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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Illumina Inc | NASDAQ:ILMN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.05 | 0.89% | 118.98 | 118.00 | 119.10 | 119.395 | 115.91 | 118.04 | 1,803,176 | 01:00:00 |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Delaware
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33-0804655
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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5200 Illumina Way
San Diego, California
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92122
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.01 par value
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The NASDAQ Global Select Market
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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Page
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•
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our expectations as to our future financial performance, results of operations, or other operational results or metrics;
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•
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the benefits that we expect will result from our business activities and certain transactions we have completed, such as product introductions, increased revenue, decreased expenses, and avoided expenses and expenditures;
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our expectations of the effect on our financial condition of claims, litigation, contingent liabilities, and governmental investigations, proceedings, and regulations;
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our strategies or expectations for product development, market position, financial results, and reserves; and
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•
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other expectations, beliefs, plans, strategies, anticipated developments, and other matters that are not historical facts.
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our ability to develop and commercialize our instruments and consumables, to deploy new products, services, and applications, and to expand the markets for our technology platforms;
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our ability to manufacture robust instrumentation and consumables;
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our ability to identify and integrate acquired technologies, products, or businesses successfully;
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our expectations and beliefs regarding prospects and growth for the business and its markets;
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•
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the assumptions underlying our critical accounting policies and estimates;
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•
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our assessments and estimates that determine our effective tax rate;
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our assessments and beliefs regarding the outcome of pending legal proceedings and any liability, that we may incur as a result of those proceedings;
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uncertainty, or adverse economic and business conditions, including as a result of slowing or uncertain economic growth in the United States or worldwide; and
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other factors detailed in our filings with the SEC, including the risks, uncertainties, and assumptions described in Item 1A “Risk Factors” below, or in information disclosed in public conference calls, the date and time of which are released beforehand.
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GenoLogics Life Sciences Software Inc., a developer of industry-leading laboratory information management systems, in August 2015;
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•
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Myraqa, Inc., a regulatory and quality consulting firm specializing in IVDs and companion diagnostics, in July 2014;
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•
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NextBio, a provider of clinical and genomic informatics, in November 2013;
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•
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Advanced Liquid Logic Inc., a developer of digital microfluidics and liquid handling solutions, in July 2013;
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Verinata Health, Inc., a provider of non-invasive tests for the early identification of fetal chromosomal abnormalities, in February 2013; and
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BlueGnome Ltd., a provider of cytogenetics and in vitro fertilization screening solutions, in September 2012.
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ITEM 1A.
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Risk Factors.
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•
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availability, quality, and price relative to competing products and services;
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•
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the functionality and performance of new and existing products and services;
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•
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the timing of introduction of new products or services relative to competing products and services;
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•
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scientists’ and customers’ opinions of the utility of new products or services;
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•
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citation of new products or services in published research;
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•
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regulatory trends and approvals; and
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•
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general trends in life sciences research and applied markets.
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•
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not experimental or investigational;
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•
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medically necessary;
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•
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appropriate for the specific patient;
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•
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cost-effective;
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•
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supported by peer-reviewed publications; and
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•
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included in clinical practice guidelines.
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•
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difficulties in integrating new operations, technologies, products, and personnel;
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•
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lack of synergies or the inability to realize expected synergies and cost-savings;
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•
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difficulties in managing geographically dispersed operations;
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•
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underperformance of any acquired technology, product, or business relative to our expectations and the price we paid;
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•
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negative near-term impacts on financial results after an acquisition, including acquisition-related earnings charges;
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•
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the potential loss of key employees, customers, and strategic partners of acquired companies;
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•
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claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction;
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•
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the issuance of dilutive securities, assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash;
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•
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diversion of management’s attention and company resources from existing operations of the business;
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•
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inconsistencies in standards, controls, procedures, and policies;
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•
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the impairment of intangible assets as a result of technological advancements, or worse-than-expected performance of acquired companies; and
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•
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assumption of, or exposure to, known or unknown contingent liabilities or liabilities that are difficult to identify or accurately quantify.
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•
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decreased demand for our products;
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•
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injury to our reputation;
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•
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increased product liability insurance costs;
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•
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costs of related litigation; and
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•
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substantial monetary awards to plaintiffs.
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•
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longer payment cycles and difficulties in collecting accounts receivable outside of the United States;
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•
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longer sales cycles due to the volume of transactions taking place through public tenders;
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•
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challenges in staffing and managing foreign operations;
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•
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tariffs and other trade barriers;
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•
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unexpected changes in legislative or regulatory requirements of foreign countries into which we sell our products;
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•
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difficulties in obtaining export licenses or in overcoming other trade barriers and restrictions resulting in delivery delays; and
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•
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significant taxes or other burdens of complying with a variety of foreign laws.
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ITEM 1B.
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Unresolved Staff Comments.
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ITEM 2.
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Properties.
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Location
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Approximate Square Feet
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Operation
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Lease
Expiration Dates
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||
San Diego, CA*
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902,000
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R&D, Manufacturing, Warehouse, Distribution, and Administrative
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2018 – 2031
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San Francisco Bay Area, CA*
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274,000
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R&D, Manufacturing, Warehouse, and Administrative
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2018 – 2026
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Singapore
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211,000
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R&D, Manufacturing, Warehouse, Distribution, and Administrative
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2018 – 2021
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Cambridge, United Kingdom*
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105,000
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R&D, Manufacturing, and Administrative
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2017 – 2024
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Eindhoven, the Netherlands
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42,000
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Distribution and Administrative
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2020
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Madison, WI
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73,000
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R&D, Manufacturing, Warehouse, Distribution, and Administrative
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2018 – 2019
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Other
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47,000
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Administrative
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2017 – 2019
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ITEM 3.
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Legal Proceedings.
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ITEM 4.
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Mine Safety Disclosures.
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ITEM 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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2016
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2015
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||||||||||||
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High
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Low
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High
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Low
|
||||||||
First Quarter
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$
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188.25
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$
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130.37
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$
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213.33
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$
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178.52
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Second Quarter
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$
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178.77
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$
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127.10
|
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$
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223.08
|
|
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$
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178.68
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Third Quarter
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$
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182.67
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|
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$
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132.65
|
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$
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242.37
|
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$
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170.29
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Fourth Quarter
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$
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186.88
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$
|
119.37
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$
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196.47
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$
|
130.00
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|
Period
|
Total Number
of Shares
Purchased (1) |
|
Average Price Paid per Share |
|
Total Number of
Shares Purchased as Part of Publicly Announced Programs |
|
Approximate Dollar
Value of Shares that May Yet Be Purchased Under the Programs |
||||||
October 3, 2016 - October 30, 2016
|
—
|
|
|
—
|
|
|
—
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$
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236,926,941
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October 31, 2016 - November 27, 2016
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—
|
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—
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—
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$
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236,926,941
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November 28, 2016 - January 1, 2017
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1,056,021
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$
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129.02
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1,056,021
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$
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100,680,660
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Total
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1,056,021
|
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$
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129.02
|
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1,056,021
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$
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100,680,660
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|
ITEM 6.
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Selected Financial Data.
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Years Ended
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||||||||||||||||||
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January 1, 2017 (52 weeks)
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January 3, 2016 (53 weeks)
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December 28, 2014 (52 weeks)
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December 29, 2013 (52 weeks)
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December 30, 2012 (52 weeks)
|
||||||||||
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(In thousands, except per share data)
|
||||||||||||||||||
Total revenue
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$
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2,398,373
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$
|
2,219,762
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$
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1,861,358
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$
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1,421,178
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$
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1,148,516
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Income from operations
|
$
|
587,032
|
|
|
$
|
612,841
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|
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$
|
514,711
|
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$
|
134,107
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$
|
200,752
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Consolidated net income
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$
|
428,090
|
|
|
$
|
457,390
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$
|
353,351
|
|
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$
|
125,308
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$
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151,254
|
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Net income attributable to Illumina stockholders
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$
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462,649
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$
|
461,559
|
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$
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353,351
|
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$
|
125,308
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|
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$
|
151,254
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Net income attributable to Illumina stockholders for earnings per share
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$
|
454,106
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$
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461,526
|
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$
|
353,351
|
|
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$
|
125,308
|
|
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$
|
151,254
|
|
Earnings per share attributable to Illumina stockholders:
|
|
|
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|
|
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||||||
Basic
|
$
|
3.09
|
|
|
$
|
3.19
|
|
|
$
|
2.61
|
|
|
$
|
1.00
|
|
|
$
|
1.23
|
|
Diluted
|
$
|
3.07
|
|
|
$
|
3.10
|
|
|
$
|
2.37
|
|
|
$
|
0.90
|
|
|
$
|
1.13
|
|
Shares used in calculating earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
146,788
|
|
|
144,826
|
|
|
135,553
|
|
|
125,076
|
|
|
122,999
|
|
|||||
Diluted
|
148,040
|
|
|
149,069
|
|
|
148,977
|
|
|
139,936
|
|
|
133,693
|
|
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
|
December 29,
2013 |
|
December 30,
2012 |
||||||||||
|
(In thousands)
|
||||||||||||||||||
Cash, cash equivalents and short-term investments
|
$
|
1,558,724
|
|
|
$
|
1,386,220
|
|
|
$
|
1,338,371
|
|
|
$
|
1,165,603
|
|
|
$
|
1,350,204
|
|
Total assets
|
$
|
4,280,600
|
|
|
$
|
3,687,747
|
|
|
$
|
3,339,640
|
|
|
$
|
3,019,006
|
|
|
$
|
2,566,085
|
|
Long-term debt, less current portion
|
$
|
1,047,805
|
|
|
$
|
1,015,649
|
|
|
$
|
986,780
|
|
|
$
|
839,305
|
|
|
$
|
805,406
|
|
Redeemable noncontrolling interest
|
$
|
43,940
|
|
|
$
|
32,546
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total stockholders’ equity
|
$
|
2,197,229
|
|
|
$
|
1,848,553
|
|
|
$
|
1,462,798
|
|
|
$
|
1,533,202
|
|
|
$
|
1,318,581
|
|
ITEM 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
Business Overview and Outlook
. High level discussion of our operating results and significant known trends that affect our business.
|
•
|
Results of Operations
. Detailed discussion of our revenues and expenses.
|
•
|
Liquidity and Capital Resources
. Discussion of key aspects of our statements of cash flows, changes in our financial position, and our financial commitments.
|
•
|
Off-Balance Sheet Arrangements
. We have no off-balance sheet arrangements.
|
•
|
Contractual Obligations.
Tabular disclosure of known contractual obligations as of
January 1, 2017
.
|
•
|
Critical Accounting Policies and Estimates
. Discussion of significant changes we believe are important to understanding the assumptions and judgments underlying our financial statements.
|
•
|
Recent Accounting Pronouncements.
|
•
|
Net revenue
increased
8.0%
in
2016
over
2015
due to the growth in sales of our sequencing consumables and services, partially offset by lower shipments of our high-throughput platforms. We expect our revenue to continue to increase in
2017
.
|
•
|
Gross profit as a percentage of revenue (gross margin) decreased to
69.5%
in
2016
from
69.8%
in
2015
. Gross margins in
2016
decreased primarily due to our increased manufacturing capacity, which was partially offset by a greater mix of sequencing consumables. Our gross margin in future periods will depend on several factors, including: market conditions that may impact our pricing power; sales mix changes among consumables, instruments, and services; product mix changes between established products and new products in new markets; excess and obsolete inventories; royalties; our cost structure for manufacturing operations; and product support obligations.
|
•
|
Income from operations as a percentage of revenue
decreased
to
24.5%
in
2016
compared to
27.6%
in
2015
primarily due to the increase in research and development and selling, general, and administrative expenses as a percentage of revenue. We expect research and development and selling, general and administrative expenses to continue to grow.
|
•
|
Our effective tax rate was
23.7%
and
21.6%
in
2016
and
2015
, respectively. The variance from the U.S. federal statutory tax rate of 35% was primarily attributable to the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore and the United Kingdom, partially offset by the tax impact associated with the investments in our consolidated variable interest entities.
|
•
|
We ended
2016
with cash, cash equivalents, and short-term investments totaling
$1.6 billion
, of which approximately
$749.7 million
was held by our foreign subsidiaries. Cash and cash equivalents held by our consolidated VIEs as of
January 1, 2017
were
$75.9 million
.
|
|
2016
|
|
2015
|
|
2014
|
|||
Revenue:
|
|
|
|
|
|
|
|
|
Product revenue
|
84.7
|
%
|
|
85.2
|
%
|
|
87.0
|
%
|
Service and other revenue
|
15.3
|
|
|
14.8
|
|
|
13.0
|
|
Total revenue
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
Cost of product revenue
|
22.3
|
|
|
22.1
|
|
|
23.2
|
|
Cost of service and other revenue
|
6.4
|
|
|
6.0
|
|
|
5.0
|
|
Amortization of acquired intangible assets
|
1.8
|
|
|
2.1
|
|
|
2.1
|
|
Total cost of revenue
|
30.5
|
|
|
30.2
|
|
|
30.3
|
|
Gross profit
|
69.5
|
|
|
69.8
|
|
|
69.7
|
|
Operating expense:
|
|
|
|
|
|
|
|
|
Research and development
|
21.0
|
|
|
18.1
|
|
|
20.8
|
|
Selling, general and administrative
|
24.3
|
|
|
23.6
|
|
|
25.1
|
|
Legal contingencies
|
(0.4
|
)
|
|
0.9
|
|
|
(4.0
|
)
|
Acquisition related gain, net
|
—
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
Headquarter relocation
|
0.1
|
|
|
(0.1
|
)
|
|
0.3
|
|
Total operating expense
|
45.0
|
|
|
42.2
|
|
|
42.1
|
|
Income from operations
|
24.5
|
|
|
27.6
|
|
|
27.6
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest income
|
0.4
|
|
|
0.2
|
|
|
0.3
|
|
Interest expense
|
(1.4
|
)
|
|
(1.9
|
)
|
|
(2.2
|
)
|
Cost-method investment gain, net
|
—
|
|
|
0.7
|
|
|
0.2
|
|
Other expense, net
|
(0.1
|
)
|
|
(0.3
|
)
|
|
(1.8
|
)
|
Total other expense, net
|
(1.1
|
)
|
|
(1.3
|
)
|
|
(3.5
|
)
|
Income before income taxes
|
23.4
|
|
|
26.3
|
|
|
24.1
|
|
Provision for income taxes
|
5.6
|
|
|
5.7
|
|
|
5.1
|
|
Consolidated net income
|
17.8
|
|
|
20.6
|
|
|
19.0
|
|
Add: Net loss attributable to noncontrolling interests
|
1.5
|
|
|
0.2
|
|
|
—
|
|
Net income attributable to Illumina stockholders
|
19.3
|
%
|
|
20.8
|
%
|
|
19.0
|
%
|
|
2016 - 2015
|
|
2015 - 2014
|
||||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
% Change
|
|
2014
|
|
Change
|
|
% Change
|
||||||||||||
Product revenue
|
$
|
2,031,997
|
|
|
$
|
1,890,633
|
|
|
$
|
141,364
|
|
|
7
|
%
|
|
$
|
1,619,511
|
|
|
$
|
271,122
|
|
|
17
|
%
|
Service and other revenue
|
366,376
|
|
|
329,129
|
|
|
37,247
|
|
|
11
|
|
|
241,847
|
|
|
87,282
|
|
|
36
|
|
|||||
Total revenue
|
$
|
2,398,373
|
|
|
$
|
2,219,762
|
|
|
$
|
178,611
|
|
|
8
|
%
|
|
$
|
1,861,358
|
|
|
$
|
358,404
|
|
|
19
|
%
|
|
2016 - 2015
|
|
2015 - 2014
|
||||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
% Change
|
|
2014
|
|
Change
|
|
% Change
|
||||||||||||
Total gross profit
|
$
|
1,666,448
|
|
|
$
|
1,549,290
|
|
|
$
|
117,158
|
|
|
8
|
%
|
|
$
|
1,297,710
|
|
|
$
|
251,580
|
|
|
19
|
%
|
Total gross margin
|
69.5
|
%
|
|
69.8
|
%
|
|
|
|
|
|
69.7
|
%
|
|
|
|
|
|
2016 - 2015
|
|
2015 - 2014
|
||||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
% Change
|
|
2014
|
|
Change
|
|
% Change
|
||||||||||||
Research and development
|
$
|
504,415
|
|
|
$
|
401,527
|
|
|
$
|
102,888
|
|
|
26
|
%
|
|
$
|
388,055
|
|
|
$
|
13,472
|
|
|
3
|
%
|
Selling, general and administrative
|
583,005
|
|
|
524,657
|
|
|
58,348
|
|
|
11
|
|
|
466,283
|
|
|
58,374
|
|
|
13
|
|
|||||
Legal contingencies
|
(9,490
|
)
|
|
19,000
|
|
|
(28,490
|
)
|
|
(150
|
)
|
|
(74,338
|
)
|
|
93,338
|
|
|
(126
|
)
|
|||||
Acquisition related gain, net
|
—
|
|
|
(6,124
|
)
|
|
6,124
|
|
|
(100
|
)
|
|
(2,639
|
)
|
|
(3,485
|
)
|
|
132
|
|
|||||
Headquarter relocation
|
1,486
|
|
|
(2,611
|
)
|
|
4,097
|
|
|
(157
|
)
|
|
5,638
|
|
|
(8,249
|
)
|
|
(146
|
)
|
|||||
Total operating expense
|
$
|
1,079,416
|
|
|
$
|
936,449
|
|
|
$
|
142,967
|
|
|
15
|
%
|
|
$
|
782,999
|
|
|
$
|
153,450
|
|
|
20
|
%
|
|
2016 - 2015
|
|
2015 - 2014
|
||||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
% Change
|
|
2014
|
|
Change
|
|
% Change
|
||||||||||||
Interest income
|
$
|
9,799
|
|
|
$
|
5,024
|
|
|
$
|
4,775
|
|
|
95
|
%
|
|
$
|
3,901
|
|
|
$
|
1,123
|
|
|
29
|
%
|
Interest expense
|
(33,181
|
)
|
|
(42,121
|
)
|
|
8,940
|
|
|
(21
|
)
|
|
(41,728
|
)
|
|
(393
|
)
|
|
1
|
|
|||||
Cost-method investment gain, net
|
—
|
|
|
15,601
|
|
|
(15,601
|
)
|
|
(100
|
)
|
|
4,427
|
|
|
11,174
|
|
|
252
|
|
|||||
Other expense, net
|
(2,472
|
)
|
|
(8,203
|
)
|
|
5,731
|
|
|
(70
|
)
|
|
(32,553
|
)
|
|
24,350
|
|
|
(75
|
)
|
|||||
Total other expense, net
|
$
|
(25,854
|
)
|
|
$
|
(29,699
|
)
|
|
$
|
3,845
|
|
|
(13
|
)%
|
|
$
|
(65,953
|
)
|
|
$
|
36,254
|
|
|
(55
|
)%
|
|
2016 - 2015
|
|
2015 - 2014
|
||||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
% Change
|
|
2014
|
|
Change
|
|
% Change
|
||||||||||||
Income before income taxes
|
$
|
561,178
|
|
|
$
|
583,142
|
|
|
$
|
(21,964
|
)
|
|
(4
|
)%
|
|
$
|
448,758
|
|
|
$
|
134,384
|
|
|
30
|
%
|
Provision for income taxes
|
133,088
|
|
|
125,752
|
|
|
7,336
|
|
|
6
|
|
|
95,407
|
|
|
30,345
|
|
|
32
|
|
|||||
Consolidated net income
|
$
|
428,090
|
|
|
$
|
457,390
|
|
|
$
|
(29,300
|
)
|
|
(6
|
)%
|
|
$
|
353,351
|
|
|
$
|
104,039
|
|
|
29
|
%
|
Effective tax rate
|
23.7
|
%
|
|
21.6
|
%
|
|
|
|
|
|
21.3
|
%
|
|
|
|
|
•
|
support of commercialization efforts related to our current and future products, including expansion of our direct sales force and field support resources both in the United States and abroad;
|
•
|
acquisitions of equipment and other fixed assets for use in our current and future manufacturing and research and development facilities;
|
•
|
the continued advancement of research and development efforts;
|
•
|
potential strategic acquisitions and investments;
|
•
|
potential early repayment of debt obligations as a result of conversions;
|
•
|
the expansion needs of our facilities, including costs of leasing and building out additional facilities; and
|
•
|
repurchases of our outstanding common stock.
|
•
|
our ability to successfully commercialize and further develop our technologies and create innovative products in our markets;
|
•
|
scientific progress in our research and development programs and the magnitude of those programs;
|
•
|
competing technological and market developments; and
|
•
|
the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings.
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash provided by operating activities
|
$
|
687,238
|
|
|
$
|
659,596
|
|
|
$
|
501,271
|
|
Net cash used in investing activities
|
(514,539
|
)
|
|
(106,146
|
)
|
|
(406,624
|
)
|
|||
Net cash used in financing activities
|
(204,713
|
)
|
|
(418,762
|
)
|
|
(166,748
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(2,240
|
)
|
|
(2,072
|
)
|
|
(3,382
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
$
|
(34,254
|
)
|
|
$
|
132,616
|
|
|
$
|
(75,483
|
)
|
|
|
Payments Due by Period(1)
|
||||||||||||||||||
|
|
|
|
Less Than
|
|
|
|
|
|
More Than
|
||||||||||
Contractual Obligation
|
|
Total
|
|
1 Year
|
|
1 – 3 Years
|
|
3 – 5 Years
|
|
5 Years
|
||||||||||
Debt obligations(2)
|
|
$
|
1,161,644
|
|
|
$
|
2,588
|
|
|
$
|
637,675
|
|
|
$
|
521,381
|
|
|
$
|
—
|
|
Operating leases
|
|
661,931
|
|
|
42,759
|
|
|
91,981
|
|
|
91,586
|
|
|
435,605
|
|
|||||
Build-to-suit leases
|
|
376,857
|
|
|
12,244
|
|
|
53,297
|
|
|
56,488
|
|
|
254,828
|
|
|||||
License agreements
|
|
77,225
|
|
|
12,920
|
|
|
41,155
|
|
|
23,150
|
|
|
—
|
|
|||||
Purchase obligations
|
|
22,458
|
|
|
18,503
|
|
|
3,955
|
|
|
—
|
|
|
—
|
|
|||||
Amounts due under executive deferred compensation plan
|
|
29,223
|
|
|
29,223
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Contingent consideration payments related to acquisitions
|
|
4,139
|
|
|
—
|
|
|
4,139
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
2,333,477
|
|
|
$
|
118,237
|
|
|
$
|
832,202
|
|
|
$
|
692,605
|
|
|
$
|
690,433
|
|
(1)
|
The table excludes
$65.0 million
of uncertain tax positions,
$43.9 million
of redeemable noncontrolling interest, and
$89.5 million
of capital commitments for the Venture Fund as the timing and amounts of the settlement remained uncertain as of
January 1, 2017
. See note “10. Income Taxes” and note “2. Balance Sheet Account Details” in Part II, Item 8 of this Form 10-K for further discussions of these items.
|
(2)
|
Debt obligations include the principal amount of our convertible senior notes due 2019 and 2021, as well as interest payments to be made under the notes. Although these notes mature in 2019 and 2021, respectively, they may be converted into cash and shares of our common stock prior to maturity if certain conditions are met. Any conversion prior to maturity can result in repayments of the principal amounts sooner than the scheduled repayments as indicated in the table. See note “5. Convertible Senior Notes” in Part II, Item 8 of this Form 10-K for further discussion of the terms of the convertible senior notes.
|
ITEM 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
ITEM 8.
|
Financial Statements and Supplementary Data.
|
|
Page
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
734,516
|
|
|
$
|
768,770
|
|
Short-term investments
|
824,208
|
|
|
617,450
|
|
||
Accounts receivable, net
|
381,316
|
|
|
385,529
|
|
||
Inventory
|
300,170
|
|
|
270,777
|
|
||
Prepaid expenses and other current assets
|
77,881
|
|
|
54,297
|
|
||
Total current assets
|
2,318,091
|
|
|
2,096,823
|
|
||
Property and equipment, net
|
713,334
|
|
|
342,694
|
|
||
Goodwill
|
775,995
|
|
|
752,629
|
|
||
Intangible assets, net
|
242,652
|
|
|
273,621
|
|
||
Deferred tax assets
|
123,317
|
|
|
134,515
|
|
||
Other assets
|
107,211
|
|
|
87,465
|
|
||
Total assets
|
$
|
4,280,600
|
|
|
$
|
3,687,747
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
137,930
|
|
|
$
|
139,226
|
|
Accrued liabilities
|
342,751
|
|
|
386,844
|
|
||
Build-to-suit lease liability
|
222,734
|
|
|
9,495
|
|
||
Long-term debt, current portion
|
1,250
|
|
|
74,929
|
|
||
Total current liabilities
|
704,665
|
|
|
610,494
|
|
||
Long-term debt
|
1,047,805
|
|
|
1,015,649
|
|
||
Other long-term liabilities
|
213,955
|
|
|
180,505
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Redeemable noncontrolling interests
|
43,940
|
|
|
32,546
|
|
||
Stockholders’ equity:
|
|
|
|
|
|||
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued and outstanding at January 1, 2017 and January 3, 2016
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 320,000 shares authorized; 188,759 shares issued and 146,196 outstanding at January 1, 2017; 186,663 shares issued and 146,584 outstanding at January 3, 2016
|
1,887
|
|
|
1,859
|
|
||
Additional paid-in capital
|
2,733,394
|
|
|
2,497,501
|
|
||
Accumulated other comprehensive (loss) income
|
(1,037
|
)
|
|
36
|
|
||
Retained earnings
|
1,485,414
|
|
|
1,022,765
|
|
||
Treasury stock, 42,563 shares and 40,079 shares at cost at January 1, 2017 and January 3, 2016, respectively
|
(2,022,429
|
)
|
|
(1,673,608
|
)
|
||
Total Illumina stockholders’ equity
|
2,197,229
|
|
|
1,848,553
|
|
||
Noncontrolling interests
|
73,006
|
|
|
—
|
|
||
Total stockholders’ equity
|
2,270,235
|
|
|
1,848,553
|
|
||
Total liabilities and stockholders’ equity
|
$
|
4,280,600
|
|
|
$
|
3,687,747
|
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||
Product revenue
|
$
|
2,031,997
|
|
|
$
|
1,890,633
|
|
|
$
|
1,619,511
|
|
Service and other revenue
|
366,376
|
|
|
329,129
|
|
|
241,847
|
|
|||
Total revenue
|
2,398,373
|
|
|
2,219,762
|
|
|
1,861,358
|
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|||
Cost of product revenue
|
534,199
|
|
|
490,812
|
|
|
431,920
|
|
|||
Cost of service and other revenue
|
154,762
|
|
|
133,850
|
|
|
92,355
|
|
|||
Amortization of acquired intangible assets
|
42,964
|
|
|
45,810
|
|
|
39,373
|
|
|||
Total cost of revenue
|
731,925
|
|
|
670,472
|
|
|
563,648
|
|
|||
Gross profit
|
1,666,448
|
|
|
1,549,290
|
|
|
1,297,710
|
|
|||
Operating expense:
|
|
|
|
|
|
|
|
|
|||
Research and development
|
504,415
|
|
|
401,527
|
|
|
388,055
|
|
|||
Selling, general and administrative
|
583,005
|
|
|
524,657
|
|
|
466,283
|
|
|||
Legal contingencies
|
(9,490
|
)
|
|
19,000
|
|
|
(74,338
|
)
|
|||
Acquisition related gain, net
|
—
|
|
|
(6,124
|
)
|
|
(2,639
|
)
|
|||
Headquarter relocation
|
1,486
|
|
|
(2,611
|
)
|
|
5,638
|
|
|||
Total operating expense
|
1,079,416
|
|
|
936,449
|
|
|
782,999
|
|
|||
Income from operations
|
587,032
|
|
|
612,841
|
|
|
514,711
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|||
Interest income
|
9,799
|
|
|
5,024
|
|
|
3,901
|
|
|||
Interest expense
|
(33,181
|
)
|
|
(42,121
|
)
|
|
(41,728
|
)
|
|||
Cost-method investment gain, net
|
—
|
|
|
15,601
|
|
|
4,427
|
|
|||
Other expense, net
|
(2,472
|
)
|
|
(8,203
|
)
|
|
(32,553
|
)
|
|||
Total other expense, net
|
(25,854
|
)
|
|
(29,699
|
)
|
|
(65,953
|
)
|
|||
Income before income taxes
|
561,178
|
|
|
583,142
|
|
|
448,758
|
|
|||
Provision for income taxes
|
133,088
|
|
|
125,752
|
|
|
95,407
|
|
|||
Consolidated net income
|
428,090
|
|
|
457,390
|
|
|
353,351
|
|
|||
Add: Net loss attributable to noncontrolling interests
|
34,559
|
|
|
4,169
|
|
|
—
|
|
|||
Net income attributable to Illumina stockholders
|
$
|
462,649
|
|
|
$
|
461,559
|
|
|
$
|
353,351
|
|
Net income attributable to Illumina stockholders for earnings per share
|
$
|
454,106
|
|
|
$
|
461,526
|
|
|
$
|
353,351
|
|
Earnings per share attributable to Illumina stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
3.09
|
|
|
$
|
3.19
|
|
|
$
|
2.61
|
|
Diluted
|
$
|
3.07
|
|
|
$
|
3.10
|
|
|
$
|
2.37
|
|
Shares used in computing earnings per common share:
|
|
|
|
|
|
||||||
Basic
|
146,788
|
|
|
144,826
|
|
|
135,553
|
|
|||
Diluted
|
148,040
|
|
|
149,069
|
|
|
148,977
|
|
|
|
Years Ended
|
||||||||||
|
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Consolidated net income
|
|
$
|
428,090
|
|
|
$
|
457,390
|
|
|
$
|
353,351
|
|
Unrealized (loss) gain on available-for-sale securities, net of deferred tax
|
|
(1,073
|
)
|
|
1,116
|
|
|
(2,314
|
)
|
|||
Total consolidated comprehensive income
|
|
427,017
|
|
|
458,506
|
|
|
351,037
|
|
|||
Add: Comprehensive loss attributable to noncontrolling interests
|
|
34,559
|
|
|
4,169
|
|
|
—
|
|
|||
Comprehensive income attributable to Illumina stockholders
|
|
$
|
461,576
|
|
|
$
|
462,675
|
|
|
$
|
351,037
|
|
|
Illumina Stockholders
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
Additional
|
|
Accumulated Other
|
|
|
|
|
|
|
|
|
|
Total
|
||||||||||||||||
|
Common Stock
|
|
Paid-In
|
|
Comprehensive
|
|
Retained
|
|
Treasury Stock
|
|
Noncontrolling
|
|
Stockholders’
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Capital
|
|
Income (Loss)
|
|
Earnings
|
|
Shares
|
|
Amount
|
|
Interests
|
|
Equity
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||||
Balance as of December 29, 2013
|
175,205
|
|
|
$
|
1,753
|
|
|
$
|
2,562,705
|
|
|
$
|
1,234
|
|
|
$
|
207,855
|
|
|
(47,482
|
)
|
|
$
|
(1,240,345
|
)
|
|
$
|
—
|
|
|
$
|
1,533,202
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
353,351
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
353,351
|
|
|||||||
Unrealized loss on available-for-sale securities, net of deferred tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,314
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,314
|
)
|
|||||||
Issuance of common stock, net of repurchases
|
6,127
|
|
|
52
|
|
|
96,204
|
|
|
—
|
|
|
—
|
|
|
(2,696
|
)
|
|
(247,221
|
)
|
|
—
|
|
|
(150,965
|
)
|
|||||||
Tax impact from the issuance, repurchase and conversion of convertible notes
|
—
|
|
|
—
|
|
|
(58,354
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58,354
|
)
|
|||||||
Reclassification of conversion option subject to cash settlement
|
—
|
|
|
—
|
|
|
282
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
282
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
153,189
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
153,189
|
|
|||||||
Net incremental tax benefit related to share-based compensation
|
—
|
|
|
—
|
|
|
126,477
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
126,477
|
|
|||||||
Equity based contingent compensation
|
—
|
|
|
—
|
|
|
2,621
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,621
|
|
|||||||
Warrant exercises
|
—
|
|
|
—
|
|
|
(215,493
|
)
|
|
—
|
|
|
—
|
|
|
12,475
|
|
|
215,493
|
|
|
—
|
|
|
—
|
|
|||||||
Repurchase of convertible notes, net of issuances
|
—
|
|
|
—
|
|
|
(494,691
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(494,691
|
)
|
|||||||
Balance as of December 28, 2014
|
181,332
|
|
|
1,805
|
|
|
2,172,940
|
|
|
(1,080
|
)
|
|
561,206
|
|
|
(37,703
|
)
|
|
(1,272,073
|
)
|
|
—
|
|
|
1,462,798
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
461,559
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
461,559
|
|
|||||||
Unrealized gain on available-for-sale securities, net of deferred tax
|
—
|
|
|
—
|
|
|
—
|
|
|
1,116
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,116
|
|
|||||||
Issuance of common stock, net of repurchases
|
5,331
|
|
|
54
|
|
|
69,870
|
|
|
—
|
|
|
—
|
|
|
(2,376
|
)
|
|
(401,535
|
)
|
|
—
|
|
|
(331,611
|
)
|
|||||||
Tax impact from the conversion of convertible notes
|
—
|
|
|
—
|
|
|
373
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
373
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
133,454
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
133,454
|
|
|||||||
Net incremental tax benefit related to share-based compensation
|
—
|
|
|
—
|
|
|
125,451
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
125,451
|
|
|||||||
Vesting of redeemable equity awards
|
—
|
|
|
—
|
|
|
(418
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(418
|
)
|
|||||||
Adjustment to the carrying value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(4,169
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,169
|
)
|
|||||||
Balance as of January 3, 2016
|
186,663
|
|
|
1,859
|
|
|
2,497,501
|
|
|
36
|
|
|
1,022,765
|
|
|
(40,079
|
)
|
|
(1,673,608
|
)
|
|
—
|
|
|
1,848,553
|
|
|||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
462,649
|
|
|
—
|
|
|
—
|
|
|
(13,817
|
)
|
|
448,832
|
|
|||||||
Unrealized loss on available-for-sale securities, net of deferred tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,073
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,073
|
)
|
|||||||
Issuance of common stock, net of repurchases
|
2,096
|
|
|
28
|
|
|
47,599
|
|
|
—
|
|
|
—
|
|
|
(2,506
|
)
|
|
(349,167
|
)
|
|
—
|
|
|
(301,540
|
)
|
|||||||
Tax impact from the conversion of convertible notes
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
128,538
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
128,538
|
|
|||||||
Net incremental tax benefit related to share-based compensation
|
—
|
|
|
—
|
|
|
86,872
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86,872
|
|
|||||||
Adjustment to the carrying value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(21,194
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,194
|
)
|
|||||||
Vesting of redeemable equity awards
|
—
|
|
|
—
|
|
|
(1,942
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,942
|
)
|
|||||||
Vesting of non-redeemable equity awards
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|||||||
Issuance of subsidiary shares in business combination
|
—
|
|
|
—
|
|
|
2,102
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
198
|
|
|
2,300
|
|
|||||||
Issuance of treasury stock
|
—
|
|
|
—
|
|
|
3,554
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
346
|
|
|
—
|
|
|
3,900
|
|
|||||||
Contributions from noncontrolling interest owners
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80,000
|
|
|
80,000
|
|
|||||||
Proceeds from early exercise of equity awards from a subsidiary
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,558
|
|
|
6,558
|
|
|||||||
Tax impact of deemed dividend from GRAIL, Inc.
|
—
|
|
|
—
|
|
|
(9,561
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,561
|
)
|
|||||||
Balance as of January 1, 2017
|
188,759
|
|
|
$
|
1,887
|
|
|
$
|
2,733,394
|
|
|
$
|
(1,037
|
)
|
|
$
|
1,485,414
|
|
|
(42,563
|
)
|
|
$
|
(2,022,429
|
)
|
|
$
|
73,006
|
|
|
$
|
2,270,235
|
|
ILLUMINA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|||||||||||
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|||
Consolidated net income
|
$
|
428,090
|
|
|
$
|
457,390
|
|
|
$
|
353,351
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation expense
|
89,955
|
|
|
72,687
|
|
|
61,905
|
|
|||
Amortization of intangible assets
|
50,960
|
|
|
53,732
|
|
|
50,669
|
|
|||
Share-based compensation expense
|
129,065
|
|
|
132,593
|
|
|
152,551
|
|
|||
Accretion of debt discount
|
29,732
|
|
|
38,517
|
|
|
38,069
|
|
|||
Loss on extinguishment of debt
|
113
|
|
|
4,062
|
|
|
31,360
|
|
|||
Incremental tax benefit related to share-based compensation
|
(91,332
|
)
|
|
(126,659
|
)
|
|
(126,479
|
)
|
|||
Deferred income tax expense
|
93,562
|
|
|
80,504
|
|
|
99,846
|
|
|||
Change in fair value of contingent consideration
|
(1,161
|
)
|
|
(6,124
|
)
|
|
(5,356
|
)
|
|||
Cost-method investment gain, net
|
—
|
|
|
(15,601
|
)
|
|
(4,427
|
)
|
|||
Gain on litigation settlement
|
(11,490
|
)
|
|
—
|
|
|
(109,363
|
)
|
|||
Other
|
14,759
|
|
|
6,937
|
|
|
15,618
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
3,239
|
|
|
(95,913
|
)
|
|
(50,381
|
)
|
|||
Inventory
|
(29,686
|
)
|
|
(80,545
|
)
|
|
(36,542
|
)
|
|||
Prepaid expenses and other current assets
|
(1,204
|
)
|
|
(10,876
|
)
|
|
6,619
|
|
|||
Other assets
|
(6,882
|
)
|
|
(1,418
|
)
|
|
(36,256
|
)
|
|||
Accounts payable
|
(1,969
|
)
|
|
46,296
|
|
|
(2,106
|
)
|
|||
Accrued liabilities
|
(24,250
|
)
|
|
98,791
|
|
|
60,332
|
|
|||
Other long-term liabilities
|
15,737
|
|
|
5,223
|
|
|
1,861
|
|
|||
Net cash provided by operating activities
|
687,238
|
|
|
659,596
|
|
|
501,271
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|||
Purchases of available-for-sale securities
|
(894,369
|
)
|
|
(797,022
|
)
|
|
(791,252
|
)
|
|||
Sales of available-for-sale securities
|
543,252
|
|
|
582,528
|
|
|
391,655
|
|
|||
Maturities of available-for-sale securities
|
139,642
|
|
|
294,224
|
|
|
150,229
|
|
|||
Net cash paid for acquisitions
|
(17,841
|
)
|
|
(36,581
|
)
|
|
(3,285
|
)
|
|||
Net purchases of strategic investments
|
(13,842
|
)
|
|
(6,048
|
)
|
|
(11,755
|
)
|
|||
Purchases of property and equipment
|
(259,891
|
)
|
|
(142,847
|
)
|
|
(105,996
|
)
|
|||
Cash paid for intangible assets
|
(11,490
|
)
|
|
(400
|
)
|
|
(36,220
|
)
|
|||
Net cash used in investing activities
|
(514,539
|
)
|
|
(106,146
|
)
|
|
(406,624
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||
Payments on financing obligations
|
(65,897
|
)
|
|
(244,952
|
)
|
|
(29,991
|
)
|
|||
Payments on acquisition related contingent consideration liability
|
(29,200
|
)
|
|
(2,900
|
)
|
|
—
|
|
|||
Proceeds from issuance of debt
|
5,000
|
|
|
—
|
|
|
1,132,378
|
|
|||
Repurchase of convertible notes
|
—
|
|
|
—
|
|
|
(1,244,721
|
)
|
|||
Incremental tax benefit related to share-based compensation
|
91,332
|
|
|
126,659
|
|
|
126,479
|
|
|||
Common stock repurchases
|
(249,342
|
)
|
|
(274,324
|
)
|
|
(237,183
|
)
|
|||
Taxes paid related to net share settlement of equity awards
|
(99,825
|
)
|
|
(127,212
|
)
|
|
(10,038
|
)
|
|||
Proceeds from issuance of common stock
|
47,661
|
|
|
71,839
|
|
|
96,328
|
|
|||
Proceeds from early exercise of equity awards from a subsidiary
|
6,558
|
|
|
—
|
|
|
—
|
|
|||
Contributions from noncontrolling interest owners
|
89,000
|
|
|
32,128
|
|
|
—
|
|
|||
Net cash used in financing activities
|
(204,713
|
)
|
|
(418,762
|
)
|
|
(166,748
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(2,240
|
)
|
|
(2,072
|
)
|
|
(3,382
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(34,254
|
)
|
|
132,616
|
|
|
(75,483
|
)
|
|||
Cash and cash equivalents at beginning of year
|
768,770
|
|
|
636,154
|
|
|
711,637
|
|
|||
Cash and cash equivalents at end of year
|
$
|
734,516
|
|
|
$
|
768,770
|
|
|
$
|
636,154
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|||
Cash paid for income taxes
|
$
|
59,749
|
|
|
$
|
16,913
|
|
|
$
|
17,886
|
|
1.
|
Organization and Summary of Significant Accounting Policies
|
•
|
Level 1 —
Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 —
Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
•
|
Level 3 —
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
|
Estimated Useful Lives
|
Building and leasehold improvements
|
4 to 30 years
|
Machinery and equipment
|
3 to 5 years
|
Computer hardware and software
|
3 to 7 years
|
Furniture and fixtures
|
7 years
|
|
Years Ended
|
|||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
|||
Weighted average shares outstanding
|
146,788
|
|
|
144,826
|
|
|
135,553
|
|
Effect of potentially dilutive common shares from:
|
|
|
|
|
|
|||
Convertible senior notes
|
60
|
|
|
1,661
|
|
|
3,489
|
|
Equity awards
|
1,192
|
|
|
2,582
|
|
|
4,340
|
|
Warrants
|
—
|
|
|
—
|
|
|
5,595
|
|
Weighted average shares used in calculating diluted earnings per share
|
148,040
|
|
|
149,069
|
|
|
148,977
|
|
Potentially dilutive shares excluded from calculation due to anti-dilutive effect
|
459
|
|
|
139
|
|
|
124
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Foreign currency translation adjustments
|
$
|
1,289
|
|
|
$
|
1,289
|
|
Unrealized (loss) gain on available-for-sale securities, net of deferred tax
|
(2,326
|
)
|
|
(1,253
|
)
|
||
Total accumulated other comprehensive (loss) income
|
$
|
(1,037
|
)
|
|
$
|
36
|
|
2.
|
Balance Sheet Account Details
|
|
January 1, 2017
|
|
January 3, 2016
|
||||||||||||||||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||||||||||
Available-for-sale securities:
|
|||||||||||||||||||||||||||||||
Debt securities in government-sponsored entities
|
$
|
33,862
|
|
|
$
|
—
|
|
|
$
|
(162
|
)
|
|
$
|
33,700
|
|
|
$
|
14,634
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
14,626
|
|
Corporate debt securities
|
478,159
|
|
|
42
|
|
|
(1,959
|
)
|
|
476,242
|
|
|
422,177
|
|
|
44
|
|
|
(1,127
|
)
|
|
421,094
|
|
||||||||
U.S. Treasury securities
|
315,502
|
|
|
31
|
|
|
(1,267
|
)
|
|
314,266
|
|
|
182,144
|
|
|
3
|
|
|
(417
|
)
|
|
181,730
|
|
||||||||
Total available-for-sale securities
|
$
|
827,523
|
|
|
$
|
73
|
|
|
$
|
(3,388
|
)
|
|
$
|
824,208
|
|
|
$
|
618,955
|
|
|
$
|
47
|
|
|
$
|
(1,552
|
)
|
|
$
|
617,450
|
|
|
Estimated Fair Value
|
||
Due within one year
|
$
|
362,143
|
|
After one but within five years
|
462,065
|
|
|
Total
|
$
|
824,208
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Accounts receivable from product and service sales
|
$
|
385,164
|
|
|
$
|
393,106
|
|
Other receivables
|
386
|
|
|
636
|
|
||
Total accounts receivable, gross
|
385,550
|
|
|
393,742
|
|
||
Allowance for doubtful accounts
|
(4,234
|
)
|
|
(8,213
|
)
|
||
Total accounts receivable, net
|
$
|
381,316
|
|
|
$
|
385,529
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Raw materials
|
$
|
101,999
|
|
|
$
|
97,740
|
|
Work in process
|
161,087
|
|
|
138,322
|
|
||
Finished goods
|
37,084
|
|
|
34,715
|
|
||
Total inventory
|
$
|
300,170
|
|
|
$
|
270,777
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Leasehold improvements
|
$
|
270,453
|
|
|
$
|
178,019
|
|
Machinery and equipment
|
274,376
|
|
|
224,158
|
|
||
Computer hardware and software
|
155,602
|
|
|
136,550
|
|
||
Furniture and fixtures
|
24,023
|
|
|
18,539
|
|
||
Building
|
9,015
|
|
|
7,670
|
|
||
Construction in progress
|
306,678
|
|
|
44,501
|
|
||
Total property and equipment, gross
|
1,040,147
|
|
|
609,437
|
|
||
Accumulated depreciation
|
(326,813
|
)
|
|
(266,743
|
)
|
||
Total property and equipment, net
|
$
|
713,334
|
|
|
$
|
342,694
|
|
|
Goodwill
|
||
Balance as of December 28, 2014
|
$
|
724,904
|
|
Current period acquisitions
|
27,725
|
|
|
Balance as of January 3, 2016
|
752,629
|
|
|
Current period acquisitions
|
23,366
|
|
|
Balance as of January 1, 2017
|
$
|
775,995
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Deferred revenue, current portion
|
$
|
120,621
|
|
|
$
|
96,654
|
|
Accrued compensation expenses
|
111,800
|
|
|
120,662
|
|
||
Accrued taxes payable
|
32,040
|
|
|
44,159
|
|
||
Customer deposits
|
20,528
|
|
|
20,901
|
|
||
Acquisition related contingent liability
|
2,768
|
|
|
35,000
|
|
||
Other
|
54,994
|
|
|
69,468
|
|
||
Total accrued liabilities
|
$
|
342,751
|
|
|
$
|
386,844
|
|
|
Redeemable Noncontrolling Interests
|
||
Balance as of December 28, 2014
|
$
|
—
|
|
Cash contributions
|
56,875
|
|
|
Amount held in escrow by third party
|
(24,747
|
)
|
|
Vesting of redeemable equity awards
|
418
|
|
|
Net loss attributable to noncontrolling interests
|
(4,169
|
)
|
|
Adjustment up to the redemption value
|
4,169
|
|
|
Balance as of January 3, 2016
|
32,546
|
|
|
Cash contributions
|
9,000
|
|
|
Vesting of redeemable equity awards
|
1,942
|
|
|
Net loss attributable to noncontrolling interests
|
(20,742
|
)
|
|
Adjustment up to the redemption value
|
21,194
|
|
|
Balance as of January 1, 2017
|
$
|
43,940
|
|
3.
|
Intangible Assets
|
|
January 1, 2017
|
|
January 3, 2016
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Intangibles,
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Intangibles,
Net
|
||||||||||||
Licensed technologies
|
$
|
95,021
|
|
|
$
|
(63,717
|
)
|
|
$
|
31,304
|
|
|
$
|
83,956
|
|
|
$
|
(53,226
|
)
|
|
$
|
30,730
|
|
Core technologies
|
328,098
|
|
|
(141,961
|
)
|
|
186,137
|
|
|
324,898
|
|
|
(109,706
|
)
|
|
215,192
|
|
||||||
Customer relationships
|
33,216
|
|
|
(22,103
|
)
|
|
11,113
|
|
|
34,246
|
|
|
(17,558
|
)
|
|
16,688
|
|
||||||
License agreements
|
13,688
|
|
|
(6,271
|
)
|
|
7,417
|
|
|
15,442
|
|
|
(6,289
|
)
|
|
9,153
|
|
||||||
Trade name
|
4,779
|
|
|
(3,398
|
)
|
|
1,381
|
|
|
5,379
|
|
|
(3,521
|
)
|
|
1,858
|
|
||||||
Total finite-lived intangible assets, net
|
$
|
474,802
|
|
|
$
|
(237,450
|
)
|
|
$
|
237,352
|
|
|
$
|
463,921
|
|
|
$
|
(190,300
|
)
|
|
$
|
273,621
|
|
|
Estimated Annual Amortization
|
||
2017
|
$
|
47,360
|
|
2018
|
37,967
|
|
|
2019
|
34,532
|
|
|
2020
|
26,795
|
|
|
2021
|
22,768
|
|
|
Thereafter
|
67,930
|
|
|
Total
|
$
|
237,352
|
|
4.
|
Fair Value Measurements
|
|
January 1, 2017
|
|
January 3, 2016
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds (cash equivalent)
|
$
|
385,455
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
385,455
|
|
|
$
|
391,246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
391,246
|
|
Debt securities in government-sponsored entities
|
—
|
|
|
33,700
|
|
|
—
|
|
|
33,700
|
|
|
—
|
|
|
14,626
|
|
|
—
|
|
|
14,626
|
|
||||||||
Corporate debt securities
|
—
|
|
|
476,242
|
|
|
—
|
|
|
476,242
|
|
|
—
|
|
|
421,094
|
|
|
—
|
|
|
421,094
|
|
||||||||
U.S. Treasury securities
|
314,266
|
|
|
—
|
|
|
—
|
|
|
314,266
|
|
|
181,730
|
|
|
—
|
|
|
—
|
|
|
181,730
|
|
||||||||
Deferred compensation plan assets
|
—
|
|
|
30,859
|
|
|
—
|
|
|
30,859
|
|
|
—
|
|
|
26,245
|
|
|
—
|
|
|
26,245
|
|
||||||||
Total assets measured at fair value
|
$
|
699,721
|
|
|
$
|
540,801
|
|
|
$
|
—
|
|
|
$
|
1,240,522
|
|
|
$
|
572,976
|
|
|
$
|
461,965
|
|
|
$
|
—
|
|
|
$
|
1,034,941
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Acquisition related contingent consideration liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,139
|
|
|
$
|
4,139
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,000
|
|
|
$
|
35,000
|
|
Deferred compensation liability
|
—
|
|
|
29,223
|
|
|
—
|
|
|
29,223
|
|
|
—
|
|
|
24,925
|
|
|
—
|
|
|
24,925
|
|
||||||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
29,223
|
|
|
$
|
4,139
|
|
|
$
|
33,362
|
|
|
$
|
—
|
|
|
$
|
24,925
|
|
|
$
|
35,000
|
|
|
$
|
59,925
|
|
|
Contingent
Consideration
Liability
(Level 3
Measurement)
|
||
Balance as of December 29, 2013
|
$
|
49,480
|
|
Change in estimated fair value, recorded in acquisition related gain, net
|
(5,356
|
)
|
|
Balance as of December 28, 2014
|
44,124
|
|
|
Change in estimated fair value, recorded in acquisition related gain, net
|
(6,124
|
)
|
|
Cash payments
|
(3,000
|
)
|
|
Balance as of January 3, 2016
|
35,000
|
|
|
Additional liability recorded as a result of a current period acquisition
|
5,300
|
|
|
Change in estimated fair value, recorded in selling, general and administrative expenses
|
(1,161
|
)
|
|
Cash payments
|
(35,000
|
)
|
|
Balance as of January 1, 2017
|
$
|
4,139
|
|
5.
|
Debt
|
|
2016 Notes
|
||
Cash paid for principal of notes converted
|
$
|
75,543
|
|
Conversion value over principal amount paid in shares of common stock
|
$
|
63,753
|
|
Number of shares of common stock issued upon conversion
|
409
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Principal amount of convertible notes outstanding
|
$
|
1,150,000
|
|
|
$
|
1,225,547
|
|
Unamortized discount of liability component
|
(105,312
|
)
|
|
(134,969
|
)
|
||
Net carrying amount of liability component
|
1,044,688
|
|
|
1,090,578
|
|
||
Less: current portion
|
—
|
|
|
(74,929
|
)
|
||
Long-term debt
|
$
|
1,044,688
|
|
|
$
|
1,015,649
|
|
Carrying value of equity component, net of issuance costs
|
$
|
161,237
|
|
|
$
|
213,811
|
|
Fair value of outstanding notes
|
$
|
1,107,671
|
|
|
$
|
1,456,451
|
|
Weighted average remaining amortization period of discount on the liability component
|
3.6 years
|
|
|
4.6 years
|
|
6.
|
Commitments
|
|
Operating
Leases
|
|
Sublease
Income
|
|
Net Operating
Leases
|
|
Build-to-suit Leases
|
||||||||
2017
|
$
|
42,759
|
|
|
$
|
(7,042
|
)
|
|
$
|
35,717
|
|
|
$
|
12,244
|
|
2018
|
45,214
|
|
|
(9,878
|
)
|
|
35,336
|
|
|
28,760
|
|
||||
2019
|
46,767
|
|
|
(10,175
|
)
|
|
36,592
|
|
|
24,537
|
|
||||
2020
|
46,166
|
|
|
(10,369
|
)
|
|
35,797
|
|
|
27,928
|
|
||||
2021
|
45,420
|
|
|
(10,338
|
)
|
|
35,082
|
|
|
28,560
|
|
||||
Thereafter
|
435,605
|
|
|
(26,360
|
)
|
|
409,245
|
|
|
254,828
|
|
||||
Total minimum lease payments
|
$
|
661,931
|
|
|
$
|
(74,162
|
)
|
|
$
|
587,769
|
|
|
$
|
376,857
|
|
|
Facility Exit Obligation
|
||
Balance as of December 29, 2013
|
$
|
38,218
|
|
Adjustment to facility exit obligation
|
2,555
|
|
|
Accretion of interest expense
|
2,638
|
|
|
Cash payments
|
(5,711
|
)
|
|
Balance as of December 28, 2014
|
37,700
|
|
|
Adjustment to facility exit obligation
|
(5,303
|
)
|
|
Accretion of interest expense
|
2,294
|
|
|
Cash payments
|
(12,531
|
)
|
|
Balance as of January 3, 2016
|
22,160
|
|
|
Adjustment to facility exit obligation
|
190
|
|
|
Accretion of interest expense
|
1,296
|
|
|
Cash payments
|
(4,723
|
)
|
|
Balance as of January 1, 2017
|
$
|
18,923
|
|
|
Minimum Payments
|
||
2017
|
$
|
12,920
|
|
2018
|
18,055
|
|
|
2019
|
23,100
|
|
|
2020
|
23,150
|
|
|
Total minimum royalty payments
|
$
|
77,225
|
|
|
Warranty Reserve
|
||
Balance as of December 29, 2013
|
$
|
10,407
|
|
Additions charged to cost of revenue
|
24,150
|
|
|
Repairs and replacements
|
(18,941
|
)
|
|
Balance as of December 28, 2014
|
15,616
|
|
|
Additions charged to cost of revenue
|
27,574
|
|
|
Repairs and replacements
|
(26,473
|
)
|
|
Balance as of January 3, 2016
|
16,717
|
|
|
Additions charged to cost of revenue
|
21,243
|
|
|
Repairs and replacements
|
(24,721
|
)
|
|
Balance as of January 1, 2017
|
$
|
13,239
|
|
7.
|
Share-based Compensation Expense
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Cost of product revenue
|
$
|
9,070
|
|
|
$
|
9,841
|
|
|
$
|
9,451
|
|
Cost of service and other revenue
|
1,584
|
|
|
1,609
|
|
|
1,204
|
|
|||
Research and development
|
42,295
|
|
|
42,001
|
|
|
50,880
|
|
|||
Selling, general and administrative
|
76,116
|
|
|
79,142
|
|
|
91,016
|
|
|||
Share-based compensation expense before taxes
|
129,065
|
|
|
132,593
|
|
|
152,551
|
|
|||
Related income tax benefits
|
(40,969
|
)
|
|
(38,986
|
)
|
|
(44,194
|
)
|
|||
Share-based compensation expense, net of taxes
|
$
|
88,096
|
|
|
$
|
93,607
|
|
|
$
|
108,357
|
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Risk-free interest rate
|
0.40% - 0.50%
|
|
|
0.07%-0.33%
|
|
|
0.05% - 0.13%
|
|
|||
Expected volatility
|
40% - 44%
|
|
|
29% - 38%
|
|
|
38% - 41%
|
|
|||
Expected term
|
0.5 - 1.0 year
|
|
|
0.5 -1.0 year
|
|
|
0.5 - 1.0 year
|
|
|||
Expected dividends
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|||
Weighted-average grant-date fair value per share
|
$
|
48.29
|
|
|
$
|
53.92
|
|
|
$
|
44.64
|
|
8.
|
Stockholders’ Equity
|
|
Restricted
Stock Awards
(RSA)
|
|
Restricted
Stock Units
(RSU)
|
|
Performance
Stock Units
(PSU)(1)
|
|
Weighted-Average
Grant-Date Fair Value per Share
|
|||||||||||||
|
|
|
|
RSA
|
|
RSU
|
|
PSU
|
||||||||||||
Outstanding at December 29, 2013
|
248
|
|
|
3,628
|
|
|
1,101
|
|
|
$
|
53.46
|
|
|
$
|
59.66
|
|
|
$
|
54.64
|
|
Awarded
|
—
|
|
|
780
|
|
|
968
|
|
|
—
|
|
|
$
|
172.53
|
|
|
$
|
104.52
|
|
|
Vested
|
(140
|
)
|
|
(1,383
|
)
|
|
(753
|
)
|
|
$
|
47.90
|
|
|
$
|
55.44
|
|
|
$
|
49.52
|
|
Cancelled
|
—
|
|
|
(184
|
)
|
|
(59
|
)
|
|
—
|
|
|
$
|
65.09
|
|
|
$
|
52.87
|
|
|
Outstanding at December 28, 2014
|
108
|
|
|
2,841
|
|
|
1,257
|
|
|
$
|
56.62
|
|
|
$
|
92.35
|
|
|
$
|
96.21
|
|
Awarded
|
—
|
|
|
756
|
|
|
194
|
|
|
—
|
|
|
$
|
184.10
|
|
|
$
|
183.29
|
|
|
Vested
|
(87
|
)
|
|
(1,138
|
)
|
|
(741
|
)
|
|
$
|
58.72
|
|
|
$
|
75.29
|
|
|
$
|
60.80
|
|
Cancelled
|
—
|
|
|
(253
|
)
|
|
(127
|
)
|
|
—
|
|
|
$
|
99.50
|
|
|
$
|
99.30
|
|
|
Outstanding at January 3, 2016
|
21
|
|
|
2,206
|
|
|
583
|
|
|
$
|
47.93
|
|
|
$
|
131.80
|
|
|
$
|
169.41
|
|
Awarded
|
22
|
|
|
1,245
|
|
|
172
|
|
|
$
|
179.00
|
|
|
$
|
132.47
|
|
|
$
|
113.56
|
|
Vested
|
(11
|
)
|
|
(928
|
)
|
|
(199
|
)
|
|
$
|
47.93
|
|
|
$
|
105.49
|
|
|
$
|
148.99
|
|
Cancelled
|
—
|
|
|
(230
|
)
|
|
(96
|
)
|
|
—
|
|
|
$
|
139.74
|
|
|
$
|
163.05
|
|
|
Outstanding at January 1, 2017
|
32
|
|
|
2,293
|
|
|
460
|
|
|
$
|
136.30
|
|
|
$
|
141.80
|
|
|
$
|
158.66
|
|
(1)
|
The number of units reflect the estimated number of shares to be issued at the end of the performance period.
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Pre-tax intrinsic value of outstanding restricted stock:
|
|
|
|
|
|
||||||
RSA
|
$
|
4,138
|
|
|
$
|
4,041
|
|
|
$
|
20,321
|
|
RSU
|
$
|
293,592
|
|
|
$
|
423,391
|
|
|
$
|
534,708
|
|
PSU
|
$
|
58,838
|
|
|
$
|
111,958
|
|
|
$
|
236,606
|
|
|
|
|
|
|
|
||||||
Fair value of restricted stock vested:
|
|
|
|
|
|
||||||
RSA
|
$
|
505
|
|
|
$
|
5,104
|
|
|
$
|
6,712
|
|
RSU
|
$
|
97,952
|
|
|
$
|
85,683
|
|
|
$
|
76,646
|
|
PSU
|
$
|
29,668
|
|
|
$
|
45,014
|
|
|
$
|
37,313
|
|
|
Options
(in thousands)
|
|
Weighted-
Average
Exercise Price
|
|||
Outstanding at December 29, 2013
|
5,724
|
|
|
$
|
32.64
|
|
Exercised
|
(2,478
|
)
|
|
$
|
29.93
|
|
Cancelled
|
(35
|
)
|
|
$
|
31.73
|
|
Outstanding at December 28, 2014
|
3,211
|
|
|
$
|
34.74
|
|
Exercised
|
(1,529
|
)
|
|
$
|
28.54
|
|
Cancelled
|
(83
|
)
|
|
$
|
10.31
|
|
Outstanding at January 3, 2016
|
1,599
|
|
|
$
|
41.95
|
|
Exercised
|
(552
|
)
|
|
$
|
29.41
|
|
Cancelled
|
(2
|
)
|
|
$
|
46.35
|
|
Outstanding at January 1, 2017
|
1,045
|
|
|
$
|
48.56
|
|
9.
|
Legal Proceedings
|
10.
|
Income Taxes
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
United States
|
$
|
120,147
|
|
|
$
|
217,674
|
|
|
$
|
176,974
|
|
Foreign
|
441,031
|
|
|
365,468
|
|
|
271,784
|
|
|||
Total income before income taxes
|
$
|
561,178
|
|
|
$
|
583,142
|
|
|
$
|
448,758
|
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Current:
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
71,474
|
|
|
$
|
106,062
|
|
|
$
|
60,984
|
|
State
|
9,980
|
|
|
18,240
|
|
|
12,381
|
|
|||
Foreign
|
44,942
|
|
|
46,397
|
|
|
41,815
|
|
|||
Total current provision
|
126,396
|
|
|
170,699
|
|
|
115,180
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|||
Federal
|
15,935
|
|
|
(11,534
|
)
|
|
(3,191
|
)
|
|||
State
|
(5,254
|
)
|
|
(31,779
|
)
|
|
(4,974
|
)
|
|||
Foreign
|
(3,989
|
)
|
|
(1,634
|
)
|
|
(11,608
|
)
|
|||
Total deferred expense (benefit)
|
6,692
|
|
|
(44,947
|
)
|
|
(19,773
|
)
|
|||
Total tax provision
|
$
|
133,088
|
|
|
$
|
125,752
|
|
|
$
|
95,407
|
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Tax at federal statutory rate
|
$
|
196,412
|
|
|
$
|
204,100
|
|
|
$
|
157,065
|
|
State, net of federal benefit
|
9,685
|
|
|
8,821
|
|
|
5,023
|
|
|||
Research and other credits
|
(13,650
|
)
|
|
(19,853
|
)
|
|
(16,144
|
)
|
|||
Change in valuation allowance
|
4,677
|
|
|
(3,750
|
)
|
|
(4,212
|
)
|
|||
Impact of foreign operations
|
(85,766
|
)
|
|
(42,356
|
)
|
|
(42,215
|
)
|
|||
Cost sharing adjustment
|
(6,696
|
)
|
|
(24,813
|
)
|
|
—
|
|
|||
Investments in consolidated variable interest entities
|
25,059
|
|
|
1,376
|
|
|
—
|
|
|||
Other
|
3,367
|
|
|
2,227
|
|
|
(4,110
|
)
|
|||
Total tax provision
|
$
|
133,088
|
|
|
$
|
125,752
|
|
|
$
|
95,407
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Deferred tax assets:
|
|
|
|
|
|
||
Net operating losses
|
$
|
20,419
|
|
|
$
|
35,448
|
|
Tax credits
|
43,245
|
|
|
40,590
|
|
||
Other accruals and reserves
|
23,805
|
|
|
42,223
|
|
||
Stock compensation
|
37,536
|
|
|
52,199
|
|
||
Deferred rent
|
38,310
|
|
|
30,355
|
|
||
Cost sharing adjustment
|
31,509
|
|
|
24,813
|
|
||
Other amortization
|
16,396
|
|
|
32,782
|
|
||
Other
|
37,622
|
|
|
27,727
|
|
||
Total gross deferred tax assets
|
248,842
|
|
|
286,137
|
|
||
Valuation allowance on deferred tax assets
|
(18,069
|
)
|
|
(13,392
|
)
|
||
Total deferred tax assets
|
230,773
|
|
|
272,745
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
||
Purchased intangible amortization
|
(53,159
|
)
|
|
(78,270
|
)
|
||
Convertible debt
|
(37,261
|
)
|
|
(47,863
|
)
|
||
Property and equipment
|
(17,422
|
)
|
|
(15,090
|
)
|
||
Other
|
(482
|
)
|
|
(825
|
)
|
||
Total deferred tax liabilities
|
(108,324
|
)
|
|
(142,048
|
)
|
||
Net deferred tax assets
|
$
|
122,449
|
|
|
$
|
130,697
|
|
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Balance at beginning of year
|
$
|
56,142
|
|
|
$
|
52,088
|
|
|
$
|
49,046
|
|
Increases related to prior year tax positions
|
—
|
|
|
2,185
|
|
|
426
|
|
|||
Decreases related to prior year tax positions
|
(1,674
|
)
|
|
(1,115
|
)
|
|
(804
|
)
|
|||
Increases related to current year tax positions
|
12,912
|
|
|
10,584
|
|
|
8,756
|
|
|||
Decreases related to lapse of statute of limitations
|
(2,354
|
)
|
|
(7,600
|
)
|
|
(5,336
|
)
|
|||
Balance at end of year
|
$
|
65,026
|
|
|
$
|
56,142
|
|
|
$
|
52,088
|
|
11.
|
Employee Benefit Plans
|
12.
|
Segment Information, Geographic Data, and Significant Customers
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Revenues:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
2,428,024
|
|
|
$
|
2,219,762
|
|
|
$
|
1,861,358
|
|
Consolidated VIEs
|
—
|
|
|
—
|
|
|
—
|
|
|||
Elimination of intersegment revenues
|
(29,651
|
)
|
|
—
|
|
|
—
|
|
|||
Consolidated revenues
|
$
|
2,398,373
|
|
|
$
|
2,219,762
|
|
|
$
|
1,861,358
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
137,585
|
|
|
$
|
126,342
|
|
|
$
|
112,574
|
|
Consolidated VIEs
|
4,345
|
|
|
77
|
|
|
—
|
|
|||
Total depreciation and amortization
|
$
|
141,930
|
|
|
$
|
126,419
|
|
|
$
|
112,574
|
|
|
|
|
|
|
|
||||||
Operating income (loss):
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
683,790
|
|
|
$
|
621,215
|
|
|
$
|
514,711
|
|
Consolidated VIEs
|
(81,114
|
)
|
|
(8,374
|
)
|
|
—
|
|
|||
Elimination of intersegment earnings
|
(15,644
|
)
|
|
—
|
|
|
—
|
|
|||
Consolidated operating income
|
$
|
587,032
|
|
|
$
|
612,841
|
|
|
$
|
514,711
|
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Total assets:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
4,167,230
|
|
|
$
|
3,657,953
|
|
|
$
|
3,339,640
|
|
Consolidated VIEs
|
179,725
|
|
|
30,447
|
|
|
—
|
|
|||
Elimination of intersegment assets
|
(66,355
|
)
|
|
(653
|
)
|
|
—
|
|
|||
Consolidated total assets
|
$
|
4,280,600
|
|
|
$
|
3,687,747
|
|
|
$
|
3,339,640
|
|
|
|
|
|
|
|
||||||
Capital expenditures:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
238,420
|
|
|
$
|
141,607
|
|
|
$
|
105,996
|
|
Consolidated VIEs
|
22,385
|
|
|
1,240
|
|
|
—
|
|
|||
Total capital expenditures
|
$
|
260,805
|
|
|
$
|
142,847
|
|
|
$
|
105,996
|
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
United States
|
$
|
1,294,178
|
|
|
$
|
1,207,373
|
|
|
$
|
950,703
|
|
Europe
|
553,217
|
|
|
527,406
|
|
|
466,536
|
|
|||
Asia-Pacific
|
456,380
|
|
|
379,575
|
|
|
342,702
|
|
|||
Other markets
|
94,598
|
|
|
105,408
|
|
|
101,417
|
|
|||
Total
|
$
|
2,398,373
|
|
|
$
|
2,219,762
|
|
|
$
|
1,861,358
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
United States
|
$
|
636,318
|
|
|
$
|
273,193
|
|
Singapore
|
44,263
|
|
|
30,127
|
|
||
United Kingdom
|
27,490
|
|
|
33,271
|
|
||
Other countries
|
5,263
|
|
|
6,103
|
|
||
Total
|
$
|
713,334
|
|
|
$
|
342,694
|
|
13.
|
Quarterly Financial Information (unaudited)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue
|
$
|
571,763
|
|
|
$
|
600,124
|
|
|
$
|
607,139
|
|
|
$
|
619,347
|
|
Gross profit
|
$
|
397,054
|
|
|
$
|
423,805
|
|
|
$
|
426,150
|
|
|
$
|
419,439
|
|
Consolidated net income
|
$
|
87,219
|
|
|
$
|
116,394
|
|
|
$
|
116,935
|
|
|
$
|
107,542
|
|
Net income attributable to Illumina stockholders
|
$
|
89,587
|
|
|
$
|
120,412
|
|
|
$
|
128,888
|
|
|
$
|
123,762
|
|
Earnings per share attributable to Illumina stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.61
|
|
|
$
|
0.83
|
|
|
$
|
0.88
|
|
|
$
|
0.84
|
|
Diluted
|
$
|
0.60
|
|
|
$
|
0.82
|
|
|
$
|
0.87
|
|
|
$
|
0.84
|
|
2015
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
538,565
|
|
|
$
|
539,378
|
|
|
$
|
550,271
|
|
|
$
|
591,548
|
|
Gross profit
|
$
|
375,027
|
|
|
$
|
376,365
|
|
|
$
|
387,539
|
|
|
$
|
410,359
|
|
Consolidated net income
|
$
|
136,658
|
|
|
$
|
102,247
|
|
|
$
|
115,621
|
|
|
$
|
102,864
|
|
Net income attributable to Illumina stockholders
|
$
|
136,658
|
|
|
$
|
102,247
|
|
|
$
|
118,177
|
|
|
$
|
104,477
|
|
Earnings per share attributable to Illumina stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.95
|
|
|
$
|
0.71
|
|
|
$
|
0.81
|
|
|
$
|
0.72
|
|
Diluted
|
$
|
0.92
|
|
|
$
|
0.69
|
|
|
$
|
0.79
|
|
|
$
|
0.70
|
|
ITEM 9A.
|
Controls and Procedures.
|
ITEM 9B.
|
Other Information.
|
ITEM 10.
|
Directors, Executive Officers, and Corporate Governance.
|
ITEM 11.
|
Executive Compensation.
|
ITEM 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
ITEM 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
ITEM 14.
|
Principal Accountant Fees and Services.
|
ITEM 15.
|
Exhibits, Financial Statement Schedules.
|
|
Balance at
Beginning of
Period
|
|
Additions Charged
to Expenses/(Reductions from
Revenue)(1)
|
|
Deductions(2)
|
|
Balance at
End of
Period
|
||||||
|
(In thousands)
|
||||||||||||
Year ended January 1, 2017
|
|
|
|
|
|
|
|
||||||
Allowance for doubtful accounts
|
$
|
8,213
|
|
|
2,953
|
|
|
(6,932
|
)
|
|
$
|
4,234
|
|
Year ended January 3, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||
Allowance for doubtful accounts
|
$
|
5,459
|
|
|
3,213
|
|
|
(459
|
)
|
|
$
|
8,213
|
|
Year ended December 28, 2014
|
|
|
|
|
|
|
|
|
|
|
|
||
Allowance for doubtful accounts
|
$
|
3,680
|
|
|
1,870
|
|
|
(91
|
)
|
|
$
|
5,459
|
|
(1)
|
Additions to and reductions from allowance for doubtful accounts are recorded to selling, general and administrative expense.
|
(2)
|
Deductions for allowance for doubtful accounts are for accounts receivable written off.
|
INDEX TO EXHIBITS — (Continued)
|
|||||||||||||
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit
|
|
|
|
|
|
|
|
|
|
Filing
|
|
Filed
|
|
Number
|
|
Exhibit Description
|
|
Form
|
|
File Number
|
|
Exhibit
|
|
Date
|
|
Herewith
|
|
+10.12
|
|
The Solexa Unapproved Company Share Option Plan
|
|
8-K
|
|
000-30361
|
|
99.3
|
|
|
11/26/2007
|
|
|
+10.13
|
|
The Solexa Share Option Plan for Consultants
|
|
8-K
|
|
000-30361
|
|
99.4
|
|
|
11/26/2007
|
|
|
+10.14
|
|
Solexa Limited Enterprise Management Incentive Plan
|
|
8-K
|
|
000-30361
|
|
99.5
|
|
|
11/26/2007
|
|
|
+10.15
|
|
Amended and Restated Solexa 2005 Equity Incentive Plan
|
|
10-K
|
|
000-30361
|
|
10.25
|
|
|
2/26/2009
|
|
|
+10.16
|
|
Amended and Restated Solexa 1992 Stock Option Plan
|
|
10-K
|
|
000-30361
|
|
10.26
|
|
|
2/26/2009
|
|
|
10,170
|
|
Amended and Restated Lease between BMR-9885 Towne Centre Drive LLC and Illumina for the 9885 Towne Centre Drive property, dated January 26, 2007
|
|
10-Q
|
|
000-30361
|
|
10.41
|
|
|
5/3/2007
|
|
|
10.18
|
|
Lease between BMR-9885 Towne Centre Drive LLC and Illumina for the 9865 Towne Centre Drive property, dated January 26, 2007
|
|
10-Q
|
|
000-30361
|
|
10.42
|
|
|
5/3/2007
|
|
|
10.19
|
|
Amended and Restated Lease Agreement, dated March 27, 2012, between ARE-SD Region No. 32, LLC and Illumina
|
|
10-Q
|
|
001-35406
|
|
10.1
|
|
|
5/3/2012
|
|
|
10.20
|
|
First Amendment to Amended and Restated Lease Agreement, dated March 27, 2012, between ARE-SD Region No. 32, LLC and Illumina
|
|
10-K
|
|
001-35406
|
|
10.23
|
|
|
2/18/2015
|
|
|
10.21
|
|
Second Amendment to Amended and Restated Lease Agreement, dated March 27, 2012, between ARE-SD Region No. 32, LLC and Illumina
|
|
10-K
|
|
001-35406
|
|
10.24
|
|
|
2/18/2015
|
|
|
+10.22
|
|
Deferred Compensation Plan, effective December 1, 2007
|
|
14D-9
|
|
005-60457
|
|
99(e)(6)
|
|
|
2/7/2012
|
|
|
10.23
|
|
Lease between BMR-Lincoln Centre LP and Illumina, dated December 30, 2014
|
|
10-K
|
|
001-35406
|
|
10.26
|
|
|
2/18/2015
|
|
|
10.24
|
|
Pooled Patents Agreement between Illumina and Sequenom, Inc., dated December 2, 2014 (with certain confidential portions omitted)
|
|
10-K
|
|
001-35406
|
|
10.27
|
|
|
2/18/2015
|
|
|
10.25
|
|
Agreement for Lease between Granta Park Park Jco 1 Limited and Illumina, dated June 25, 2015
|
|
10-Q
|
|
001-35406
|
|
10.1
|
|
|
7/31/2015
|
|
|
10.26
|
|
Third Amendment to Lease between ARE-SD Region No. 32, LLC and Illumina, dated September 2, 2015
|
|
10-K
|
|
001-35406
|
|
10.29
|
|
|
3/2/2016
|
|
|
10.27
|
|
First Amendment to Lease between BMR-Lincoln Center LP and Illumina, dated February 23, 2016
|
|
10-K
|
|
001-35406
|
|
10.30
|
|
|
3/2/2016
|
|
|
10.28
|
|
Fourth Amendment to Lease between ARE-SD Region No. 32, LLC and Illumina, dated April 14, 2016
|
|
|
|
|
|
|
|
|
|
X
|
|
10.29
|
|
Second Amendment to Lease between BMR-Lincoln Center LP and Illumina dated August 15, 2016
|
|
|
|
|
|
|
|
|
|
X
|
INDEX TO EXHIBITS — (Continued)
|
|||||||||||||
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit
|
|
|
|
|
|
|
|
|
|
Filing
|
|
Filed
|
|
Number
|
|
Exhibit Description
|
|
Form
|
|
File Number
|
|
Exhibit
|
|
Date
|
|
Herewith
|
|
10.30
|
|
Deed of Variation to the Agreement for Lease between Granta Park Jco 1 Limited and Illumina dated October 24, 2016
|
|
|
|
|
|
|
|
|
|
X
|
|
10.31
|
|
Separation Agreement and General Release of All Claims between Illumina and Christian Henry
|
|
|
|
|
|
|
|
|
|
X
|
|
21.1
|
|
Subsidiaries of Illumina
|
|
|
|
|
|
|
|
|
|
|
X
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
|
X
|
24.1
|
|
Power of Attorney (included on the signature page)
|
|
|
|
|
|
|
|
|
|
|
X
|
31.1
|
|
Certification of Francis A. deSouza pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Certification of Sam A. Samad pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
X
|
32.1
|
|
Certification of Frances A. deSouza pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
X
|
32.2
|
|
Certification of Sam A. Samad pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
X
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
|
|
|
|
|
X
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
+
|
|
Management contract or corporate plan or arrangement
|
|
ILLUMINA
, I
NC.
|
|
|
|
|
|
By
|
/s/ F
RANCIS
A.
DE
S
OUZA
|
|
|
Francis A. deSouza
President and Chief Executive Officer
|
/s/ F
RANCIS
A.
DE
S
OUZA
|
|
President, Chief Executive Officer, and Director
(Principal Executive Officer)
|
|
February 13, 2017
|
Francis A. deSouza
|
|
|
|
|
|
|
|
|
|
/s/ S
AM
A. S
AMAD
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
February 13, 2017
|
Sam A. Samad
|
|
|
|
|
|
|
|
|
|
/s/ M
ICHEL
B
OUCHARD
|
|
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
|
February 13, 2017
|
Michel Bouchard
|
|
|
|
|
|
|
|
|
|
/s/ J
AY
T. F
LATLEY
|
|
Executive Chairman of the Board of Directors
|
|
February 13, 2017
|
Jay T. Flatley
|
|
|
|
|
|
|
|
|
|
/s/
F
RANCES
A
RNOLD
|
|
Director
|
|
February 13, 2017
|
Frances Arnold
|
|
|
|
|
|
|
|
|
|
/s/ A. B
LAINE
B
OWMAN
|
|
Director
|
|
February 13, 2017
|
A. Blaine Bowman
|
|
|
|
|
|
|
|
|
|
/s/ D
ANIEL
M. B
RADBURY
|
|
Director
|
|
February 13, 2017
|
Daniel M. Bradbury
|
|
|
|
|
|
|
|
|
|
/s/ C
AROLINE
D. D
ORSA
|
|
Director
|
|
February 13, 2017
|
Caroline D. Dorsa
|
|
|
|
|
|
|
|
|
|
/s/ K
ARIN
E
ASTHAM
|
|
Director
|
|
February 13, 2017
|
Karin Eastham
|
|
|
|
|
|
|
|
|
|
/s/ R
OBERT
S. E
PSTEIN
|
|
Director
|
|
February 13, 2017
|
Robert S. Epstein
|
|
|
|
|
|
|
|
|
|
/s/ P
HILIP
W. S
CHILLER
|
|
Director
|
|
February 13, 2017
|
Philip W. Schiller
|
|
|
|
|
|
|
|
|
|
/s/ R
OY
W
HITFIELD
|
|
Director
|
|
February 13, 2017
|
Roy Whitfield
|
|
|
|
|
1 Year Illumina Chart |
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