SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. The condensed consolidated financial statements include the accounts of Affymetrix, Inc. and its wholly owned subsidiaries (“Affymetrix” or the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring entries) considered necessary for a fair presentation have been included.

Results for any interim period are not necessarily indicative of results for any future interim period or for the entire year. The accompanying Condensed Consolidated Balance Sheet as of June 30, 2013, and the Condensed Consolidated Statements of Operations, Comprehensive (Loss) Income and Cash Flows for the three and six month periods ended June 30, 2013 and 2012 are unaudited. The Condensed Consolidated Balance Sheet as of December 31, 2012 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 1, 2013. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and the accompanying notes to those financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

The accompanying Condensed Consolidated Statements of Operations for the three and six month periods ended June 30, 2012 includes adjustments that were made during the three months ended September 30, 2012 upon finalization of the valuation of certain assets acquired and liabilities assumed from the acquisition of eBioscience Holdings, Inc. ("eBioscience") discussed in Note 2. “Acquisition”. Such adjustments are considered to have occurred as of June 25, 2012 (the "Acquisition Date"). Thus, the Company's comparative financial statements as of June 30, 2012 and for the three and six months then ended have been recast to reflect these adjustments. Refer to Note 12. "Income Taxes" for further information.

There have been no material changes to the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 except as otherwise described below:

Comprehensive (Loss) Income

Comprehensive (loss) income is comprised of net loss and other comprehensive (loss) income. Other comprehensive (loss) income includes foreign currency translation adjustments, unrealized gains and losses on the Company’s available-for-sale securities that are excluded from net loss, and unrealized gains and losses on cash flow hedges. Total comprehensive (loss) income has been disclosed in the accompanying Condensed Consolidated Statements of Comprehensive (Loss) Income.

During the first quarter of 2013, the Company adopted Accounting Standards Update (“ASU”) 2013-2, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income which requires filers to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net loss. The following table summarizes the amounts reclassified out of accumulated other comprehensive income, net of tax, for the six months ended June 30, 2013 (in thousands):



	December 31, 2012		(Decrease)/ Increase			Reclassification Adjustments					June 30, 2013
Foreign currency translation adjustments	$	5,374	$	(1,857	)	$	—				$	3,517
Unrealized change in available-for-sale and non-marketable securities	896		(231		)	(99		)	(1	)	566
Unrealized change in cash flow hedges	32		1,424			(697		)	(2	)	759
Total accumulated other comprehensive income, net of tax	$	6,302	$	(664	)	$	(796	)			$	4,842


(1)	Net gain recognized in Interest income and other, net.


(2)	Net gain recognized in Revenue, except for $0.2 million gain that was recognized in Interest income and other, net due to hedging ineffectiveness. See Note 4. “Financial Instruments–Derivative Financial Instruments” for further information.