program which enables third-party diagnostic companies to access and develop DNA and RNA-based diagnostic tests on Affymetrix technology platforms. This business unit also markets the CytoScan Dx product, the recently FDA approved microarray system for post natal diagnostics of children with developmental delays and intellectual disabilities;

• Life Science Reagents: This business unit sells reagents, enzymes, purification kits and biochemicals used by life science researchers and other tool provider businesses, including those developing and marketing Next Generation Sequencing products and molecular diagnostics; and

• Corporate: This business unit is comprised primarily of incidental revenue from royalty arrangements and field revenue from field-services provided to customers of the Company.

The eBioscience business unit operates with its own manufacturing, research and marketing groups. The eBioscience business unit does utilize certain Corporate functions such as finance, legal and human resources. This reportable segment specializes in the areas of flow cytometry reagents, immunoassays, microscopic imaging, other protein-based analyses, QuantiGene single and multiplex RNA solution assays (not including the QuantiGeneRNA View in-situ hybridization platform) and Procarta multiplex immunoassay product lines.

eBioscience began integrating the development and marketing of the QuantiGene (excluding the ViewRNA in-situ hybridization platform) and Procarta product lines during 2013 with full integration in 2014. These products were previously reported by the Expression Business Unit of the Affymetrix Core reportable segment.  Accordingly, segment information for prior periods has been restated to reflect these changes for purposes of comparability. 

The Company evaluates the performance of its reportable segments based on revenue and income (loss) from operations. Revenue is allocated to each business unit based on product codes. The eBioscience business is operated on a stand-alone basis.

The following table shows revenue and loss from operations by reportable operating segment for the three and nine months ended September 30, 2014 and 2013 (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
Revenue:
Affymetrix Core	$	64,645	$	58,178		$	186,177		$	171,335
eBioscience	22,441		22,176			69,312			66,428
Totals	$	87,086	$	80,354		$	255,489		$	237,763
Income (loss) from operations:
Affymetrix Core	$	3,139	$	686		$	(3,595	)	$	(7,103	)
eBioscience	1,737		(1,969		)	(574		)	(9,339		)
Totals	$	4,876	$	(1,283	)	$	(4,169	)	$	(16,442	)

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 2,384	$ (4,156)	$ (9,001)	$ (25,700)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment	(6,500)	3,051	(6,958)	1,194
Unrealized change in available-for-sale and non-marketable securities (net of tax of $(25) and $230 for the three and nine months ended September 30, 2014, respectively; net of $0 tax in each of the three and nine months ended September 30, 2013)	(195)	426	226	98
Unrealized change in cash flow hedges (net of tax of $154 for the three and nine months ended September 30, 2014; net of $0 tax in each of the three and nine months ended September 30, 2013)	1,328	(1,363)	1,806	(638)
Net change in other comprehensive (loss) income, net of tax	(5,367)	2,114	(4,926)	654
Comprehensive loss	$ (2,983)	$ (2,042)	$ (13,927)	$ (25,046)

XML

INVENTORIES

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

INVENTORIES

INVENTORIES

At September 30, 2014 and December 31, 2013, inventories, net consisted of the following (in thousands):

	September 30, 2014		December 31, 2013
Raw materials	$	11,169	$	11,587
Work-in-process	18,497		22,139
Finished goods	28,106		30,305
Total	$	57,772	$	64,031
Short-term portion	$	51,674	$	58,059
Long-term portion	$	6,098	$	5,972

Inventory at December 31, 2013 includes $4.7 million, net of fair value step-up in basis that was recognized when the Company acquired eBioscience in 2012. Amortization expense related to the fair value step-up during the nine months ended September 30, 2014 and 2013 was approximately $4.7 million and $12.0 million, respectively. The inventory fair value step-up was fully amortized as of June 30, 2014.

XML

STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE

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 September 30, 2014, the Company had approximately 4.7 million shares of common stock reserved for future issuance under its share-based compensation plans. 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 September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Costs of product sales	$	687	$	223	$	1,884	$	651
Research and development	599		340		1,743		906
Selling, general and administrative	1,877		1,436		5,809		3,552
Total share-based compensation expense	$	3,163	$	1,999	$	9,436	$	5,109

As of September 30, 2014, $16.3 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 2018. The weighted‑average terms of the unrecognized share-based compensation expense are 2.3 years for stock options and 2.1 years for restricted stock.

Performance-Based Awards

The Company's share-based awards program includes performance-based restricted stock awards ("PRSUs") that vest based upon the achievement of certain performance criteria and a service vesting criteria following the achievement of performance criteria. Performance criteria include various operational criteria of the Company such as revenues, earnings before interest, taxes, depreciation and amortization, product launches, and similar criteria, either on a Company-wide or business unit specific basis. The service vesting criteria ranges from six months to four years. The Company recognizes the fair value of these awards to the extent the achievement of the related performance criteria is estimated to be probable. If a performance criteria is subsequently determined to not be probable of achievement, any related expense is reversed in the period such determination is made. Conversely, if a performance criteria is not currently expected to be achieved but is later determined to be probable of achievement, a “catch-up” entry is recorded in the period such determination is made for the expense that would have been recognized had the performance criteria been probable of achievement since the grant of the award.

As of September 30, 2014, there were 807,350 PRSUs outstanding with an average grant date fair value of $6.70 per PRSU. The Company expects that it is probable that 695,199 of these PRSUs will vest and that the related unrecognized stock compensation expense of $2.3 million will be recognized over the next 4 years. Changes in the Company’s assessment of the probability of achievement of performance criteria could have a material effect on the results of operations in future periods. There were no material changes in estimate related to the probability of vesting or recognition of expense related to PRSUs during either of the periods ended September 30, 2014 or 2013.

For additional information concerning the Company's share-based compensation plans, including performance-based awards programs, see Note 13, "Stockholders' Equity and Share-Based Compensation Expense", to the consolidated financial statements in Part II, Item 8 of the Company's 2013 Annual Report on Form 10-K.

XML

DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Notional values of entity's foreign currency forward contracts mature within 12 months

As of September 30, 2014 and December 31, 2013, the total notional values of the Company’s derivative assets and liabilities were as follows (in thousands):

	September 30, 2014		December 31, 2013
Euro	$	12,374	$	21,990
Japanese Yen	3,907		4,588
British Pound	2,650		5,653
Interest rate swap	—		10,307
Total	$	18,931	$	42,538

Entity's foreign currency derivatives measured at fair value

The Company records all derivative on the accompanying Condensed Consolidated Balance sheets at fair value. The following table shows the Company’s derivatives as of September 30, 2014 and December 31, 2013 (in thousands):

	September 30, 2014		December 31, 2013		Balance Sheet Classification
Derivative assets:
Foreign exchange contracts	$	1,037	$	185	Prepaid expenses and other current assets
Derivative liabilities:
Foreign exchange contracts	—		927		Accounts payable and accrued liabilities
Interest rate swap	—		11		Other long-term 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 and ninemonths endedSeptember 30, 2014and 2013 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Derivatives in cash flow hedging relationships:
Net loss recognized in OCI	$	(1,327	)	$	(1,363	)	$	(1,806	)	$	(638	)
Net gain (loss) reclassified from accumulated OCI into Revenue	732			(13		)	(26		)	1,068
Net (loss) gain reclassified from accumulated OCI into Other (expense) income, net	—			—			(17		)	158
Net (loss) gain recognized in Other (expense) income, net	(1		)	18			—			63
Derivatives not designated as hedging relationships:
Net gain (loss) recognized in Other (expense) income, net	2			(185		)	14			(37		)

XML

RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2014

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

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 September 30, 2014, no significant royalties have been earned from this agreement.

XML

NET LOSS PER COMMON SHARE

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

NET LOSS PER COMMON SHARE

NET LOSS PER COMMON SHARE

Basic earnings 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 earnings per common share, if any, gives effect to dilutive common stock subject to repurchase, stock options (calculated based on the treasury stock method), shares purchased under the employee stock purchase plan and convertible debt (calculated using an as-if-converted method).

The following table sets forth a reconciliation of basic and diluted net income (loss) per common share (in thousands except per common share amounts):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
Net income (loss)	$	2,384	$	(4,156	)	$	(9,001	)	$	(25,700	)
Add effect of dilutive securities:
Interest on convertible notes	—		—			—			—
Adjusted net income (loss)	$	2,384	$	(4,156	)	$	(9,001	)	$	(25,700	)
Shares used in computing basic net income (loss) per common share	73,413		71,600			72,955			71,227
Add effect of dilutive securities:
Employee stock compensation plans	1,170		—			—			—
Common stock subject to repurchase	1,732		—			—			—
Convertible notes	—		—			—			—
Shares used in computing diluted net income (loss) per common share	76,315		71,600			72,955			71,227
Basic net income (loss) per common share	$	0.03	$	(0.06	)	$	(0.12	)	$	(0.36	)
Diluted net income (loss) per common share	$	0.03	$	(0.06	)	$	(0.12	)	$	(0.36	)

The potential dilutive securities excluded from diluted net income (loss) per common share were as follows (in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Employee stock options	3,283	5,364	4,452	5,364
Employee stock purchase plan	174	—	88	—
Restricted stock and restricted stock units	1,918	3,252	3,650	3,252
Convertible notes	17,857	17,857	17,857	17,864
Total	23,232	26,473	26,047	26,480

XML

WARRANTIES

9 Months Ended

Sep. 30, 2014

Product Warranties Disclosures [Abstract]

WARRANTIES

WARRANTIES

The Company provides for anticipated warranty costs at the time the associated product revenue is recognized. Accrued warranties are included in accounts payable and accrued liabilities in the accompanying Condensed Consolidated Balance Sheets. 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. Changes to the Company’s product warranty liability for the nine months ended September 30, 2014 are as follows (in thousands):

Balance at December 31, 2013	$	1,697
Additions charged to cost of product sales	482
Repairs and replacements	(893		)
Adjustments	(183		)
Balance at September 30, 2014	$	1,103

XML

LONG-TERM DEBT OBLIGATIONS

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

LONG-TERM DEBT OBLIGATIONS

LONG-TERM DEBT OBLIGATIONS

The following table summarizes the carrying amount of the Company's borrowings (in thousands):

	September 30, 2014		December 31, 2013
Term loan	$	23,950	$	29,450
Revolving credit facility	—		10,000
Convertible notes	105,000		105,000
Total debt	128,950		144,450
Less: current portion of long-term debt	4,000		12,750
Total long-term debt	$	124,950	$	131,700

Term Loan and Revolving Credit Facility

On June 25, 2012, in conjunction with the acquisition of eBioscience, Inc., the Company entered into a five year $100.0 million Senior Secured Credit Facility credit agreement (the “Credit Agreement”). The Credit Agreement provided for a 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.

On October 17, 2013 the Company refinanced its Senior Secured Credit Facility and entered into the Fourth Amendment to Credit Agreement (the "Fourth Amendment"). The Fourth Amendment provided, among other things, for term loan in the aggregate principal amount of $38.0 million and revolving loan commitments in the aggregate principal amount of $10.0 million, each with a term of five years. The Company borrowed a total of $38.0 million under the Term Loan and $10.0 million under the revolving loan upon refinancing.

On July 28, 2014, the Company entered into the Fifth Amendment to Credit Agreement (the "Fifth Amendment" and the Credit Agreement as so amended, the "Amended Credit Agreement"). The Fifth Amendment provides, among other things, for (1) an uncommitted incremental term loan facility in an aggregate amount not to exceed $50.0 million and (2) the reduction of interest rate margins. As of September 30, 2014, the applicable interest rate was approximately 3.13%.

At the option of the Company (subject to certain limitations), borrowings under the Amended 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 1.5% to 1.75% dependent on the senior leverage ratio then in effect calculated on the basis of the actual number of days elapsed in a 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 described in the Amended Credit Agreement) as the U.S. “Prime Rate,” (b) the federal funds rate, plus 0.50% per annum or (c) LIBOR for an interest period of one month, plus 1.00% 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 years) and will be equal to LIBOR plus 2.50% and 2.75% dependent on the senior leverage ratio then in effect, calculated based on the actual number of days elapsed in a 360-day year. Interest will be paid at the end of each interest period or in the case of interest periods longer than three months, quarterly.

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 Amended Credit Agreement requires the Company to maintain an interest coverage ratio of at least 3.5 to 1.0 and a senior leverage ratio not exceeding initially 1.75 to 1.00 and stepping down to 1.20 to 1.00. The Amended 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.

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 Amended Credit Agreement), subject to leverage-based step-downs, (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.

The Amended 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% Convertible Notes would be an event of default under the Amended Credit Agreement. As of September 30, 2014, the Company was in compliance with the covenants.

The proceeds received on June 25, 2012 from the original Term Loan were net of debt issuance costs of approximately $4.5 million being amortized over the 5-year term of the Senior Secured Credit Facility. Following the refinancing under the Fourth Amendment, the Company wrote off unamortized debt issuance costs of $2.5 million associated with the original Term Loan, and received proceeds on October 17, 2013 from the new Term Loan and Revolver, net of debt issuance costs of approximately $0.8 million that amortize on the effective interest rate method beginning October 17, 2013.

As of September 30, 2014, the Company had an outstanding principal balance of approximately $24.0 million under the Term Loan and incurred $0.4 million and $1.4 million in interest expense under the Senior Secured Credit Facility for the three and nine months ended September 30, 2014, respectively. There were no amounts outstanding under the Revolving Credit Facility as of June 30, 2014.

Quarterly, principal payments are due under the Term Loan, which amortizes such that 10% of the outstanding principal is due during the first four years and the remaining 60% is due in the fifth year, including any remaining principal balance and any outstanding revolver balance at such time. The principal amount of unpaid maturities per the Amended Credit Agreement is as follows (in thousands):

2014, remainder thereof	$	—
2015	—
2016	—
2017	1,150
2018	22,800
Total	$	23,950

The Company intends to continue making quarterly payments during 2014 and reclassified $4.0 million as current on the accompanying Condensed Consolidated Balance Sheet as of September 30, 2014.

4.00% Convertible Senior Notes

On June 25, 2012, the Company issued $105.0 million principal amount of 4.00% Convertible Senior Notes ("4.00% Convertible Notes") due July 1, 2019. The net proceeds, after debt issuance costs totaling $3.9 million from the 4.00% Convertible Notes offering, were $101.1 million. The 4.00% Convertible 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% Convertible Notes, which is 7 years.

Holders of the 4.00% Convertible Notes may convert their 4.00% Convertible 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% Convertible 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% Convertible 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% Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

As of September 30, 2014, the outstanding balance on the 4.00% Convertible Notes was $105.0 million and interest incurred for the three and nine months ended September 30, 2014 was $1.2 million and $3.6 million, respectively.

XML

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENICES

AND CONTINGENCIES

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 the 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 flows 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:

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. 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. On April 22, 2014, the Company entered into a settlement agreement with Enzo with respect to these two lawsuits. Pursuant to the agreement the Company agreed to pay Enzo $5.1 million and recorded the litigation settlement charge within the results of operations in the first three months of 2014. The settlement agreement does not include the Delaware Case described below.

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 nine months ended September 30, 2014 and 2013, the Company did not incur significant costs in connection with administrative proceedings.

Leases

In June 2014, the Company entered into two leases for premises located in San Diego, California (the “Leases”). The Leases cover premises totaling approximately 82,759 rentable square feet. Subject to the completion of tenant improvements, both Leases are expected to commence in August 2015 and expire in March 2023.

On August 26, 2014, the Company extended its two leases for 26111 and 26101 Miles Road, Warrensville Heights, Ohio 44128 for three years commencing on April 1, 2015 and terminating on March 31, 2018. In addition, the Company has two options to extend these leases for an additional three year period with respect to each option.

Future minimum lease obligations, net of sublease income, as of September 30, 2014 under the two leases mentioned above are as follows (in thousands):

For the Year Ending December 31,	Amount
2014, remainder thereof	$	—
2015	376
2016	2,008
2017	2,639
2018	2,524
Thereafter	11,242
Total	$	18,789

XML

FAIR VALUE MEASUREMENTS CHANGES IN FAIR VALUE MEASUREMENT OF LEVEL 3 ITEMS (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands, unless otherwise specified			9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance as of December 31, 2013	$ 4,516	$ 4,383	$ 4,383
Sales			(2,162)
Realized gain			1,700
Unrealized gain			595
Balance as of September 30, 2014	$ 4,516	$ 4,383	$ 4,516

XML

COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Loss Contingencies [Line Items]
2014, remainder thereof	$ 0
2015	376,000
2016	2,008,000
2017	2,639,000
2018	2,524,000
Thereafter	11,242,000
Total	18,789,000
Settled Litigation [Member] | Southern District of New York [Member]
Loss Contingencies [Line Items]
Litigation Settlement, Amount	$ 5,100,000

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Components of accumulated other comprehensive income, net of tax

The following table summarizes the amounts reclassified out of accumulated other comprehensive income, net of tax, for the nine months ended September 30, 2014 (in thousands):

	December 31, 2013			(Decrease)/ Increase			Reclassification Adjustments			September 30, 2014
Foreign currency translation adjustment	$	7,784		$	(6,958	)	$	—		$	826
Unrealized change in non-marketable securities	1,373			226			—			1,599
Unrealized change in cash flow hedges	(765		)	1,849			(43		)	1,041
Total accumulated other comprehensive income, net of tax	$	8,392		$	(4,883	)	$	(43	)	$	3,466

XML

WARRANTIES (Tables)

9 Months Ended

Sep. 30, 2014

Product Warranties Disclosures [Abstract]

Changes in entity's product warranty liability

Changes to the Company’s product warranty liability for the nine months ended September 30, 2014 are as follows (in thousands):

Balance at December 31, 2013	$	1,697
Additions charged to cost of product sales	482
Repairs and replacements	(893		)
Adjustments	(183		)
Balance at September 30, 2014	$	1,103

XML

NET LOSS PER COMMON SHARE (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net income (loss)	$ 2,384	$ (4,156)	$ (9,001)	$ (25,700)
Adjusted net income (loss)	2,384	(4,156)	(9,001)	(25,700)
Shares used in computing basic net income (loss) per common share	73,413	71,600	72,955	71,227
Shares used in computing diluted net income (loss) per common share	76,315	71,600	72,955	71,227
Basic net income (loss) per common share	$ 0.03	$ (0.06)	$ (0.12)	$ (0.36)
Diluted net income (loss) per common share	$ 0.03	$ (0.06)	$ (0.12)	$ (0.36)
Employee stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive securities	1,170
Restricted stock and restricted stock units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive securities	$ 1,732

XML

STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION EXPENSE Performance-Based Awards Narrative (Details) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense	$ 16.3
Performance-Based Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding	807,350
Average grant date fair value	$ 6.70
PRSU's expected to vest	695,199
Unrecognized share-based compensation expense	$ 2.3
Period for recognition	4 years
Performance-Based Awards [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	6 months
Performance-Based Awards [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
Unrealized change in available-for-sale and non-marketable securities, Tax	$ (25)	$ 230
Unrealized change in cash flow hedges, Tax	$ 154	$ 154

XML

DERIVATIVE FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS

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 are held in the foreign 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.

In accordance with the terms of the Credit Agreement as defined in Note 7, "Long-Term Debt Obligations", the Company had previously maintained an interest rate swap (the "Interest Rate Swap"). In July 2014, the Company amended the terms of the Credit Agreement such that the interest rate swap is no longer required. Accordingly, the Company settled the Interest Rate Swap on September 30, 2014.

The Company is exposed to the risk that the counterparties to its hedges may be unable to meet the terms of these agreements. To mitigate the 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 foreign currency forward contracts for trading or speculative purposes and is not party to any leveraged derivative instruments.

As of September 30, 2014 and December 31, 2013, the total notional values of the Company’s derivative assets and liabilities were as follows (in thousands):

	September 30, 2014		December 31, 2013
Euro	$	12,374	$	21,990
Japanese Yen	3,907		4,588
British Pound	2,650		5,653
Interest rate swap	—		10,307
Total	$	18,931	$	42,538

The Company records all derivative on the accompanying Condensed Consolidated Balance sheets at fair value. The following table shows the Company’s derivatives as of September 30, 2014 and December 31, 2013 (in thousands):

	September 30, 2014		December 31, 2013		Balance Sheet Classification
Derivative assets:
Foreign exchange contracts	$	1,037	$	185	Prepaid expenses and other current assets
Derivative liabilities:
Foreign exchange contracts	—		927		Accounts payable and accrued liabilities
Interest rate swap	—		11		Other long-term liabilities

The effective portions of designated cash flow hedges are recorded in OCI until the hedged item is recognized in operations. Derivatives that are not designated as hedging instruments and the ineffective portions of cash flow hedges are adjusted to fair value through operations.

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 associated with such derivative instruments are reclassified immediately into operations through Other (expense) income, net on the Condensed Consolidated Statements of Operations. Any subsequent changes in fair value of such derivative instruments are reflected in Other (expense) income, net unless they are re-designated as hedges of other transactions.

As of December 31, 2013, the Interest Rate Swap was not designated as a hedging relationship. All other derivative assets and liabilities were designated as hedging relationships as of September 30, 2014 and December 31, 2013.

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 and ninemonths endedSeptember 30, 2014and 2013 (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Derivatives in cash flow hedging relationships:
Net loss recognized in OCI	$	(1,327	)	$	(1,363	)	$	(1,806	)	$	(638	)
Net gain (loss) reclassified from accumulated OCI into Revenue	732			(13		)	(26		)	1,068
Net (loss) gain reclassified from accumulated OCI into Other (expense) income, net	—			—			(17		)	158
Net (loss) gain recognized in Other (expense) income, net	(1		)	18			—			63
Derivatives not designated as hedging relationships:
Net gain (loss) recognized in Other (expense) income, net	2			(185		)	14			(37		)

As of September 30, 2014, the deferred amount recorded in OCI related to the Company's derivatives recorded is a net gain of $1.0 million and is expected to be recognized into earnings over the next12 months.

XML

LONG-TERM DEBT OBLIGATIONS (Tables)

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Schedule of Debt

The following table summarizes the carrying amount of the Company's borrowings (in thousands):

	September 30, 2014		December 31, 2013
Term loan	$	23,950	$	29,450
Revolving credit facility	—		10,000
Convertible notes	105,000		105,000
Total debt	128,950		144,450
Less: current portion of long-term debt	4,000		12,750
Total long-term debt	$	124,950	$	131,700

Schedule of Maturities of Long-term Debt

The principal amount of unpaid maturities per the Amended Credit Agreement is as follows (in thousands):

2014, remainder thereof	$	—
2015	—
2016	—
2017	1,150
2018	22,800
Total	$	23,950

XML

DERIVATIVE FINANCIAL INSTRUMENTS Gain (Loss) by Hedging Relationship (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Derivatives in cash flow hedging relationships [Member]
Effect of derivative instruments on statements of operations [Abstract]
Net (loss) gain recognized in OCI, net of tax	$ (1,327)	$ (1,363)	$ (1,806)	$ (638)
Net (loss) gain reclassified from accumulated OCI into Revenue, net of tax	732	(13)	(26)	1,068
Net (loss) gain reclassified from accumulated OCI into Interest income and other, net, net of tax			(17)	158
Net (loss) gain recognized in Interest income and other, net, net of tax	(1)	18		63
Derivatives not designated as hedging relationships [Member]
Effect of derivative instruments on statements of operations [Abstract]
Net gain recognized in Interest income and other, net, net of tax	$ 2	$ (185)	$ 14	$ (37)

XML

RESTRUCTURING

9 Months Ended

Sep. 30, 2014

Restructuring and Related Activities [Abstract]

RESTRUCTURING

RESTRUCTURING

During the fourth quarter of 2012, the Company initiated a cost reduction action that included downsizing its workforce to realign the Company's organization to support its strategy to stabilize its core business and position the Company for growth. Restructuring charges of $4.5 million were recognized during the first half of 2013. The restructuring activities were completed in the second quarter of 2013.