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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 | |
---|---|---|---|---|---|---|---|---|---|---|
-5.71 | -4.61% | 118.28 | 14.50 | 134.52 | 127.745 | 117.67 | 127.08 | 2,987,106 | 05:00:10 |
þ
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
¨
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Delaware
|
|
33-0804655
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
5200 Illumina Way,
San Diego, CA
|
|
92122
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
þ
|
|
Accelerated filer
|
¨
|
|
|
|
|
|
Non-accelerated filer
|
¨
|
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
Page
|
|
|
|
|
|
April 3,
2016 |
|
January 3,
2016 |
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
754,910
|
|
|
$
|
768,770
|
|
Short-term investments
|
588,182
|
|
|
617,450
|
|
||
Accounts receivable, net
|
402,514
|
|
|
385,529
|
|
||
Inventory
|
287,919
|
|
|
270,777
|
|
||
Prepaid expenses and other current assets
|
40,273
|
|
|
54,297
|
|
||
Total current assets
|
2,073,798
|
|
|
2,096,823
|
|
||
Property and equipment, net
|
385,253
|
|
|
342,694
|
|
||
Goodwill
|
776,029
|
|
|
752,629
|
|
||
Intangible assets, net
|
269,576
|
|
|
273,621
|
|
||
Deferred tax assets
|
196,198
|
|
|
134,515
|
|
||
Other assets
|
92,852
|
|
|
87,465
|
|
||
Total assets
|
$
|
3,793,706
|
|
|
$
|
3,687,747
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
154,680
|
|
|
$
|
148,721
|
|
Accrued liabilities
|
326,548
|
|
|
386,844
|
|
||
Long-term debt, current portion
|
—
|
|
|
74,929
|
|
||
Total current liabilities
|
481,228
|
|
|
610,494
|
|
||
Long-term debt
|
1,022,646
|
|
|
1,015,649
|
|
||
Other long-term liabilities
|
185,526
|
|
|
180,505
|
|
||
Redeemable noncontrolling interests
|
33,383
|
|
|
32,546
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock
|
1,876
|
|
|
1,859
|
|
||
Additional paid-in capital
|
2,617,681
|
|
|
2,497,501
|
|
||
Accumulated other comprehensive income
|
1,982
|
|
|
36
|
|
||
Retained earnings
|
1,112,352
|
|
|
1,022,765
|
|
||
Treasury stock, at cost
|
(1,742,782
|
)
|
|
(1,673,608
|
)
|
||
Total Illumina stockholders’ equity
|
1,991,109
|
|
|
1,848,553
|
|
||
Noncontrolling interests
|
79,814
|
|
|
—
|
|
||
Total stockholders’ equity
|
2,070,923
|
|
|
1,848,553
|
|
||
Total liabilities and stockholders’ equity
|
$
|
3,793,706
|
|
|
$
|
3,687,747
|
|
|
Three Months Ended
|
||||||
|
April 3,
2016 |
|
March 29,
2015 |
||||
Revenue:
|
|
|
|
||||
Product revenue
|
$
|
482,750
|
|
|
$
|
459,127
|
|
Service and other revenue
|
89,013
|
|
|
79,438
|
|
||
Total revenue
|
571,763
|
|
|
538,565
|
|
||
Cost of revenue:
|
|
|
|
||||
Cost of product revenue
|
125,326
|
|
|
119,624
|
|
||
Cost of service and other revenue
|
38,887
|
|
|
32,529
|
|
||
Amortization of acquired intangible assets
|
10,496
|
|
|
11,385
|
|
||
Total cost of revenue
|
174,709
|
|
|
163,538
|
|
||
Gross profit
|
397,054
|
|
|
375,027
|
|
||
Operating expense:
|
|
|
|
||||
Research and development
|
123,994
|
|
|
91,772
|
|
||
Selling, general and administrative
|
149,233
|
|
|
116,317
|
|
||
Legal contingencies
|
2,000
|
|
|
—
|
|
||
Headquarter relocation
|
382
|
|
|
699
|
|
||
Acquisition related gain, net
|
—
|
|
|
(9,887
|
)
|
||
Total operating expense
|
275,609
|
|
|
198,901
|
|
||
Income from operations
|
121,445
|
|
|
176,126
|
|
||
Other income (expense):
|
|
|
|
||||
Interest income
|
1,224
|
|
|
1,693
|
|
||
Interest expense
|
(8,525
|
)
|
|
(11,164
|
)
|
||
Cost-method investment gain, net
|
—
|
|
|
12,582
|
|
||
Other income (expense), net
|
1,452
|
|
|
(1,191
|
)
|
||
Total other (expense) income, net
|
(5,849
|
)
|
|
1,920
|
|
||
Income before income taxes
|
115,596
|
|
|
178,046
|
|
||
Provision for income taxes
|
28,377
|
|
|
41,388
|
|
||
Consolidated net income
|
87,219
|
|
|
136,658
|
|
||
Add: Net loss attributable to noncontrolling interests
|
2,368
|
|
|
—
|
|
||
Net income attributable to Illumina stockholders
|
$
|
89,587
|
|
|
$
|
136,658
|
|
Earnings per share attributable to Illumina stockholders:
|
|
|
|
||||
Basic
|
$
|
0.61
|
|
|
$
|
0.95
|
|
Diluted
|
$
|
0.60
|
|
|
$
|
0.92
|
|
Shares used in computing earnings per common share:
|
|
|
|
||||
Basic
|
146,866
|
|
|
143,771
|
|
||
Diluted
|
148,357
|
|
|
148,683
|
|
|
Three Months Ended
|
||||||
|
April 3,
2016 |
|
March 29,
2015 |
||||
Consolidated net income
|
$
|
87,219
|
|
|
$
|
136,658
|
|
Unrealized gain on available-for-sale securities, net of deferred tax
|
1,946
|
|
|
3,414
|
|
||
Total consolidated comprehensive income
|
89,165
|
|
|
140,072
|
|
||
Add: Comprehensive loss attributable to noncontrolling interests
|
2,368
|
|
|
—
|
|
||
Comprehensive income attributable to Illumina stockholders
|
$
|
91,533
|
|
|
$
|
140,072
|
|
|
Illumina Stockholders
|
|
|
|
|
||||||||||||||||||||||
|
|
|
Additional
|
|
Accumulated Other
|
|
|
|
|
|
|
|
Total
|
||||||||||||||
|
Common
|
|
Paid-In
|
|
Comprehensive
|
|
Retained
|
|
Treasury
|
|
Noncontrolling
|
|
Stockholders’
|
||||||||||||||
|
Stock
|
|
Capital
|
|
Income
|
|
Earnings
|
|
Stock
|
|
Interests
|
|
Equity
|
||||||||||||||
Balance as of January 3, 2016
|
$
|
1,859
|
|
|
$
|
2,497,501
|
|
|
$
|
36
|
|
|
$
|
1,022,765
|
|
|
$
|
(1,673,608
|
)
|
|
$
|
—
|
|
|
$
|
1,848,553
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
89,587
|
|
|
—
|
|
|
(382
|
)
|
|
89,205
|
|
|||||||
Unrealized gain on available-for-sale securities, net of deferred tax
|
—
|
|
|
—
|
|
|
1,946
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,946
|
|
|||||||
Issuance of common stock, net of repurchases
|
17
|
|
|
23,002
|
|
|
—
|
|
|
—
|
|
|
(69,520
|
)
|
|
—
|
|
|
(46,501
|
)
|
|||||||
Tax impact from the conversion of convertible notes
|
—
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|||||||
Share-based compensation
|
—
|
|
|
35,432
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
35,440
|
|
|||||||
Net incremental tax benefit related to share-based compensation
|
—
|
|
|
58,867
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58,867
|
|
|||||||
Vesting of redeemable equity awards
|
—
|
|
|
(837
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(837
|
)
|
|||||||
Adjustment to the carrying value of redeemable noncontrolling interests
|
—
|
|
|
(1,986
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,986
|
)
|
|||||||
Issuance of subsidiary shares in business combination
|
—
|
|
|
2,112
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
188
|
|
|
2,300
|
|
|||||||
Issuance of treasury stock
|
—
|
|
|
3,554
|
|
|
—
|
|
|
—
|
|
|
346
|
|
|
—
|
|
|
3,900
|
|
|||||||
Contributions from noncontrolling interest owners
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80,000
|
|
|
80,000
|
|
|||||||
Balance as of April 3, 2016
|
$
|
1,876
|
|
|
$
|
2,617,681
|
|
|
$
|
1,982
|
|
|
$
|
1,112,352
|
|
|
$
|
(1,742,782
|
)
|
|
$
|
79,814
|
|
|
$
|
2,070,923
|
|
|
Three Months Ended
|
||||||
|
April 3,
2016 |
|
March 29,
2015 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Consolidated net income
|
$
|
87,219
|
|
|
$
|
136,658
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation expense
|
20,674
|
|
|
16,754
|
|
||
Amortization of intangible assets
|
12,545
|
|
|
13,348
|
|
||
Share-based compensation expense
|
35,292
|
|
|
31,918
|
|
||
Accretion of debt discount
|
7,731
|
|
|
10,169
|
|
||
Incremental tax benefit related to share-based compensation
|
(58,993
|
)
|
|
(76,445
|
)
|
||
Deferred income tax (benefit) expense
|
(6,200
|
)
|
|
53,452
|
|
||
Change in fair value of contingent consideration
|
—
|
|
|
(9,887
|
)
|
||
Cost-method investment gain, net
|
—
|
|
|
(12,582
|
)
|
||
Other
|
(1,055
|
)
|
|
1,255
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(12,630
|
)
|
|
(59,474
|
)
|
||
Inventory
|
(17,149
|
)
|
|
(14,044
|
)
|
||
Prepaid expenses and other current assets
|
(2,571
|
)
|
|
(1,157
|
)
|
||
Other assets
|
(2,404
|
)
|
|
(2,530
|
)
|
||
Accounts payable
|
3,057
|
|
|
28,867
|
|
||
Accrued liabilities
|
(29,791
|
)
|
|
(51,044
|
)
|
||
Other long-term liabilities
|
4,013
|
|
|
1,521
|
|
||
Net cash provided by operating activities
|
39,738
|
|
|
66,779
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of available-for-sale securities
|
(84,882
|
)
|
|
(325,383
|
)
|
||
Sales of available-for-sale securities
|
39,009
|
|
|
152,156
|
|
||
Maturities of available-for-sale securities
|
76,455
|
|
|
42,564
|
|
||
Net cash paid for acquisitions
|
(17,875
|
)
|
|
—
|
|
||
Net (purchases of) sales proceeds from strategic investments
|
(2,842
|
)
|
|
13,067
|
|
||
Purchases of property and equipment
|
(53,418
|
)
|
|
(36,551
|
)
|
||
Net cash used in investing activities
|
(43,553
|
)
|
|
(154,147
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Payments on financing obligations
|
(75,675
|
)
|
|
(114
|
)
|
||
Payments on acquisition related contingent consideration liability
|
(29,200
|
)
|
|
—
|
|
||
Incremental tax benefit related to share-based compensation
|
58,993
|
|
|
76,445
|
|
||
Common stock repurchases
|
—
|
|
|
(34,753
|
)
|
||
Taxes paid related to net share settlement of equity awards
|
(69,520
|
)
|
|
(83,839
|
)
|
||
Proceeds from issuance of common stock
|
23,053
|
|
|
29,727
|
|
||
Contributions from noncontrolling interest owners
|
80,000
|
|
|
—
|
|
||
Net cash used in financing activities
|
(12,349
|
)
|
|
(12,534
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
2,304
|
|
|
(2,715
|
)
|
||
Net decrease in cash and cash equivalents
|
(13,860
|
)
|
|
(102,617
|
)
|
||
Cash and cash equivalents at beginning of period
|
768,770
|
|
|
636,154
|
|
||
Cash and cash equivalents at end of period
|
$
|
754,910
|
|
|
$
|
533,537
|
|
|
Three Months Ended
|
||||
|
April 3,
2016 |
|
March 29,
2015 |
||
Weighted average shares outstanding
|
146,866
|
|
|
143,771
|
|
Effect of potentially dilutive common shares from:
|
|
|
|
||
Convertible senior notes
|
239
|
|
|
2,177
|
|
Equity awards
|
1,252
|
|
|
2,735
|
|
Weighted average shares used in calculating diluted earnings per share
|
148,357
|
|
|
148,683
|
|
Potentially dilutive shares excluded from calculation due to anti-dilutive effect
|
978
|
|
|
3
|
|
|
April 3, 2016
|
|
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
|
$
|
4,753
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
4,752
|
|
|
$
|
14,634
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
14,626
|
|
Corporate debt securities
|
386,062
|
|
|
610
|
|
|
(256
|
)
|
|
386,416
|
|
|
422,177
|
|
|
44
|
|
|
(1,127
|
)
|
|
421,094
|
|
||||||||
U.S. Treasury securities
|
196,671
|
|
|
363
|
|
|
(20
|
)
|
|
197,014
|
|
|
182,144
|
|
|
3
|
|
|
(417
|
)
|
|
181,730
|
|
||||||||
Total available-for-sale securities
|
$
|
587,486
|
|
|
$
|
973
|
|
|
$
|
(277
|
)
|
|
$
|
588,182
|
|
|
$
|
618,955
|
|
|
$
|
47
|
|
|
$
|
(1,552
|
)
|
|
$
|
617,450
|
|
|
Estimated
Fair Value
|
||
Due within one year
|
$
|
262,378
|
|
After one but within five years
|
325,804
|
|
|
Total
|
$
|
588,182
|
|
|
April 3,
2016 |
|
January 3,
2016 |
||||
Raw materials
|
$
|
96,303
|
|
|
$
|
97,740
|
|
Work in process
|
155,563
|
|
|
138,322
|
|
||
Finished goods
|
36,053
|
|
|
34,715
|
|
||
Total inventory
|
$
|
287,919
|
|
|
$
|
270,777
|
|
|
Goodwill
|
||
Balance as of January 3, 2016
|
$
|
752,629
|
|
Current period acquisitions
|
23,400
|
|
|
Balance as of April 3, 2016
|
$
|
776,029
|
|
|
April 3,
2016 |
|
January 3,
2016 |
||||
Deferred revenue, current portion
|
$
|
102,179
|
|
|
$
|
96,654
|
|
Accrued compensation expenses
|
83,336
|
|
|
120,662
|
|
||
Accrued taxes payable
|
42,288
|
|
|
44,159
|
|
||
Customer deposits
|
22,994
|
|
|
20,901
|
|
||
Acquisition related contingent liability, current portion
|
5,835
|
|
|
35,000
|
|
||
Other
|
69,916
|
|
|
69,468
|
|
||
Total accrued liabilities
|
$
|
326,548
|
|
|
$
|
386,844
|
|
|
Three Months Ended
|
||||||
|
April 3,
2016 |
|
March 29,
2015 |
||||
Balance at beginning of period
|
$
|
16,717
|
|
|
$
|
15,616
|
|
Additions charged to cost of product revenue
|
6,650
|
|
|
6,897
|
|
||
Repairs and replacements
|
(7,547
|
)
|
|
(6,522
|
)
|
||
Balance at end of period
|
$
|
15,820
|
|
|
$
|
15,991
|
|
|
Three Months Ended
|
||||||
|
April 3,
2016 |
|
March 29,
2015 |
||||
Balance at beginning of period
|
$
|
22,160
|
|
|
$
|
37,700
|
|
Adjustment to facility exit obligation
|
47
|
|
|
—
|
|
||
Accretion of interest expense
|
335
|
|
|
607
|
|
||
Cash payments
|
(1,180
|
)
|
|
(1,488
|
)
|
||
Balance at end of period
|
$
|
21,362
|
|
|
$
|
36,819
|
|
|
Redeemable Noncontrolling Interests
|
||
Balance as of January 3, 2016
|
$
|
32,546
|
|
Vesting of redeemable equity awards
|
837
|
|
|
Net loss attributable to noncontrolling interests
|
(1,986
|
)
|
|
Adjustment up to the redemption value
|
1,986
|
|
|
Balance as of April 3, 2016
|
$
|
33,383
|
|
|
April 3, 2016
|
|
January 3, 2016
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds (cash equivalents)
|
$
|
403,521
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
403,521
|
|
|
$
|
391,246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
391,246
|
|
Debt securities in government-sponsored entities
|
—
|
|
|
4,752
|
|
|
—
|
|
|
4,752
|
|
|
—
|
|
|
14,626
|
|
|
—
|
|
|
14,626
|
|
||||||||
Corporate debt securities
|
—
|
|
|
386,416
|
|
|
—
|
|
|
386,416
|
|
|
—
|
|
|
421,094
|
|
|
—
|
|
|
421,094
|
|
||||||||
U.S. Treasury securities
|
197,014
|
|
|
—
|
|
|
—
|
|
|
197,014
|
|
|
181,730
|
|
|
—
|
|
|
—
|
|
|
181,730
|
|
||||||||
Deferred compensation plan assets
|
—
|
|
|
28,353
|
|
|
—
|
|
|
28,353
|
|
|
—
|
|
|
26,245
|
|
|
—
|
|
|
26,245
|
|
||||||||
Total assets measured at fair value
|
$
|
600,535
|
|
|
$
|
419,521
|
|
|
$
|
—
|
|
|
$
|
1,020,056
|
|
|
$
|
572,976
|
|
|
$
|
461,965
|
|
|
$
|
—
|
|
|
$
|
1,034,941
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Acquisition related contingent consideration liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,300
|
|
|
$
|
5,300
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,000
|
|
|
$
|
35,000
|
|
Deferred compensation liability
|
—
|
|
|
27,157
|
|
|
—
|
|
|
27,157
|
|
|
—
|
|
|
24,925
|
|
|
—
|
|
|
24,925
|
|
||||||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
27,157
|
|
|
$
|
5,300
|
|
|
$
|
32,457
|
|
|
$
|
—
|
|
|
$
|
24,925
|
|
|
$
|
35,000
|
|
|
$
|
59,925
|
|
|
Contingent
Consideration
Liability
(Level 3
Measurement)
|
||
Balance as of January 3, 2016
|
$
|
35,000
|
|
Additional liability recorded as a result of a current period acquisition
|
5,300
|
|
|
Cash payments
|
(35,000
|
)
|
|
Balance as of April 3, 2016
|
$
|
5,300
|
|
|
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
|
|
|
April 3,
2016 |
|
January 3,
2016 |
||||
Principal amount of convertible notes outstanding
|
$
|
1,150,000
|
|
|
$
|
1,225,547
|
|
Unamortized discount of liability component
|
(127,354
|
)
|
|
(134,969
|
)
|
||
Net carrying amount of liability component
|
1,022,646
|
|
|
1,090,578
|
|
||
Less: current portion
|
—
|
|
|
(74,929
|
)
|
||
Long-term debt
|
$
|
1,022,646
|
|
|
$
|
1,015,649
|
|
Carrying value of equity component, net of debt issuance cost
|
$
|
161,237
|
|
|
$
|
213,811
|
|
Fair value of outstanding notes
|
$
|
1,224,951
|
|
|
$
|
1,456,451
|
|
Weighted-average remaining amortization period of discount on the liability component
|
4.3 years
|
|
|
4.6 years
|
|
|
Three Months Ended
|
||||||
|
April 3,
2016 |
|
March 29,
2015 |
||||
Cost of product revenue
|
$
|
2,192
|
|
|
$
|
2,332
|
|
Cost of service and other revenue
|
432
|
|
|
279
|
|
||
Research and development
|
10,681
|
|
|
11,307
|
|
||
Selling, general and administrative
|
21,987
|
|
|
18,000
|
|
||
Share-based compensation expense before taxes
|
35,292
|
|
|
31,918
|
|
||
Related income tax benefits
|
(7,811
|
)
|
|
(9,113
|
)
|
||
Share-based compensation expense, net of taxes
|
$
|
27,481
|
|
|
$
|
22,805
|
|
|
Employee Stock Purchase Rights
|
||
Risk-free interest rate
|
0.47
|
%
|
|
Expected volatility
|
40% - 44%
|
|
|
Expected term
|
0.5 - 1.0 year
|
|
|
Expected dividends
|
0
|
%
|
|
Weighted-average fair value per share
|
$
|
47.77
|
|
|
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 January 3, 2016
|
21
|
|
|
2,206
|
|
|
583
|
|
|
$
|
47.93
|
|
|
$
|
131.80
|
|
|
$
|
169.41
|
|
Awarded
|
22
|
|
|
54
|
|
|
10
|
|
|
$
|
179.00
|
|
|
$
|
164.72
|
|
|
$
|
178.29
|
|
Vested
|
—
|
|
|
(242
|
)
|
|
—
|
|
|
—
|
|
|
$
|
76.03
|
|
|
—
|
|
||
Cancelled
|
—
|
|
|
(81
|
)
|
|
(31
|
)
|
|
—
|
|
|
$
|
135.20
|
|
|
$
|
164.71
|
|
|
Outstanding at April 3, 2016
|
43
|
|
|
1,937
|
|
|
562
|
|
|
$
|
114.59
|
|
|
$
|
139.58
|
|
|
$
|
170.72
|
|
(1)
|
The number of units reflect the estimated number of shares to be issued at the end of the performance period.
|
|
Options
(in thousands)
|
|
Weighted-Average
Exercise Price
|
|||
Outstanding at January 3, 2016
|
1,599
|
|
|
$
|
41.95
|
|
Exercised
|
(166
|
)
|
|
$
|
36.39
|
|
Cancelled
|
(2
|
)
|
|
$
|
48.36
|
|
Outstanding at April 3, 2016
|
1,431
|
|
|
$
|
42.59
|
|
•
|
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.
|
•
|
Critical Accounting Policies and Estimates
. Discussion of significant changes since our most recent Annual Report on Form 10-K we believe are important to understanding the assumptions and judgments underlying our financial statements.
|
•
|
Recent Accounting Pronouncements
. Summary of recent accounting pronouncements applicable to our condensed consolidated financial statements.
|
•
|
Net revenue
increased
6.2%
during
Q1 2016
to
$571.8 million
compared to
Q1 2015
. Our revenue increased due to the growth in sales of our sequencing consumables and services.
|
•
|
Gross profit as a percentage of revenue (gross margin) was
69.4%
in
Q1 2016
compared to
69.6%
in
Q1 2015
. Gross margins in
Q1 2016
decreased primarily due to an unfavorable shift within instrument product mix and a decline in service margin, partially offset by a positive shift in product mix to sequencing consumables. We believe 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; royalties; our cost structure for manufacturing operations; and product support obligations.
|
•
|
Income from operations
decreased
$54.7 million
in
Q1 2016
compared to
Q1 2015
despite higher gross profit due to the increase in research and development and selling, general and administrative expenses, which we expect will continue to grow.
|
•
|
Our effective tax rate was
24.5%
in
Q1 2016
, compared to
23.2%
in
Q1 2015
. 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. Our future effective tax rate may vary from the U.S. federal statutory tax rate due to the mix of earnings in tax jurisdictions with different statutory tax rates and the other factors discussed in the risk factor “We are subject to risks related to taxation in multiple jurisdictions” in Part I Item 1A of our Annual Report on Form 10-K for the fiscal year ended
January 3, 2016
. We anticipate that our effective tax rate will trend lower than the U.S. federal statutory tax rate in the future due to the portion of our earnings that will be subject to lower statutory tax rates.
|
•
|
Cash, cash equivalents, and short-term investments were
$1.3 billion
as of
April 3, 2016
.
|
|
Q1 2016
|
|
Q1 2015
|
||
Revenue:
|
|
|
|
||
Product revenue
|
84.4
|
%
|
|
85.3
|
%
|
Service and other revenue
|
15.6
|
|
|
14.7
|
|
Total revenue
|
100.0
|
|
|
100.0
|
|
Cost of revenue:
|
|
|
|
||
Cost of product revenue
|
21.9
|
|
|
22.2
|
|
Cost of service and other revenue
|
6.8
|
|
|
6.0
|
|
Amortization of acquired intangible assets
|
1.9
|
|
|
2.2
|
|
Total cost of revenue
|
30.6
|
|
|
30.4
|
|
Gross profit
|
69.4
|
|
|
69.6
|
|
Operating expense:
|
|
|
|
||
Research and development
|
21.7
|
|
|
17.0
|
|
Selling, general and administrative
|
26.1
|
|
|
21.6
|
|
Legal contingencies
|
0.3
|
|
|
—
|
|
Headquarter relocation
|
0.1
|
|
|
0.1
|
|
Acquisition related gain, net
|
—
|
|
|
(1.8
|
)
|
Total operating expense
|
48.2
|
|
|
36.9
|
|
Income from operations
|
21.2
|
|
|
32.7
|
|
Other income (expense):
|
|
|
|
||
Interest income
|
0.2
|
|
|
0.3
|
|
Interest expense
|
(1.5
|
)
|
|
(2.0
|
)
|
Cost-method investment gain, net
|
—
|
|
|
2.3
|
|
Other income (expense), net
|
0.3
|
|
|
(0.2
|
)
|
Total other (expense) income, net
|
(1.0
|
)
|
|
0.4
|
|
Income before income taxes
|
20.2
|
|
|
33.1
|
|
Provision for income taxes
|
4.9
|
|
|
7.7
|
|
Consolidated net income
|
15.3
|
|
|
25.4
|
|
Add: Net loss attributable to noncontrolling interests
|
0.4
|
|
|
—
|
|
Net income attributable to Illumina stockholders
|
15.7
|
%
|
|
25.4
|
%
|
(Dollars in thousands)
|
Q1 2016
|
|
Q1 2015
|
|
Change
|
|
% Change
|
|||||||
Product revenue
|
$
|
482,750
|
|
|
$
|
459,127
|
|
|
$
|
23,623
|
|
|
5
|
%
|
Service and other revenue
|
89,013
|
|
|
79,438
|
|
|
9,575
|
|
|
12
|
|
|||
Total revenue
|
$
|
571,763
|
|
|
$
|
538,565
|
|
|
$
|
33,198
|
|
|
6
|
%
|
(Dollars in thousands)
|
Q1 2016
|
|
Q1 2015
|
|
Change
|
|
% Change
|
||||||
Gross profit
|
$
|
397,054
|
|
|
$
|
375,027
|
|
|
$
|
22,027
|
|
|
6%
|
Gross margin
|
69.4
|
%
|
|
69.6
|
%
|
|
|
|
|
(Dollars in thousands)
|
Q1 2016
|
|
Q1 2015
|
|
Change
|
|
% Change
|
|||||||
Research and development
|
$
|
123,994
|
|
|
$
|
91,772
|
|
|
$
|
32,222
|
|
|
35
|
%
|
Selling, general and administrative
|
149,233
|
|
|
116,317
|
|
|
32,916
|
|
|
28
|
|
|||
Legal contingencies
|
2,000
|
|
|
—
|
|
|
2,000
|
|
|
100
|
|
|||
Headquarter relocation
|
382
|
|
|
699
|
|
|
(317
|
)
|
|
(45
|
)
|
|||
Acquisition related gain, net
|
—
|
|
|
(9,887
|
)
|
|
9,887
|
|
|
(100
|
)
|
|||
Total operating expense
|
$
|
275,609
|
|
|
$
|
198,901
|
|
|
$
|
76,708
|
|
|
39
|
%
|
(Dollars in thousands)
|
Q1 2016
|
|
Q1 2015
|
|
Change
|
|
% Change
|
|||||||
Interest income
|
$
|
1,224
|
|
|
$
|
1,693
|
|
|
$
|
(469
|
)
|
|
(28
|
)%
|
Interest expense
|
(8,525
|
)
|
|
(11,164
|
)
|
|
2,639
|
|
|
(24
|
)
|
|||
Cost-method investment gain, net
|
—
|
|
|
12,582
|
|
|
(12,582
|
)
|
|
(100
|
)
|
|||
Other income (expense), net
|
1,452
|
|
|
(1,191
|
)
|
|
2,643
|
|
|
(222
|
)
|
|||
Total other (expense) income, net
|
$
|
(5,849
|
)
|
|
$
|
1,920
|
|
|
$
|
(7,769
|
)
|
|
(405
|
)%
|
(Dollars in thousands)
|
Q1 2016
|
|
Q1 2015
|
|
Change
|
|
% Change
|
|||||||
Income before income taxes
|
$
|
115,596
|
|
|
$
|
178,046
|
|
|
$
|
(62,450
|
)
|
|
(35
|
)%
|
Provision for income taxes
|
28,377
|
|
|
41,388
|
|
|
(13,011
|
)
|
|
(31
|
)
|
|||
Consolidated net income
|
$
|
87,219
|
|
|
$
|
136,658
|
|
|
$
|
(49,439
|
)
|
|
(36
|
)%
|
Effective tax rate
|
24.5
|
%
|
|
23.2
|
%
|
|
|
|
|
•
|
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;
|
•
|
repurchases of our outstanding common stock;
|
•
|
the continued advancement of research and development efforts;
|
•
|
potential strategic acquisitions and investments;
|
•
|
potential early repayment of debt obligations as a result of conversions; and
|
•
|
the expansion needs of our facilities, including costs of leasing and building out additional facilities.
|
•
|
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)
|
Q1 2016
|
|
Q1 2015
|
||||
Net cash provided by operating activities
|
$
|
39,738
|
|
|
$
|
66,779
|
|
Net cash used in investing activities
|
(43,553
|
)
|
|
(154,147
|
)
|
||
Net cash used in financing activities
|
(12,349
|
)
|
|
(12,534
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
2,304
|
|
|
(2,715
|
)
|
||
Net decrease in cash and cash equivalents
|
$
|
(13,860
|
)
|
|
$
|
(102,617
|
)
|
•
|
our ability to develop and commercialize our instruments and consumables, to deploy new products, services, and applications, and expand the markets for our technology platforms;
|
•
|
our ability to manufacture robust instrumentation and consumables;
|
•
|
our ability to identify and integrate acquired technologies, products, or businesses successfully;
|
•
|
our expectations and beliefs regarding prospects and growth for the business and its markets;
|
•
|
the assumptions underlying our critical accounting policies and estimates;
|
•
|
our assessments and estimates that determine our effective tax rate;
|
•
|
our assessments and beliefs regarding the outcome of pending legal proceedings and any liability, that we may incur as a result of those proceedings;
|
•
|
uncertainty, or adverse economic and business conditions, including as a result of slowing or uncertain economic growth in the United States or worldwide; and
|
•
|
other factors detailed in our filings with the SEC, including the risks, uncertainties, and assumptions described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended
January 3, 2016
, or in information disclosed in public conference calls, the date and time of which are released beforehand.
|
Exhibit Number
|
|
Description of Document
|
|
|
|
31.1
|
|
Certification of Jay T. Flatley pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification of Marc A. Stapley pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1
|
|
Certification of Jay T. Flatley pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2
|
|
Certification of Marc A. Stapley pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
ILLUMINA, INC.
(registrant)
|
||
|
|
|
|
Date:
|
May 9, 2016
|
|
/s/ M
ARC
A. S
TAPLEY
|
|
|
|
Marc A. Stapley
Executive Vice President, Chief Administrative Officer and Chief Financial Officer
|
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