8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 21, 2008

AFFYMETRIX, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	0-28218	77-0319159
(State of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3420 Central Expressway
Santa Clara, California 95051

(Address of principal executive offices) (Zip Code)

(408) 731-5000

Registrant’s telephone number, including area code

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On July 24, 2008, Affymetrix, Inc. (the “Company”) issued a press release announcing the Company’s operating results for the second quarter ended June 30, 2008.  A copy of the Company’s press release is attached hereto as Exhibit 99.1.

The information furnished under Item 2.02 of this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference into Affymetrix’ filings with the SEC under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 2.05 Costs Associated with Exit or Disposal Activities

Earlier this year, we committed to a restructuring plan designed to optimize our production capacity and cost structure and improve our future gross margins.  The restructuring plan was approved as part of our ongoing efforts to reduce costs and involved moving the majority of our probe array manufacturing from our West Sacramento, California facility to our Singapore facility.  In connection with these restructuring activities, for the six months ended June 30, 2008, we incurred a restructuring charge of $14.8 million.

On July 21, 2008, we decided to expand our restructuring plan by closing our West Sacramento manufacturing facility.  Following the closure of our West Sacramento manufacturing facility, all of our products will be manufactured out of our Singapore and Cleveland, Ohio facilities, as well as by third parties.  In addition to the charges incurred during the six months ended June 30, 2008, we expect to incur a total of approximately $42 million in charges related to this expansion of our restructuring plan.  Of this total, we expect that approximately $22 million will be included as a component of total cost of product sales, $17 million of which relates to accelerated depreciation charges associated with the continued use of certain long-lived manufacturing assets and $5 million of which relates to manufacturing transition and other costs.  Additionally, we expect to include approximately $20 million in the line item labeled “restructuring charges” in our consolidated statements of operations, $11 million of which relates to impairment charges primarily related to the facility itself and to certain long-lived manufacturing assets and $9 million related to employee severance costs.

We expect the closure of the West Sacramento facility to be substantially complete by the end of the second quarter of 2009.  We expect to incur approximately $26 million of the charges relating to the closure of the West Sacramento facility during the remainder of fiscal 2008 and approximately $16 million of charges in 2009. The estimated cash outlays to be incurred in connection with these restructuring activities are estimated to be approximately $13 million.  Depending on the rate at which we transfer our production capacity out of our West Sacramento facility, we may incur additional expenses.

In addition to historical information, this Current Report on Form 8-K contains “forward-looking statements” within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. These statements involve risks and uncertainties that could cause our actual results to differ materially from the future results expressed or implied by the forward-looking statements. All statements other than statements of historical facts included in this Current Report on Form 8-K, including statements regarding our future financial position and results, are forward-looking statements. For further information regarding risks and uncertainties associated with our business, please refer to our SEC filings, including, but not limited to, the “Risk Factors” section of our annual report on Form 10-K for the fiscal year ended December 31, 2007 and all subsequent quarterly reports.

Item 2.06 Material Impairments

The description in Item 2.05 above is incorporated by reference herein to the extent applicable.

Item 9.01 Financial Statements and Exhibits

(d)   Exhibits.

Exhibit No.	Description
99.1	Press Release dated July 24, 2008

2

SIGNATURE

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 hereunto duly authorized.

AFFYMETRIX, INC.
By:	/s/ John C. Batty
	Name: John C. Batty
	Title:	Executive Vice President and Chief Financial
		Officer, Treasurer and Principal Financial Officer

Dated:  July 24, 2008

3

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release dated July 24, 2008

4

EX-99.1

EXHIBIT 99.1

Contact:

Doug Farrell

Vice President of Investor Relations & Treasury

408-731-5285

AFFYMETRIX REPORTS SECOND QUARTER 2008 RESULTS

- Announces Manufacturing Restructuring to Improve Gross Margins -

- Acquires New Platform to Enter Low to Mid-Multiplex Markets -

Santa Clara, Calif. — July 24, 2008 — Affymetrix Inc., (Nasdaq: AFFX) today reported its operating results for the second quarter of 2008.  Total revenue for the quarter was $86.9 million, as compared to total revenue of $88.3 million in the second quarter of 2007.

Product revenue was $75.0 million, which consists of array and reagent revenue of $68.9 million and instrument revenue of $6.1 million.  Service revenue was $9.0 million, and royalties and other revenue were $2.9 million for the second quarter of 2008.  This compares to second quarter 2007 product revenue of $68.4 million.  Service revenue was $12.0 million, and royalties and other revenue were $7.9 million for the second quarter of 2007.  Affymetrix shipped 22 GeneChip^® systems in the quarter, bringing its cumulative systems shipped to 1,761 at the end of the second quarter.

The Company reported net loss of approximately $3.6 million or $0.05 per diluted share in the second quarter of 2008, which includes a pretax restructuring charge of $0.9 million or $0.01 per diluted share, as compared to net income of $1.2 million or $0.02 per diluted share in the second quarter of 2007, which included a pretax restructuring charge of $1.8 million or $0.03 per diluted share.

Cost of product sales was $32.3 million in the second quarter of 2008 compared to $25.7 million in the same period of 2007.  Cost of services was $6.7 million compared to $10.8 million in the second quarter of 2007.  Product gross margin was 57.0 percent in the second quarter of 2008 compared to 62.4 percent in the second quarter of 2007.

Operating expenses were $50.1 million for the second quarter of 2008, which includes restructuring charges of $0.9 million, as compared to $54.8 million in the second quarter of 2007, which includes restructuring charges of $1.8 million.

Updated Financial Outlook for 2008

Due to predicted ongoing weakness in the Company’s pharmaceutical revenue, the Company now expects 2008 revenue to be in the range of $455 million to $460 million, including a one-time $90 million payment.  Total gross margin is expected to be approximately 65 percent, of which 9 points is expected to be attributable to the one-time $90 million payment.  The Company expects total operating expenses between $262 million to $267 million, including total restructuring charges of approximately $32 million and acquisition related charges of $21 million.

Operations

·Affymetrix announces its plan to consolidate manufacturing to three locations.  These manufacturing consolidations are expected to improve capacity utilization, increase operational efficiencies and expand the Company’s product gross margin.

Acquisitions

·In July, Affymetrix completed an acquisition of a privately held San Francisco-based company that develops digitally encoded microparticle technology for approximately $25 million in cash.  This high performance and flexible platform technology will enable the Company to enter low to mid-multiplex markets and compete with bead-based platforms.  In addition, this technology is applicable to the research, applied, and diagnostic markets.

Recent Highlights

DNA Analysis

·The Wellcome Trust of Great Britain has awarded Affymetrix the second phase of its Case Control Consortium (WTCCC) project.  The project will analyze the genetic information of 60,000 additional individuals, 30,000 of them with the Affymetrix Genome-Wide Human SNP Array 6.0, plus 6,000 common controls.

·The Company announced that the Republic of Korea’s National Institute of Health (NIH) and Center for Disease Control and Prevention is expanding the Korean Association Resource project from its original 10,000 samples to include an additional 13,000 samples, which will use the Affymetrix Genome-Wide Human SNP Array 6.0.

·Affymetrix announced that Case Western Reserve University and the Translational Genomics Research Institute will run 10,000 samples with the Affymetrix Genome-Wide Human SNP Array 6.0 to discover genetic pathways associated with diabetic nephropathy.

·The Company announced that the Center for Inherited Disease Research (CIDR) has adopted its Genome-Wide Human SNP Array 6.0 for large-scale genotyping and copy number projects. CIDR is making Affymetrix-based genotyping available to supporting members of the National Institutes of Health.

·Affymetrix and LineaGen Inc. announced that a team of prominent researchers at the University of Utah and Vanderbilt University are leveraging Utah’s deep domain expertise in human genetic research and the Affymetrix Genome-Wide Human SNP Array 6.0 to discover genetic markers associated with multiple sclerosis and autism.

RNA Analysis

·The Company announced that a team of researchers at the Fraunhofer Institute in Germany is using Affymetrix’ Whole Transcript gene expression technology to better understand the molecular basis of drug-induced liver injury.

Molecular Diagnostics

·Affymetrix and Asuragen Inc., a leading molecular biology diagnostic company and service provider, announced an agreement to license, develop and manufacture in vitro transcription (IVT) reagent kits for molecular diagnostic applications.

·Affymetrix announced that its technology powers the Ipsogen MapQuant Dx™ Genomic Grade, the first genomic test designed to provide a more precise measurement of tumor grade than previous techniques.

Affymetrix’ management team will host a conference call on July 24, 2008 at 2:00 p.m. PT to review its operating results for the second quarter of 2008. A live webcast can be accessed by visiting the Investor Relations section of the Company’s website at www.affymetrix.com. In addition, investors and other interested parties can listen by dialing domestic: (866) 500-AFFX, international: (706) 643-2771.

A replay of this call will be available from 5:00 p.m. PT on July 24, 2008 until 8:00 p.m. PT on July 31, 2008 at the following numbers: domestic: (800) 642-1687, international: (706) 645-9291. The passcode for both replays is 55629576.  An archived webcast of the conference call will be available under the Investor Relations section of the Company’s website at www.affymetrix.com.

About Affymetrix

Affymetrix GeneChip® microarray technology is the industry-standard tool for analyzing complex genetic information. After inventing microarray technology in the late 1980s, Affymetrix scientists have been dedicated to developing innovative products that provide researchers with a more complete view of the genome. These products continue to accelerate genetic research and enable scientists to develop diagnostics and tailor treatments for individual patients by identifying and measuring the genetic information associated with complex diseases.

Today, Affymetrix technology is used by the world’s top pharmaceutical, diagnostic and biotechnology companies, as well as leading academic, government and not-for-profit research institutes. More than 1,700 systems have been shipped around the world and more than 12,000 peer-reviewed papers have been published using the technology.

Affymetrix is headquartered in Santa Clara, Calif., and has manufacturing facilities in Sacramento, Calif., Cleveland, Ohio and Singapore. The Company has about 1,100 employees worldwide and maintains sales and distribution operations across Europe and Asia. For more information about Affymetrix, please visit: www.affymetrix.com.

All statements in this press release that are not historical are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act as amended, including statements regarding Affymetrix’ “expectations,” “beliefs,” “hopes,” “intentions,” “strategies” or the like. Such statements are subject to risks and uncertainties that could cause actual results to differ materially for Affymetrix from those projected, including, but not limited to: risk relating to past and future acquisitions; risks of the company’s ability to achieve and sustain higher levels of revenue, higher gross margins and reduced operating expenses; uncertainties relating to technological approaches, risks associated with manufacturing and product development, including risks relating to the relocation of a substantial portion of our manufacturing to Singapore; personnel retention; uncertainties relating to cost and pricing of Affymetrix products; dependence on collaborative partners; uncertainties relating to sole-source suppliers; uncertainties relating to FDA and other regulatory approvals; competition; risks relating to intellectual property of others and the uncertainties of patent protection and litigation. These and other risk factors are discussed in Affymetrix’ Form 10-K for the year ended December 31, 2007, and other SEC reports, including its Quarterly Reports on Form 10-Q for subsequent quarterly periods. Affymetrix expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Affymetrix’ expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

PLEASE NOTE:

Affymetrix, the Affymetrix logo and GeneChip are trademarks owned or used by Affymetrix, Inc.

– Financial Charts to Follow –

AFFYMETRIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(UNAUDITED)

	June 30, 2008			December 31, 2007
				(Note 1)
ASSETS:
Current assets:
Cash and cash equivalents	$	325,728		$	288,644
Restricted cash	4,000			—
Available-for-sale securities – short-term portion	263,948			205,718
Accounts receivable, net ($67 in 2008 and $389 in 2007 from Perlegen Sciences)	77,889			81,941
Inventories	49,296			42,912
Deferred tax assets – current portion	15,322			28,584
Notes receivable from employees – current portion	135			1,376
Prepaid expenses and other current assets	10,275			17,933
Total current assets	746,593			667,108
Available-for-sale securities – long-term portion	19,658			89,912
Property and equipment, net	126,639			143,884
Acquired technology rights, net	57,717			46,797
Goodwill	174,129			125,050
Deferred tax assets – long-term portion	38,942			18,426
Notes receivable from employees – long-term portion	—			487
Other assets	35,151			41,927
Total assets	$	1,198,829		$	1,133,591
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	60,609		$	61,543
Deferred revenue – current portion	18,024			22,498
Total current liabilities	78,633			84,041
Deferred revenue – long-term portion	3,754			3,922
Other long-term liabilities	10,587			10,971
Convertible notes	436,250			436,250
Stockholders’ equity:
Common stock	702			692
Additional paid-in capital	734,658			704,189
Accumulated other comprehensive income	100			1,998
Accumulated deficit	(65,855		)	(108,472		)
Total stockholders’ equity	669,605			598,407
Total liabilities and stockholders’ equity	$	1,198,829		$	1,133,591

Note 1:The condensed consolidated balance sheet at December 31, 2007 has been derived from the audited consolidated financial statements at that date included in the Company’s Form 10-K for the fiscal year ended December 31, 2007.

AFFYMETRIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
Revenue:
Product sales ($6 and $797 in 2008 and $4,423 and $11,101 in 2007 from Perlegen Sciences)	$	75,022		$	68,409		$	137,828		$	132,894
Services	9,005			12,031			17,425			20,788
Royalties and other revenue	2,884			7,867			101,233			15,060
Total revenue	86,911			88,307			256,486			168,742
Costs and expenses:
Cost of product sales ($0 and $442 in 2008 and $1,907 and $4,328 in 2007 from Perlegen Sciences)	32,257			25,726			58,234			47,871
Cost of services	6,691			10,760			12,369			17,166
Cost of royalties and other revenue	52			80			52			146
Research and development	19,591			19,427			38,359			38,654
Selling, general and administrative	29,640			33,643			64,373			69,501
Acquired in-process technology	—			—			800			—
Restructuring charges	898			1,771			14,808			7,142
Total costs and expenses	89,129			91,407			188,995			180,480
(Loss) income from operations	(2,218		)	(3,100		)	67,491			(11,738		)
Interest income and other, net	2,286			5,340			9,158			8,091
Interest expense	(3,548		)	(414		)	(7,137		)	(829		)
(Loss) income before income taxes	(3,480		)	1,826			69,512			(4,476		)
Income tax (provision) benefit	(155		)	(584		)	(26,895		)	1,712
Net (loss) income	$	(3,635	)	$	1,242		$	42,617		$	(2,764	)
Basic net (loss) income per common share	$	(0.05	)	$	0.02		$	0.62		$	(0.04	)
Diluted net (loss) income per common share	$	(0.05	)	$	0.02		$	0.56		$	(0.04	)
Shares used in computing basic net (loss) income per share	68,539			68,244			68,522			68,075
Shares used in computing diluted net (loss) income per share	68,539			68,758			82,971			68,075