Illumina Reports Financial Results for Fourth Quarter and Fiscal Year 2015
SAN DIEGO–(BUSINESS WIRE)–Illumina, Inc. (NASDAQ: ILMN) today announced its financial results for
the fourth quarter and fiscal year 2015.
Fourth quarter 2015 results:
-
Revenue of $592 million, a 15% increase compared to $512 million in
the fourth quarter of 2014, and an increase of 19% on a constant
currency basis -
GAAP net income attributable to Illumina stockholders for the quarter
of $104 million, or $0.70 per diluted share, compared to $153 million,
or $1.03 per diluted share, for the fourth quarter of 2014 -
Non-GAAP net income attributable to Illumina stockholders for the
quarter of $121 million, or $0.81 per diluted share, compared to $129
million, or $0.87 per diluted share, for the fourth quarter of 2014
(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 $240 million and free cash flow of $205
million for the quarter
Gross margin in the fourth quarter of 2015 was 69.4% compared to 75.1%
in the prior year period. Excluding the effect of non-cash stock
compensation expense, amortization of acquired intangible assets, legal
contingencies, and impairments, non-GAAP gross margin was 71.7% for the
fourth quarter of 2015 compared to 72.3% in the prior year period.
Research and development (R&D) expenses for the fourth quarter of 2015
were $114.3 million compared to $142.9 million in the prior year period.
R&D expenses included $10.8 million and $11.8 million of non-cash stock
compensation expense in the fourth quarters of 2015 and 2014,
respectively. Excluding these charges, contingent compensation, legal
contingencies, and impairments, R&D expenses as a percentage of revenue
were 17.5% compared to 15.7% in the prior year period.
Selling, general and administrative (SG&A) expenses for the fourth
quarter of 2015 were $147.3 million compared to $122.2 million in the
prior year period. SG&A expenses included $21.4 million and $23.7
million of non-cash stock compensation expense in the fourth quarters of
2015 and 2014, respectively. Excluding these charges, amortization of
acquired intangible assets, and contingent compensation, SG&A expenses
as a percentage of revenue were 20.9% compared to 18.9% in the prior
year period.
Depreciation and amortization expenses were $32.8 million and capital
expenditures were $35.5 million during the fourth quarter of 2015. The
company settled $28.6 million of the 0.25% Convertible Senior Notes due
2016 and repurchased $202.0 million of common stock under the previously
announced discretionary and 10b5-1 share repurchase programs. At the
close of the quarter, the company held $1.39 billion in cash, cash
equivalents and short-term investments, compared to $1.34 billion as of
December 28, 2014.
Fiscal 2015 results:
-
Revenue of $2,220 million, a 19% increase compared to $1,861 million
in fiscal 2014, and an increase of 23% on a constant currency basis -
GAAP net income attributable to Illumina stockholders of $462 million,
or $3.10 per diluted share, compared to $353 million, or $2.37 per
diluted share, in fiscal 2014 -
Non-GAAP net income attributable to Illumina stockholders of $495
million, or $3.32 per diluted share, compared to $407 million, or
$2.74 per diluted share, in fiscal 2014 (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 $660 million and free cash flow of $517
million for the fiscal year
Gross margin for fiscal 2015 was 69.8% compared to 69.7% in the prior
year. Excluding the effect of non-cash stock compensation expense,
amortization of acquired intangible assets, legal contingencies, and
impairments, non-GAAP gross margin was 72.4% for fiscal 2015 compared to
71.7% in the prior year.
Research and development (R&D) expenses for fiscal 2015 were $401.5
million compared to $388.1 million in the prior year. R&D expenses
included $42.0 million and $50.9 million of non-cash stock compensation
expense in fiscal 2015 and 2014, respectively. Excluding these charges,
contingent compensation, legal contingencies, and impairments, R&D
expenses as a percentage of revenue were 16.2% compared to 15.3% in the
prior year.
Selling, general and administrative (SG&A) expenses for fiscal 2015 were
$524.7 million compared to $466.3 million in the prior year. SG&A
expenses included $79.1 million and $91.0 million of non-cash stock
compensation expense in fiscal 2015 and 2014, respectively. Excluding
these charges, amortization of acquired intangible assets, and
contingent compensation, SG&A expenses as a percentage of revenue were
19.8% compared to 19.5% in the prior year.
“We closed 2015 with strong momentum as fourth quarter orders and
revenue exceeded our expectations,” stated Jay Flatley, CEO. “Our recent
product announcements of MiniSeq™ and Infinium® XT further enhance the
most extensive genomics portfolio available. This portfolio, combined
with our investments in Project Firefly, Helix, and GRAIL, will position
us for long-term growth as we enable our continued penetration of the
enormous markets ahead.”
Updates since our last earnings release:
-
Announced the formation of GRAIL, a new company to enable asymptomatic
cancer screening through the development of a pan-cancer screening test -
Launched the MiniSeq System, a flexible benchtop sequencer priced
at $49,500, and cost-efficient to run, which will allow virtually any
laboratory to adopt next-generation sequencing (NGS), regardless of
sample volume -
Launched Infinium XT, a 96-sample BeadChip offering laboratories the
ability to perform genotyping on larger numbers of samples -
Previewed Project Firefly, a highly-reliable, easy-to-use NGS platform
available in the second half of 2017 that will minimize hands-on time
for both library preparation and sequencing -
Launched EpiSeq™, an NGS service for epidemiological monitoring and
control of healthcare-associated infections, in partnership with
bioMérieux -
Entered into partnership with Bio-Rad Laboratories, Inc. to develop an
NGS workflow for single-cell analysis -
Entered into a collaboration with Novogene to develop clinical
applications in the fields of reproductive health and oncology based
on Illumina’s NGS technology
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 2016, the Company is projecting approximately 16% revenue
growth, assuming current exchange rates, and non-GAAP earnings per
diluted share attributable to Illumina stockholders of $3.55 to $3.65.
These projections assume full year non-GAAP gross margin of
approximately 73% and a net loss attributable to non-controlling
interests of approximately $30 million. Full-year weighted average
diluted shares outstanding, for the measurement of pro forma amounts, is
expected to be approximately 149 million shares.
Quarterly conference call information
The conference call will begin at 2:00 pm Pacific Time (5:00 pm Eastern
Time) on Tuesday, February 2, 2016. Interested parties may listen to the
call by dialing 888.687.3295 (passcode: 21551023), or if outside North
America by dialing +1.503.406.4070 (passcode: 21551023). Individuals may
access the live teleconference in the Investor Relations section of
Illumina’s web site under the “company” tab at www.illumina.com.
A replay of the conference call will be available from 5:00 pm Pacific
Time (8:00 pm Eastern Time) on February 2, 2016 through February 9, 2016
by dialing 855.859.2056 (passcode: 21551023), or if outside North
America by dialing +1.800.585.8367 (passcode: 21551023).
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 stock compensation expense, 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
believes that presentation of operating results that excludes these
items provides useful supplemental information to investors and
facilitates the analysis of the company’s core operating results and
comparison of operating results across reporting periods. Management
also believes that this supplemental non-GAAP information is therefore
useful to investors in analyzing and assessing the company’s past and
future operating performance.
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 projections, information about our financial
outlook, earnings guidance, and other forward-looking statements that
involve risks and uncertainties. These forward-looking statements are
based on our expectations as of the date of this release and may differ
materially from actual future events or results. 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; 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 thousands) | ||||||||||
January 3, | December 28, | |||||||||
2016 | 2014 | |||||||||
ASSETS | (unaudited) | |||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 768,770 | $ | 636,154 | ||||||
Short-term investments | 617,450 | 702,217 | ||||||||
Accounts receivable, net | 385,529 | 289,458 | ||||||||
Inventory | 270,777 | 191,144 | ||||||||
Deferred tax assets, current portion | — | 40,786 | ||||||||
Prepaid expenses and other current assets | 54,297 | 29,844 | ||||||||
Total current assets | 2,096,823 | 1,889,603 | ||||||||
Property and equipment, net | 342,694 | 265,264 | ||||||||
Goodwill | 752,629 | 724,904 | ||||||||
Intangible assets, net | 273,621 | 314,500 | ||||||||
Deferred tax assets, long-term portion | 134,515 | 49,848 | ||||||||
Other assets | 87,465 | 95,521 | ||||||||
Total assets | $ | 3,687,747 | $ | 3,339,640 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 139,226 | $ | 82,626 | ||||||
Accrued liabilities | 396,339 | 335,276 | ||||||||
Long-term debt, current portion | 74,929 | 304,256 | ||||||||
Total current liabilities | 610,494 | 722,158 | ||||||||
Long-term debt | 1,015,649 | 986,780 | ||||||||
Other long-term liabilities | 180,505 | 167,904 | ||||||||
Redeemable noncontrolling interests | 32,546 | — | ||||||||
Stockholders’ equity | 1,848,553 | 1,462,798 | ||||||||
Total liabilities and stockholders’ equity | $ | 3,687,747 | $ | 3,339,640 | ||||||
Illumina, Inc. | ||||||||||||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||||||||
2016 | 2014 | 2016 | 2014 | |||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Product revenue | $ | 497,922 | $ | 450,329 | $ | 1,890,633 | $ | 1,619,511 | ||||||||||||||||
Service and other revenue | 93,626 | 62,050 | 329,129 | 241,847 | ||||||||||||||||||||
Total revenue | 591,548 | 512,379 | 2,219,762 | 1,861,358 | ||||||||||||||||||||
Cost of revenue: | ||||||||||||||||||||||||
Cost of product revenue (a) | 130,775 | 93,069 | 490,812 | 431,920 | ||||||||||||||||||||
Cost of service and other revenue (a) | 39,561 | 23,757 | 133,850 | 92,355 | ||||||||||||||||||||
Amortization of acquired intangible assets | 10,853 | 10,616 | 45,810 | 39,373 | ||||||||||||||||||||
Total cost of revenue | 181,189 | 127,442 | 670,472 | 563,648 | ||||||||||||||||||||
Gross profit | 410,359 | 384,937 | 1,549,290 | 1,297,710 | ||||||||||||||||||||
Operating expense: | ||||||||||||||||||||||||
Research and development (a) | 114,347 | 142,947 | 401,527 | 388,055 | ||||||||||||||||||||
Selling, general and administrative (a) | 147,251 | 122,173 | 524,657 | 466,283 | ||||||||||||||||||||
Legal contingencies | 4,000 | (82,043 | ) | 19,000 | (74,338 | ) | ||||||||||||||||||
Headquarter relocation | 436 | 1,281 | (2,611 | ) | 5,638 | |||||||||||||||||||
Acquisition related expense (gain), net | 325 | (2,304 | ) | (6,124 | ) | (2,639 | ) | |||||||||||||||||
Total operating expense | 266,359 | 182,054 | 936,449 | 782,999 | ||||||||||||||||||||
Income from operations | 144,000 | 202,883 | 612,841 | 514,711 | ||||||||||||||||||||
Other expense, net | (8,993 | ) | (10,822 | ) | (29,699 | ) | (65,953 | ) | ||||||||||||||||
Income before income taxes | 135,007 | 192,061 | 583,142 | 448,758 | ||||||||||||||||||||
Provision for income taxes | 32,143 | 38,781 | 125,752 | 95,407 | ||||||||||||||||||||
Consolidated net income | 102,864 | 153,280 | 457,390 | 353,351 | ||||||||||||||||||||
Add: Net loss attributable to noncontrolling interests | 1,613 | — | 4,169 | — | ||||||||||||||||||||
Net income attributable to Illumina stockholders | $ | 104,477 | $ | 153,280 | $ | 461,559 | $ | 353,351 | ||||||||||||||||
Earnings per share attributable to Illumina stockholders: | ||||||||||||||||||||||||
Basic | $ | 0.72 | $ | 1.08 | $ | 3.19 | $ | 2.61 | ||||||||||||||||
Diluted | $ | 0.70 | $ | 1.03 | $ | 3.10 | $ | 2.37 | ||||||||||||||||
Shares used in computing earnings per common share: | ||||||||||||||||||||||||
Basic | 145,963 | 142,342 | 144,826 | 135,553 | ||||||||||||||||||||
Diluted | 148,952 | 148,657 | 149,069 | 148,977 | ||||||||||||||||||||
(a) Includes total stock-based compensation expense for stock-based awards: |
||||||||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||||||||
2016 | 2014 | 2016 | 2014 | |||||||||||||||||||||
Cost of product revenue | $ | 2,829 | $ | 2,635 | $ | 9,841 | $ | 9,451 | ||||||||||||||||
Cost of service and other revenue | 366 | 324 | 1,609 | 1,204 | ||||||||||||||||||||
Research and development | 10,849 | 11,837 | 42,001 | 50,880 | ||||||||||||||||||||
Selling, general and administrative | 21,445 | 23,666 | 79,142 | 91,016 | ||||||||||||||||||||
Stock-based compensation expense before taxes | $ | 35,489 | $ | 38,462 | $ | 132,593 | $ | 152,551 | ||||||||||||||||
Illumina, Inc. | ||||||||||||||||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||||||||
2016 | 2014 | 2016 | 2014 | |||||||||||||||||||||
Net cash provided by operating activities (a) | $ | 240,378 | $ | 140,549 | $ | 659,596 | $ | 501,271 | ||||||||||||||||
Net cash provided by (used in) investing activities | 229,398 | (332,783 | ) | (106,146 | ) | (406,624 | ) | |||||||||||||||||
Net cash (used in) provided by financing activities (a) | (253,141 | ) | 202 | (418,762 | ) | (166,748 | ) | |||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 606 | (1,709 | ) | (2,072 | ) | (3,382 | ) | |||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 217,241 | (193,741 | ) | 132,616 | (75,483 | ) | ||||||||||||||||||
Cash and cash equivalents, beginning of period | 551,529 | 829,895 | 636,154 | 711,637 | ||||||||||||||||||||
Cash and cash equivalents, end of period | $ | 768,770 | $ | 636,154 | $ | 768,770 | $ | 636,154 | ||||||||||||||||
Calculation of free cash flow: | ||||||||||||||||||||||||
Net cash provided by operating activities (a) | $ | 240,378 | $ | 140,549 | $ | 659,596 | $ | 501,271 | ||||||||||||||||
Purchases of property and equipment | (35,486 | ) | (34,832 | ) | (142,847 | ) | (105,996 | ) | ||||||||||||||||
Free cash flow (b) | $ | 204,892 | $ | 105,717 | $ | 516,749 | $ | 395,275 | ||||||||||||||||
(a) Net cash provided by operating activities excludes excess tax
benefit related to stock-based compensation of $126.7 million in fiscal
2015, of which $5.0 million was recorded in Q4, and $126.5 million in
fiscal 2014, of which $23.8 million was recorded in Q4. Net cash used in
financing activities reflects the excess tax benefit as a corresponding
in-flow in the respective periods.
(b) 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 thousands, except per share amounts) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP EARNINGS PER SHARE ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS: |
||||||||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||||||||
2016 | 2014 | 2016 | 2014 | |||||||||||||||||||||
GAAP earnings per share attributable to Illumina stockholders – diluted |
$ | 0.70 | $ | 1.03 | $ | 3.10 | $ | 2.37 | ||||||||||||||||
Amortization of acquired intangible assets | 0.09 | 0.08 | 0.35 | 0.32 | ||||||||||||||||||||
Non-cash interest expense (a) | 0.06 | 0.07 | 0.26 | 0.26 | ||||||||||||||||||||
Legal contingencies (b) | 0.03 | (0.40 | ) | 0.13 | (0.24 | ) | ||||||||||||||||||
Contingent compensation expense (c) | — | — | — | 0.03 | ||||||||||||||||||||
Headquarter relocation | — | 0.01 | (0.02 | ) | 0.04 | |||||||||||||||||||
Loss on extinguishment of debt | — | — | 0.03 | 0.21 | ||||||||||||||||||||
Acquisition related expense (gain), net (d) | — | (0.02 | ) | (0.04 | ) | (0.02 | ) | |||||||||||||||||
Cost-method investment gain, net (e) | — | — | (0.10 | ) | (0.03 | ) | ||||||||||||||||||
Tax benefit related to cost-sharing arrangement (f) | — | — | (0.17 | ) | — | |||||||||||||||||||
Incremental non-GAAP tax (expense) benefit (g) | (0.07 | ) | 0.10 | (0.22 | ) | (0.20 | ) | |||||||||||||||||
Non-GAAP earnings per share attributable to Illumina stockholders – diluted (h) |
$ | 0.81 | $ | 0.87 | $ | 3.32 | $ | 2.74 | ||||||||||||||||
Shares used in calculating non-GAAP diluted earnings per share attributable to Illumina stockholders |
148,952 | 148,657 | 149,069 | 148,815 | ||||||||||||||||||||
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS: |
||||||||||||||||||||||||
GAAP net income attributable to Illumina stockholders | $ | 104,477 | $ | 153,280 | $ | 461,559 | $ | 353,351 | ||||||||||||||||
Amortization of acquired intangible assets | 12,376 | 12,203 | 51,829 | 48,165 | ||||||||||||||||||||
Non-cash interest expense (a) | 8,705 | 10,099 | 38,589 | 38,154 | ||||||||||||||||||||
Legal contingencies (b) | 4,000 | (59,483 | ) | 19,000 | (35,931 | ) | ||||||||||||||||||
Contingent compensation expense (c) | 685 | 433 | 934 | 4,265 | ||||||||||||||||||||
Headquarter relocation | 436 | 1,281 | (2,611 | ) | 5,638 | |||||||||||||||||||
Loss on extinguishment of debt | 325 | — | 4,062 | 31,360 | ||||||||||||||||||||
Acquisition related expense (gain), net (d) | 325 | (2,304 | ) | (6,124 | ) | (2,639 | ) | |||||||||||||||||
Cost-method investment gain, net (e) | (119 | ) | — | (15,601 | ) | (4,427 | ) | |||||||||||||||||
Impairments (i) | — | (485 | ) | — | (485 | ) | ||||||||||||||||||
Tax benefit related to cost-sharing arrangement (f) | (56 | ) | — | (24,813 | ) | — | ||||||||||||||||||
Incremental non-GAAP tax (expense) benefit (g) | (10,584 | ) | 13,925 | (31,621 | ) | (30,234 | ) | |||||||||||||||||
Non-GAAP net income attributable to Illumina stockholders (h) | $ | 120,570 | $ | 128,949 | $ | 495,203 | $ | 407,217 | ||||||||||||||||
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP DILUTED NUMBER OF SHARES ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS: |
||||||||||||||||||||||||
Weighted average shares used in calculation of GAAP diluted earnings per share |
148,952 | 148,657 | 149,069 | 148,977 | ||||||||||||||||||||
Weighted average dilutive potential common shares issuable of redeemable convertible senior notes |
— | — | — | (162 | ) | |||||||||||||||||||
Weighted average shares used in calculation of non-GAAP diluted earnings per share attributable to Illumina stockholders |
148,952 | 148,657 | 149,069 | 148,815 | ||||||||||||||||||||
(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) Legal contingencies in fiscal 2015 represent charges related
to patent litigation. Legal contingencies in fiscal 2014 primarily
represent a gain related to the settlement of our patent litigation with
Syntrix Biosystems, Inc., partially offset by the expenses recorded upon
our litigation settlement and pooling of patents with Sequenom, Inc.
(c) Contingent compensation expense relates to contingent
payments for post-combination services associated with an acquisition.
(d) Acquisition related expense (gain), net consists of changes
in fair value of contingent consideration and transaction related costs.
(e) Cost-method investment gain, net consists primarily of gains
on disposition of investments partially offset by impairment charges on
other investments.
(f) Tax benefit related to cost-sharing arrangement refers to the
exclusion of stock compensation from prior period cost-sharing charges
as a result of a recent tax court ruling.
(g) Incremental non-GAAP tax (expense) benefit reflects the tax
impact related to the non-GAAP adjustments listed above.
(h) 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 drivers of the
Company’s core operating performance and major factors in management’s
bonus compensation each year. 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.
(i) Impairments in fiscal 2014 consisted of a gain on an asset
sale associated with a non-core product line discontinued in 2013,
partially offset by an intangible asset impairment.
Illumina, Inc. | ||||||||||||||||||||||||||||||||||||||||||||
Results of Operations – Non-GAAP (continued) | ||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE: |
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Three Months Ended | Years Ended | |||||||||||||||||||||||||||||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||||||||||||||||||||||||||||
2016 | 2014 | 2016 | 2014 | |||||||||||||||||||||||||||||||||||||||||
GAAP gross profit | $ | 410,359 | 69.4 | % | $ | 384,937 | 75.1 | % | $ | 1,549,290 | 69.8 | % | $ | 1,297,710 | 69.7 | % | ||||||||||||||||||||||||||||
Stock-based compensation expense | 3,195 | 0.5 | % | 2,959 | 0.6 | % | 11,450 | 0.5 | % | 10,655 | 0.6 | % | ||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 10,853 | 1.8 | % | 10,616 | 2.1 | % | 45,810 | 2.1 | % | 39,373 | 2.1 | % | ||||||||||||||||||||||||||||||||
Legal contingencies (a) | — | — | (26,240 | ) | (5.1 | )% | — | — | (10,393 | ) | (0.6 | )% | ||||||||||||||||||||||||||||||||
Impairments (b) | — | — | (2,000 | ) | (0.4 | )% | — | — | (2,000 | ) | (0.1 | )% | ||||||||||||||||||||||||||||||||
Non-GAAP gross profit (c) | $ | 424,407 | 71.7 | % | $ | 370,272 | 72.3 | % | $ | 1,606,550 | 72.4 | % | $ | 1,335,345 | 71.7 | % | ||||||||||||||||||||||||||||
GAAP research and development expense | $ | 114,347 | 19.3 | % | $ | 142,947 | 27.9 | % | $ | 401,527 | 18.1 | % | $ | 388,055 | 20.8 | % | ||||||||||||||||||||||||||||
Stock-based compensation expense | (10,849 | ) | (1.8 | )% | (11,837 | ) | (2.3 | )% | (42,001 | ) | (1.9 | )% | (50,880 | ) | (2.7 | )% | ||||||||||||||||||||||||||||
Contingent compensation expense (d) | (83 | ) | — | (433 | ) | (0.1 | )% | (127 | ) | — | (1,509 | ) | (0.1 | )% | ||||||||||||||||||||||||||||||
Legal contingencies (a) | — | — | (48,800 | ) | (9.5 | )% | — | — | (48,800 | ) | (2.6 | )% | ||||||||||||||||||||||||||||||||
Impairments (b) | — | — | (1,515 | ) | (0.3 | )% | — | — | (1,515 | ) | (0.1 | )% | ||||||||||||||||||||||||||||||||
Non-GAAP research and development expense | $ | 103,415 | 17.5 | % | $ | 80,362 | 15.7 | % | $ | 359,399 | 16.2 | % | $ | 285,351 | 15.3 | % | ||||||||||||||||||||||||||||
GAAP selling, general and administrative expense | $ | 147,251 | 24.9 | % | $ | 122,173 | 23.8 | % | $ | 524,657 | 23.6 | % | $ | 466,283 | 25.1 | % | ||||||||||||||||||||||||||||
Stock-based compensation expense | (21,445 | ) | (3.6 | )% | (23,666 | ) | (4.6 | )% | (79,142 | ) | (3.5 | )% | (91,016 | ) | (4.9 | )% | ||||||||||||||||||||||||||||
Amortization of acquired intangible assets | (1,523 | ) | (0.3 | )% | (1,587 | ) | (0.3 | )% | (6,019 | ) | (0.3 | )% | (8,792 | ) | (0.6 | )% | ||||||||||||||||||||||||||||
Contingent compensation expense (d) | (602 | ) | (0.1 | )% | — | — | (807 | ) | — | (2,756 | ) | (0.1 | )% | |||||||||||||||||||||||||||||||
Non-GAAP selling, general and administrative expense | $ | 123,681 | 20.9 | % | $ | 96,920 | 18.9 | % | $ | 438,689 | 19.8 | % | $ | 363,719 | 19.5 | % | ||||||||||||||||||||||||||||
GAAP operating profit | $ | 144,000 | 24.3 | % | $ | 202,883 | 39.6 | % | $ | 612,841 | 27.6 | % | $ | 514,711 | 27.7 | % | ||||||||||||||||||||||||||||
Stock-based compensation expense | 35,489 | 6.0 | % | 38,462 | 7.5 | % | 132,593 | 5.9 | % | 152,551 | 8.2 | % | ||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 12,376 | 2.1 | % | 12,203 | 2.4 | % | 51,829 | 2.4 | % | 48,165 | 2.6 | % | ||||||||||||||||||||||||||||||||
Legal contingencies (a) | 4,000 | 0.7 | % | (59,483 | ) | (11.6 | )% | 19,000 | 0.9 | % | (35,931 | ) | (1.9 | )% | ||||||||||||||||||||||||||||||
Contingent compensation expense (d) | 685 | 0.1 | % | 433 | 0.1 | % | 934 | — | 4,265 | 0.2 | % | |||||||||||||||||||||||||||||||||
Headquarter relocation | 436 | 0.1 | % | 1,281 | 0.2 | % | (2,611 | ) | (0.1 | )% | 5,638 | 0.2 | % | |||||||||||||||||||||||||||||||
Acquisition related expense (gain), net (e) | 325 | 0.1 | % | (2,304 | ) | (0.4 | )% | (6,124 | ) | (0.3 | )% | (2,639 | ) | (0.1 | )% | |||||||||||||||||||||||||||||
Impairments (b) | — | — | (485 | ) | (0.1 | )% | — | — | (485 | ) | — | |||||||||||||||||||||||||||||||||
Non-GAAP operating profit (c) | $ | 197,311 | 33.4 | % | $ | 192,990 | 37.7 | % | $ | 808,462 | 36.4 | % | $ | 686,275 | 36.9 | % | ||||||||||||||||||||||||||||
GAAP other expense, net | $ | (8,993 | ) | (1.5 | )% | $ | (10,822 | ) | (2.1 | )% | $ | (29,699 | ) | (1.3 | )% | $ | (65,953 | ) | (3.5 | )% | ||||||||||||||||||||||||
Non-cash interest expense (f) | 8,705 | 1.5 | % | 10,099 | 2.0 | % | 38,589 | 1.7 | % | 38,154 | 2.0 | % | ||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | 325 | — | — | — | 4,062 | 0.2 | % | 31,360 | 1.7 | % | ||||||||||||||||||||||||||||||||||
Cost-method investment gain, net (g) | (119 | ) | — | — | — | (15,601 | ) | (0.7 | )% | (4,427 | ) | (0.2 | )% | |||||||||||||||||||||||||||||||
Non-GAAP other expense, net (c) | $ | (82 | ) | — | $ | (723 | ) | (0.1 | )% | $ | (2,649 | ) | (0.1 | )% | $ | (866 | ) | — | ||||||||||||||||||||||||||
Contacts
Illumina, Inc.
Investors:
Rebecca Chambers
858.255.5243
rchambers@illumina.com
or
Media:
Eric
Endicott
858.882.6822
pr@illumina.com