SAN DIEGO--(BUSINESS WIRE)--Oct. 24, 2017--
Illumina, Inc. (NASDAQ: ILMN) today announced its financial results for
the third quarter of fiscal year 2017.
Third quarter 2017 results:
-
Revenue of $714 million, an 18% increase compared to $607 million in
the third quarter of 2016
-
GAAP net income attributable to Illumina stockholders for the quarter
of $163 million, or $1.11 per diluted share, compared to $129 million,
or $0.87 per diluted share, for the third quarter of 2016
-
Non-GAAP net income attributable to Illumina stockholders for the
quarter of $163 million, or $1.11 per diluted share, compared to $144
million, or $0.97 per diluted share, for the third quarter of 2016
(see the table entitled “Itemized Reconciliation Between GAAP and
Non-GAAP Net Income Attributable to Illumina Stockholders” for a
reconciliation of these GAAP and non-GAAP financial measures)
-
Cash flow from operations of $235 million compared to $176 million in
the third quarter of 2016
-
Free cash flow (cash flow from operations less capital expenditures)
of $153 million for the quarter, compared to $119 million in the third
quarter of 2016
Gross margin in the third quarter of 2017 was 67.5% compared to 70.2% in
the prior year period. Excluding amortization of acquired intangible
assets, non-GAAP gross margin was 68.8% for the third quarter of 2017
compared to 72.0% in the prior year period.
Research and development (R&D) expenses for the third quarter of 2017
were $134 million compared to $126 million in the prior year period. R&D
expenses as a percentage of revenue were 18.7%, including 0.8%
attributable to Helix. This compares to 20.7% in the prior year period,
including 2.4% attributable to GRAIL and Helix.
Selling, general and administrative (SG&A) expenses for the third
quarter of 2017 were $167 million compared to $139 million in the prior
year period. Excluding the amortization of acquired intangible assets,
SG&A expenses as a percentage of revenue were 23.2%, including 1.7%
attributable to Helix. This compares to 22.6% in the prior year period,
including 1.5% attributable to GRAIL and Helix.
Depreciation and amortization expenses were $40 million and capital
expenditures for free cash flow purposes were $82 million during the
third quarter of 2017. At the close of the quarter, the company held
$2.0 billion in cash, cash equivalents and short-term investments,
compared to $1.6 billion as of January 1, 2017.
“We delivered strong financial results in the third quarter with revenue
growth across both our sequencing and microarray portfolios,” said
Francis deSouza, President and CEO. “NovaSeq™ momentum continued to grow
in the third quarter, with close to 200 NovaSeq systems now in
customers’ hands. Further innovations, including the recently launched
S4 flow cell, Xp workflow and Nextera DNA Flex library preparation kit,
are expected to fuel incremental NovaSeq demand.”
Updates since our last earnings release:
-
Released the NovaSeq S4 flow cell, reagent kit for the NovaSeq 6000
System, delivering up to 6TB of output in two days
-
Announced the upcoming availability of NovaSeq Xp workflow, enabling
users to load libraries directly into individual lanes of the flow
cells, further enhancing the flexibility of the NovaSeq 6000 System
-
Launched the Nextera DNA Flex library preparation kit, offering a
fast, integrated workflow for a wide variety of applications
-
Announced Verogen, Inc., a newly established independent company
focused on accelerating growth of Illumina’s next-generation
sequencing technology in the forensic genomics market
-
Repurchased $75 million of common stock in the third quarter under the
previously announced share repurchase program
Financial outlook and guidance
The non-GAAP financial guidance discussed below reflects certain pro
forma adjustments to assist in analyzing and assessing our core
operational performance. Please see our Reconciliation of Non-GAAP
Financial Guidance included in this release for a reconciliation of the
GAAP and non-GAAP financial measures.
For fiscal 2017, the company now projects approximately 13% revenue
growth from fiscal 2016, GAAP earnings per diluted share attributable
to Illumina stockholders of $5.56 to $5.61 and non-GAAP earnings per
diluted share attributable to Illumina stockholders of $3.73 to $3.78.
Quarterly conference call information
The conference call will begin at 2:00 pm Pacific Time (5:00 pm Eastern
Time) on Tuesday, October 24, 2017. Interested parties may access the
live teleconference through the Investor Relations section of Illumina’s
web site under the “company” tab at www.illumina.com.
Alternatively, individuals can access the call by dialing 888-771-4371,
or 1-847-585-4405 outside North America, both with passcode 45640029.
A replay of the conference call will be available from 4:30 pm Pacific
Time (7:30 pm Eastern Time) on October 24, 2017 through October 31, 2017
by dialing 888-843-7419, or 1-630-652-3042 outside North America, both
with passcode 45640029.
Statement regarding use of non-GAAP financial measures
The company reports non-GAAP results for diluted net income per share,
net income, gross margins, operating expenses, operating margins, other
income, and free cash flow in addition to, and not as a substitute for,
or superior to, financial measures calculated in accordance with GAAP.
The company’s financial measures under GAAP include substantial charges
such as amortization of acquired intangible assets, non-cash interest
expense associated with the company’s convertible debt instruments that
may be settled in cash, and others that are listed in the itemized
reconciliations between GAAP and non-GAAP financial measures included in
this press release. Management has excluded the effects of these items
in non-GAAP measures to assist investors in analyzing and assessing past
and future operating performance. Additionally, non-GAAP net income
attributable to Illumina stockholders and diluted earnings per share
attributable to Illumina stockholders are key components of the
financial metrics utilized by the company’s board of directors to
measure, in part, management’s performance and determine significant
elements of management’s compensation.
The company encourages investors to carefully consider its results under
GAAP, as well as its supplemental non-GAAP information and the
reconciliation between these presentations, to more fully understand its
business. Reconciliations between GAAP and non-GAAP results are
presented in the tables of this release.
Use of forward-looking statements
This release contains forward-looking statements that involve risks and
uncertainties, such as Illumina’s expectations regarding the launch of
new products. Among the important factors that could cause actual
results to differ materially from those in any forward-looking
statements are (i) our ability to further develop and commercialize our
instruments and consumables and to deploy new products, services, and
applications, and expand the markets, for our technology platforms; (ii)
our ability to manufacture robust instrumentation and consumables; (iii)
our ability to successfully identify and integrate acquired
technologies, products, or businesses; (iv) our expectations and beliefs
regarding future conduct and growth of the business and the markets in
which we operate; (v) challenges inherent in developing, manufacturing,
and launching new products and services, including the timing of
customer orders and impact on existing products and services; and (vi)
the application of generally accepted accounting principles, which are
highly complex and involve many subjective assumptions, estimates, and
judgments, together with other factors detailed in our filings with the
Securities and Exchange Commission, including our most recent filings on
Forms 10-K and 10-Q, or in information disclosed in public conference
calls, the date and time of which are released beforehand. We undertake
no obligation, and do not intend, to update these forward-looking
statements, to review or confirm analysts’ expectations, or to provide
interim reports or updates on the progress of the current quarter.
About Illumina
Illumina is improving human health by unlocking the power of the genome.
Our focus on innovation has established us as the global leader in DNA
sequencing and array-based technologies, serving customers in the
research, clinical and applied markets. Our products are used for
applications in the life sciences, oncology, reproductive health,
agriculture and other emerging segments. To learn more, visit www.illumina.com and
follow @illumina.
|
Illumina, Inc.
|
Condensed Consolidated Balance Sheets
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 1, 2017
|
|
|
|
|
|
January 1, 2017
|
ASSETS
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
$
|
1,354
|
|
|
|
|
|
|
$
|
735
|
Short-term investments
|
|
|
|
|
|
|
|
687
|
|
|
|
|
|
|
824
|
Accounts receivable, net
|
|
|
|
|
|
|
|
383
|
|
|
|
|
|
|
381
|
Inventory
|
|
|
|
|
|
|
|
327
|
|
|
|
|
|
|
300
|
Prepaid expenses and other current assets
|
|
|
|
|
|
|
|
54
|
|
|
|
|
|
|
78
|
Total current assets
|
|
|
|
|
|
|
|
2,805
|
|
|
|
|
|
|
2,318
|
Property and equipment, net
|
|
|
|
|
|
|
|
862
|
|
|
|
|
|
|
713
|
Goodwill
|
|
|
|
|
|
|
|
771
|
|
|
|
|
|
|
776
|
Intangible assets, net
|
|
|
|
|
|
|
|
185
|
|
|
|
|
|
|
243
|
Deferred tax assets
|
|
|
|
|
|
|
|
117
|
|
|
|
|
|
|
123
|
Other assets
|
|
|
|
|
|
|
|
306
|
|
|
|
|
|
|
108
|
Total assets
|
|
|
|
|
|
|
|
$
|
5,046
|
|
|
|
|
|
|
$
|
4,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
|
|
$
|
158
|
|
|
|
|
|
|
$
|
138
|
Accrued liabilities
|
|
|
|
|
|
|
|
381
|
|
|
|
|
|
|
342
|
Build-to-suit lease liability
|
|
|
|
|
|
|
|
124
|
|
|
|
|
|
|
223
|
Long-term debt, current portion
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
2
|
Total current liabilities
|
|
|
|
|
|
|
|
665
|
|
|
|
|
|
|
705
|
Long-term debt
|
|
|
|
|
|
|
|
1,180
|
|
|
|
|
|
|
1,056
|
Other long-term liabilities
|
|
|
|
|
|
|
|
222
|
|
|
|
|
|
|
206
|
Redeemable noncontrolling interests
|
|
|
|
|
|
|
|
124
|
|
|
|
|
|
|
44
|
Stockholders’ equity
|
|
|
|
|
|
|
|
2,855
|
|
|
|
|
|
|
2,270
|
Total liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
$
|
5,046
|
|
|
|
|
|
|
$
|
4,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Illumina, Inc.
|
Condensed Consolidated Statements of Income
|
(In millions, except per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
October 1, 2017
|
|
|
|
October 2, 2016
|
|
|
|
October 1, 2017
|
|
|
|
October 2, 2016
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenue
|
|
|
|
$
|
596
|
|
|
|
|
$
|
514
|
|
|
|
|
$
|
1,631
|
|
|
|
|
$
|
1,506
|
|
Service and other revenue
|
|
|
|
118
|
|
|
|
|
93
|
|
|
|
|
344
|
|
|
|
|
273
|
|
Total revenue
|
|
|
|
714
|
|
|
|
|
607
|
|
|
|
|
1,975
|
|
|
|
|
1,779
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product revenue (a)
|
|
|
|
173
|
|
|
|
|
132
|
|
|
|
|
508
|
|
|
|
|
383
|
|
Cost of service and other revenue (a)
|
|
|
|
50
|
|
|
|
|
38
|
|
|
|
|
153
|
|
|
|
|
117
|
|
Amortization of acquired intangible assets
|
|
|
|
9
|
|
|
|
|
11
|
|
|
|
|
30
|
|
|
|
|
32
|
|
Total cost of revenue
|
|
|
|
232
|
|
|
|
|
181
|
|
|
|
|
691
|
|
|
|
|
532
|
|
Gross profit
|
|
|
|
482
|
|
|
|
|
426
|
|
|
|
|
1,284
|
|
|
|
|
1,247
|
|
Operating expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development (a)
|
|
|
|
134
|
|
|
|
|
126
|
|
|
|
|
409
|
|
|
|
|
374
|
|
Selling, general and administrative (a) (b)
|
|
|
|
167
|
|
|
|
|
139
|
|
|
|
|
499
|
|
|
|
|
438
|
|
Legal contingencies
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(9
|
)
|
Total operating expense
|
|
|
|
301
|
|
|
|
|
265
|
|
|
|
|
908
|
|
|
|
|
803
|
|
Income from operations
|
|
|
|
181
|
|
|
|
|
161
|
|
|
|
|
376
|
|
|
|
|
444
|
|
Other (expense) income, net
|
|
|
|
(6
|
)
|
|
|
|
(7
|
)
|
|
|
|
444
|
|
|
|
|
(17
|
)
|
Income before income taxes
|
|
|
|
175
|
|
|
|
|
154
|
|
|
|
|
820
|
|
|
|
|
427
|
|
Provision for income taxes
|
|
|
|
23
|
|
|
|
|
37
|
|
|
|
|
199
|
|
|
|
|
106
|
|
Consolidated net income
|
|
|
|
152
|
|
|
|
|
117
|
|
|
|
|
621
|
|
|
|
|
321
|
|
Add: Net loss attributable to noncontrolling interests
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
37
|
|
|
|
|
18
|
|
Net income attributable to Illumina stockholders
|
|
|
|
$
|
163
|
|
|
|
|
$
|
129
|
|
|
|
|
$
|
658
|
|
|
|
|
$
|
339
|
|
Net income attributable to Illumina stockholders for earnings per
share (c)
|
|
|
|
$
|
163
|
|
|
|
|
$
|
129
|
|
|
|
|
$
|
657
|
|
|
|
|
$
|
336
|
|
Earnings per share attributable to Illumina stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
1.12
|
|
|
|
|
$
|
0.88
|
|
|
|
|
$
|
4.49
|
|
|
|
|
$
|
2.29
|
|
Diluted
|
|
|
|
$
|
1.11
|
|
|
|
|
$
|
0.87
|
|
|
|
|
$
|
4.45
|
|
|
|
|
$
|
2.27
|
|
Shares used in computing earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
146
|
|
|
|
|
147
|
|
|
|
|
146
|
|
|
|
|
147
|
|
Diluted
|
|
|
|
148
|
|
|
|
|
148
|
|
|
|
|
148
|
|
|
|
|
148
|
|
____________________________________________________________________________________________________
(a) Includes stock-based compensation expense for stock-based
awards:
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
October 1, 2017
|
|
|
|
October 2, 2016
|
|
|
|
October 1, 2017
|
|
|
|
October 2, 2016
|
Cost of product revenue
|
|
|
|
$
|
3
|
|
|
|
|
$
|
2
|
|
|
|
|
$
|
9
|
|
|
|
|
$
|
6
|
Cost of service and other revenue
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
2
|
Research and development
|
|
|
|
12
|
|
|
|
|
12
|
|
|
|
|
38
|
|
|
|
|
33
|
Selling, general and administrative
|
|
|
|
18
|
|
|
|
|
20
|
|
|
|
|
74
|
|
|
|
|
61
|
Stock-based compensation expense before taxes (1)
|
|
|
|
$
|
34
|
|
|
|
|
$
|
35
|
|
|
|
|
$
|
123
|
|
|
|
|
$
|
102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes stock-based compensation of $1.3 million and $2.7
million for Helix for three and nine months ended October 1, 2017,
respectively, and $10.1 million for GRAIL for the nine months ended
October 1, 2017. This compares to stock-based compensation of $0.3
million and $0.2 million for GRAIL and Helix for the three months ended
October 2, 2016, respectively, and $1.3 million and $0.6 million for the
nine months ended October 2, 2016, respectively.
(b) Headquarter relocation expense of $0.4 million and $1.1
million was reclassified to selling, general and administrative expense
for the three and nine months ended October 2, 2016, respectively, to
conform to the current period presentation.
(c) Amount reflects the additional losses attributable to the
common shareholders of GRAIL and Helix for earnings per share purposes.
|
Illumina, Inc.
|
Condensed Consolidated Statements of Cash Flows
|
(In millions)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
October 1, 2017
|
|
|
|
October 2, 2016
|
|
|
|
October 1, 2017
|
|
|
|
October 2, 2016
|
Net cash provided by operating activities (a)
|
|
|
|
$
|
235
|
|
|
|
|
$
|
176
|
|
|
|
|
$
|
581
|
|
|
|
|
$
|
517
|
|
Net cash (used in) provided by investing activities
|
|
|
|
(97
|
)
|
|
|
|
(341
|
)
|
|
|
|
101
|
|
|
|
|
(341
|
)
|
Net cash (used in) provided by financing activities (a)
|
|
|
|
(5
|
)
|
|
|
|
9
|
|
|
|
|
(67
|
)
|
|
|
|
(151
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
2
|
|
|
|
|
(1
|
)
|
|
|
|
4
|
|
|
|
|
1
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
135
|
|
|
|
|
(157
|
)
|
|
|
|
619
|
|
|
|
|
26
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
1,219
|
|
|
|
|
952
|
|
|
|
|
735
|
|
|
|
|
769
|
|
Cash and cash equivalents, end of period
|
|
|
|
$
|
1,354
|
|
|
|
|
$
|
795
|
|
|
|
|
$
|
1,354
|
|
|
|
|
$
|
795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of free cash flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities (a)
|
|
|
|
$
|
235
|
|
|
|
|
$
|
176
|
|
|
|
|
$
|
581
|
|
|
|
|
$
|
517
|
|
Purchases of property and equipment (b)
|
|
|
|
(82
|
)
|
|
|
|
(57
|
)
|
|
|
|
(234
|
)
|
|
|
|
(178
|
)
|
Free cash flow (c)
|
|
|
|
$
|
153
|
|
|
|
|
$
|
119
|
|
|
|
|
$
|
347
|
|
|
|
|
$
|
339
|
|
______________________________________________________________________________________________________
(a) Excess tax benefit related to stock-based compensation of $26
million and $110 million for the three and nine months ended October 2,
2016, respectively, was reclassified from cash used in financing
activities to cash provided by operating activities as a result of the
Company’s retrospective application of ASU 2016-09 adopted in Q1 2017.
(b) Excludes property and equipment recorded under build-to-suit
lease accounting, which are non-cash expenditures, of $1 million and $60
million for the three and nine months ended October 1, 2017,
respectively, and $84 million and $169 million for the three and nine
months ended October 2, 2016, respectively.
(c) Free cash flow, which is a non-GAAP financial measure, is
calculated as net cash provided by operating activities reduced by
purchases of property and equipment. Free cash flow is useful to
management as it is one of the metrics used to evaluate our performance
and to compare us with other companies in our industry. However, our
calculation of free cash flow may not be comparable to similar measures
used by other companies.
|
Illumina, Inc.
|
Results of Operations - Non-GAAP
|
(In millions, except per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP EARNINGS PER
SHARE ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS:
|
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
October 1, 2017
|
|
|
|
October 2, 2016
|
|
|
|
October 1, 2017
|
|
|
|
October 2, 2016
|
GAAP earnings per share attributable to Illumina stockholders -
diluted
|
|
|
|
$
|
1.11
|
|
|
|
|
$
|
0.87
|
|
|
|
|
$
|
4.45
|
|
|
|
|
$
|
2.27
|
|
Amortization of acquired intangible assets
|
|
|
|
0.07
|
|
|
|
|
0.08
|
|
|
|
|
0.24
|
|
|
|
|
0.25
|
|
Non-cash interest expense (a)
|
|
|
|
0.05
|
|
|
|
|
0.05
|
|
|
|
|
0.15
|
|
|
|
|
0.15
|
|
Equity-method investment loss (gain) (b)
|
|
|
|
0.01
|
|
|
|
|
—
|
|
|
|
|
(0.01
|
)
|
|
|
|
—
|
|
Legal contingencies (c)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(0.06
|
)
|
Gain on deconsolidation of GRAIL (d)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(3.07
|
)
|
|
|
|
—
|
|
Impairment of acquired intangible asset
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.12
|
|
|
|
|
—
|
|
Impairment of in-process research and development
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.03
|
|
|
|
|
—
|
|
Performance-based compensation related to GRAIL Series B financing (e)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.03
|
|
|
|
|
—
|
|
Acquisition related gain (f)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(0.01
|
)
|
|
|
|
—
|
|
Contingent compensation expense (g)
|
|
|
|
—
|
|
|
|
|
0.01
|
|
|
|
|
—
|
|
|
|
|
0.01
|
|
Headquarter relocation
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.01
|
|
Deemed dividend (h)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(0.01
|
)
|
Incremental non-GAAP tax expense (i)
|
|
|
|
(0.05
|
)
|
|
|
|
(0.04
|
)
|
|
|
|
0.84
|
|
|
|
|
(0.10
|
)
|
Excess tax benefit from share-based compensation (j)
|
|
|
|
(0.08
|
)
|
|
|
|
—
|
|
|
|
|
(0.21
|
)
|
|
|
|
—
|
|
Non-GAAP earnings per share attributable to Illumina stockholders -
diluted (k)
|
|
|
|
$
|
1.11
|
|
|
|
|
$
|
0.97
|
|
|
|
|
$
|
2.56
|
|
|
|
|
$
|
2.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME
ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS:
|
GAAP net income attributable to Illumina stockholders (l)
|
|
|
|
$
|
163
|
|
|
|
|
$
|
129
|
|
|
|
|
$
|
658
|
|
|
|
|
$
|
339
|
|
Amortization of acquired intangible assets
|
|
|
|
11
|
|
|
|
|
12
|
|
|
|
|
35
|
|
|
|
|
36
|
|
Non-cash interest expense (a)
|
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
22
|
|
|
|
|
22
|
|
Equity-method investment loss (gain) (b)
|
|
|
|
1
|
|
|
|
|
—
|
|
|
|
|
(2
|
)
|
|
|
|
—
|
|
Legal contingencies (c)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(9
|
)
|
Gain on deconsolidation of GRAIL (d)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(453
|
)
|
|
|
|
—
|
|
Impairment of acquired intangible asset
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
18
|
|
|
|
|
—
|
|
Impairment of in-process research and development
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
5
|
|
|
|
|
—
|
|
Performance-based compensation related to GRAIL Series B financing (e)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
4
|
|
|
|
|
—
|
|
Acquisition related gain (f)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
|
|
—
|
|
Contingent compensation expense (g)
|
|
|
|
—
|
|
|
|
|
1
|
|
|
|
|
—
|
|
|
|
|
2
|
|
Headquarter relocation
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1
|
|
Incremental non-GAAP tax expense (i)
|
|
|
|
(8
|
)
|
|
|
|
(6
|
)
|
|
|
|
124
|
|
|
|
|
(14
|
)
|
Excess tax benefit from share-based compensation (j)
|
|
|
|
(12
|
)
|
|
|
|
—
|
|
|
|
|
(31
|
)
|
|
|
|
—
|
|
Non-GAAP net income attributable to Illumina stockholders (k)
|
|
|
|
$
|
163
|
|
|
|
|
$
|
144
|
|
|
|
|
$
|
379
|
|
|
|
|
$
|
377
|
|
___________________________________________________________________________________________________
All amounts in tables are rounded to the nearest millions, except as
otherwise noted. As a result, certain amounts may not recalculate
using the rounded amounts provided.
(a) Non-cash interest expense is calculated in accordance with
the authoritative accounting guidance for convertible debt instruments
that may be settled in cash.
(b) Equity-method investment loss (gain) represents
mark-to-market adjustments from our investment in Illumina Innovations
Fund I, L.P.
(c) Legal contingencies for 2016 represent a reversal of
previously recorded expense related to the settlement of patent
litigation.
(d) The company sold a portion of its interest in GRAIL,
resulting in the deconsolidation of GRAIL. The $150 million tax effect
of the gain is included in incremental non-GAAP tax expense. Subsequent
to the transaction, the company’s remaining interest is treated as a
cost-method investment.
(e) Amount represents performance-based stock which vested as a
result of the financing, net of attribution to noncontrolling interest.
(f) Acquisition related gain consists of change in fair value of
contingent consideration.
(g) Contingent compensation expense relates to contingent
payments for post-combination services associated with an acquisition.
(h) Amount represents the impact of a deemed dividend, net of
Illumina’s portion of the losses incurred by GRAIL’s common stockholders
resulting from the company’s common to preferred share exchange with
GRAIL. The amount was added to net income attributable to Illumina
stockholders for purposes of calculating Illumina’s consolidated
earnings per share. The deemed dividend, net of tax, was recorded
through equity.
(i) Incremental non-GAAP tax expense reflects the tax impact
related to the non-GAAP adjustments listed above.
(j) Excess tax benefits from share-based compensation are
recorded as a discrete item within the provision for income taxes on the
consolidated statement of income pursuant to ASU 2016-09, which was
previously recognized in additional paid-in capital on the consolidated
statement of stockholders’ equity.
(k) Non-GAAP net income attributable to Illumina stockholders and
diluted earnings per share attributable to Illumina stockholders exclude
the effect of the pro forma adjustments as detailed above. Non-GAAP net
income attributable to Illumina stockholders and diluted earnings per
share attributable to Illumina stockholders are key components of the
financial metrics utilized by the company’s board of directors to
measure, in part, management’s performance and determine significant
elements of management’s compensation. Management has excluded the
effects of these items in these measures to assist investors in
analyzing and assessing our past and future core operating performance.
(l) GAAP net income attributable to Illumina stockholders
excludes the additional losses attributable to common shareholders of
GRAIL and Helix for earnings per share purposes. These amounts are
included in GAAP net income attributable to Illumina stockholders for
earnings per share of $163 million and $657 million for the three and
nine months ended October 1, 2017, respectively, and $129 million and
$336 million for the three and nine months ended October 2, 2016,
respectively.
Illumina, Inc.
|
Results of Operations - Non-GAAP (continued)
|
(Dollars in millions)
|
(unaudited)
|
|
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF
OPERATIONS AS A PERCENT OF REVENUE:
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Nine Months Ended
|
|
|
|
|
October 1, 2017
|
|
|
|
October 2, 2016
|
|
|
|
October 1, 2017
|
|
|
|
October 2, 2016
|
GAAP gross profit
|
|
|
|
$
|
482
|
|
|
67.5
|
%
|
|
|
|
$
|
426
|
|
|
70.2
|
%
|
|
|
|
$
|
1,284
|
|
|
65.0
|
%
|
|
|
|
$
|
1,247
|
|
|
70.1
|
%
|
Amortization of acquired intangible asset
|
|
|
|
9
|
|
|
1.3
|
%
|
|
|
|
11
|
|
|
1.8
|
%
|
|
|
|
30
|
|
|
1.6
|
%
|
|
|
|
32
|
|
|
1.8
|
%
|
Impairment of acquired intangible asset
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
18
|
|
|
0.9
|
%
|
|
|
|
—
|
|
|
—
|
|
Non-GAAP gross profit (a)
|
|
|
|
$
|
491
|
|
|
68.8
|
%
|
|
|
|
$
|
437
|
|
|
72.0
|
%
|
|
|
|
$
|
1,332
|
|
|
67.5
|
%
|
|
|
|
$
|
1,279
|
|
|
71.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development expense
|
|
|
|
$
|
134
|
|
|
18.7
|
%
|
|
|
|
$
|
126
|
|
|
20.7
|
%
|
|
|
|
$
|
409
|
|
|
20.7
|
%
|
|
|
|
$
|
374
|
|
|
21.0
|
%
|
Impairment of in-process research and development
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
(5
|
)
|
|
(0.3
|
)%
|
|
|
|
—
|
|
|
—
|
|
Non-GAAP research and development expense
|
|
|
|
$
|
134
|
|
|
18.7
|
%
|
|
|
|
$
|
126
|
|
|
20.7
|
%
|
|
|
|
$
|
404
|
|
|
20.4
|
%
|
|
|
|
$
|
374
|
|
|
21.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP selling, general and administrative expense
|
|
|
|
$
|
167
|
|
|
23.5
|
%
|
|
|
|
$
|
139
|
|
|
23.0
|
%
|
|
|
|
$
|
499
|
|
|
25.3
|
%
|
|
|
|
$
|
438
|
|
|
24.6
|
%
|
Amortization of acquired intangible assets
|
|
|
|
(2
|
)
|
|
(0.3
|
)%
|
|
|
|
(1
|
)
|
|
(0.2
|
)%
|
|
|
|
(5
|
)
|
|
(0.3
|
)%
|
|
|
|
(4
|
)
|
|
(0.2
|
)%
|
Performance-based compensation related to GRAIL Series B financing (b)
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
(10
|
)
|
|
(0.5
|
)%
|
|
|
|
—
|
|
|
—
|
|
Acquisition related gain (c)
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
1
|
|
|
0.1
|
%
|
|
|
|
—
|
|
|
—
|
|
Contingent compensation expense (d)
|
|
|
|
—
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
(0.2
|
)%
|
|
|
|
—
|
|
|
—
|
|
|
|
|
(2
|
)
|
|
(0.1
|
)%
|
Headquarter relocation
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
(0.1
|
)%
|
Non-GAAP selling, general and administrative expense
|
|
|
|
$
|
165
|
|
|
23.2
|
%
|
|
|
|
$
|
137
|
|
|
22.6
|
%
|
|
|
|
$
|
485
|
|
|
24.6
|
%
|
|
|
|
$
|
431
|
|
|
24.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating profit
|
|
|
|
$
|
181
|
|
|
25.3
|
%
|
|
|
|
$
|
161
|
|
|
26.5
|
%
|
|
|
|
$
|
376
|
|
|
19.0
|
%
|
|
|
|
$
|
444
|
|
|
25.0
|
%
|
Amortization of acquired intangible assets
|
|
|
|
11
|
|
|
1.5
|
%
|
|
|
|
12
|
|
|
2.0
|
%
|
|
|
|
35
|
|
|
1.8
|
%
|
|
|
|
36
|
|
|
2.0
|
%
|
Legal contingencies (e)
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
(9
|
)
|
|
(0.5
|
)%
|
Impairment of acquired intangible asset
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
18
|
|
|
0.9
|
%
|
|
|
|
—
|
|
|
—
|
|
Performance-based compensation related to GRAIL Series B financing (b)
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
10
|
|
|
0.5
|
%
|
|
|
|
—
|
|
|
—
|
|
Impairment of in-process research and development
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
5
|
|
|
0.3
|
%
|
|
|
|
—
|
|
|
—
|
|
Acquisition related gain (c)
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
(1
|
)
|
|
(0.1
|
)%
|
|
|
|
—
|
|
|
—
|
|
Contingent compensation expense (d)
|
|
|
|
—
|
|
|
—
|
|
|
|
|
1
|
|
|
0.2
|
%
|
|
|
|
—
|
|
|
—
|
|
|
|
|
2
|
|
|
0.1
|
%
|
Headquarter relocation
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
1
|
|
|
0.1
|
%
|
Non-GAAP operating profit (a)
|
|
|
|
$
|
192
|
|
|
26.8
|
%
|
|
|
|
$
|
174
|
|
|
28.7
|
%
|
|
|
|
$
|
443
|
|
|
22.4
|
%
|
|
|
|
$
|
474
|
|
|
26.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP other (expense) income, net
|
|
|
|
$
|
(6
|
)
|
|
(0.8
|
)%
|
|
|
|
$
|
(7
|
)
|
|
(1.0
|
)%
|
|
|
|
$
|
444
|
|
|
22.5
|
%
|
|
|
|
$
|
(17
|
)
|
|
(1.0
|
)%
|
Non-cash interest expense (f)
|
|
|
|
8
|
|
|
1.1
|
%
|
|
|
|
8
|
|
|
1.2
|
%
|
|
|
|
22
|
|
|
1.0
|
%
|
|
|
|
22
|
|
|
1.3
|
%
|
Equity-method investment loss (gain) (g)
|
|
|
|
1
|
|
|
0.1
|
%
|
|
|
|
—
|
|
|
—
|
|
|
|
|
(2
|
)
|
|
(0.1
|
)%
|
|
|
|
—
|
|
|
—
|
|
Gain on deconsolidation of GRAIL (h)
|
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
(453
|
)
|
|
(22.9
|
)%
|
|
|
|
—
|
|
|
—
|
|
Non-GAAP other income, net (a)
|
|
|
|
$
|
3
|
|
|
0.4
|
%
|
|
|
|
$
|
1
|
|
|
0.2
|
%
|
|
|
|
$
|
11
|
|
|
0.5
|
%
|
|
|
|
$
|
5
|
|
|
0.3
|
%
|
_____________________________________________________________________________________________________
All amounts in tables are rounded to the nearest millions, except as
otherwise noted. As a result, certain amounts may not recalculate
using the rounded amounts provided.
(a) Non-GAAP gross profit, included within non-GAAP operating
profit, is a key measure of the effectiveness and efficiency of
manufacturing processes, product mix and the average selling prices of
the company’s products and services. Non-GAAP operating profit, and
non-GAAP other income, net, exclude the effects of the pro forma
adjustments as detailed above. Management has excluded the effects of
these items in these measures to assist investors in analyzing and
assessing past and future operating performance.
(b) Amount represents performance-based stock which vested as a
result of the financing.
(c) Acquisition related gain consists of change in fair value of
contingent consideration.
(d) Contingent compensation expense relates to contingent
payments for post-combination services associated with an acquisition.
(e) Legal contingencies for 2016 represent a reversal of
previously recorded expense related to the settlement of patent
litigation.
(f) Non-cash interest expense is calculated in accordance with
the authoritative accounting guidance for convertible debt instruments
that may be settled in cash.
(g) Equity-method investment loss (gain) represents
mark-to-market adjustments from our investment in Illumina Innovations
Fund I, L.P.
(h) The company sold a portion of its interest in GRAIL in Q1
2017, resulting in the deconsolidation of GRAIL. Subsequent to the
transaction, the company’s remaining interest is treated as a
cost-method investment.
Illumina, Inc.
Reconciliation of Non-GAAP Financial
Guidance
The company’s future performance and financial results are subject to
risks and uncertainties, and actual results could differ materially from
the guidance set forth below. Some of the factors that could affect the
company’s financial results are stated above in this press release. More
information on potential factors that could affect the company’s
financial results is included from time to time in the company’s public
reports filed with the Securities and Exchange Commission, including the
company’s Form 10-K for the fiscal year ended January 1, 2017, filed
with the SEC on February 13, 2017, and the company’s Form 10-Q for the
fiscal quarter ended April 2, 2017 and July 2, 2017. The company assumes
no obligation to update any forward-looking statements or information.
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2017
|
GAAP diluted earnings per share attributable to Illumina
stockholders
|
|
|
|
|
|
|
|
|
|
|
|
$5.56 - $5.61
|
Gain on deconsolidation of GRAIL (a)
|
|
|
|
|
|
|
|
|
|
|
|
(3.07)
|
Amortization of acquired intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
0.30
|
Non-cash interest expense (b)
|
|
|
|
|
|
|
|
|
|
|
|
0.20
|
Impairment of acquired intangible asset
|
|
|
|
|
|
|
|
|
|
|
|
0.12
|
Impairment of in-process research and development
|
|
|
|
|
|
|
|
|
|
|
|
0.03
|
Performance-based compensation related to Series B financing (c)
|
|
|
|
|
|
|
|
|
|
|
|
0.03
|
Equity-method investment gain, net (d)
|
|
|
|
|
|
|
|
|
|
|
|
(0.01)
|
Acquisition related gain (e)
|
|
|
|
|
|
|
|
|
|
|
|
(0.01)
|
Incremental non-GAAP tax expense (f)
|
|
|
|
|
|
|
|
|
|
|
|
0.79
|
Excess tax benefits from share-based compensation (g)
|
|
|
|
|
|
|
|
|
|
|
|
(0.21)
|
Non-GAAP diluted earnings per share attributable to Illumina
stockholders
|
|
|
|
|
|
|
|
|
|
|
|
$3.73 - $3.78
|
______________________________________________________________________________________________________
(a) The company sold a portion of its interest in GRAIL,
resulting in the deconsolidation of GRAIL. The $150 million tax effect
of the gain is included in incremental non-GAAP tax expense. Subsequent
to the transaction, the company’s remaining interest is treated as a
cost-method investment.
(b) Non-cash interest expense is calculated in accordance with
the authoritative accounting guidance for convertible debt instruments
that may be settled in cash.
(c) Amount represents performance-based stock which vested as a
result of the financing, net of attribution to noncontrolling interest.
(d) Equity-method investment gain represents mark-to-market
adjustments from our investment in Illumina Innovations Fund I, L.P.
(e) Acquisition related gain consists of change in fair value of
contingent consideration.
(f) Incremental non-GAAP tax expense reflects the tax impact
related to the non-GAAP adjustments listed above.
(g) Excess tax benefits from share-based compensation are
recorded as a discrete item within the provision for income taxes on the
consolidated statement of income pursuant to ASU 2016-09, which was
previously recognized in additional paid-in capital on the consolidated
statement of stockholders’ equity.

View source version on businesswire.com: http://www.businesswire.com/news/home/20171024006568/en/
Source: Illumina, Inc.
Illumina, Inc.
Investors:
Jacquie Ross, CFA
858-882-2172
ir@illumina.com
or
Media:
Eric
Endicott
858-882-6822
pr@illumina.com