Illumina, Inc. (NASDAQ:ILMN) today announced its full financial
results for the fourth quarter and fiscal year 2016.
Fourth quarter 2016 results:
- Revenue of $619 million, a 5% increase
compared to $592 million in the fourth quarter of 2015
- GAAP net income attributable to
Illumina stockholders for the quarter of $124 million, or $0.84 per
diluted share, compared to $104 million, or $0.70 per diluted
share, for the fourth quarter of 2015
- Non-GAAP net income attributable to
Illumina stockholders for the quarter of $126 million, or $0.85 per
diluted share, compared to $121 million, or $0.81 per diluted
share, for the fourth quarter of 2015 (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 $280
million and free cash flow of $199 million for the quarter,
compared to $240 million and $205 million, respectively, in the
prior year period
Gross margin in the fourth quarter of 2016 was 67.7% compared to
69.4% in the prior year period. Excluding the effect of non-cash
stock compensation expense and amortization of acquired intangible
assets, non-GAAP gross margin was 69.9% for the fourth quarter of
2016 compared to 71.7% in the prior year period.
Research and development (R&D) expenses for the fourth
quarter of 2016 were $129.9 million, or 21.0% of revenue, compared
to $114.3 million, or 19.3% of revenue, in the prior year period.
R&D expenses included $9.4 million and $10.8 million of
non-cash stock compensation expense in the fourth quarters of 2016
and 2015, respectively. Excluding these charges and contingent
compensation, R&D expenses as a percentage of revenue were
19.5%, including 2.5% attributable to GRAIL and Helix. This
compares to 17.5% in the prior year period.
Selling, general and administrative (SG&A) expenses for the
fourth quarter of 2016 were $146.1 million, or 23.6% of revenue,
compared to $147.3 million, or 24.9% of revenue, in the prior year
period. SG&A expenses included $15.2 million and $21.4 million
of non-cash stock compensation expense in the fourth quarters of
2016 and 2015, respectively. Excluding these charges, amortization
of acquired intangible assets, and contingent compensation,
SG&A expenses as a percentage of revenue were 20.9%, including
1.6% attributable to GRAIL and Helix. This compares to 20.9% in the
prior year period.
Depreciation and amortization expenses were $37.4 million and
capital expenditures for free cash flow purposes were $81.5 million
during the fourth quarter of 2016, which excludes an increase
of $24.6 million in property and equipment recorded under
build-to-suit lease accounting since such expenses were paid for by
the landlord. At the close of the quarter, the company held $1.56
billion in cash, cash equivalents and short-term investments,
compared to $1.39 billion as of January 3, 2016.
Fiscal 2016 results:
- Revenue of $2,398 million, an 8%
increase compared to $2,220 million in fiscal 2015
- GAAP net income attributable to
Illumina stockholders of $463 million, or $3.07 per diluted share,
compared to $462 million, or $3.10 per diluted share, in fiscal
2015
- Non-GAAP net income attributable to
Illumina stockholders of $503 million, or $3.33 per diluted share,
compared to $495 million, or $3.32 per diluted share, in fiscal
2015 (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 $687
million and free cash flow of $427 million for the fiscal year,
compared to $660 million and $517 million, respectively, in the
prior year
Gross margin for fiscal 2016 was 69.5% compared to 69.8% in the
prior year. Excluding the effect of non-cash stock compensation
expense and amortization of acquired intangible assets, non-GAAP
gross margin was 71.7% for fiscal 2016 compared to 72.4% in the
prior year period.
Research and development (R&D) expenses for fiscal 2016 were
$504.4 million compared to $401.5 million in the prior year.
R&D expenses included $42.3 million and $42.0 million of
non-cash stock compensation expense in fiscal 2016 and 2015,
respectively. Excluding these charges and contingent compensation,
R&D expenses as a percentage of revenue were 19.3%, including
1.8% attributable to GRAIL and Helix. This compares to 16.2% in the
prior year period.
Selling, general and administrative (SG&A) expenses for
fiscal 2016 were $583.0 million compared to $524.7 million in the
prior year. SG&A expenses included $76.1 million and $79.1
million of non-cash stock compensation expense in fiscal 2016 and
2015, respectively. Excluding these charges, amortization of
acquired intangible assets, and contingent compensation, SG&A
expenses as a percentage of revenue were 20.8%, including 1.2%
attributable to GRAIL and Helix. This compares to 19.8% in the
prior year period.
“We ended 2016 on a stronger note than we anticipated, with
robust performance across sequencing consumables and microarrays,”
stated Francis de Souza, President and CEO. “We also made
significant progress on key R&D programs as evidenced by the
launch of NovaSeq, a brand new architecture that delivers the most
powerful, flexible sequencer ever created, once again redefining
the trajectory of sequencing.”
Updates since our last earnings release:
- Launched the NovaSeq System™, an
entirely new scalable high throughput architecture designed to one
day usher in the $100 genome
- Announced the launch of
the Illumina® Bio-Rad® Single-Cell Sequencing Solution, the
first next-generation sequencing (NGS) workflow for single-cell
analysis
- Launched TruSight® Tumor 170, a 170
gene next-generation sequencing solution to support a multi-analyte
approach and provide a more thorough picture of a tumor’s genomic
landscape
- Applied the CE mark to our VeriSeq™
NIPT Analysis Software, designed for larger batches of 48
samples
- Entered into a strategic collaboration
with Philips to integrate Illumina’s sequencing systems for
large-scale analysis of genetic variation and function and Philips’
IntelliSpace Genomics clinical informatics platform
- Partnered with IBM to expand access to
genome data interpretation by integrating Watson for Genomics into
Illumina’s BaseSpace Sequence Hub and tumor sequencing process
- Announced that GRAIL has received
indications of interest to invest approximately $1B in its Series B
financing, which is intended to close prior to the end of the first
quarter
- Announced several key senior
appointments to our executive team: Garret Hampton as EVP, Clinical
Genomics Group, Sam Samad as Senior Vice President and Chief
Financial Officer, and Jonathan Seaton as Senior Vice President of
Corporate and Business Development
- Appointed Caroline Dorsa to the
company’s Board of Directors and the Audit Committee of the
Board
Financial outlook and guidance
The non-GAAP financial guidance discussed below reflects certain
pro forma adjustments to assist in analyzing and assessing our
operational performance. Please see our Reconciliation of Non-GAAP
Financial Guidance included in this release for a reconciliation of
the GAAP and non-GAAP financial measures.
For fiscal 2017, the company is projecting 10% to
12% revenue growth, GAAP earnings per diluted share
attributable to Illumina stockholders of $3.25 to $3.35 and
non-GAAP earnings per diluted share attributable to Illumina
stockholders of $3.60 to $3.70. Our annual guidance
assumes first quarter revenue of $580 million to $595 million, GAAP
earnings per diluted share attributable to Illumina stockholders of
$0.51 to $0.56 and non-GAAP earnings per diluted share attributable
to Illumina stockholders of $0.60 to $0.65.
All earnings per diluted share guidance includes the
consolidated results of GRAIL in the first quarter, with the
exception of any one-time items associated with the expected close
of the Series B financing.
Quarterly conference call information
The conference call will begin at 2:00 pm Pacific Time (5:00 pm
Eastern Time) on Tuesday, January 31, 2017. Interested parties may
listen to the call by dialing 888.771.4371 (passcode: 44094804), or
if outside North America by dialing +1.847.585.4405 (passcode:
44094804). 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 4:30 pm
Pacific Time (7:30 pm Eastern Time) on January 31, 2017 through
February 7, 2017 by dialing 888.843.7419 (passcode: 44094804), or
if outside North America by dialing +1.630.652.3042 (passcode:
44094804).
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 has excluded
the effects of these items in non-GAAP measures to assist investors
in analyzing and assessing past and future operating performance.
Additionally, non-GAAP net income attributable to Illumina
stockholders and diluted earnings per share attributable to
Illumina stockholders are key components of the financial metrics
utilized by the company’s board of directors to measure, in part,
management’s performance and determine significant elements of
management’s compensation.
The company encourages investors to carefully consider its
results under GAAP, as well as its supplemental non-GAAP
information and the reconciliation between these presentations, to
more fully understand its business. Reconciliations between GAAP
and non-GAAP results are presented in the tables of this
release.
Use of forward-looking statements
This release contains forward-looking statements that involve
risks and uncertainties, such as Illumina’s expectations regarding
the launch of any products and the future cost of genome
sequencing. 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) achievement and timing of
the planned deconsolidation of GRAIL, Inc.’s financial results in
our financial statements; (iv) our ability to successfully identify
and integrate acquired technologies, products, or businesses; (v)
our expectations and beliefs regarding future conduct and growth of
the business and the markets in which we operate; (vi) challenges
inherent in developing, manufacturing, and launching new products
and services, including the timing of customer orders and impact on
existing products and services; and (vii) 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 1, January
3, 2017 2016 ASSETS (unaudited)
Current assets: Cash and cash equivalents $ 734,516 $ 768,770
Short-term investments 824,208 617,450 Accounts receivable, net
381,316 385,529 Inventory 300,170 270,777 Prepaid expenses and
other current assets 77,881 54,297 Total current
assets 2,318,091 2,096,823 Property and equipment, net 713,334
342,694 Goodwill 775,995 752,629 Intangible assets, net 242,652
273,621 Deferred tax assets 123,317 134,515 Other assets
107,211 87,465 Total assets $ 4,280,600 $ 3,687,747
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
Accounts payable $ 137,930 $ 139,226 Accrued liabilities 342,751
386,844 Build-to-suit lease liability 222,734 9,495 Long-term debt,
current portion 1,250 74,929 Total current
liabilities 704,665 610,494 Long-term debt 1,047,805 1,015,649
Other long-term liabilities 213,955 180,505 Redeemable
noncontrolling interests 43,940 32,546 Stockholders’ equity
2,270,235 1,848,553 Total liabilities and stockholders’
equity $ 4,280,600 $ 3,687,747
Illumina, Inc.
Condensed Consolidated Statements of Income (In
thousands, except per share amounts) (unaudited)
Three Months Ended Years Ended January
1, January 3, January 1, January
3, 2017 2016
2017 2016 Revenue: Product
revenue $ 525,581 $ 497,922 $ 2,031,997 $ 1,890,633 Service and
other revenue 93,766 93,626
366,376 329,129 Total revenue 619,347
591,548 2,398,373
2,219,762 Cost of revenue: Cost of product revenue
(a) 151,343 130,775 534,199 490,812 Cost of service and
other revenue
(a) 37,606 39,561 154,762 133,850 Amortization
of acquired intangible assets 10,959 10,853
42,964 45,810 Total cost of
revenue 199,908 181,189 731,925
670,472 Gross profit 419,439
410,359 1,666,448 1,549,290
Operating expense: Research and development
(a)
129,915 114,347 504,415 401,527 Selling, general and administrative
(a) 146,091 147,251 583,005 524,657 Legal contingencies —
4,000 (9,490 ) 19,000 Headquarter relocation 417 436 1,486 (2,611 )
Acquisition related expense (gain), net — 325
— (6,124 ) Total operating expense
276,423 266,359 1,079,416
936,449 Income from operations 143,016 144,000
587,032 612,841 Other expense, net (8,773 ) (8,993 )
(25,854 ) (29,699 ) Income before income taxes
134,243 135,007 561,178 583,142 Provision for income taxes
26,701 32,143 133,088
125,752 Consolidated net income 107,542 102,864 428,090
457,390 Add: Net loss attributable to noncontrolling interests
16,220 1,613 34,559
4,169 Net income attributable to Illumina
stockholders $ 123,762 $ 104,477 $ 462,649 $
461,559 Net income attributable to Illumina stockholders for
earnings per share
(b) $ 123,884 $ 104,477 $
454,106 $ 461,526 Earnings per share attributable to
Illumina stockholders: Basic $ 0.84 $ 0.72 $ 3.09 $ 3.19 Diluted $
0.84 $ 0.70 $ 3.07 $ 3.10 Shares used in computing earnings per
common share: Basic 146,804 145,963 146,788 144,826 Diluted 148,015
148,952 148,040 149,069
(a) Includes stock-based
compensation expense for stock-based awards:
Three Months
Ended Years Ended January 1, January 3,
January 1, January 3, 2017
2016 2017
2016 Cost of product revenue $ 3,121 $ 2,829 $ 9,070
$ 9,841 Cost of service and other revenue (530 ) 366 1,584 1,609
Research and development
(1) 9,406 10,849 42,295 42,001
Selling, general and administrative
(2) 15,223
21,445 76,116 79,142
Stock-based compensation expense before taxes $ 27,220 $
35,489 $ 129,065 $ 132,593
(1) Includes stock-based
compensation from GRAIL and Helix of $0.2 million and $0.7 million
for the three months and year ended January 1, 2017, respectively,
and stock-based compensation from Helix of $0.2 million for the
three months and year ended January 3, 2016.
(2) Includes stock-based
compensation from GRAIL and Helix of $0.3 million and $1.7 million
for the three months and year ended January 1, 2017, respectively,
and stock-based compensation from Helix of $0.3 million for the
three months and year ended January 3, 2016.
(b) Amount reflects the additional
losses attributable to the common shareholders of GRAIL and Helix
for earnings per share purposes. For the year ended January 1,
2017, the additional losses were partially offset by the net impact
of a deemed dividend from the company’s common to preferred share
exchange with GRAIL.
Illumina, Inc. Condensed Consolidated Statements
of Cash Flows (In thousands) (unaudited)
Three Months Ended Years Ended
January 1, January 3, January 1, January
3, 2017 2016
2017 2016 Net cash provided by
operating activities
(a) $ 280,153 $ 240,378 $ 687,238 $
659,596 Net cash (used in) provided by investing activities
(173,292 ) 229,398 (514,539 ) (106,146 ) Net cash used in financing
activities
(a) (163,492 ) (253,141 ) (204,713 ) (418,762 )
Effect of exchange rate changes on cash and cash equivalents
(3,550 ) 606 (2,240 ) (2,072 ) Net
(decrease) increase in cash and cash equivalents (60,181 ) 217,241
(34,254 ) 132,616 Cash and cash equivalents, beginning of period
794,697 551,529 768,770
636,154 Cash and cash equivalents, end of period $
734,516 $ 768,770 $ 734,516 $ 768,770
Calculation of free cash flow: Net cash provided by
operating activities
(a) $ 280,153 $ 240,378 $ 687,238 $
659,596 Purchases of property and equipment
(b)
(81,538 ) (35,486 ) (259,891 ) (142,847 ) Free
cash flow
(c) $ 198,615 $ 204,892 $ 427,347
$ 516,749
(a) Net cash provided by operating
activities excludes excess tax benefit related to stock-based
compensation of $91.3 million in fiscal 2016, of which $18.6
million was recorded as cash inflow from operating activities in
Q4. This compares to $126.7 million in fiscal 2015, of which $5.0
million was recorded in Q4. Net cash used in financing activities
reflects the excess tax benefit as a corresponding inflow in the
respective periods except Q4 2016 which is an outflow.
(b) Excludes property and equipment
recorded under build-to-suit lease accounting, which are non-cash
expenditures, of $193.4 million in fiscal 2016, of which $24.6
million was in Q4, and $9.5 million in fiscal 2015, all of which
was in Q4.
(c) Free cash flow, which is a
non-GAAP financial measure, is calculated as net cash provided by
operating activities reduced by purchases of property and
equipment. Free cash flow is useful to management as it is one of
the metrics used to evaluate our performance and to compare us with
other companies in our industry. However, our calculation of free
cash flow may not be comparable to similar measures used by other
companies.
Illumina, Inc. Results of Operations -
Non-GAAP (In 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 1, January 3, January
1, January 3, 2017
2016 2017 2016
GAAP earnings per share attributable to Illumina
stockholders - diluted $ 0.84 $
0.70 $ 3.07 $ 3.10 Amortization
of acquired intangible assets 0.08 0.09 0.33 0.35 Non-cash interest
expense
(a) 0.05 0.06 0.20 0.26 Contingent compensation
(gain) expense
(b) — — 0.01 — Legal contingencies
(c)
— 0.03 (0.06 ) 0.13 Headquarter relocation — — 0.01 (0.02 ) Deemed
dividend
(d) — — (0.01 ) — Loss on extinguishment of debt —
— — 0.03 Acquisition related expense (gain), net
(e) — — —
(0.04 ) Cost-method investment gain, net
(f) — — — (0.10 )
Tax benefit related to cost-sharing arrangement
(g) (0.05 )
— (0.05 ) (0.17 ) Incremental non-GAAP tax expense
(h)
(0.07 ) (0.07 ) (0.17 ) (0.22 )
Non-GAAP earnings per share attributable to Illumina stockholders -
diluted
(i) $ 0.85 $ 0.81 $ 3.33 $ 3.32
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP
NET INCOME ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS: GAAP net
income attributable to Illumina stockholders (j) $
123,762 $ 104,477 $ 462,649
$ 461,559 Amortization of acquired intangible assets
12,423 12,376 48,984 51,829 Non-cash interest expense
(a)
7,404 8,705 29,786 38,589 Headquarter relocation 417 436 1,486
(2,611 ) Contingent compensation (gain) expense
(b) (252 )
685 1,833 934 Legal contingencies
(c) — 4,000 (9,490 )
19,000 Loss on extinguishment of debt — 325 — 4,062 Acquisition
related expense (gain), net
(e) — 325 — (6,124 ) Cost-method
investment gain, net
(f) — (119 ) — (15,601 ) Tax benefit
related to cost-sharing arrangement
(g) (6,696 ) (56 )
(6,696 ) (24,813 ) Incremental non-GAAP tax expense
(h)
(10,625 ) (10,584 ) (25,320 ) (31,621 )
Non-GAAP net income attributable to Illumina stockholders
(i) $ 126,433 $ 120,570 $ 503,232 $
495,203
(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 (gain)
expense relates to contingent payments for post-combination
services associated with an acquisition.
(c) Legal contingencies in 2016
represent a reversal of prior year expense related to settlement of
patent litigation.
(d) Amount represents the impact of
a deemed dividend, net of Illumina’s portion of the losses incurred
by GRAIL’s common shareholders resulting from the company’s common
to preferred share exchange with GRAIL. The amount was added to net
income attributable to Illumina stockholders for purposes of
calculating Illumina’s consolidated earnings per share. The deemed
dividend, net of tax, was recorded through equity.
(e) Acquisition related expense
(gain), net consists of changes in fair value of contingent
consideration.
(f) Cost-method investment gain,
net consists primarily of a gain on the sale of a cost-method
investment.
(g) 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 tax court ruling.
(h) Incremental non-GAAP tax
expense reflects the tax impact related to the non-GAAP adjustments
listed above.
(i) Non-GAAP net income
attributable to Illumina stockholders and diluted earnings per
share attributable to Illumina stockholders exclude the effect of
the pro forma adjustments as detailed above. Non-GAAP net income
attributable to Illumina stockholders and diluted earnings per
share attributable to Illumina stockholders are key components of
the financial metrics utilized by the company’s board of directors
to measure, in part, management’s performance and determine
significant elements of management’s compensation. Management has
excluded the effects of these items in these measures to assist
investors in analyzing and assessing our past and future core
operating performance.
(j) GAAP net income attributable to
Illumina stockholders excludes the net impact of the deemed
dividend as detailed in (d) above and the additional losses
attributable to common shareholders of GRAIL and Helix for earnings
per share purposes. These amounts are included in GAAP net income
attributable to Illumina stockholders for earnings per share of
$123.9 million and $454.1 million for the three months and year
ended January 1, 2017, respectively and $104.5 million and $461.5
million for the three months and year ended January 3, 2016,
respectively.
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 1,
January 3, January 1, January 3,
2017 2016 2017 2016 GAAP gross
profit $ 419,439 67.7 %
$ 410,359 69.4 % $
1,666,448 69.5 % $
1,549,290 69.8 % Stock-based
compensation expense 2,591 0.4 % 3,195 0.5 % 10,654 0.4 % 11,450
0.5 % Amortization of acquired intangible assets 10,959
1.8 % 10,853 1.8 % 42,964 1.8 %
45,810 2.1 % Non-GAAP gross profit
(a) $
432,989 69.9 % $ 424,407 71.7 % $ 1,720,066
71.7 % $ 1,606,550 72.4 %
GAAP research and
development expense $ 129,915 21.0
% $ 114,347 19.3 % $
504,415 21.0 % $ 401,527
18.1 % Stock-based compensation expense (9,406 ) (1.5
)% (10,849 ) (1.8 )% (42,295 ) (1.7 )% (42,001 ) (1.9 )% Contingent
compensation gain (expense)
(b) 12 —
(83 ) — (313 ) — (127 ) —
Non-GAAP research and development expense $ 120,521 19.5 % $
103,415 17.5 % $ 461,807 19.3 % $ 359,399 16.2
%
GAAP selling, general and administrative expense
$ 146,091 23.6 % $
147,251 24.9 % $ 583,005
24.3 % $ 524,657 23.6 %
Stock-based compensation expense (15,223 ) (2.5 )% (21,445 ) (3.6
)% (76,116 ) (3.2 )% (79,142 ) (3.5 )% Amortization of acquired
intangible assets (1,464 ) (0.2 )% (1,523 ) (0.3 )% (6,020 ) (0.2
)% (6,019 ) (0.3 )% Contingent compensation gain (expense)
(b) 240 — (602 ) (0.1 )%
(1,520 ) (0.1 )% (807 ) — Non-GAAP selling, general
and administrative expense $ 129,644 20.9 % $ 123,681
20.9 % $ 499,349 20.8 % $ 438,689 19.8 %
GAAP operating profit $ 143,016 23.1
% $ 144,000 24.3 % $
587,032 24.5 % $ 612,841
27.6 % Stock-based compensation expense 27,220 4.4 %
35,489 6.0 % 129,065 5.3 % 132,593 5.9 % Amortization of acquired
intangible assets 12,423 2.0 % 12,376 2.1 % 48,984 2.0 % 51,829 2.4
% Headquarter relocation 417 — 436 0.1 % 1,486 0.1 % (2,611 ) (0.1
)% Contingent compensation (gain) expense
(b) (252 ) — 685
0.1 % 1,833 0.1 % 934 — Legal contingencies
(c) — — 4,000
0.7 % (9,490 ) (0.4 )% 19,000 0.9 % Acquisition related expense
(gain), net
(d) — — 325
0.1 % — — (6,124 ) (0.3 )% Non-GAAP
operating profit
(a) $ 182,824 29.5 % $ 197,311
33.4 % $ 758,910 31.6 % $ 808,462 36.4 %
GAAP other expense, net $ (8,773
) (1.4 )% $ (8,993 )
(1.5 )% $ (25,854 ) (1.1
)% $ (29,699 ) (1.3 )%
Non-cash interest expense
(e) 7,404 1.2 % 8,705 1.5 % 29,786
1.3 % 38,589 1.7 % Loss on extinguishment of debt — — 325 — — —
4,062 0.2 % Cost-method investment gain, net
(f) —
— (119 ) — — —
(15,601 ) (0.7 )% Non-GAAP other income (expense), net
(a) $ (1,369 ) (0.2 )% $ (82 ) — $ 3,932 0.2 %
$ (2,649 ) (0.1 )%
(a) Non-GAAP gross profit, included
within non-GAAP operating profit, is a key measure of the
effectiveness and efficiency of manufacturing processes, product
mix and the average selling prices of the company’s products and
services. Non-GAAP operating profit, and non-GAAP other income
(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 operating performance.
(b) Contingent compensation
gain/expense relates to contingent payments for post-combination
services associated with an acquisition.
(c) Legal contingencies in 2016
represent a reversal of prior year expense related to settlement of
patent litigation.
(d) Acquisition related expense
(gain), net consists of changes in fair value of contingent
consideration.
(e) Non-cash interest expense is
calculated in accordance with the authoritative accounting guidance
for convertible debt instruments that may be settled in cash.
(f) Cost-method investment gain,
net consists primarily of a gain on the sale of a cost-method
investment.
Illumina, Inc. Reconciliation of Non-GAAP
Financial Guidance
The company’s future performance and
financial results are subject to risks and uncertainties, and
actual results could differ materially from the guidance set forth
below. Some of the factors that could affect the company’s
financial results are stated above in this press release. More
information on potential factors that could affect the company’s
financial results is included from time to time in the company’s
public reports filed with the Securities and Exchange Commission,
including the company’s Form 10-K for the fiscal year ended January
3, 2016, and the company’s Form 10-Q for the fiscal quarters ended
April 3, 2016, July 3, 2016, and October 2, 2016. The company
assumes no obligation to update any forward-looking statements or
information.
Fiscal Year 2017 GAAP diluted earnings per
share attributable to Illumina stockholders (a) $3.25 -
$3.35 Amortization of acquired intangible assets 0.31 Non-cash
interest expense
(b) 0.20 Incremental non-GAAP tax expense
(c) (0.16) Non-GAAP diluted earnings per share attributable
to Illumina stockholders
(a) $3.60 - $3.70
Q1
2017 GAAP diluted earnings per share attributable to
Illumina stockholders (a) $0.51- $0.56 Amortization of
acquired intangible assets 0.08 Non-cash interest expense
(b) 0.05 Incremental non-GAAP tax expense
(c) (0.04)
Non-GAAP diluted earnings per share attributable to Illumina
stockholders
(a) $0.60 - $0.65
(a) The company adopted Accounting
Standard Update (ASU) 2016-09, Compensation - Stock Compensation
(Topic 718) as of January 2, 2017. The impact of such adoption is
not included in the GAAP diluted net income per share attributable
to Illumina stockholders guidance for fiscal year 2017. The GAAP
diluted net income per share attributable to Illumina stockholders
guidance for fiscal year 2017 also excludes one-time items related
to the close of the GRAIL, Inc. Series B financing, which is
expected to occur prior to the end of the first quarter. Such
impacts will be recorded as incurred and excluded from non-GAAP
diluted net income per share attributable to Illumina
stockholders.
(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) 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/20170131006338/en/
Illumina, Inc.Investors:Rebecca
Chambers858.255.5243ir@illumina.comorMedia:Eric
Endicott858.882.6822pr@illumina.com
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