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:
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 ) —
(a) Legal contingencies in fiscal 2015 represent charges
related to patent litigation. Legal contingencies recorded in
fiscal 2014 primarily represent a gain related to the settlement of
our patent litigation with Syntrix Biosystems, Inc., or Syntrix,
partially offset by the expenses recorded upon our litigation
settlement and pooling of patents with Sequenom, Inc., or Sequenom.
The gain associated with the Syntrix settlement was recorded
partially as a reversal of cost of sales and partially as a
reduction of operating expense. The upfront payments to Sequenom
were recorded in research and development expense.
(b) Impairments in fiscal 2014 consisted of a gain
recorded in cost of sales on an asset sale associated with a
non-core product line discontinued in 2013, partially offset by an
intangible asset impairment recorded in research and development
expense.
(c) 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, 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.
(d) Contingent compensation expense relates to contingent
payments for post-combination services associated with an
acquisition.
(e) Acquisition related expense (gain), net consists of
changes in fair value of contingent consideration and transaction
related costs.
(f) Non-cash interest expense is calculated in accordance
with the authoritative accounting guidance for convertible debt
instruments that may be settled in cash.
(g) Cost-method investment gain, net consists primarily
of gains on disposition of investments 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 quarters ended March 29, 2015, June 28, 2015, and
September 27, 2015. The Company assumes no obligation to update any
forward-looking statements or information.
Fiscal Year 2016 Gross
margin Non-GAAP gross margin 73% Amortization of acquired
intangible assets (2)%
GAAP gross margin 71%
Operating margin Non-GAAP operating margin
(a) 33%
Stock-based compensation expense (6)% Amortization of acquired
intangible assets (2)%
GAAP operating margin 25%
Diluted earnings per share attributable to Illumina
stockholders Non-GAAP diluted earnings per share attributable
to Illumina stockholders $3.55 - $3.65 Amortization of acquired
intangible assets (0.32) Non-cash interest expense
(b)
(0.20) Contingent compensation
(c) (0.02) Headquarter
relocation
(d) (0.01) Incremental non-GAAP tax expense
(e) 0.19
GAAP diluted earnings per share attributable to
Illumina stockholders $3.19 - $3.29
(a) Operating margin implied at the mid-point of guidance
provided for non-GAAP diluted earnings per share.
(b) Non-cash interest expense is calculated in accordance
with the authoritative accounting guidance for convertible debt
instruments that may be settled in cash.
(c) Contingent compensation expense relates to contingent
payments for post-combination services associated with an
acquisition.
(d) Headquarter relocation represents accretion of
interest expense on lease exit liability and changes in estimate of
such liability.
(e) Incremental non-GAAP tax expense reflects the tax
impact related to the non-GAAP adjustments listed above.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160202006638/en/
Illumina, Inc.Investors:Rebecca
Chambers858.255.5243rchambers@illumina.comorMedia:Eric
Endicott858.882.6822pr@illumina.com
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