[January 28, 2013] |
 |
Illumina Reports Record Financial Results for Fourth Quarter and Fiscal Year 2012
SAN DIEGO --(Business Wire)--
Illumina, Inc. (NASDAQ:ILMN) today announced its financial results for
the fourth quarter and fiscal year of 2012.
Fourth quarter 2012 results:
-
Revenue of $309 million, a 24% increase compared to $250 million in
the fourth quarter of 2011
-
GAAP net income for the quarter of $72 million, or $0.53 per diluted
share, compared to net income of $12 million, or $0.09 per diluted
share, for the fourth quarter of 2011
-
Non-GAAP net income for the quarter of $57 million, or $0.42 per
diluted share, compared to $44 million, or $0.35 per diluted share,
for the fourth quarter of 2011 (see the table entitled "Itemized
Reconciliation Between GAAP and Non-GAAP Net Income" for a
reconciliation of these GAAP and non-GAAP financial measures)
-
Cash flow from operations of $79 million and free cash flow of $62
million for the quarter
Gross margin in the fourth quarter of 2012 was 65.8% compared to 68.2%
in the prior year period. Excluding the effect of non-cash charges
associated with stock compensation, amortization of acquired
intangibles, and amortization of inventory revaluation costs, non-GAAP
gross margin was 68.5% for the fourth quarter of 2012 compared to 70.2%
in the prior year period.
Research and development (R&D) expenses for the fourth quarter of 2012
were $56.9 million compared to $45.5 million in the fourth quarter of
2011. R&D expenses included $8.0 million and $7.3 million of non-cash
stock compensation expense in the fourth quarters of 2012 and 2011,
respectively. Excluding these charges and contingent compensation
expense, R&D expenses as a percentage of revenue were 15.4% compared to
15.0% in the prior year period.
Selling, general and administrative (SG&A) expenses for the fourth
quarter of 2012 were $79.7 million compared to $60.9 million for the
fourth quarter of 2011. SG&A expenses included $14.1 million and $12.7
million of non-cash stock compensation expense in the fourth quarters of
2012 and 2011, respectively. Excluding these charges, contingent
compensation, acquired intangible asset amortization, and legal
contingencies, SG&A expenses as a percentage of revenue were 19.9%
compared to 20.1% in the prior year period.
GAAP net income included the impact of a pre-tax gain of $48.6 million
from the sale of the Company's minority ownership interest in deCODE
Genetics to Amgen, Inc.
Depreciation and amortization expenses were $18.1 million and capital
expenditures were $17.1 million during the fourth quarter of 2012. The
Company ended the quarter with $1.35 billion in cash, cash equivalents
and short-term investments, compared to $1.19 billion as of January 1,
2012.
Fiscal 2012 results:
-
Revenue of $1.15 billion, a 9% increase over the $1.06 billion
reported in fiscal 2011
-
GAAP net income of $151 million, or $1.13 per diluted share, compared
to $87 million, or $0.62 per diluted share in fiscal 2011
-
Non-GAAP net income of $210 million, or $1.59 per diluted share,
compared to $176 million, or $1.30 per diluted share, in fiscal 2011
(see table entitled "Itemized Reconciliation Between GAAP and Non-GAAP
Net Income" for a reconciliation of these GAAP and non-GAAP financial
measures)
Gross margin for fiscal 2012 was 67.4% compared to 67.2% in fiscal 2011.
Excluding the effect of non-cash charges associated with stock
compensation, amortization of acquired intangibles, legal contingencies,
and amortization of inventory revaluation costs, non-GAAP gross margin
was 69.7% for fiscal 2012 compared to 69.0% in fiscal 2011.
R&D expenses for fiscal 2012 were $231.0 million compared to $196.9
million in fiscal 2011. R&D expenses for fiscal 2012 included a one-time
impairment charge of $21.4 million related to an in-process research and
development asset previously acquired. R&D expenses also included $30.9
million and $32.1 million of non-cash stock compensation expense in
fiscal 2012 and 2011, respectively. Excluding these charges and
contingent compensation expense, R&D expenses as a percentage of revenue
were 15.3% compared to 15.2% in the prior year.
SG&A expenses for fiscal 2012 were $286.0 million compared to $261.8
million in fiscal 2011. SG&A expenses included $55.4 million and $52.3
million of non-cash stock compensation expense in fiscal 2012 and 2011,
respectively. Excluding these charges, contingent compensation expense,
acquired intangible asset amortization, and legal contingencies, SG&A
expenses as a percentage of revenue were 19.5% compared to 19.9% in the
prior year.
"We are very pleased with our execution in 2012," stated Jay Flatley,
President and CEO. "We ended the year with a strong performance, and
made significant progress on our strategy of growing our clinical
business, both organically and through acquisition. We remain optimistic
about our growth prospects in 2013 and beyond, in spite of the
continuing challenges of the economic environment."
Highlights since our last earnings release
-
Announced a definitive agreement to acquire Verinata Health, Inc., a
leading provider of non-invasive tests for the early identification of
fetal chromosomal abnormalities
-
Completed the acquisition of Moleculo Inc., which will enable the
introduction of a novel library prep method and analysis algorithm to
produce synthetic read lengths up to 10 Kb
-
Previewed a new, ordered array flow cell technology that will provide
a significant increase in cluster density and number of reads per flow
cell
-
Announced a new kit for the HiSeq® 2500 which is capable of generating
up to 300 Gb in rapid mode
-
Presented an updated MiSeq® roadmap with chemistry and software
enhancements to deliver 15 Gb of throughput
-
Announced Nextera® Rapid Capture Exome Kits to provide the fastest
exome enrichment workflow on both the HiSeq 2500 and MiSeq
-
Launched TruSeq® DNA PCR-Free Kits, a simple, all-inclusive sample
prep solution for whole-genome sequencing
-
Announced TruSeq Targeted RNA Kits for mid-plex gene expression
profiling and validation
-
Announced that Caris Life Sciences has selected the MiSeq system to
support Caris' evidence-based molecular profiling service
-
Announced that VWR International, LLC, will distribute Illumina's qPCR
portfolio within the United States
-
Announced winners of the MiSeq grant program to accelerate original
research in microbial ecology, neglected disease, and human health
-
Named Dr. Robert S. Epstein to the Board of Directors
-
Announced a favorable ruling in patent litigation against Complete
Genomics, Inc.
-
Announced new grant recipients of our Agricultural Greater Good
Initiative at the 21st International Plant and Animal Genome Conference
-
Repurchased $25 million of common stock under our previously announced
share repurchase program
Financial outlook and guidance
The non-GAAP financial guidance discussed below excludes various
one-time or specified non-cash charges. 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 2013 we are projecting 15% total company revenue growth and non-GAAP
earnings per fully diluted share of $1.55 to $1.62, including the
pending Verinata acquisition. These projections include full year
non-GAAP gross margin of approximately 70%, a pro forma tax rate of
approximately 31% and stock compensation expense of approximately $115
million. Full-year weighted average diluted shares outstanding, for the
measurement of pro forma amounts, is expected to be approximately 134
million shares.
Quarterly conference call information
The conference call will begin at 2:00 pm Pacific Time (5:00 pm Eastern
Time) on Monday, January 28, 2013. Interested parties may listen to the
call by dialing 888-679-8035 (passcode: 35493315), or, if outside North
America, by dialing +1-617-213-4848 (passcode: 35493315). 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 4:00 pm Pacific
Time (7:00 pm Eastern Time) on January 28, 2013 through February 4, 2013
by dialing 888-286-8010 (passcode: 76555573), or if outside North
America, by dialing +1-617-801-6888 (passcode: 76555573).
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
related to stock compensation expense, non-cash interest expense
associated with the Company's convertible debt instruments that may be
settled in cash, net gains related to cost-method investments,
headquarter relocation expense, costs related to unsolicited tender
offer for the Company's stock, impairment of in-process research and
development, amortization expense related to acquired intangible assets,
contingent compensation expense, restructuring charges, legal
contingencies, acquisition related expense, amortization of inventory
revaluation costs, and loss on extinguishment of debt. Per share amounts
also include the double dilution associated with the accounting
treatment of the Company's 0.625% convertible senior notes outstanding
and the corresponding call option overlay. Management believes that
presentation of operating results that excludes these items and per
share double dilution 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 develop and
commercialize further our sequencing, array, PCR, and consumables
technologies and to deploy new products and applications, and expand the
markets, for our technology platforms; (ii) our ability to manufacture
robust instrumentation and consumables; (iii) our expectations and
beliefs regarding future conduct and growth of the business and the
markets in which we operate; (iv) challenges inherent in developing,
manufacturing, and launching new products and services; and (v) our
ability to maintain our revenue and profitability during periods of
research funding reduction or uncertainty and adverse economic and
business conditions, including as a result of slowing economic growth in
the United States or worldwide, 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 financial quarter.
About Illumina
Illumina (www.illumina.com)
is a leading developer, manufacturer, and marketer of life science tools
and integrated systems for the analysis of genetic variation and
function. We provide innovative sequencing and array-based solutions for
genotyping, copy number variation analysis, methylation studies, gene
expression profiling, and low-multiplex analysis of DNA, RNA, and
protein. We also provide tools and services that are fueling advances in
consumer genomics and diagnostics. Our technology and products
accelerate genetic analysis research and its applications, paving the
way for molecular medicine and ultimately transforming healthcare.
|
Illumina, Inc.
|
Condensed Consolidated Balance Sheets
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
December 30,
2012
|
|
January 1,
2012
|
ASSETS
|
|
(unaudited)
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
433,981
|
|
$
|
302,978
|
|
Short-term investments
|
|
|
916,223
|
|
|
886,590
|
|
Accounts receivable, net
|
|
|
214,975
|
|
|
173,886
|
|
Inventory, net
|
|
|
158,718
|
|
|
128,781
|
|
Deferred tax assets, current portion
|
|
|
30,451
|
|
|
23,188
|
|
Prepaid expenses and other current assets
|
|
|
32,700
|
|
|
29,196
|
|
Total current assets
|
|
|
1,787,048
|
|
|
1,544,619
|
|
Property and equipment, net
|
|
|
166,167
|
|
|
143,483
|
|
Goodwill
|
|
|
369,327
|
|
|
321,853
|
|
Intangible assets, net
|
|
|
130,196
|
|
|
106,475
|
|
Deferred tax assets, long-term portion
|
|
|
40,183
|
|
|
19,675
|
|
Other assets
|
|
|
73,164
|
|
|
59,735
|
|
Total assets
|
|
$
|
2,566,085
|
|
$
|
2,195,840
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
65,727
|
|
$
|
49,806
|
|
Accrued liabilities
|
|
|
201,877
|
|
|
177,115
|
|
Long-term debt, current portion
|
|
|
36,967
|
|
|
-
|
|
Total current liabilities
|
|
|
304,571
|
|
|
226,921
|
|
Long-term debt
|
|
|
805,406
|
|
|
807,369
|
|
Other long-term liabilities
|
|
|
134,369
|
|
|
80,613
|
|
Conversion option subject to cash settlement
|
|
|
3,158
|
|
|
5,722
|
|
Stockholders' equity
|
|
|
1,318,581
|
|
|
1,075,215
|
|
Total liabilities and stockholders' equity
|
|
$
|
2,566,085
|
|
$
|
2,195,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Illumina, Inc.
|
Condensed Consolidated Statements of Income
|
(In thousands, except per share amounts)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
|
|
December 30,
2012
|
|
January 1,
2012
|
|
December 30,
2012
|
|
January 1,
2012
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Product revenue
|
|
$
|
278,933
|
|
$
|
230,396
|
|
|
$
|
1,055,826
|
|
$
|
987,280
|
|
|
Service and other revenue
|
|
|
30,332
|
|
|
19,675
|
|
|
|
92,690
|
|
|
68,255
|
|
|
|
Total revenue
|
|
|
309,265
|
|
|
250,071
|
|
|
|
1,148,516
|
|
|
1,055,535
|
|
Cost of Revenue:
|
|
|
|
|
|
|
|
|
|
Cost of product revenue (a)
|
|
|
86,348
|
|
|
69,509
|
|
|
|
317,283
|
|
|
308,228
|
|
|
Cost of service and other revenue (a)
|
|
|
14,791
|
|
|
6,940
|
|
|
|
43,552
|
|
|
26,118
|
|
|
Amortization of acquired intangible assets
|
|
|
4,479
|
|
|
3,036
|
|
|
|
14,153
|
|
|
12,091
|
|
|
|
Total cost of revenue
|
|
|
105,618
|
|
|
79,485
|
|
|
|
374,988
|
|
|
346,437
|
|
|
|
|
Gross profit
|
|
|
203,647
|
|
|
170,586
|
|
|
|
773,528
|
|
|
709,098
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
Research and development (a)
|
|
|
56,907
|
|
|
45,513
|
|
|
|
231,025
|
|
|
196,913
|
|
|
Selling, general and administrative (a)
|
|
|
79,715
|
|
|
60,918
|
|
|
|
285,991
|
|
|
261,843
|
|
|
Unsolicited tender offer related expense
|
|
|
4,394
|
|
|
-
|
|
|
|
23,136
|
|
|
-
|
|
|
Headquarter relocation expense
|
|
|
2,883
|
|
|
30,243
|
|
|
|
26,328
|
|
|
41,826
|
|
|
Restructuring charges
|
|
|
88
|
|
|
8,136
|
|
|
|
3,522
|
|
|
8,136
|
|
|
Acquisition related expense (gain), net
|
|
|
314
|
|
|
(1,523
|
)
|
|
|
2,774
|
|
|
919
|
|
|
|
Total operating expenses
|
|
|
144,301
|
|
|
143,287
|
|
|
|
572,776
|
|
|
509,637
|
|
|
|
|
Income from operations
|
|
|
59,346
|
|
|
27,299
|
|
|
|
200,752
|
|
|
199,461
|
|
|
Other income (expense), net
|
|
|
44,557
|
|
|
(7,077
|
)
|
|
|
21,856
|
|
|
(66,416
|
)
|
|
|
|
Income before income taxes
|
|
|
103,903
|
|
|
20,222
|
|
|
|
222,608
|
|
|
133,045
|
|
Provision for income taxes
|
|
|
32,000
|
|
|
8,502
|
|
|
|
71,354
|
|
|
46,417
|
|
|
|
|
Net income
|
|
$
|
71,903
|
|
$
|
11,720
|
|
|
$
|
151,254
|
|
$
|
86,628
|
|
Net income per basic share
|
|
$
|
0.58
|
|
$
|
0.10
|
|
|
$
|
1.23
|
|
$
|
0.70
|
|
Net income per diluted share
|
|
$
|
0.53
|
|
$
|
0.09
|
|
|
$
|
1.13
|
|
$
|
0.62
|
|
Shares used in calculating basic net income per share
|
|
|
123,211
|
|
|
121,541
|
|
|
|
122,999
|
|
|
123,399
|
|
Shares used in calculating diluted net income per share
|
|
|
135,393
|
|
|
124,888
|
|
|
|
133,693
|
|
|
138,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes total stock-based compensation expense for
stock-based awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
|
|
December 30,
2012
|
|
January 1,
2012
|
|
December 30,
2012
|
|
January 1,
2012
|
|
Cost of product revenue
|
|
$
|
1,991
|
|
$
|
1,684
|
|
|
$
|
7,575
|
|
$
|
6,951
|
|
|
Cost of service and other revenue
|
|
|
134
|
|
|
159
|
|
|
|
461
|
|
|
695
|
|
|
Research and development
|
|
|
8,001
|
|
|
7,295
|
|
|
|
30,879
|
|
|
32,105
|
|
|
Selling, general and administrative
|
|
|
14,050
|
|
|
12,678
|
|
|
|
55,409
|
|
|
52,341
|
|
|
|
Stock-based compensation expense before taxes
|
|
$
|
24,176
|
|
$
|
21,816
|
|
|
$
|
94,324
|
|
$
|
92,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Illumina, Inc.
|
Condensed Consolidated Statements of Cash Flows
|
(In thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 30,
2012
|
|
January 1,
2012
|
|
December 30,
2012
|
|
January 1,
2012
|
Net cash provided by operating activities
|
|
$
|
78,876
|
|
|
$
|
108,300
|
|
|
$
|
291,873
|
|
|
$
|
358,140
|
|
Net cash provided by (used in) investing activities
|
|
|
18,611
|
|
|
|
(42,960
|
)
|
|
|
(150,012
|
)
|
|
|
(400,999
|
)
|
Net cash (used in) provided by financing activities
|
|
|
(6,042
|
)
|
|
|
7,848
|
|
|
|
(10,755
|
)
|
|
|
97,016
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(553
|
)
|
|
|
(56
|
)
|
|
|
(103
|
)
|
|
|
(126
|
)
|
Net increase in cash and cash equivalents
|
|
|
90,892
|
|
|
|
73,132
|
|
|
|
131,003
|
|
|
|
54,031
|
|
Cash and cash equivalents, beginning of period
|
|
|
343,089
|
|
|
|
229,846
|
|
|
|
302,978
|
|
|
|
248,947
|
|
Cash and cash equivalents, end of period
|
|
$
|
433,981
|
|
|
$
|
302,978
|
|
|
$
|
433,981
|
|
|
$
|
302,978
|
|
|
|
|
|
|
|
|
|
|
Calculation of free cash flow (a):
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
78,876
|
|
|
$
|
108,300
|
|
|
$
|
291,873
|
|
|
$
|
358,140
|
|
Purchases of property and equipment
|
|
|
(17,101
|
)
|
|
|
(27,114
|
)
|
|
|
(68,781
|
)
|
|
|
(77,800
|
)
|
Free cash flow
|
|
$
|
61,775
|
|
|
$
|
81,186
|
|
|
$
|
223,092
|
|
|
$
|
280,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) 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 NET INCOME PER
SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 30,
2012
|
|
January 1,
2012
|
|
December 30,
2012
|
|
January 1,
2012
|
GAAP net income per share - diluted
|
|
$
|
0.53
|
|
|
$
|
0.09
|
|
|
$
|
1.13
|
|
|
$
|
0.62
|
|
Pro forma impact of weighted average shares (a)
|
|
|
-
|
|
|
|
-
|
|
|
|
0.02
|
|
|
|
0.03
|
|
Adjustments to net income:
|
|
|
|
|
|
|
|
|
Cost-method investment related gains, net (b)
|
|
|
(0.34
|
)
|
|
|
-
|
|
|
|
(0.35
|
)
|
|
|
-
|
|
Non-cash interest expense (c)
|
|
|
0.07
|
|
|
|
0.07
|
|
|
|
0.27
|
|
|
|
0.24
|
|
Recovery of previously impaired note receivable
|
|
|
(0.04
|
)
|
|
|
-
|
|
|
|
(0.05
|
)
|
|
|
-
|
|
Amortization of acquired intangible assets
|
|
|
0.04
|
|
|
|
0.02
|
|
|
|
0.12
|
|
|
|
0.09
|
|
Unsolicited tender offer related expense
|
|
|
0.03
|
|
|
|
-
|
|
|
|
0.17
|
|
|
|
-
|
|
Contingent compensation expense (d)
|
|
|
0.03
|
|
|
|
0.01
|
|
|
|
0.07
|
|
|
|
0.04
|
|
Headquarter relocation expense (e)
|
|
|
0.02
|
|
|
|
0.24
|
|
|
|
0.20
|
|
|
|
0.31
|
|
Amortization of inventory revaluation costs (f)
|
|
|
0.01
|
|
|
|
-
|
|
|
|
0.01
|
|
|
|
-
|
|
Acquisition related expense (gain), net (g)
|
|
|
-
|
|
|
|
(0.01
|
)
|
|
|
0.03
|
|
|
|
0.01
|
|
Restructuring charges
|
|
|
-
|
|
|
|
0.07
|
|
|
|
0.02
|
|
|
|
0.06
|
|
Impairment of in-process research and development
|
|
|
-
|
|
|
|
-
|
|
|
|
0.02
|
|
|
|
-
|
|
Legal contingencies
|
|
|
-
|
|
|
|
(0.02
|
)
|
|
|
0.16
|
|
|
|
(0.02
|
)
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
0.28
|
|
Incremental non-GAAP tax expense (h)
|
|
|
0.07
|
|
|
|
(0.12
|
)
|
|
|
(0.23
|
)
|
|
|
(0.36
|
)
|
Non-GAAP net income per share - diluted (i)
|
|
$
|
0.42
|
|
|
$
|
0.35
|
|
|
$
|
1.59
|
|
|
$
|
1.30
|
|
Shares used in calculating non-GAAP diluted net income per share
|
|
|
134,348
|
|
|
|
124,409
|
|
|
|
132,725
|
|
|
|
135,154
|
|
|
|
|
|
|
|
|
|
|
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
|
|
$
|
71,903
|
|
|
$
|
11,720
|
|
|
$
|
151,254
|
|
|
$
|
86,628
|
|
Cost-method investment related gains, net (b)
|
|
|
(45,911
|
)
|
|
|
-
|
|
|
|
(45,911
|
)
|
|
|
-
|
|
Non-cash interest expense (c)
|
|
|
8,950
|
|
|
|
8,542
|
|
|
|
35,180
|
|
|
|
32,495
|
|
Recovery of previously impaired note receivable
|
|
|
(6,000
|
)
|
|
|
-
|
|
|
|
(6,000
|
)
|
|
|
-
|
|
Amortization of acquired intangible assets
|
|
|
5,411
|
|
|
|
3,188
|
|
|
|
15,541
|
|
|
|
12,689
|
|
Unsolicited tender offer related expense
|
|
|
4,394
|
|
|
|
-
|
|
|
|
23,136
|
|
|
|
-
|
|
Contingent compensation expense (d)
|
|
|
4,347
|
|
|
|
732
|
|
|
|
9,151
|
|
|
|
6,057
|
|
Headquarter relocation expense (e)
|
|
|
2,883
|
|
|
|
30,243
|
|
|
|
26,328
|
|
|
|
41,826
|
|
Amortization of inventory revaluation costs (f)
|
|
|
1,458
|
|
|
|
-
|
|
|
|
1,458
|
|
|
|
-
|
|
Acquisition related (gain) expense, net (g)
|
|
|
314
|
|
|
|
(1,523
|
)
|
|
|
2,774
|
|
|
|
919
|
|
Restructuring charges
|
|
|
88
|
|
|
|
8,136
|
|
|
|
3,522
|
|
|
|
8,136
|
|
Impairment of in-process research and development
|
|
|
-
|
|
|
|
-
|
|
|
|
21,438
|
|
|
|
-
|
|
Legal contingencies
|
|
|
-
|
|
|
|
(2,300
|
)
|
|
|
3,021
|
|
|
|
(2,300
|
)
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
37,611
|
|
Incremental non-GAAP tax expense (h)
|
|
|
8,963
|
|
|
|
(15,215
|
)
|
|
|
(30,464
|
)
|
|
|
(48,053
|
)
|
Non-GAAP net income (i)
|
|
$
|
56,800
|
|
|
$
|
43,523
|
|
|
$
|
210,428
|
|
|
$
|
176,008
|
|
|
|
|
|
|
|
|
|
|
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP DILUTED NUMBER
OF SHARES:
|
|
Weighted average shares used in calculation of GAAP diluted net
income per share
|
|
|
135,393
|
|
|
|
124,888
|
|
|
|
133,693
|
|
|
|
138,937
|
|
Weighted average dilutive potential common shares issuable of
redeemable convertible senior notes (a)
|
|
|
(1,045
|
)
|
|
|
(479
|
)
|
|
|
(968
|
)
|
|
|
(3,783
|
)
|
Weighted average shares used in calculation of Non-GAAP diluted net
income per share
|
|
|
134,348
|
|
|
|
124,409
|
|
|
|
132,725
|
|
|
|
135,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Pro forma impact of weighted average shares represents
the impact of double dilution associated with the accounting
treatment of the Company's outstanding convertible debt and the
corresponding call option overlay.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Cost-method investment related gain, net, consists of
$48.6 million in gains from sale of minority interest in deCODE
Genetics offset by $2.7 million in impairment of another
cost-method investment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Non-cash interest expense is calculated in accordance
with the authoritative accounting guidance for convertible debt
instruments that may be settled in cash.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Contingent compensation expense relates to contingent
payments for post-combination services associated with
acquisitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) Headquarter relocation expense in Q4 2012 consists
primarily of additional cease-use loss recorded due to a delay in
the sublease of our prior headquarters and accretion of interest
expense on lease exit liability recorded upon vacating our prior
headquarters. Headquarter relocation expense in fiscal year 2012
consists primarily of cease-use loss recorded upon vacating our
prior headquarters, double rent expense during the transition to
our new headquarter facility, accretion of interest expense on
lease exit liability, and moving costs. Headquarter relocation
expense recorded in Q4 2011 and fiscal year 2011 consisted of
cease-use loss, accelerated depreciation expense and double rent
expense during the transition to the new facility.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f) The Company recorded $1.5 million in inventory
revaluation costs in conjunction with the acquisition of
BlueGnome, Ltd., which was amortized into cost of goods sold
during Q4 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g) Acquisition related expense (gain), net during fiscal
year 2012 includes changes in fair value of contingent
consideration of $2.0 million, of which $0.3 million was recorded
in Q4, and transaction costs of $0.8 million related to the
acquisition of BlueGnome Ltd. Acquisition related (gain) expense,
net in the fiscal year 2011 consists of an acquired in-process
research and development charge of $5.4 million related to a
milestone payment for a prior acquisition, offset by changes in
fair value of contingent consideration of $4.5 million, of which
$1.5 million was recorded in Q4.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(h) Incremental non-GAAP tax benefit (expense) reflects
the increase to GAAP tax expense related to the non-GAAP
adjustments listed above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) Non-GAAP net income per share and net income exclude
the effect of the pro forma adjustments as detailed
above. Non-GAAP diluted net income per share and net income are
key drivers of our 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.
|
|
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:
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 30,
2012
|
|
January 1,
2012
|
|
December 30,
2012
|
|
January 1,
2012
|
GAAP gross profit
|
|
$
|
203,647
|
|
|
65.8
|
%
|
|
$
|
170,586
|
|
|
68.2
|
%
|
|
$
|
773,528
|
|
|
67.4
|
%
|
|
$
|
709,098
|
|
|
67.2
|
%
|
Stock-based compensation expense
|
|
|
2,125
|
|
|
0.7
|
%
|
|
|
1,843
|
|
|
0.7
|
%
|
|
|
8,036
|
|
|
0.7
|
%
|
|
|
7,646
|
|
|
0.7
|
%
|
Amortization of acquired intangible assets
|
|
|
4,479
|
|
|
1.5
|
%
|
|
|
3,036
|
|
|
1.3
|
%
|
|
|
14,153
|
|
|
1.2
|
%
|
|
|
12,091
|
|
|
1.1
|
%
|
Amortization of inventory revaluation costs (a)
|
|
|
1,458
|
|
|
0.5
|
%
|
|
|
-
|
|
|
-
|
|
|
|
1,458
|
|
|
0.1
|
%
|
|
|
-
|
|
|
-
|
|
Legal contingencies
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
3,021
|
|
|
0.3
|
%
|
|
|
-
|
|
|
-
|
|
Non-GAAP gross profit
|
|
$
|
211,709
|
|
|
68.5
|
%
|
|
$
|
175,465
|
|
|
70.2
|
%
|
|
$
|
800,196
|
|
|
69.7
|
%
|
|
$
|
728,835
|
|
|
69.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expense
|
|
$
|
56,907
|
|
|
18.4
|
%
|
|
$
|
45,513
|
|
|
18.2
|
%
|
|
$
|
231,025
|
|
|
20.1
|
%
|
|
$
|
196,913
|
|
|
18.7
|
%
|
Stock-based compensation expense
|
|
|
(8,001
|
)
|
|
(2.6
|
)%
|
|
|
(7,295
|
)
|
|
(2.9
|
)%
|
|
|
(30,879
|
)
|
|
(2.7
|
)%
|
|
|
(32,105
|
)
|
|
(3.0
|
)%
|
Contingent compensation expense (b)
|
|
|
(1,201
|
)
|
|
(0.4
|
)%
|
|
|
(732
|
)
|
|
(0.3
|
)%
|
|
|
(3,419
|
)
|
|
(0.2
|
)%
|
|
|
(4,799
|
)
|
|
(0.5
|
)%
|
Impairment of in-process research and development
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(21,438
|
)
|
|
(1.9
|
)%
|
|
|
-
|
|
|
-
|
|
Non-GAAP research and development expense
|
|
$
|
47,705
|
|
|
15.4
|
%
|
|
$
|
37,486
|
|
|
15.0
|
%
|
|
$
|
175,289
|
|
|
15.3
|
%
|
|
$
|
160,009
|
|
|
15.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense
|
|
$
|
79,715
|
|
|
25.8
|
%
|
|
$
|
60,918
|
|
|
24.4
|
%
|
|
$
|
285,991
|
|
|
24.9
|
%
|
|
$
|
261,843
|
|
|
24.8
|
%
|
Stock-based compensation expense
|
|
|
(14,050
|
)
|
|
(4.6
|
)%
|
|
|
(12,678
|
)
|
|
(5.1
|
)%
|
|
|
(55,409
|
)
|
|
(4.8
|
)%
|
|
|
(52,341
|
)
|
|
(4.9
|
)%
|
Contingent compensation expense (b)
|
|
|
(3,146
|
)
|
|
(1.0
|
)%
|
|
|
-
|
|
|
-
|
|
|
|
(5,732
|
)
|
|
(0.5
|
)%
|
|
|
(1,258
|
)
|
|
(0.1
|
)%
|
Amortization of acquired intangible assets
|
|
|
(932
|
)
|
|
(0.3
|
)%
|
|
|
(152
|
)
|
|
(0.1
|
)%
|
|
|
(1,388
|
)
|
|
(0.1
|
)%
|
|
|
(598
|
)
|
|
(0.1
|
)%
|
Legal contingencies
|
|
|
-
|
|
|
-
|
|
|
|
2,300
|
|
|
0.9
|
%
|
|
|
-
|
|
|
-
|
|
|
|
2,300
|
|
|
0.2
|
%
|
Non-GAAP selling, general and administrative expense
|
|
|
61,587
|
|
|
19.9
|
%
|
|
|
50,388
|
|
|
20.1
|
%
|
|
|
223,462
|
|
|
19.5
|
%
|
|
|
209,946
|
|
|
19.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating profit
|
|
$
|
59,346
|
|
|
19.2
|
%
|
|
$
|
27,299
|
|
|
10.9
|
%
|
|
$
|
200,752
|
|
|
17.5
|
%
|
|
$
|
199,461
|
|
|
18.9
|
%
|
Stock-based compensation expense
|
|
|
24,176
|
|
|
7.8
|
%
|
|
|
21,816
|
|
|
8.7
|
%
|
|
|
94,324
|
|
|
8.2
|
%
|
|
|
92,092
|
|
|
8.6
|
%
|
Amortization of acquired intangible assets
|
|
|
5,411
|
|
|
1.7
|
%
|
|
|
3,188
|
|
|
1.2
|
%
|
|
|
15,541
|
|
|
1.4
|
%
|
|
|
12,689
|
|
|
1.2
|
%
|
Unsolicited tender offer related expense
|
|
|
4,394
|
|
|
1.4
|
%
|
|
|
-
|
|
|
-
|
|
|
|
23,136
|
|
|
2.0
|
%
|
|
|
-
|
|
|
-
|
|
Contingent compensation expense (b)
|
|
|
4,347
|
|
|
1.4
|
%
|
|
|
732
|
|
|
0.3
|
%
|
|
|
9,151
|
|
|
0.8
|
%
|
|
|
6,057
|
|
|
0.6
|
%
|
Headquarter relocation expense (c)
|
|
|
2,883
|
|
|
1.0
|
%
|
|
|
30,243
|
|
|
12.1
|
%
|
|
|
26,328
|
|
|
2.3
|
%
|
|
|
41,826
|
|
|
4.0
|
%
|
Amortization of inventory revaluation costs (a)
|
|
|
1,458
|
|
|
0.5
|
%
|
|
|
-
|
|
|
-
|
|
|
|
1,458
|
|
|
0.1
|
%
|
|
|
-
|
|
|
-
|
|
Acquisition related expense (gain), net (d)
|
|
|
314
|
|
|
0.1
|
%
|
|
|
(1,523
|
)
|
|
(0.6
|
)%
|
|
|
2,774
|
|
|
0.2
|
%
|
|
|
919
|
|
|
0.1
|
%
|
Restructuring charges
|
|
|
88
|
|
|
-
|
|
|
|
8,136
|
|
|
3.3
|
%
|
|
|
3,522
|
|
|
0.3
|
%
|
|
|
8,136
|
|
|
0.8
|
%
|
Impairment of in-process research and development
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
21,438
|
|
|
1.9
|
%
|
|
|
-
|
|
|
-
|
|
Legal contingencies
|
|
|
-
|
|
|
-
|
|
|
|
(2,300
|
)
|
|
(0.9
|
)%
|
|
|
3,021
|
|
|
0.3
|
%
|
|
|
(2,300
|
)
|
|
(0.2
|
)%
|
Non-GAAP operating profit (e)
|
|
$
|
102,417
|
|
|
33.1
|
%
|
|
$
|
87,591
|
|
|
35.0
|
%
|
|
$
|
401,445
|
|
|
35.0
|
%
|
|
$
|
358,880
|
|
|
34.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP other income (expense), net
|
|
$
|
44,557
|
|
|
14.4
|
%
|
|
$
|
(7,077
|
)
|
|
(2.8
|
)%
|
|
$
|
21,856
|
|
|
1.9
|
%
|
|
$
|
(66,416
|
)
|
|
(6.3
|
)%
|
Cost-method investment related gains, net (f)
|
|
|
(45,911
|
)
|
|
(14.8
|
)%
|
|
|
-
|
|
|
-
|
|
|
|
(45,911
|
)
|
|
(4.1
|
)%
|
|
|
-
|
|
|
-
|
|
Non-cash interest expense (g)
|
|
|
8,950
|
|
|
2.8
|
%
|
|
|
8,542
|
|
|
3.4
|
%
|
|
|
35,180
|
|
|
3.1
|
%
|
|
|
32,495
|
|
|
3.0
|
%
|
Recovery of previously impaired note receivable
|
|
|
(6,000
|
)
|
|
(1.9
|
)%
|
|
|
-
|
|
|
-
|
|
|
|
(6,000
|
)
|
|
(0.5
|
)%
|
|
|
-
|
|
|
-
|
|
Loss on extinguishment of debt
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
37,611
|
|
|
3.6
|
%
|
Non-GAAP other income, net (e)
|
|
$
|
1,596
|
|
|
0.5
|
%
|
|
$
|
1,465
|
|
|
0.6
|
%
|
|
$
|
5,125
|
|
|
0.4
|
%
|
|
$
|
3,690
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The Company recorded $1.5 million in inventory
revaluation costs in conjunction with the acquisition of
BlueGnome, Ltd., which was amortized into cost of goods sold
during Q4 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Contingent compensation expense relates to contingent
payments for post-combination services associated with
acquisitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Headquarter relocation expense in Q4 2012
consists primarily of additional cease-use loss recorded due to a
delay in the sublease of our prior headquarters and accretion of
interest expense on lease exit liability recorded upon vacating
our prior headquarters. Headquarter relocation expense in fiscal
year 2012 consists primarily of cease-use loss recorded upon
vacating our prior headquarters, double rent expense during the
transition to our new headquarter facility, accretion of interest
expense on lease exit liability, and moving costs. Headquarter
relocation expense recorded in Q4 2011 and fiscal year 2011
consisted of cease-use loss, accelerated depreciation expense and
double rent expense during the transition to the new facility.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Acquisition related expense (gain), net during fiscal
year 2012 includes changes in fair value of contingent
consideration of $2.0 million, of which $0.3 million was recorded
in Q4, and transaction costs of $0.8 million related to the
acquisition of BlueGnome Ltd. Acquisition related (gain) expense,
net in the fiscal year 2011 consists of an acquired in-process
research and development charge of $5.4 million related to a
milestone payment for a prior acquisition, offset by changes in
fair value of contingent consideration of $4.5 million, of which
$1.5 million was recorded in Q4.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) 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 our past
and future core operating performance. Non-GAAP gross profit,
included within the non-GAAP operating profit, is a key measure of
the effectiveness and efficiency of our manufacturing processes,
product mix and the average selling prices of our products and
services.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f) Cost-method investment related gain, net, consists of
$48.6 million in gains from sale of minority interest in deCODE
Genetics offset by $2.7 million in impairment of another
cost-method investment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g) Non-cash interest expense is calculated in accordance
with the authoritative accounting guidance for convertible debt
instruments that may be settled in cash.
|
|
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 SEC,
including the Company's Form 10-K for the fiscal year ended
December 30, 2012 to be filed with the SEC, and the Company's Form
10-Q for the fiscal quarters ended April 1, 2012, July 1, 2012,
and September 30, 2012. The Company assumes no obligation to
update any forward-looking statements or information.
|
|
|
|
|
|
|
|
|
Fiscal Year 2013
|
Gross Margin
|
|
|
Non-GAAP gross margin
|
|
70 %
|
Stock-based compensation expense
|
|
(1)%
|
Amortization of acquired intangible assets
|
|
(1)%
|
GAAP gross margin
|
|
68 %
|
|
|
|
Diluted net income per share
|
|
|
Non-GAAP diluted net income per share
|
|
$1.55 - $1.62
|
Non-cash interest expense (a)
|
|
(0.17)
|
Amortization of acquired intangible assets
|
|
(0.12)
|
Contingent compensation expense (b)
|
|
(0.06)
|
Unsolicited tender offer related expense
|
|
(0.05)
|
Headquarter relocation expense (c)
|
|
(0.01)
|
Pro forma impact of weighted average shares (d)
|
|
(0.01)
|
GAAP diluted net income per share (e)
|
|
$1.13 - $1.20
|
|
|
|
|
|
|
|
|
|
(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) Contingent compensation expense represents contingent
consideration for post-combination services associated with
acquisitions.
|
|
(c) We expect to incur additional headquarter relocation
expenses, consisting primarily of accretion of interest expense on
such cease-use liabilities.
|
|
(d) Pro forma impact of weighted average shares represents
the estimated impact of double dilution associated with the
accounting treatment of the Company's outstanding convertible debt
and the corresponding call option overlay.
|
|
(e) Reconciliation items from non-GAAP to GAAP diluted net
income per share do not reflect potential impact from Verinata
acquisition.
|

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