UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 21, 2015
Illumina, Inc.
(Exact name of registrant as specified in its charter)

001-35406
(Commission File Number)
 
 
 
 
 
 
Delaware
 
33-0804655
(State or other jurisdiction of incorporation)
 
(I.R.S. Employer Identification No.)

5200 Illumina Way, San Diego, CA 92122
(Address of principal executive offices) (Zip code)

(858) 202-4500
(Registrant’s telephone number, including area code)

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






TABLE OF CONTENTS








Item 2.02 Results of Operations and Financial Condition.

On July 21, 2015, Illumina, Inc. (the "Company") issued a press release announcing financial results for the second quarter ended June 28, 2015. The full text of the Company’s press release is attached hereto as Exhibit 99.1.

The information furnished pursuant to this Item 2.02 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.







Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

99.1    Press release dated July 21, 2015 announcing Illumina, Inc.’s financial results for the second quarter ended June 28, 2015.







SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
 
 
ILLUMINA, INC.
 
Date:
July 21, 2015
By:  
/s/ MARC A. STAPLEY
 
 
 
Marc A. Stapley
 
 
 
Senior Vice President and Chief Financial Officer 







Exhibit Index

Exhibit Number
 
Description
99.1

 
Press release dated July 21, 2015 announcing Illumina, Inc.’s financial results for the second quarter ended June 28, 2015.





Illumina Reports Financial Results for Second Quarter of Fiscal Year 2015

San Diego -- (BUSINESS WIRE) - July 21, 2015 - Illumina, Inc. (NASDAQ:ILMN) today announced its financial results for the second quarter of fiscal year 2015.

Second quarter 2015 results:
Revenue of $539 million, a 21% increase compared to $448 million in the second quarter of 2014, and an increase of 25% on a constant currency basis
GAAP net income for the quarter of $102 million, or $0.69 per diluted share, compared to $47 million, or $0.31 per diluted share, for the second quarter of 2014
Non-GAAP net income for the quarter of $120 million, or $0.80 per diluted share, compared to $85 million, or $0.57 per diluted share, for the second quarter of 2014 (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 $171 million and free cash flow of $130 million for the quarter

Gross margin in the second quarter of 2015 was 69.8% compared to 67.1% in the prior year period. Excluding the effect of non-cash stock compensation expense, amortization of acquired intangible assets, and legal contingencies, non-GAAP gross margin was 72.4% for the second quarter of 2015 compared to 70.9% in the prior year period.

Research and development (R&D) expenses for the second quarter of 2015 were $96.2 million compared to $83.0 million in the prior year period. R&D expenses included $10.7 million and $12.8 million of non-cash stock compensation expense in the second quarters of 2015 and 2014, respectively. Excluding these charges and contingent compensation, R&D expenses as a percentage of revenue were 15.8% compared to 15.6% in the prior year period.

Selling, general and administrative (SG&A) expenses for the second quarter of 2015 were $124.4 million compared to $114.6 million in the prior year period. SG&A expenses included $19.6 million and $20.8 million of non-cash stock compensation expense in the second quarters of 2015 and 2014, respectively. Excluding these charges and amortization of acquired intangible assets, SG&A expenses as a percentage of revenue were 19.2% compared to 20.5% in the prior year period.

Depreciation and amortization expenses were $30.7 million and capital expenditures were $41.4 million during the second quarter of 2015. The Company ended the quarter with $1.51 billion in cash, cash equivalents and short-term investments, compared to $1.34 billion as of December 28, 2014.




“We delivered solid financial results in the second quarter with increasing demand for our new products,” stated Jay Flatley, CEO. “The fundamentals of our business are strong and we remain focused on innovation and market expansion.”

Updates since our last earnings release:
Announced an agreement with Annoroad to jointly develop advanced clinical applications for non-invasive prenatal testing in China based on our next-generation sequencing technology
Launched Illumina SeqLab for large-scale human whole genome sequencing operations, an integrated solution for customers with HiSeq X™ systems
Published a preliminary study in The Journal of the American Medical Association which retrospectively correlated 10 cases of occult maternal cancer among pregnant women receiving an “aneuploidy detected” or “aneuploidy suspected” positive results on the verifi® noninvasive Prenatal Test (NIPT)
Entered into a collaboration with Merck KGaA and Genea to advance excellence in fertility technologies and processes within the assisted reproductive treatment (ART) laboratory
Further strengthened Illumina's management team by appointing Sanjay Chikarmane as Senior Vice President and General Manager of the Enterprise Informatics business unit

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 2015, the Company continues to project approximately 20% total revenue growth, including a 3% negative impact from foreign exchange assuming current currency exchange rates. The Company has increased its projections for non-GAAP earnings per diluted share to $3.39 to $3.45.

Quarterly conference call information
The conference call will begin at 2:00 pm Pacific Time (5:00 pm Eastern Time) on Tuesday, July 21, 2015. Interested parties may listen to the call by dialing 877.703.6110 (passcode: 79927332), or if outside North America by dialing 1.857.244.7309 (passcode: 79927332). 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 6:00 pm Pacific Time (9:00 pm Eastern Time) on July 21, 2015 through July 28, 2015 by dialing 888.286.8010 (passcode: 76382666), or if outside North America by dialing 1.617.801.6888 (passcode: 76382666).




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) our ability to maintain our revenue levels and profitability during periods of research funding reduction or uncertainty and adverse economic and business conditions, 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.
Investors:
Rebecca Chambers
858.255.5243
rchambers@illumina.com
or
Media:
Eric Endicott
858.882.6822
pr@illumina.com



Illumina, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
 
 
 
 
 
June 28,
2015
 
December 28,
2014
ASSETS
(unaudited)
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
591,057

 
$
636,154

Short-term investments
919,325

 
702,217

Accounts receivable, net
368,611

 
289,458

Inventory
223,620

 
191,144

Deferred tax assets, current portion
51,676

 
40,786

Prepaid expenses and other current assets
83,402

 
29,844

Total current assets
2,237,691

 
1,889,603

Property and equipment, net
302,840

 
265,264

Goodwill
724,904

 
724,904

Intangible assets, net
288,177

 
314,500

Deferred tax assets, long-term portion
66,723

 
49,848

Other assets
82,790

 
95,521

Total assets
$
3,703,125

 
$
3,339,640

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
107,884

 
$
82,626

Accrued liabilities
314,722

 
335,276

Long-term debt, current portion
302,447

 
304,256

Total current liabilities
725,053

 
722,158

Long-term debt
1,000,829

 
986,780

Other long-term liabilities
183,331

 
167,904

Stockholders’ equity
1,793,912

 
1,462,798

Total liabilities and stockholders’ equity
$
3,703,125

 
$
3,339,640




Illumina, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
 
June 28,
2015
 
June 29,
2014
 
June 28,
2015
 
June 29,
2014
Revenue:
 
 
 
 
 
 
 
 
Product revenue
$
462,760

 
$
390,808

 
$
921,887

 
$
753,019

 
Service and other revenue
76,618

 
56,760

 
156,056

 
115,330

 
 
Total revenue
539,378

 
447,568

 
1,077,943

 
868,349

Cost of revenue:
 
 
 
 
 
 
 
 
Cost of product revenue (a)
119,459

 
114,307

 
239,083

 
225,748

 
Cost of service and other revenue (a)
32,170

 
23,176

 
64,699

 
44,689

 
Amortization of acquired intangible assets
11,384

 
9,545

 
22,769

 
19,080

 
 
Total cost of revenue
163,013

 
147,028

 
326,551

 
289,517

 
 
 
Gross profit
376,365

 
300,540

 
751,392

 
578,832

Operating expense:
 
 
 
 
 
 
 
 
Research and development (a)
96,182

 
82,985

 
187,954

 
160,026

 
Selling, general and administrative (a)
124,441

 
114,649

 
240,758

 
224,222

 
Acquisition related expense (gain), net
2,329

 
(225
)
 
(7,558
)
 
(1,238
)
 
Headquarter relocation
1,480

 
2,892

 
2,179

 
3,487

 
 
Total operating expense
224,432

 
200,301

 
423,333

 
386,497

 
 
 
Income from operations
151,933

 
100,239

 
328,059

 
192,335

Other expense, net
(10,761
)
 
(39,773
)
 
(8,841
)
 
(48,081
)
 
 
 
Income before income taxes
141,172

 
60,466

 
319,218

 
144,254

Provision for income taxes
38,925

 
13,861

 
80,313

 
37,672

 
 
 
Net income
$
102,247

 
$
46,605

 
$
238,905

 
$
106,582

Net income per basic share
$
0.71

 
$
0.36

 
$
1.66

 
$
0.82

Net income per diluted share
$
0.69

 
$
0.31

 
$
1.61

 
$
0.71

Shares used in calculating basic net income per share
144,220

 
130,583

 
143,996

 
129,365

Shares used in calculating diluted net income per share
148,969

 
149,121

 
148,826

 
149,870

 
 
 
 
 
 
 
 
 
 
 
(a) Includes total stock-based compensation expense for stock-based awards:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
 
June 28,
2015
 
June 29,
2014
 
June 28,
2015
 
June 29,
2014
 
Cost of product revenue
$
2,113

 
$
2,149

 
$
4,445

 
$
4,244

 
Cost of service and other revenue
466

 
284

 
745

 
569

 
Research and development
10,747

 
12,785

 
22,054

 
24,454

 
Selling, general and administrative
19,631

 
20,778

 
37,631

 
40,153

 
 
Stock-based compensation expense before taxes
$
32,957

 
$
35,996

 
$
64,875

 
$
69,420




Illumina, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 28,
2015
 
June 29,
2014
 
June 28,
2015
 
June 29,
2014
Net cash provided by operating activities (a)
 
$
171,445

 
$
178,030

 
$
238,224

 
$
215,117

Net cash (used in) provided by investing activities
 
(142,470
)
 
114,777

 
(296,617
)
 
(29,610
)
Net cash provided by (used in) financing activities (a)
 
27,810

 
(136,521
)
 
15,276

 
(222,445
)
Effect of exchange rate changes on cash and cash equivalents
 
735

 
422

 
(1,980
)
 
522

Net increase (decrease) in cash and cash equivalents
 
57,520

 
156,708

 
(45,097
)
 
(36,416
)
Cash and cash equivalents, beginning of period
 
533,537

 
518,513

 
636,154

 
711,637

Cash and cash equivalents, end of period
 
$
591,057

 
$
675,221

 
$
591,057

 
$
675,221

 
 
 
 
 
 
 
 
 
Calculation of free cash flow:
 
 
 
 
 
 
 
 
Net cash provided by operating activities (a)
 
$
171,445

 
$
178,030

 
$
238,224

 
$
215,117

Purchases of property and equipment
 
(41,351
)
 
(23,324
)
 
(77,902
)
 
(42,336
)
Free cash flow (b)
 
$
130,094

 
$
154,706

 
$
160,322

 
$
172,781

______________________________________________________________________________________________________
(a) Net cash provided by operating activities excludes excess tax benefit related to stock-based compensation of $106.2 million in the first half of 2015, of which $29.8 million was recorded in Q2, and $77.3 million in the first half of 2014, of which $26.8 million was recorded in Q2. 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 NET INCOME PER SHARE:
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 28,
2015
 
June 29,
2014
 
June 28,
2015
 
June 29,
2014
GAAP net income per share - diluted
 
$
0.69

 
$
0.31

 
$
1.61

 
$
0.71

Adjustments to net income:
 
 
 
 
 
 
 
 
Amortization of acquired intangible assets
 
0.08

 
0.08

 
0.17

 
0.17

Non-cash interest expense (a) 
 
0.07

 
0.06

 
0.14

 
0.12

Acquisition related expense (gain), net (b)
 
0.02

 

 
(0.05
)
 
(0.01
)
Headquarter relocation
 
0.01

 
0.02

 
0.01

 
0.02

Loss on extinguishment of debt
 

 
0.21

 

 
0.21

Legal contingencies
 

 
0.03

 

 
0.07

Contingent compensation expense (c)
 

 

 

 
0.02

Cost-method investment gain, net (d)
 

 

 
(0.09
)
 

Incremental non-GAAP tax expense (e)
 
(0.07
)
 
(0.14
)
 
(0.08
)
 
(0.21
)
Non-GAAP net income per share - diluted (f)
 
$
0.80

 
$
0.57

 
$
1.71

 
$
1.10

Shares used in calculating non-GAAP diluted net income per share
 
148,969

 
149,121

 
148,826

 
149,546

 
 
 
 
 
 
 
 
 
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME:
 
 
 
 
GAAP net income
 
$
102,247

 
$
46,605

 
$
238,905

 
$
106,582

Amortization of acquired intangible assets
 
12,772

 
11,507

 
25,659

 
24,698

Non-cash interest expense (a)
 
10,227

 
9,143

 
20,415

 
18,165

Acquisition related expense (gain), net (b)
 
2,329

 
(225
)
 
(7,558
)
 
(1,238
)
Headquarter relocation
 
1,480

 
2,892

 
2,179

 
3,487

Loss on extinguishment of debt
 
233

 
31,360

 
233

 
31,360

Legal contingencies
 

 
4,817

 

 
10,663

Contingent compensation expense (c)
 

 
496

 

 
3,336

Cost-method investment gain, net (d)
 

 

 
(12,582
)
 

Incremental non-GAAP tax expense (e)
 
(9,617
)
 
(22,025
)
 
(12,204
)
 
(32,436
)
Non-GAAP net income (f)
 
$
119,671

 
$
84,570

 
$
255,047

 
$
164,617

 
 
 
 
 
 
 
 
 
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP DILUTED NUMBER OF SHARES:
Weighted average shares used in calculation of GAAP diluted net income per share
 
148,969

 
149,121

 
148,826

 
149,870

Weighted average dilutive potential common shares issuable of redeemable convertible senior notes
 

 

 

 
(324
)
Weighted average shares used in calculation of non-GAAP diluted net income per share
 
148,969

 
149,121

 
148,826

 
149,546

______________________________________________________________________________________________________

(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) Acquisition related expense (gain), net consists of changes in fair value of contingent consideration and transaction related costs.

(c) Contingent compensation expense relates to contingent payments for post-combination services associated with prior period acquisitions.




(d) Cost-method investment gain, net consists primarily of a gain on the sale of an investment partially offset by impairment charges on other investments.

(e) Incremental non-GAAP tax expense reflects the tax impact related to the non-GAAP adjustments listed above.

(f) Non-GAAP net income and diluted net income per share exclude the effect of the pro forma adjustments as detailed above. Non-GAAP net income and diluted net income per share 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.



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
 
Six Months Ended
 
June 28,
2015
 
June 29,
2014
 
June 28,
2015
 
June 29,
2014
GAAP gross profit
$
376,365

 
69.8
 %
 
$
300,540

 
67.1
 %
 
$
751,392

 
69.7
 %
 
$
578,832

 
66.7
 %
Stock-based compensation expense
2,579

 
0.5
 %
 
2,433

 
0.6
 %
 
5,190

 
0.5
 %
 
4,813

 
0.5
 %
Amortization of acquired intangible assets
11,384

 
2.1
 %
 
9,545

 
2.1
 %
 
22,769

 
2.1
 %
 
19,080

 
2.2
 %
Legal contingencies

 

 
4,817

 
1.1
 %
 

 

 
10,663

 
1.2
 %
Non-GAAP gross profit (a)
$
390,328

 
72.4
 %
 
$
317,335

 
70.9
 %
 
$
779,351

 
72.3
 %
 
$
613,388

 
70.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP research and development expense
$
96,182

 
17.8
 %
 
$
82,985

 
18.5
 %
 
$
187,954

 
17.4
 %
 
$
160,026

 
18.4
 %
Stock-based compensation expense
(10,747
)
 
(2.0
)%
 
(12,785
)
 
(2.8
)%
 
(22,054
)
 
(2.0
)%
 
(24,454
)
 
(2.8
)%
Contingent compensation expense (b)

 

 
(496
)
 
(0.1
)%
 

 

 
(580
)
 
(0.1
)%
Non-GAAP research and development expense
$
85,435

 
15.8
 %
 
$
69,704

 
15.6
 %
 
$
165,900

 
15.4
 %
 
$
134,992

 
15.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP selling, general and administrative expense
$
124,441

 
23.1
 %
 
$
114,649

 
25.6
 %
 
$
240,758

 
22.3
 %
 
$
224,222

 
25.8
 %
Stock-based compensation expense
(19,631
)
 
(3.6
)%
 
(20,778
)
 
(4.6
)%
 
(37,631
)
 
(3.5
)%
 
(40,153
)
 
(4.7
)%
Amortization of acquired intangible assets
(1,388
)
 
(0.3
)%
 
(1,962
)
 
(0.5
)%
 
(2,890
)
 
(0.2
)%
 
(5,618
)
 
(0.6
)%
Contingent compensation expense (b)

 

 

 

 

 

 
(2,756
)
 
(0.3
)%
Non-GAAP selling, general and administrative expense
$
103,422

 
19.2
 %
 
$
91,909

 
20.5
 %
 
$
200,237

 
18.6
 %
 
$
175,695

 
20.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP operating profit
$
151,933

 
28.2
 %
 
$
100,239

 
22.4
 %
 
$
328,059

 
30.4
 %
 
$
192,335

 
22.1
 %
Stock-based compensation expense
32,957

 
6.1
 %
 
35,996

 
8.0
 %
 
64,875

 
6.0
 %
 
69,420

 
8.0
 %
Amortization of acquired intangible assets
12,772

 
2.4
 %
 
11,507

 
2.6
 %
 
25,659

 
2.4
 %
 
24,698

 
2.8
 %
Acquisition related expense (gain), net (c)
2,329

 
0.4
 %
 
(225
)
 
(0.1
)%
 
(7,558
)
 
(0.7
)%
 
(1,238
)
 
(0.1
)%
Headquarter relocation
1,480

 
0.3
 %
 
2,892

 
0.7
 %
 
2,179

 
0.2
 %
 
3,487

 
0.5
 %
Legal contingencies

 

 
4,817

 
1.1
 %
 

 

 
10,663

 
1.2
 %
Contingent compensation expense (b)

 

 
496

 
0.1
 %
 

 

 
3,336

 
0.4
 %
Non-GAAP operating profit (a)
$
201,471

 
37.4
 %
 
$
155,722

 
34.8
 %
 
$
413,214

 
38.3
 %
 
$
302,701

 
34.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP other expense, net
$
(10,761
)
 
(2.0
)%
 
$
(39,773
)
 
(8.9
)%
 
$
(8,841
)
 
(0.8
)%
 
$
(48,081
)
 
(5.5
)%
Non-cash interest expense (d)
10,227

 
1.9
 %
 
9,143

 
2.1
 %
 
20,415

 
1.9
 %
 
18,165

 
2.1
 %
Loss on extinguishment of debt
233

 

 
31,360

 
7.0
 %
 
233

 

 
31,360

 
3.6
 %
Cost-method investment gain, net (e)

 

 

 

 
(12,582
)
 
(1.2
)%
 

 

Non-GAAP other (expense) income, net (a)
$
(301
)
 
(0.1
)%
 
$
730

 
0.2
 %
 
$
(775
)
 
(0.1
)%
 
$
1,444

 
0.2
 %
______________________________________________________________________________________________________

(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 (expense) 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 core operating performance.

(b) Contingent compensation expense relates to contingent payments for post-combination services associated with prior period acquisitions.

(c) Acquisition related expense (gain), net consists of changes in fair value of contingent consideration and transaction related costs.

(d) Non-cash interest expense is calculated in accordance with the authoritative accounting guidance for convertible debt instruments that may be settled in cash.

(e) Cost-method investment gain, net consists primarily of a gain on the sale of an investment partially offset by impairment charges on other investments.



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 December 28, 2014, and the Company’s Form 10-Q for the fiscal quarter ended March 29, 2015. The Company assumes no obligation to update any forward-looking statements or information.

 
Fiscal Year 2015
Diluted net income per share
 
Non-GAAP diluted net income per share
$3.39 - $3.45
Amortization of acquired intangible assets
(0.21)
Non-cash interest expense (a)
(0.17)
Cost-method investment gain, net (b)
0.06
Acquisition related gain, net (c)
0.03
Headquarter relocation (d)
(0.02)
GAAP diluted net income per share
$3.08 - $3.14

______________________________________________________________________________________________________

(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) Cost-method investment gain, net consists primarily of a gain on the sale of an investment partially offset by impairment charges on other investments.

(c) Acquisition related gain, net consists of changes in fair value of contingent consideration.

(d) Headquarter relocation represents accretion of interest expense on lease exit liability and changes in estimate of such liability.

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