þ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 33-0804655 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
5200 Illumina Way, San Diego, CA | 92122 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | þ | Accelerated filer | ¨ | |
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
Page | |
October 1, 2017 | January 1, 2017 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,354 | $ | 735 | |||
Short-term investments | 687 | 824 | |||||
Accounts receivable, net | 383 | 381 | |||||
Inventory | 327 | 300 | |||||
Prepaid expenses and other current assets | 54 | 78 | |||||
Total current assets | 2,805 | 2,318 | |||||
Property and equipment, net | 862 | 713 | |||||
Goodwill | 771 | 776 | |||||
Intangible assets, net | 185 | 243 | |||||
Deferred tax assets | 117 | 123 | |||||
Other assets | 306 | 108 | |||||
Total assets | $ | 5,046 | $ | 4,281 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 158 | $ | 138 | |||
Accrued liabilities | 381 | 342 | |||||
Build-to-suit lease liability | 124 | 223 | |||||
Long-term debt, current portion | 2 | 2 | |||||
Total current liabilities | 665 | 705 | |||||
Long-term debt | 1,180 | 1,056 | |||||
Other long-term liabilities | 222 | 206 | |||||
Redeemable noncontrolling interests | 124 | 44 | |||||
Stockholders’ equity: | |||||||
Common stock | 2 | 2 | |||||
Additional paid-in capital | 2,891 | 2,733 | |||||
Accumulated other comprehensive loss | — | (1 | ) | ||||
Retained earnings | 2,188 | 1,485 | |||||
Treasury stock, at cost | (2,226 | ) | (2,022 | ) | |||
Total Illumina stockholders’ equity | 2,855 | 2,197 | |||||
Noncontrolling interests | — | 73 | |||||
Total stockholders’ equity | 2,855 | 2,270 | |||||
Total liabilities and stockholders’ equity | $ | 5,046 | $ | 4,281 |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 1, 2017 | October 2, 2016 | October 1, 2017 | October 2, 2016 | ||||||||||||
Revenue: | |||||||||||||||
Product revenue | $ | 596 | $ | 514 | $ | 1,631 | $ | 1,506 | |||||||
Service and other revenue | 118 | 93 | 344 | 273 | |||||||||||
Total revenue | 714 | 607 | 1,975 | 1,779 | |||||||||||
Cost of revenue: | |||||||||||||||
Cost of product revenue | 173 | 132 | 508 | 383 | |||||||||||
Cost of service and other revenue | 50 | 38 | 153 | 117 | |||||||||||
Amortization of acquired intangible assets | 9 | 11 | 30 | 32 | |||||||||||
Total cost of revenue | 232 | 181 | 691 | 532 | |||||||||||
Gross profit | 482 | 426 | 1,284 | 1,247 | |||||||||||
Operating expense: | |||||||||||||||
Research and development | 134 | 126 | 409 | 374 | |||||||||||
Selling, general and administrative | 167 | 139 | 499 | 438 | |||||||||||
Legal contingencies | — | — | — | (9 | ) | ||||||||||
Total operating expense | 301 | 265 | 908 | 803 | |||||||||||
Income from operations | 181 | 161 | 376 | 444 | |||||||||||
Other income (expense): | |||||||||||||||
Interest income | 4 | 2 | 13 | 7 | |||||||||||
Interest expense | (10 | ) | (9 | ) | (26 | ) | (25 | ) | |||||||
Other income, net | — | — | 457 | 1 | |||||||||||
Total other (expense) income, net | (6 | ) | (7 | ) | 444 | (17 | ) | ||||||||
Income before income taxes | 175 | 154 | 820 | 427 | |||||||||||
Provision for income taxes | 23 | 37 | 199 | 106 | |||||||||||
Consolidated net income | 152 | 117 | 621 | 321 | |||||||||||
Add: Net loss attributable to noncontrolling interests | 11 | 12 | 37 | 18 | |||||||||||
Net income attributable to Illumina stockholders | $ | 163 | $ | 129 | $ | 658 | $ | 339 | |||||||
Net income attributable to Illumina stockholders for earnings per share | $ | 163 | $ | 129 | $ | 657 | $ | 336 | |||||||
Earnings per share attributable to Illumina stockholders: | |||||||||||||||
Basic | $ | 1.12 | $ | 0.88 | $ | 4.49 | $ | 2.29 | |||||||
Diluted | $ | 1.11 | $ | 0.87 | $ | 4.45 | $ | 2.27 | |||||||
Shares used in computing earnings per common share: | |||||||||||||||
Basic | 146 | 147 | 146 | 147 | |||||||||||
Diluted | 148 | 148 | 148 | 148 |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 1, 2017 | October 2, 2016 | October 1, 2017 | October 2, 2016 | ||||||||||||
Consolidated net income | $ | 152 | $ | 117 | $ | 621 | $ | 321 | |||||||
Unrealized gain (loss) on available-for-sale securities, net of deferred tax | 1 | (1 | ) | 1 | 1 | ||||||||||
Total consolidated comprehensive income | 153 | 116 | 622 | 322 | |||||||||||
Add: Comprehensive loss attributable to noncontrolling interests | 11 | 12 | 37 | 18 | |||||||||||
Comprehensive income attributable to Illumina stockholders | $ | 164 | $ | 128 | $ | 659 | $ | 340 |
Illumina Stockholders | |||||||||||||||||||||||||||
Additional | Accumulated Other | Total | |||||||||||||||||||||||||
Common | Paid-In | Comprehensive | Retained | Treasury | Noncontrolling | Stockholders’ | |||||||||||||||||||||
Stock | Capital | (Loss) Income | Earnings | Stock | Interests | Equity | |||||||||||||||||||||
Balance as of January 1, 2017 | $ | 2 | $ | 2,733 | $ | (1 | ) | $ | 1,485 | $ | (2,022 | ) | $ | 73 | $ | 2,270 | |||||||||||
Net income (loss) | — | — | — | 658 | — | (7 | ) | 651 | |||||||||||||||||||
Unrealized gain on available-for-sale securities, net of deferred tax | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||
Issuance of common stock, net of repurchases | — | 63 | — | — | (204 | ) | — | (141 | ) | ||||||||||||||||||
Share-based compensation | — | 123 | — | — | — | — | 123 | ||||||||||||||||||||
Adjustment to the carrying value of redeemable noncontrolling interests | — | (30 | ) | — | — | — | — | (30 | ) | ||||||||||||||||||
Vesting of redeemable equity awards | — | (12 | ) | — | — | — | — | (12 | ) | ||||||||||||||||||
Cumulative-effect adjustment from adoption of ASU 2016-09 | — | 3 | — | 45 | — | — | 48 | ||||||||||||||||||||
Deconsolidation of GRAIL | — | 11 | — | — | — | (66 | ) | (55 | ) | ||||||||||||||||||
Balance as of October 1, 2017 | $ | 2 | $ | 2,891 | $ | — | $ | 2,188 | $ | (2,226 | ) | $ | — | $ | 2,855 |
Nine Months Ended | |||||||
October 1, 2017 | October 2, 2016 | ||||||
Cash flows from operating activities: | |||||||
Consolidated net income | $ | 621 | $ | 321 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Gain on deconsolidation of GRAIL | (453 | ) | — | ||||
Depreciation expense | 81 | 65 | |||||
Amortization of intangible assets | 36 | 38 | |||||
Share-based compensation expense | 123 | 102 | |||||
Accretion of debt discount | 23 | 22 | |||||
Deferred income taxes | 53 | 58 | |||||
Impairment of intangible assets | 23 | — | |||||
Other | (2 | ) | 5 | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 1 | 5 | |||||
Inventory | (27 | ) | (42 | ) | |||
Prepaid expenses and other current assets | 14 | 3 | |||||
Other assets | (3 | ) | (6 | ) | |||
Accounts payable | 12 | (7 | ) | ||||
Accrued liabilities | 56 | (57 | ) | ||||
Other long-term liabilities | 23 | 10 | |||||
Net cash provided by operating activities | 581 | 517 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale securities | (359 | ) | (679 | ) | |||
Sales of available-for-sale securities | 314 | 406 | |||||
Maturities of available-for-sale securities | 181 | 148 | |||||
Net cash paid for acquisitions | — | (18 | ) | ||||
Proceeds from sale of GRAIL securities | 278 | — | |||||
Deconsolidation of GRAIL cash | (52 | ) | — | ||||
Net purchases of strategic investments | (25 | ) | (9 | ) | |||
Purchases of property and equipment | (234 | ) | (178 | ) | |||
Cash paid for intangible assets | (2 | ) | (11 | ) | |||
Net cash provided by (used in) investing activities | 101 | (341 | ) | ||||
Cash flows from financing activities: | |||||||
Payments on financing obligations | (7 | ) | (71 | ) | |||
Payments on acquisition related contingent consideration liability | (3 | ) | (29 | ) | |||
Proceeds from issuance of debt | 5 | 5 | |||||
Common stock repurchases | (176 | ) | (113 | ) | |||
Taxes paid related to net share settlement of equity awards | (28 | ) | (76 | ) | |||
Proceeds from issuance of common stock | 63 | 47 | |||||
Proceeds from early exercise of equity awards from a subsidiary | — | 6 | |||||
Contributions from noncontrolling interest owners | 79 | 80 | |||||
Net cash used in financing activities | (67 | ) | (151 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 4 | 1 | |||||
Net increase in cash and cash equivalents | 619 | 26 | |||||
Cash and cash equivalents at beginning of period | 735 | 769 | |||||
Cash and cash equivalents at end of period | $ | 1,354 | $ | 795 |
Three Months Ended | Nine Months Ended | ||||||||||
October 1, 2017 | October 2, 2016 | October 1, 2017 | October 2, 2016 | ||||||||
Weighted average shares outstanding | 146 | 147 | 146 | 147 | |||||||
Effect of potentially dilutive common shares from: | |||||||||||
Equity awards | 2 | 1 | 2 | 1 | |||||||
Weighted average shares used in calculating diluted earnings per share | 148 | 148 | 148 | 148 | |||||||
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | — | — | — | 1 |
October 1, 2017 | January 1, 2017 | ||||||||||||||||||||||
Amortized Cost | Gross Unrealized Losses | Estimated Fair Value | Amortized Cost | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||||
Available-for-sale securities: | |||||||||||||||||||||||
Debt securities in government sponsored entities | $ | 74 | $ | — | $ | 74 | $ | 34 | $ | — | $ | 34 | |||||||||||
Corporate debt securities | 343 | (1 | ) | 342 | 478 | (2 | ) | 476 | |||||||||||||||
U.S. Treasury securities | 272 | (1 | ) | 271 | 316 | (2 | ) | 314 | |||||||||||||||
Total available-for-sale securities | $ | 689 | $ | (2 | ) | $ | 687 | $ | 828 | $ | (4 | ) | $ | 824 |
Estimated Fair Value | |||
Due within one year | $ | 421 | |
After one but within five years | 266 | ||
Total | $ | 687 |
October 1, 2017 | January 1, 2017 | ||||||
Raw materials | $ | 90 | $ | 102 | |||
Work in process | 192 | 161 | |||||
Finished goods | 45 | 37 | |||||
Total inventory | $ | 327 | $ | 300 |
October 1, 2017 | January 1, 2017 | ||||||
Leasehold improvements | $ | 320 | $ | 270 | |||
Machinery and equipment | 301 | 274 | |||||
Computer hardware and software | 178 | 156 | |||||
Furniture and fixtures | 34 | 24 | |||||
Building | 147 | 9 | |||||
Construction in progress | 273 | 307 | |||||
Total property and equipment, gross | 1,253 | 1,040 | |||||
Accumulated depreciation | (391 | ) | (327 | ) | |||
Total property and equipment, net | $ | 862 | $ | 713 |
Goodwill | |||
Balance as of January 1, 2017 | $ | 776 | |
GRAIL deconsolidation | (5 | ) | |
Balance as of October 1, 2017 | $ | 771 |
October 1, 2017 | January 1, 2017 | ||||||
Accrued compensation expenses | $ | 138 | $ | 112 | |||
Deferred revenue, current portion | 131 | 121 | |||||
Accrued taxes payable | 41 | 32 | |||||
Customer deposits | 18 | 20 | |||||
Other | 53 | 57 | |||||
Total accrued liabilities | $ | 381 | $ | 342 |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 1, 2017 | October 2, 2016 | October 1, 2017 | October 2, 2016 | ||||||||||||
Balance at beginning of period | $ | 14 | $ | 16 | $ | 13 | $ | 17 | |||||||
Additions charged to cost of product revenue | 7 | 4 | 18 | 17 | |||||||||||
Repairs and replacements | (5 | ) | (6 | ) | (15 | ) | (20 | ) | |||||||
Balance at end of period | $ | 16 | $ | 14 | $ | 16 | $ | 14 |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 1, 2017 | October 2, 2016 | October 1, 2017 | October 2, 2016 | ||||||||||||
Balance at beginning of period | $ | 18 | $ | 21 | $ | 19 | $ | 22 | |||||||
Accretion of interest expense | — | — | — | 1 | |||||||||||
Cash payments | (1 | ) | (1 | ) | (2 | ) | (3 | ) | |||||||
Balance at end of period | $ | 17 | $ | 20 | $ | 17 | $ | 20 |
Redeemable Noncontrolling Interests | |||
Balance as of January 1, 2017 | $ | 44 | |
Amount released from escrow | 79 | ||
Vesting of redeemable equity awards | 12 | ||
Net loss attributable to noncontrolling interests | (30 | ) | |
Adjustment up to the redemption value | 30 | ||
Deconsolidation of GRAIL | (11 | ) | |
Balance as of October 1, 2017 | $ | 124 |
October 1, 2017 | January 1, 2017 | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Money market funds (cash equivalents) | $ | 1,051 | $ | — | $ | — | $ | 1,051 | $ | 386 | $ | — | $ | — | $ | 386 | |||||||||||||||
Debt securities in government-sponsored entities | — | 74 | — | 74 | — | 34 | — | 34 | |||||||||||||||||||||||
Corporate debt securities | — | 342 | — | 342 | — | 476 | — | 476 | |||||||||||||||||||||||
U.S. Treasury securities | 271 | — | — | 271 | 314 | — | — | 314 | |||||||||||||||||||||||
Deferred compensation plan assets | — | 34 | — | 34 | — | 31 | — | 31 | |||||||||||||||||||||||
Total assets measured at fair value | $ | 1,322 | $ | 450 | $ | — | $ | 1,772 | $ | 700 | $ | 541 | $ | — | $ | 1,241 | |||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Acquisition related contingent consideration liabilities | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 4 | $ | 4 | |||||||||||||||
Deferred compensation liability | — | 31 | — | 31 | — | 29 | — | 29 | |||||||||||||||||||||||
Total liabilities measured at fair value | $ | — | $ | 31 | $ | — | $ | 31 | $ | — | $ | 29 | $ | 4 | $ | 33 |
October 1, 2017 | January 1, 2017 | ||||||
Principal amount of 2019 Notes outstanding | $ | 633 | $ | 633 | |||
Principal amount of 2021 Notes outstanding | 517 | 517 | |||||
Unamortized discount of liability component of convertible senior notes | (83 | ) | (105 | ) | |||
Net carrying amount of liability component of convertible senior notes | 1,067 | 1,045 | |||||
Obligations under financing leases | 111 | 9 | |||||
Other | 4 | 4 | |||||
Less: current portion | (2 | ) | (2 | ) | |||
Long-term debt | $ | 1,180 | $ | 1,056 | |||
Carrying value of equity component of convertible senior notes, net of debt issuance cost | $ | 161 | $ | 161 | |||
Fair value of convertible senior notes outstanding (Level 2) | $ | 1,262 | $ | 1,108 | |||
Weighted-average remaining amortization period of discount on the liability component of convertible senior notes | 3.0 years | 3.6 years |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 1, 2017 | October 2, 2016 | October 1, 2017 | October 2, 2016 | ||||||||||||
Cost of product revenue | $ | 3 | $ | 2 | $ | 9 | $ | 6 | |||||||
Cost of service and other revenue | 1 | 1 | 2 | 2 | |||||||||||
Research and development | 12 | 12 | 38 | 33 | |||||||||||
Selling, general and administrative | 18 | 20 | 74 | 61 | |||||||||||
Share-based compensation expense before taxes | 34 | 35 | 123 | 102 | |||||||||||
Related income tax benefits | (11 | ) | (8 | ) | (34 | ) | (23 | ) | |||||||
Share-based compensation expense, net of taxes | $ | 23 | $ | 27 | $ | 89 | $ | 79 |
Employee Stock Purchase Rights | |||
Risk-free interest rate | 0.50% - 1.22% | ||
Expected volatility | 29% - 44% | ||
Expected term | 0.5 - 1.0 year | ||
Expected dividends | 0 | % | |
Weighted-average fair value per share | $ | 46.85 |
Restricted Stock Awards (RSA) | Restricted Stock Units (RSU) | Performance Stock Units (PSU)(1) | Weighted-Average Grant-Date Fair Value per Share | |||||||||||||||||
RSA | RSU | PSU | ||||||||||||||||||
Outstanding at January 1, 2017 | 32 | 2,293 | 460 | $ | 136.30 | $ | 141.80 | $ | 158.66 | |||||||||||
Awarded | — | 141 | 38 | — | $ | 173.08 | $ | 154.93 | ||||||||||||
Vested | (11 | ) | (257 | ) | — | $ | 179.00 | $ | 110.56 | — | ||||||||||
Cancelled | — | (184 | ) | (60 | ) | — | $ | 149.22 | $ | 176.15 | ||||||||||
Outstanding at October 1, 2017 | 21 | 1,993 | 438 | $ | 114.59 | $ | 147.41 | $ | 155.95 |
(1) | The number of units reflect the estimated number of shares to be issued at the end of the performance period. |
Options (in thousands) | Weighted-Average Exercise Price | |||||
Outstanding at January 1, 2017 | 1,045 | $ | 48.56 | |||
Exercised | (604 | ) | $ | 46.43 | ||
Outstanding and exercisable at October 1, 2017 | 441 | $ | 51.51 |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 1, 2017 | October 2, 2016 | October 1, 2017 | October 2, 2016 | ||||||||||||
Revenues: | |||||||||||||||
Core Illumina | $ | 715 | $ | 615 | $ | 1,978 | $ | 1,792 | |||||||
Consolidated VIEs | 1 | — | 4 | — | |||||||||||
Elimination of intersegment revenues | (2 | ) | (8 | ) | (7 | ) | (13 | ) | |||||||
Consolidated revenues | $ | 714 | $ | 607 | $ | 1,975 | $ | 1,779 | |||||||
Operating income (loss): | |||||||||||||||
Core Illumina | $ | 203 | $ | 191 | $ | 447 | $ | 502 | |||||||
Consolidated VIEs | (22 | ) | (25 | ) | (72 | ) | (50 | ) | |||||||
Elimination of intersegment earnings | — | (5 | ) | 1 | (8 | ) | |||||||||
Consolidated operating income | $ | 181 | $ | 161 | $ | 376 | $ | 444 |
October 1, 2017 | January 1, 2017 | ||||||
Total assets: | |||||||
Core Illumina | $ | 4,999 | $ | 4,167 | |||
Consolidated VIEs | 59 | 180 | |||||
Elimination of intersegment assets | (12 | ) | (66 | ) | |||
Consolidated total assets | $ | 5,046 | $ | 4,281 |
• | Business Overview and Outlook. High level discussion of our operating results and significant known trends that affect our business. |
• | Results of Operations. Detailed discussion of our revenues and expenses. |
• | Liquidity and Capital Resources. Discussion of key aspects of our statements of cash flows, changes in our financial position, and our financial commitments. |
• | Off-Balance Sheet Arrangements. We have no off-balance sheet arrangements. |
• | Critical Accounting Policies and Estimates. Discussion of significant changes since our most recent Annual Report on Form 10-K we believe are important to understanding the assumptions and judgments underlying our financial statements. |
• | Recent Accounting Pronouncements. Summary of recent accounting pronouncements applicable to our condensed consolidated financial statements. |
• | Net revenue increased 11% during the first three quarters of 2017 to $2.0 billion compared to $1.8 billion in the first three quarters of 2016 due to the growth in sales of our sequencing consumables and genotyping services, as well as the launch of our NovaSeq platform, partially offset by lower shipments of our HiSeq instruments. We expect our revenue to continue to increase in 2017. |
• | Gross profit as a percentage of revenue (gross margin) was 65.0% in the first three quarters of 2017 compared to 70.1% in the first three quarters of 2016. The gross margin decrease was driven by a variety of factors, including impairment of an acquired intangible asset, an increase in lower-margin array services mix, inventory reserves related to product transitions, and lower instrument margin from the NovaSeq introduction. Our gross margin in future periods will depend on several factors, including: market conditions that may impact our pricing power; sales mix changes among consumables, instruments, and services; product mix changes between established products and new products in new markets; excess and obsolete inventories; royalties; our cost structure for manufacturing operations relative to volume; and product support obligations. |
• | Income from operations as a percentage of revenue decreased to 19.0% in the first three quarters of 2017 compared to 25.0% in the first three quarters of 2016 primarily due to lower gross margins. We expect research and development and selling, general and administrative expenses to continue to grow. |
• | Our effective tax rate was 24.3% in the first three quarters of 2017 compared to 24.9% in the first three quarters of 2016. The variance from the U.S. federal statutory tax rate of 35% was primarily attributable to the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore and the United Kingdom, and excess tax benefits related to share-based compensation, partially offset by the discrete tax impact of $150 million from the gain on the deconsolidation of GRAIL. Our future effective tax rate may vary from the U.S. federal statutory tax rate due to the mix of earnings in tax jurisdictions with different statutory tax rates and the other factors discussed in the risk factor “We are subject to risks related to taxation in multiple jurisdictions” in Part I Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 1, 2017. We anticipate that our effective tax rate will trend lower than the U.S. federal statutory tax rate in the future due to the portion of our earnings that will be subject to lower statutory tax rates. |
• | Cash, cash equivalents, and short-term investments were $2.0 billion as of October 1, 2017, of which approximately $953 million was held by our foreign subsidiaries. |
Q3 2017 | Q3 2016 | YTD 2017 | YTD 2016 | ||||||||
Revenue: | |||||||||||
Product revenue | 83.5 | % | 84.7 | % | 82.6 | % | 84.7 | % | |||
Service and other revenue | 16.5 | 15.3 | 17.4 | 15.3 | |||||||
Total revenue | 100.0 | 100.0 | 100.0 | 100.0 | |||||||
Cost of revenue: | |||||||||||
Cost of product revenue | 24.2 | 21.7 | 25.7 | 21.5 | |||||||
Cost of service and other revenue | 7.0 | 6.3 | 7.7 | 6.6 | |||||||
Amortization of acquired intangible assets | 1.3 | 1.8 | 1.6 | 1.8 | |||||||
Total cost of revenue | 32.5 | 29.8 | 35.0 | 29.9 | |||||||
Gross profit | 67.5 | 70.2 | 65.0 | 70.1 | |||||||
Operating expense: | |||||||||||
Research and development | 18.7 | 20.7 | 20.7 | 21.0 | |||||||
Selling, general and administrative | 23.5 | 23.0 | 25.3 | 24.6 |
Legal contingencies | — | — | — | (0.5 | ) | ||||||
Total operating expense | 42.2 | 43.7 | 46.0 | 45.1 | |||||||
Income from operations | 25.3 | 26.5 | 19.0 | 25.0 | |||||||
Other income (expense): | |||||||||||
Interest income | 0.6 | 0.3 | 0.7 | 0.4 | |||||||
Interest expense | (1.4 | ) | (1.3 | ) | (1.3 | ) | (1.5 | ) | |||
Other income, net | — | — | 23.1 | 0.1 | |||||||
Total other (expense) income, net | (0.8 | ) | (1.0 | ) | 22.5 | (1.0 | ) | ||||
Income before income taxes | 24.5 | 25.5 | 41.5 | 24.0 | |||||||
Provision for income taxes | 3.2 | 6.1 | 10.1 | 6.0 | |||||||
Consolidated net income | 21.3 | 19.4 | 31.4 | 18.0 | |||||||
Add: Net loss attributable to noncontrolling interests | 1.5 | 2.0 | 1.9 | 1.0 | |||||||
Net income attributable to Illumina stockholders | 22.8 | % | 21.4 | % | 33.3 | % | 19.0 | % |
(Dollars in millions) | Q3 2017 | Q3 2016 | Change | % Change | YTD 2017 | YTD 2016 | Change | % Change | |||||||||||||||||||||
Product revenue | $ | 596 | $ | 514 | $ | 82 | 16 | % | $ | 1,631 | $ | 1,506 | $ | 125 | 8 | % | |||||||||||||
Service and other revenue | 118 | 93 | 25 | 27 | 344 | 273 | 71 | 26 | |||||||||||||||||||||
Total revenue | $ | 714 | $ | 607 | $ | 107 | 18 | % | $ | 1,975 | $ | 1,779 | $ | 196 | 11 | % |
(Dollars in millions) | Q3 2017 | Q3 2016 | Change | % Change | YTD 2017 | YTD 2016 | Change | % Change | |||||||||||||||||||
Gross profit | $ | 482 | $ | 426 | $ | 56 | 13% | $ | 1,284 | $ | 1,247 | $ | 37 | 3% | |||||||||||||
Gross margin | 67.5 | % | 70.2 | % | 65.0 | % | 70.1 | % |
(Dollars in millions) | Q3 2017 | Q3 2016 | Change | % Change | YTD 2017 | YTD 2016 | Change | % Change | |||||||||||||||||||||
Research and development | $ | 134 | $ | 126 | $ | 8 | 6 | % | $ | 409 | $ | 374 | $ | 35 | 9 | % | |||||||||||||
Selling, general and administrative | 167 | 139 | 28 | 20 | 499 | 438 | 61 | 14 | |||||||||||||||||||||
Legal contingencies | — | — | — | — | — | (9 | ) | 9 | (100 | ) | |||||||||||||||||||
Total operating expense | $ | 301 | $ | 265 | $ | 36 | 14 | % | $ | 908 | $ | 803 | $ | 105 | 13 | % |
(Dollars in millions) | Q3 2017 | Q3 2016 | Change | % Change | YTD 2017 | YTD 2016 | Change | % Change | |||||||||||||||||||||
Interest income | $ | 4 | $ | 2 | $ | 2 | 100 | % | $ | 13 | $ | 7 | $ | 6 | 86 | % | |||||||||||||
Interest expense | (10 | ) | (9 | ) | (1 | ) | 11 | (26 | ) | (25 | ) | (1 | ) | 4 | |||||||||||||||
Other income, net | — | — | — | — | 457 | 1 | 456 | 45,600 | |||||||||||||||||||||
Total other (expense) income, net | $ | (6 | ) | $ | (7 | ) | $ | 1 | (14 | )% | $ | 444 | $ | (17 | ) | $ | 461 | (2,712 | )% |
(Dollars in millions) | Q3 2017 | Q3 2016 | Change | % Change | YTD 2017 | YTD 2016 | Change | % Change | |||||||||||||||||||||
Income before income taxes | $ | 175 | $ | 154 | $ | 21 | 14 | % | $ | 820 | $ | 427 | $ | 393 | 92 | % | |||||||||||||
Provision for income taxes | 23 | 37 | (14 | ) | (38 | ) | 199 | 106 | 93 | 88 | |||||||||||||||||||
Consolidated net income | $ | 152 | $ | 117 | $ | 35 | 30 | % | $ | 621 | $ | 321 | $ | 300 | 93 | % | |||||||||||||
Effective tax rate | 12.9 | % | 24.2 | % | 24.3 | % | 24.9 | % |
• | support of commercialization efforts related to our current and future products, including expansion of our direct sales force and field support resources both in the United States and abroad; |
• | acquisitions of equipment and other fixed assets for use in our current and future manufacturing and research and development facilities; |
• | the continued advancement of research and development efforts; |
• | potential strategic acquisitions and investments; |
• | potential early repayment of debt obligations as a result of conversions; |
• | the expansion needs of our facilities, including costs of leasing and building out additional facilities; and |
• | repurchases of our outstanding common stock. |
• | our ability to successfully commercialize and further develop our technologies and create innovative products in our markets; |
• | scientific progress in our research and development programs and the magnitude of those programs; |
• | competing technological and market developments; and |
• | the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings. |
(In millions) | YTD 2017 | YTD 2016 | |||||
Net cash provided by operating activities | $ | 581 | $ | 517 | |||
Net cash provided by (used in) investing activities | 101 | (341 | ) | ||||
Net cash used in financing activities | (67 | ) | (151 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 4 | 1 | |||||
Net increase in cash and cash equivalents | $ | 619 | $ | 26 |
• | our ability to develop and commercialize our instruments and consumables, to deploy new products, services, and applications, and expand the markets for our technology platforms; |
• | our ability to manufacture robust instrumentation and consumables; |
• | our ability to identify and integrate acquired technologies, products, or businesses successfully; |
• | our expectations and beliefs regarding prospects and growth for the business and its markets; |
• | the assumptions underlying our critical accounting policies and estimates; |
• | our assessments and estimates that determine our effective tax rate; |
• | our assessments and beliefs regarding the outcome of pending legal proceedings and any liability that we may incur as a result of those proceedings; |
• | uncertainty, or adverse economic and business conditions, including as a result of slowing or uncertain economic growth in the United States or worldwide; and |
• | other factors detailed in our filings with the SEC, including the risks, uncertainties, and assumptions described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 1, 2017, or in information disclosed in public conference calls, the date and time of which are released beforehand. |
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs | |||||||||
July 3, 2017 - July 30, 2017 | — | — | — | $ | 250,001 | ||||||||
July 31, 2017 - August 27, 2017 | 385 | $ | 194.85 | 385 | $ | 175,001 | |||||||
August 28, 2017 - October 1, 2017 | — | — | — | $ | 175,001 | ||||||||
Total | 385 | $ | 194.85 | 385 | $ | 175,001 |
Exhibit Number | Description of Document | |
Certification of Francis A. deSouza pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification of Sam A. Samad pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification of Francis A. deSouza pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
Certification of Sam A. Samad pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
XBRL Instance Document | ||
XBRL Taxonomy Extension Schema | ||
XBRL Taxonomy Extension Calculation Linkbase | ||
XBRL Taxonomy Extension Label Linkbase | ||
XBRL Taxonomy Extension Presentation Linkbase | ||
XBRL Taxonomy Extension Definition Linkbase |
ILLUMINA, INC. (registrant) | |||
Date: | October 25, 2017 | /s/ SAM A. SAMAD | |
Sam A. Samad Senior Vice President and Chief Financial Officer |
1 | I have reviewed this Quarterly Report on Form 10-Q of Illumina, Inc.; | ||
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | ||
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | ||
4 | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | ||
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | ||
5 | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | ||
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | ||
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ FRANCIS A. DESOUZA | ||
Francis A. deSouza | |||
President and Chief Executive Officer |
1 | I have reviewed this Quarterly Report on Form 10-Q of Illumina, Inc.; | |
2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4 | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
5 | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ SAM A. SAMAD | ||
Sam A. Samad | |||
Senior Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ FRANCIS A. DESOUZA | ||
Francis A. deSouza | |||
President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ SAM A. SAMAD | ||
Sam A. Samad | |||
Senior Vice President and Chief Financial Officer |
Document and Entity Information - shares shares in Millions |
9 Months Ended | |
---|---|---|
Oct. 01, 2017 |
Oct. 20, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Illumina Inc | |
Entity Central Index Key | 0001110803 | |
Current Fiscal Year End Date | --01-01 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Oct. 01, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 146 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Consolidated net income | $ 152 | $ 117 | $ 621 | $ 321 |
Unrealized gain (loss) on available-for-sale securities, net of deferred tax | 1 | (1) | 1 | 1 |
Total consolidated comprehensive income | 153 | 116 | 622 | 322 |
Add: Comprehensive loss attributable to noncontrolling interests | 11 | 12 | 37 | 18 |
Comprehensive income attributable to Illumina stockholders | $ 164 | $ 128 | $ 659 | $ 340 |
Condensed Consolidated Statement of Stockholders' Equity Statement - 9 months ended Oct. 01, 2017 - USD ($) $ in Millions |
Total |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Accumulated Other Comprehensive (Loss) Income [Member] |
Retained Earnings [Member] |
Treasury Stock [Member] |
Noncontrolling Interests [Member] |
---|---|---|---|---|---|---|---|
Beginning balance at Jan. 01, 2017 | $ 2,270 | $ 2 | $ 2,733 | $ (1) | $ 1,485 | $ (2,022) | $ 73 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 651 | 658 | (7) | ||||
Unrealized gain on available-for-sale securities, net of deferred tax | 1 | 1 | |||||
Issuance of common stock, net of repurchases | (141) | 63 | (204) | ||||
Share-based compensation | 123 | 123 | |||||
Adjustment to the carrying value of redeemable noncontrolling interests | (30) | (30) | |||||
Vesting of redeemable equity awards | (12) | (12) | |||||
Cumulative-effect adjustment from adoption of ASU 2016-09 | 48 | 3 | 45 | ||||
Deconsolidation of GRAIL | (55) | 11 | (66) | ||||
Ending balance at Oct. 01, 2017 | $ 2,855 | $ 2 | $ 2,891 | $ 0 | $ 2,188 | $ (2,226) | $ 0 |
Basis of Presentation and Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Interim financial results are not necessarily indicative of results anticipated for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2017, from which the balance sheet information herein was derived. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expense, and related disclosure of contingent assets and liabilities. Actual results could differ from those estimates. The unaudited condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, majority-owned or controlled companies, and variable interest entities (VIEs) for which the Company is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. Effective February 28, 2017, Illumina deconsolidated GRAIL, Inc.’s financial statements. In management’s opinion, the accompanying financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results for the interim periods presented. The Company evaluates its ownership, contractual, and other interests in entities that are not wholly-owned by the Company to determine if these entities are VIEs, and, if so, whether the Company is the primary beneficiary of the VIE. In determining whether the Company is the primary beneficiary of a VIE and is therefore required to consolidate the VIE, the Company applies a qualitative approach that determines whether it has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses of, or the rights to receive benefits from, the VIE that could potentially be significant to that VIE. The Company continuously assesses whether it is the primary beneficiary of a VIE as changes to existing relationships or future transactions may result in the consolidation or deconsolidation, as the case may be, of such VIE. The Company has not provided financial or other support during the periods presented to its VIEs that it was not previously contractually required to provide. The equity method is used to account for investments in which the Company has the ability to exercise significant influence, but not control, over the investee. Such investments are recorded within other assets, and the share of net income or losses of equity investments is recognized on a one quarter lag in other income, net. Redeemable Noncontrolling Interests Noncontrolling interests represent the portion of equity (net assets) in a consolidated entity that is not wholly-owned by the Company that is not attributable, directly or indirectly, to the Company. Noncontrolling interests with embedded contingent redemption features, such as put rights, that are not solely within the Company’s control are considered redeemable noncontrolling interests. Redeemable noncontrolling interests are presented outside of stockholders’ equity on the condensed consolidated balance sheets. Fiscal Year The Company’s fiscal year consists of 52 or 53 weeks ending the Sunday closest to December 31, with quarters of 13 or 14 weeks ending the Sunday closest to March 31, June 30, September 30, and December 31. The three and nine months ended October 1, 2017 and October 2, 2016 were both 13 and 39 weeks, respectively. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Significant Accounting Policies During the three and nine months ended October 1, 2017, there have been no changes to the Company’s significant accounting policies as described in the Annual Report on Form 10-K for the fiscal year ended January 1, 2017. Recently Adopted Accounting Pronouncements In March 2016, the Financial Accounting Standards Board issued Accounting Standard Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718), which aims to simplify the accounting for share-based payment transactions, including accounting for income taxes, classification on the statement of cash flows, accounting for forfeitures, and classification of awards as either liabilities or equity. This ASU was effective for the Company beginning in the first quarter of 2017. Under the ASU, excess tax benefits from share-based payment arrangements are classified as discrete items within the provision for income taxes, rather than recognizing excess tax benefits in additional paid-in capital. Upon adoption in Q1 2017, the Company recorded $45 million, net, to retained earnings, primarily related to unrealized tax benefits associated with share-based compensation. During the three and nine months ended October 1, 2017, excess tax benefits of $12 million and $31 million, respectively, were reflected as a component of the provision for income taxes. In addition, under the ASU, excess income tax benefits from share-based compensation arrangements are classified as cash flow from operations, rather than cash flow from financing activities. The Company has elected to apply the cash flow classification guidance retrospectively and reclassified $110 million from financing activity to operating activity for the nine months ended October 2, 2016. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). The new standard is based on the principle that revenue should be recognized in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the transfer of promised goods or services. Since its initial release, the FASB has issued several amendments to the standard, which include clarification of accounting guidance related to identification of performance obligations, intellectual property licenses, and principal vs. agent considerations. ASU 2014-09 and all subsequent amendments (collectively, the “new standards”) will be effective for the Company beginning in the first quarter of 2018 and may be applied using either the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company continues to work through steps in the implementation project plan, which include: finalizing new disclosures required by the new standards and implementing changes to business processes and reporting in support of the adoption of the new standards. The Company will adopt the new standards using the modified retrospective method with an adjustment to beginning retained earnings for the cumulative effect of the change, which is not expected to be material. In January 2016, the Financial Accounting Standards Board issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10), which requires equity investments (other than those accounted for under the equity method or those that result in consolidation) to be measured at fair value, with changes in fair value recognized in net income. ASU 2016-01 will be effective for the Company beginning in the first quarter of 2018. The Company anticipates that the adoption of ASU 2016-01 may increase the volatility of other income and expense, net, as a result of the remeasurement of the Company’s cost-method investments. In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and eliminates certain real estate-specific provisions. ASU 2016-02 will be effective for the Company beginning in the first quarter of 2019. ASU 2016-02 will be adopted on a modified retrospective transition basis for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available for sale debt securities. The ASU is effective for the Company beginning in the first quarter of 2020, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-13 on its consolidated financial statements. Earnings per Share Basic earnings per share attributable to Illumina stockholders is computed based on the weighted average number of common shares outstanding during the period. Diluted earnings per share attributable to Illumina stockholders is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Per-share earnings of our VIEs are included in the Company’s consolidated basic and diluted earnings per share computations based on the Company’s share of the VIEs’ securities. Potentially dilutive common shares consist of shares issuable under convertible senior notes and equity awards. Convertible senior notes have a dilutive impact when the average market price of the Company’s common stock exceeds the applicable conversion price of the respective notes. Potentially dilutive common shares from equity awards are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercise of equity awards and the average amount of unrecognized compensation expense for equity awards are assumed to be used to repurchase shares. In loss periods, basic net loss per share and diluted net loss per share are identical because the otherwise dilutive potential common shares become anti-dilutive and are therefore excluded. The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in millions):
|
Balance Sheet Account Details |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Account Details | Balance Sheet Account Details Short-Term Investments The following is a summary of short-term investments (in millions):
Realized gains and losses are determined based on the specific identification method and are reported in interest income. Contractual maturities of available-for-sale debt securities as of October 1, 2017 were as follows (in millions):
The Company has the ability, if necessary, to liquidate any of its cash equivalents and short-term investments in order to meet its liquidity needs in the next 12 months. Accordingly, those investments with contractual maturities greater than one year from the date of purchase nonetheless are classified as short-term on the accompanying condensed consolidated balance sheets. Strategic Investments As of October 1, 2017 and January 1, 2017, the aggregate carrying amounts of the Company’s cost-method investments in non-publicly traded companies included in other assets were $250 million and $57 million, respectively. Revenue recognized from transactions with such companies was $38 million and $96 million, respectively, for the three and nine months ended October 1, 2017 and $12 million and $42 million, respectively, for the three and nine months ended October 2, 2016. The Company’s cost-method investments are assessed for impairment quarterly. The Company determines that it is not practicable to estimate the fair value of its cost-method investments on a regular basis and does not reassess the fair value of cost-method investments unless there are identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investments. No material impairment losses were recorded during the three and nine months ended October 1, 2017 or October 2, 2016. The Company invests in a venture capital investment fund (the Fund) with a capital commitment of $100 million that is callable over ten years. The Company’s investment in the Fund is accounted for as an equity method investment. The carrying amounts included in other assets were $14 million and $10 million as of October 1, 2017 and January 1, 2017, respectively. Inventory Inventory consists of the following (in millions):
Property and Equipment Property and equipment, net consists of the following (in millions):
Property and equipment, net included non-cash expenditures of $94 million and $194 million for the nine months ended October 1, 2017 and October 2, 2016, respectively, which were excluded from the condensed consolidated statements of cash flows. Such non-cash expenditures included $60 million and $169 million recorded under build-to-suit lease accounting for the nine months ended October 1, 2017 and October 2, 2016, respectively. Intangible Assets and Goodwill The Company tests the carrying value of goodwill in accordance with accounting rules on impairment of goodwill, which require the Company to estimate the fair value of the reporting unit annually, or when impairment indicators exist, and compare such amounts to their respective carrying values to determine if an impairment is required. The Company performed its annual assessment for goodwill impairment in the second quarter of 2017, noting no impairment. Changes to the Company’s goodwill balance during the nine months ended October 1, 2017 are as follows (in millions):
The Company regularly performs reviews to determine if any event has occurred that may indicate its identifiable intangible assets are potentially impaired. During the nine months ended October 1, 2017, the Company performed a recoverability test when the planned use of a finite-lived acquired intangible asset changed, resulting in an impairment charge of $18 million recorded in cost of product revenue. Also during the nine months ended October 1, 2017, the Company recorded a $5 million impairment charge of in-process research and development as it was determined the project had no future alternative use. Derivatives The Company is exposed to foreign exchange rate risks in the normal course of business. The Company enters into foreign exchange contracts to manage foreign currency risks related to monetary assets and liabilities that are denominated in currencies other than the U.S. dollar. These foreign exchange contracts are carried at fair value in other assets or other liabilities and are not designated as hedging instruments. Changes in the value of derivatives are recognized in other income, net, along with the remeasurement gain or loss on the foreign currency denominated assets or liabilities. As of October 1, 2017, the Company had foreign exchange forward contracts in place to hedge exposures in the euro, Japanese yen, Australian dollar, and Canadian dollar. As of October 1, 2017 and January 1, 2017, the total notional amounts of outstanding forward contracts in place for foreign currency purchases were $79 million and $69 million, respectively. Accrued Liabilities Accrued liabilities consist of the following (in millions):
Warranties The Company generally provides a one-year warranty on instruments. Additionally, the Company provides a warranty on consumables through the expiration date, which generally ranges from six to twelve months after the manufacture date. At the time revenue is recognized, the Company establishes an accrual for estimated warranty expenses based on historical experience as well as anticipated product performance. The Company periodically reviews its warranty reserve for adequacy and adjusts the warranty accrual, if necessary, based on actual experience and estimated costs to be incurred. Warranty expense is recorded as a component of cost of product revenue. Changes in the Company’s reserve for product warranties during the three and nine months ended October 1, 2017 and October 2, 2016 are as follows (in millions):
Leases Changes in the Company’s facility exit obligation related to its former headquarters lease during the three and nine months ended October 1, 2017 and October 2, 2016 are as follows (in millions):
On February 22, 2017, the Company entered into a lease agreement for a building under construction in Madison, Wisconsin. Minimum lease payments during the initial 15-year term are estimated to be $46 million. Investments in Consolidated Variable Interest Entities GRAIL, Inc. In January 2016, the Company obtained a majority equity ownership interest in GRAIL, a company formed with unrelated third party investors to develop a blood test for early-stage cancer detection. The Company determined that GRAIL was a variable interest entity as the entity lacked sufficient equity to finance its activities without additional support. Additionally, the Company determined that it had (a) control of GRAIL’s board of directors, which had unilateral power over the activities that most significantly impacted the economic performance of GRAIL and (b) the obligation to absorb losses of and the right to receive benefits from GRAIL that were potentially significant to GRAIL. As a result, the Company was deemed to be the primary beneficiary of GRAIL and was required to consolidate GRAIL. In January 2016, GRAIL completed its Series A convertible preferred stock financing, raising $120 million, of which the Company invested $40 million. Additionally, the Company and GRAIL executed a long-term supply agreement in which the Company contributed certain perpetual licenses, employees, and discounted supply terms in exchange for 113 million shares of GRAIL’s Class B common stock. Such contributions were recorded at their historical basis as they remained within the control of the Company. The $80 million received by GRAIL from unrelated third party investors upon issuance of its Series A convertible preferred stock was classified as noncontrolling interests in stockholders’ equity on the Company’s condensed consolidated balance sheet. In June 2016, GRAIL authorized for issuance 98 million shares of Series A-1 convertible preferred stock, all of which were issued to Illumina in exchange for Illumina’s 98 million shares of GRAIL Class B common stock. As a result of the exchange, Illumina recorded a $10 million deemed dividend, net of tax of $10 million, through equity, which was eliminated in consolidation. Deconsolidation of GRAIL, Inc. On February 28, 2017, GRAIL completed the initial close of its Series B preferred stock financing, raising over $900 million, in which the Company did not participate. Concurrent with the financing, GRAIL repurchased from the Company 35 million shares of its Series A preferred stock and approximately 34 million shares of its Series A-1 preferred stock for an aggregate purchase price of $278 million. At this time, the Company ceased to have a controlling financial interest in GRAIL and the Company’s equity ownership was reduced from 52% to 19%. Additionally, the Company’s voting interest was reduced to 13%, and the Company no longer has representation on GRAIL’s board of directors. As a result, the Company deconsolidated GRAIL’s financial statements effective February 28, 2017 and accounts for the remaining retained investment as a cost method investment. During the three months ended July 2, 2017, the Company purchased approximately 3 million Series B preferred shares for $14 million resulting in an ownership of approximately 17% of GRAIL’s outstanding stock and a 12% voting interest. As of October 1, 2017, the Company holds $185 million in other assets related to this investment, which consists of 5 million Series A preferred shares, and approximately 3 million Series B preferred shares and 78 million Class A common shares of GRAIL. The operations of GRAIL from January 2, 2017 up to the date of deconsolidation are included in the accompanying condensed consolidated statements of income for the nine months ended October 1, 2017. During this period, the Company absorbed approximately 50% of GRAIL’s losses based upon its proportional ownership of GRAIL’s common stock. On February 28, 2017, the Company recorded a pretax gain of $453 million included in other income, net, of which $159 million relates to the remeasurement of the Company’s retained equity interest to its fair value. The pretax gain on deconsolidation includes (i) the consideration received from GRAIL for its repurchase of a portion of the Company’s ownership interest, (ii) the derecognition of the carrying amounts of GRAIL’s assets and liabilities, (iii) the derecognition of the noncontrolling interest related to GRAIL, and (iv) the recording of the Company’s remaining interest in GRAIL at fair value. This fair value measurement of the Company’s remaining interest was derived using the market approach. Significant estimates and assumptions required for this valuation included, but were not limited to, various Black-Scholes option-pricing model assumptions as of the date of deconsolidation and estimated discounts for lack of marketability related to the equity securities. These unobservable inputs, which represent a Level 3 measurement, are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. In connection with the deconsolidation of GRAIL, the parties amended their long-term supply agreement, including the discounted supply terms. The repurchase and supply arrangements, which were entered into concurrently, contain various elements and, as such, are deemed to be an arrangement with multiple deliverables as defined under the respective authoritative accounting guidance. The Company determined that each of the elements, which include the purchase obligation, the purchase right, and services to be provided in accordance with the long-term supply agreement, were at, or approximated, fair value on a standalone basis, and therefore, there was no discount to allocate among the deliverables. As such, none of the deconsolidation gain was allocated to these elements. Helix Holdings I, LLC In July 2015, the Company obtained a 50% voting equity ownership interest in Helix Holdings I, LLC (Helix), a limited liability company formed with unrelated third party investors to pursue the development and commercialization of a marketplace for consumer genomics. The Company determined that Helix is a variable interest entity as the holders of the at-risk equity investments as a group lack the power to direct the activities of Helix that most significantly impact Helix’s economic performance. Additionally, the Company determined that it has (a) unilateral power over one of the activities that most significantly impacts the economic performance of Helix through its contractual arrangements and no one individual party has unilateral power over the remaining significant activities of Helix and (b) the obligation to absorb losses of and the right to receive benefits from Helix that are potentially significant to Helix. As a result, the Company is deemed to be the primary beneficiary of Helix and is required to consolidate Helix. As contractually committed, the Company contributed certain perpetual licenses, instruments, intangibles, initial laboratory setup, and discounted supply terms in exchange for voting equity interests in Helix. Such contributions are recorded at their historical basis as they remain within the control of the Company. Helix is financed through cash contributions made by the third party investors in exchange for voting equity interests in Helix. Certain noncontrolling Helix investors may require the Company to redeem all noncontrolling interests in cash at the then approximate fair market value. Such redemption right is exercisable at the option of certain noncontrolling interest holders after January 1, 2021, provided that a bona fide pursuit of the sale of Helix has occurred and an initial public offering of Helix has not been completed. The fair value of the redeemable noncontrolling interests is considered a Level 3 instrument. As the contingent redemption is outside of the control of Illumina, the redeemable noncontrolling interests in Helix are classified outside of stockholders’ equity on the accompanying condensed consolidated balance sheets. The balance of the redeemable noncontrolling interests is reported at the greater of its carrying value after receiving its allocation of Helix’s profits and losses or its estimated redemption value at each reporting date. As of October 1, 2017, the noncontrolling shareholders and Illumina each held 50% of Helix’s outstanding voting equity interests. The assets and liabilities of Helix are not significant to the Company’s financial position as of October 1, 2017. Helix has an immaterial impact on the Company’s condensed consolidated statements of income and cash flows for the three and nine months ended October 1, 2017. As of October 1, 2017, the accompanying condensed consolidated balance sheet includes $32 million of cash and cash equivalents attributable to Helix that will be used to settle their respective obligations and will not be available to settle obligations of the Company. Redeemable Noncontrolling Interests The activity of the redeemable noncontrolling interests during the nine months ended October 1, 2017 is as follows (in millions):
|
Fair Value Measurements |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The following table presents the Company’s hierarchy for assets and liabilities measured at fair value on a recurring basis as of October 1, 2017 and January 1, 2017 (in millions):
The Company holds available-for-sale securities that consist of highly liquid, investment grade debt securities. The Company considers information provided by the Company’s investment accounting and reporting service provider in the measurement of fair value of its debt securities. The investment service provider provides valuation information from an industry-recognized valuation service. Such valuations may be based on trade prices in active markets for identical assets or liabilities (Level 1 inputs) or valuation models using inputs that are observable either directly or indirectly (Level 2 inputs), such as quoted prices for similar assets or liabilities, yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures. The Company’s deferred compensation plan assets consist primarily of investments in life insurance contracts carried at cash surrender value, which reflects the net asset value of the underlying publicly traded mutual funds. The Company performs control procedures to corroborate the fair value of its holdings, including comparing valuations obtained from its investment service provider to valuations reported by the Company’s asset custodians, validation of pricing sources and models, and review of key model inputs if necessary. |
Debt |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Summary of debt obligations The Company’s debt obligations consist of the following (dollars in millions):
Convertible Senior Notes 0% Convertible Senior Notes due 2019 (2019 Notes) and 0.5% Convertible Senior Notes due 2021 (2021 Notes) In June 2014, the Company issued $633 million aggregate principal amount of 2019 Notes and $517 million aggregate principal amount of 2021 Notes. The Company used the net proceeds plus cash on hand to repurchase outstanding debt. The 2019 and 2021 Notes mature on June 15, 2019 and June 15, 2021, respectively, and the implied estimated effective rates of the liability components of the Notes were 2.9% and 3.5%, respectively, assuming no conversion. Both the 2019 and 2021 Notes will be convertible into cash, shares of common stock, or a combination of cash and shares of common stock, at the Company's election, based on an initial conversion rate, subject to adjustment, of 3.9318 shares per $1,000 principal amount of the notes (which represents an initial conversion price of approximately $254.34 per share), only in the following circumstances and to the following extent: (1) during the five business-day period after any 10 consecutive trading day period (the measurement period) in which the trading price per 2019 and 2021 Note for each day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such day; (2) during any calendar quarter (and only during that quarter) after the calendar quarter ending September 30, 2014, if the last reported sale price of the Company’s common stock for 20 or more trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; (3) upon the occurrence of specified events described in the indenture for the 2019 and 2021 Notes; and (4) at any time on or after March 15, 2019 for the 2019 Notes, or March 15, 2021 for the 2021 Notes, through the second scheduled trading day immediately preceding the maturity date. Neither the 2019 nor the 2021 Notes were convertible as of October 1, 2017, and had no dilutive impact during the three and nine months ended October 1, 2017. If the 2019 and 2021 Notes were converted as of October 1, 2017, the if-converted value would not exceed the principal amount. 0.25% Convertible Senior Notes due 2016 In 2011, the Company issued $920 million aggregate principal amount of 0.25% convertible senior notes due 2016 (2016 Notes) with a maturity date of March 15, 2016. The effective rate of the liability component was estimated to be 4.5%. Based upon meeting the stock trading price conversion requirement during the three months ended March 30, 2014, the 2016 Notes became convertible on April 1, 2014 through, and including, March 11, 2016. All notes were converted by March 11, 2016. Build-to-suit leases The Company evaluates whether it is the accounting owner of leased assets during the construction period when the Company is involved in the construction of leased assets. Including the Madison lease agreement entered on February 28, 2017, the Company is considered the owner of two construction projects for accounting purposes only under build-to-suit lease accounting due to certain indemnification obligations related to the construction. As of October 1, 2017 and January 1, 2017, the Company has recorded $124 million and $223 million, respectively, in project construction costs paid or reimbursed by the landlord as construction in progress and a corresponding build-to-suit lease liability. During the nine months ended October 1, 2017, construction of a build-to-suit property was completed. The Company concluded it did not qualify for “sale-leaseback” treatment and the lease is accounted for as a financing obligation. Accordingly, the Company reclassified $102 million of construction in progress and build-to-suit lease liability to building asset and obligations under financing leases, respectively. On February 28, 2017, the Company deconsolidated GRAIL, as further described in note “2. Balance Sheet Account Details”, and removed $58 million of construction in progress and the corresponding build-to-suit lease liability. |
Share-based Compensation Expense |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Expense | Share-based Compensation Expense Share-based compensation expense for all stock awards consists of the following (in millions):
The assumptions used for the specified reporting periods and the resulting estimates of weighted-average fair value per share for stock purchased under the Employee Stock Purchase Plan (ESPP) during the nine months ended October 1, 2017 are as follows:
As of October 1, 2017, approximately $242 million of unrecognized compensation cost related to restricted stock and ESPP shares granted to date is expected to be recognized over a weighted-average period of approximately 2.2 years. |
Stockholders' Equity |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity As of October 1, 2017, approximately 6.3 million shares remained available for future grants under the 2015 Stock Plan. Restricted Stock The Company’s restricted stock activity and related information for the nine months ended October 1, 2017 is as follows (units in thousands):
______________________________________
Stock Options The Company’s stock option activity under all stock option plans during the nine months ended October 1, 2017 is as follows:
Employee Stock Purchase Plan The price at which common stock is purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first day of the offering period or purchase date, whichever is lower. During the nine months ended October 1, 2017, approximately 0.3 million shares were issued under the ESPP. As of October 1, 2017, there were approximately 14.0 million shares available for issuance under the ESPP. Share Repurchases On July 28, 2016, the Company’s Board of Directors authorized a share repurchase program, which superseded all prior and available repurchase authorizations, to repurchase $250 million of outstanding common stock. During the three months ended April 2, 2017, the Company repurchased 0.6 million shares for $101 million, completing the share repurchase program. On May 4, 2017, the Company’s Board of Directors authorized an additional share repurchase program to repurchase $250 million of outstanding common stock. The repurchases may be completed under a 10b5-1 plan or at management’s discretion. During the three months ended October 1, 2017, the Company repurchased 0.4 million shares for $75 million under a 10b5-1 plan. Authorizations to repurchase $175 million of the Company’s common stock remained available as of October 1, 2017. |
Income Taxes |
9 Months Ended |
---|---|
Oct. 01, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate may vary from the U.S. federal statutory tax rate due to the change in the mix of earnings in tax jurisdictions with different statutory rates, benefits related to tax credits, and the tax impact of non-deductible expenses and other permanent differences between income before income taxes and taxable income. The effective tax rates for the three and nine months ended October 1, 2017 were 12.9% and 24.3%, respectively. For the three and nine months ended October 1, 2017, the variance from the U.S. federal statutory tax rate of 35% was primarily attributable to the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore and the United Kingdom, and excess tax benefits related to share-based compensation. In addition, for the nine months ended October 1, 2017, the decrease from the federal statutory tax rate was partially offset by the discrete tax impact of $150 million from the gain on the deconsolidation of GRAIL. |
Legal Proceedings |
9 Months Ended |
---|---|
Oct. 01, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Legal Proceedings The Company is involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property, employment, and contractual matters. In connection with these matters, the Company assesses, on a regular basis, the probability and range of possible loss based on the developments in these matters. A liability is recorded in the financial statements if it is believed to be probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable results could occur, assessing contingencies is highly subjective and requires judgments about future events. The Company regularly reviews outstanding legal matters to determine the adequacy of the liabilities accrued and related disclosures. The amount of ultimate loss may differ from these estimates. Each matter presents its own unique circumstances, and prior litigation does not necessarily provide a reliable basis on which to predict the outcome, or range of outcomes, in any individual proceeding. Because of the uncertainties related to the occurrence, amount, and range of loss on any pending litigation or claim, the Company is currently unable to predict their ultimate outcome, and, with respect to any pending litigation or claim where no liability has been accrued, to make a meaningful estimate of the reasonably possible loss or range of loss that could result from an unfavorable outcome. In the event that opposing litigants in outstanding litigations or claims ultimately succeed at trial and any subsequent appeals on their claims, any potential loss or charges in excess of any established accruals, individually or in the aggregate, could have a material adverse effect on the Company’s business, financial condition, results of operations, and/or cash flows in the period in which the unfavorable outcome occurs or becomes probable, and potentially in future periods. |
Segment Information (Notes) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] | Segment Information The Company has two reportable segments: Core Illumina and one segment related to the combined activities of the Company’s consolidated VIEs, GRAIL and Helix (Consolidated VIEs). Following the GRAIL deconsolidation on February 28, 2017, the Company’s Consolidated VIEs no longer include GRAIL. The Company reports segment information based on the management approach. This approach designates the internal reporting used by the Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance as the source of the Company’s reportable segments. The CODM allocates resources and assesses the performance of each operating segment using information about its revenues and income (losses) from operations. Based on the information used by the CODM, the Company has determined its reportable segments as follows: Core Illumina: Core Illumina’s products and services serve customers in the research, clinical and applied markets, and enable the adoption of a variety of genomic solutions. Core Illumina includes all operations of the Company, excluding the results of its consolidated VIEs. Consolidated VIEs: GRAIL: GRAIL was created to develop a blood test for early-stage cancer detection. GRAIL is currently in the early stages of developing this test and as such, had no revenues through the date of deconsolidation. Helix: Helix was established to enable individuals to explore their genetic information by providing affordable sequencing and database services for consumers through third party partners, driving the creation of an ecosystem of consumer applications. Management evaluates the performance of the Company’s operating segments based upon income (loss) from operations. The Company does not allocate expenses between segments. Core Illumina sells products and provides services to GRAIL and Helix in accordance with contractual agreements between the entities. The following table presents the operating performance of each reportable segment (in millions):
The following table presents the total assets of each reportable segment (in millions):
|
Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
---|---|
Oct. 01, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. |
Consolidation | The unaudited condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, majority-owned or controlled companies, and variable interest entities (VIEs) for which the Company is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. Effective February 28, 2017, Illumina deconsolidated GRAIL, Inc.’s financial statements. In management’s opinion, the accompanying financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results for the interim periods presented. |
Variable Interest Entities | The Company evaluates its ownership, contractual, and other interests in entities that are not wholly-owned by the Company to determine if these entities are VIEs, and, if so, whether the Company is the primary beneficiary of the VIE. In determining whether the Company is the primary beneficiary of a VIE and is therefore required to consolidate the VIE, the Company applies a qualitative approach that determines whether it has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses of, or the rights to receive benefits from, the VIE that could potentially be significant to that VIE. The Company continuously assesses whether it is the primary beneficiary of a VIE as changes to existing relationships or future transactions may result in the consolidation or deconsolidation, as the case may be, of such VIE. The Company has not provided financial or other support during the periods presented to its VIEs that it was not previously contractually required to provide. |
Equity Method Investments | The equity method is used to account for investments in which the Company has the ability to exercise significant influence, but not control, over the investee. Such investments are recorded within other assets, and the share of net income or losses of equity investments is recognized on a one quarter lag in other income, net. |
Redeemable Noncontrolling Interests | Noncontrolling interests represent the portion of equity (net assets) in a consolidated entity that is not wholly-owned by the Company that is not attributable, directly or indirectly, to the Company. Noncontrolling interests with embedded contingent redemption features, such as put rights, that are not solely within the Company’s control are considered redeemable noncontrolling interests. Redeemable noncontrolling interests are presented outside of stockholders’ equity on the condensed consolidated balance sheets. |
Fiscal Year | The Company’s fiscal year consists of 52 or 53 weeks ending the Sunday closest to December 31, with quarters of 13 or 14 weeks ending the Sunday closest to March 31, June 30, September 30, and December 31. The three and nine months ended October 1, 2017 and October 2, 2016 were both 13 and 39 weeks, respectively. |
Reclassifications | Certain prior period amounts have been reclassified to conform to the current period presentation. |
Recently Adopted Accounting Pronouncements | In March 2016, the Financial Accounting Standards Board issued Accounting Standard Update (ASU) 2016-09, Compensation - Stock Compensation (Topic 718), which aims to simplify the accounting for share-based payment transactions, including accounting for income taxes, classification on the statement of cash flows, accounting for forfeitures, and classification of awards as either liabilities or equity. This ASU was effective for the Company beginning in the first quarter of 2017. Under the ASU, excess tax benefits from share-based payment arrangements are classified as discrete items within the provision for income taxes, rather than recognizing excess tax benefits in additional paid-in capital. Upon adoption in Q1 2017, the Company recorded $45 million, net, to retained earnings, primarily related to unrealized tax benefits associated with share-based compensation. During the three and nine months ended October 1, 2017, excess tax benefits of $12 million and $31 million, respectively, were reflected as a component of the provision for income taxes. In addition, under the ASU, excess income tax benefits from share-based compensation arrangements are classified as cash flow from operations, rather than cash flow from financing activities. The Company has elected to apply the cash flow classification guidance retrospectively and reclassified $110 million from financing activity to operating activity for the nine months ended October 2, 2016. |
Recently Issued Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606). The new standard is based on the principle that revenue should be recognized in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the transfer of promised goods or services. Since its initial release, the FASB has issued several amendments to the standard, which include clarification of accounting guidance related to identification of performance obligations, intellectual property licenses, and principal vs. agent considerations. ASU 2014-09 and all subsequent amendments (collectively, the “new standards”) will be effective for the Company beginning in the first quarter of 2018 and may be applied using either the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company continues to work through steps in the implementation project plan, which include: finalizing new disclosures required by the new standards and implementing changes to business processes and reporting in support of the adoption of the new standards. The Company will adopt the new standards using the modified retrospective method with an adjustment to beginning retained earnings for the cumulative effect of the change, which is not expected to be material. In January 2016, the Financial Accounting Standards Board issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10), which requires equity investments (other than those accounted for under the equity method or those that result in consolidation) to be measured at fair value, with changes in fair value recognized in net income. ASU 2016-01 will be effective for the Company beginning in the first quarter of 2018. The Company anticipates that the adoption of ASU 2016-01 may increase the volatility of other income and expense, net, as a result of the remeasurement of the Company’s cost-method investments. In February 2016, the Financial Accounting Standards Board issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and eliminates certain real estate-specific provisions. ASU 2016-02 will be effective for the Company beginning in the first quarter of 2019. ASU 2016-02 will be adopted on a modified retrospective transition basis for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available for sale debt securities. The ASU is effective for the Company beginning in the first quarter of 2020, with early adoption permitted. The Company is currently evaluating the impact of ASU 2016-13 on its consolidated financial statements. |
Earnings per Share | Basic earnings per share attributable to Illumina stockholders is computed based on the weighted average number of common shares outstanding during the period. Diluted earnings per share attributable to Illumina stockholders is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Per-share earnings of our VIEs are included in the Company’s consolidated basic and diluted earnings per share computations based on the Company’s share of the VIEs’ securities. Potentially dilutive common shares consist of shares issuable under convertible senior notes and equity awards. Convertible senior notes have a dilutive impact when the average market price of the Company’s common stock exceeds the applicable conversion price of the respective notes. Potentially dilutive common shares from equity awards are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercise of equity awards and the average amount of unrecognized compensation expense for equity awards are assumed to be used to repurchase shares. In loss periods, basic net loss per share and diluted net loss per share are identical because the otherwise dilutive potential common shares become anti-dilutive and are therefore excluded. |
Derivatives | The Company is exposed to foreign exchange rate risks in the normal course of business. The Company enters into foreign exchange contracts to manage foreign currency risks related to monetary assets and liabilities that are denominated in currencies other than the U.S. dollar. These foreign exchange contracts are carried at fair value in other assets or other liabilities and are not designated as hedging instruments. Changes in the value of derivatives are recognized in other income, net, along with the remeasurement gain or loss on the foreign currency denominated assets or liabilities. |
Warranties | The Company generally provides a one-year warranty on instruments. Additionally, the Company provides a warranty on consumables through the expiration date, which generally ranges from six to twelve months after the manufacture date. At the time revenue is recognized, the Company establishes an accrual for estimated warranty expenses based on historical experience as well as anticipated product performance. The Company periodically reviews its warranty reserve for adequacy and adjusts the warranty accrual, if necessary, based on actual experience and estimated costs to be incurred. Warranty expense is recorded as a component of cost of product revenue. |
Basis of Presentation and Summary of Significant Accounting Policies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Calculation of Weighted Average Shares used to Calculate Basic and Diluted Earnings Per Share, Earnings Per Share | The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Calculation of Weighted Average Shares used to Calculate Basic and Diluted Earnings Per Share, Antidilutive Securities | The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in millions):
|
Balance Sheet Account Details (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Short-term Investments | The following is a summary of short-term investments (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Contractual Maturities of Available-for-sale Debt Securities | Contractual maturities of available-for-sale debt securities as of October 1, 2017 were as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Inventory | Inventory consists of the following (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Property and Equipment | Property and equipment, net consists of the following (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Goodwill | Changes to the Company’s goodwill balance during the nine months ended October 1, 2017 are as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accrued Liabilities | Accrued liabilities consist of the following (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Reserve for Product Warranties | Changes in the Company’s reserve for product warranties during the three and nine months ended October 1, 2017 and October 2, 2016 are as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Facility Exit Obligation Related to the Former Headquarters Lease | Changes in the Company’s facility exit obligation related to its former headquarters lease during the three and nine months ended October 1, 2017 and October 2, 2016 are as follows (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Activity of Redeemable Noncontrolling Interests | The activity of the redeemable noncontrolling interests during the nine months ended October 1, 2017 is as follows (in millions):
|
Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Hierarchy for Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents the Company’s hierarchy for assets and liabilities measured at fair value on a recurring basis as of October 1, 2017 and January 1, 2017 (in millions):
|
Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Debt [Table Text Block] | Summary of debt obligations The Company’s debt obligations consist of the following (dollars in millions):
|
Share-based Compensation Expense (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Share-based Compensation Expense for all Stock Awards | Share-based compensation expense for all stock awards consists of the following (in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Assumptions used to Estimate the Weighted-Average Fair Value Per Share for Stock Purchase under the Employee Stock Purchase Plan | The assumptions used for the specified reporting periods and the resulting estimates of weighted-average fair value per share for stock purchased under the Employee Stock Purchase Plan (ESPP) during the nine months ended October 1, 2017 are as follows:
|
Stockholders' Equity (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restricted Stock Activity and Related Information, Restricted Stock | The Company’s restricted stock activity and related information for the nine months ended October 1, 2017 is as follows (units in thousands):
______________________________________
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restricted Stock Activity and Related Information, Performance Units | The Company’s restricted stock activity and related information for the nine months ended October 1, 2017 is as follows (units in thousands):
______________________________________
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Activity Under all Stock Option Plans | The Company’s stock option activity under all stock option plans during the nine months ended October 1, 2017 is as follows:
|
Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 01, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operating Performance and Assets by Segment | The following table presents the operating performance of each reportable segment (in millions):
The following table presents the total assets of each reportable segment (in millions):
|
Basis of Presentation and Summary of Significant Accounting Policies - Narrative - Recently Adopted Accounting Principles (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 01, 2017 |
Oct. 01, 2017 |
Oct. 02, 2016 |
Apr. 02, 2017 |
|
Accounting Policies [Abstract] | ||||
Excess tax benefits from share-based compensation not yet recognized recorded in retained earnings | $ 45 | |||
Excess tax benefits from share-based compensation recorded in provision for income taxes | $ 12 | $ 31 | ||
Excess tax benefits from share-based compensation recorded in operating activities | $ 110 |
Basis of Presentation and Summary of Significant Accounting Policies - Summary of Calculation of Weighted Average Shares used to Calculate Basic and Diluted Earnings Per Share (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
Weighted average shares used to calculate basic and diluted earnings per share | ||||
Weighted average shares outstanding | 146 | 147 | 146 | 147 |
Effect of potentially dilutive common shares from: | ||||
Equity awards | 2 | 1 | 2 | 1 |
Weighted average shares used in calculating diluted earnings per share | 148 | 148 | 148 | 148 |
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | 1 |
Balance Sheet Account Details - Summary of Short-term Investments (Details) - USD ($) $ in Millions |
Oct. 01, 2017 |
Jan. 01, 2017 |
---|---|---|
Available-for-sale securities: | ||
Amortized Cost | $ 689 | $ 828 |
Gross Unrealized Losses | (2) | (4) |
Estimated Fair Value | 687 | 824 |
Debt securities in government sponsored entities [Member] | ||
Available-for-sale securities: | ||
Amortized Cost | 74 | 34 |
Estimated Fair Value | 74 | 34 |
Corporate debt securities [Member] | ||
Available-for-sale securities: | ||
Amortized Cost | 343 | 478 |
Gross Unrealized Losses | (1) | (2) |
Estimated Fair Value | 342 | 476 |
U.S. Treasury securities [Member] | ||
Available-for-sale securities: | ||
Amortized Cost | 272 | 316 |
Gross Unrealized Losses | (1) | (2) |
Estimated Fair Value | $ 271 | $ 314 |
Balance Sheet Account Details - Summary of Contractual Maturities of Available-for-sale Debt Securities (Details) $ in Millions |
Oct. 01, 2017
USD ($)
|
---|---|
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract] | |
Due within one year | $ 421 |
After one but within five years | 266 |
Total | $ 687 |
Balance Sheet Account Details - Narrative - Strategic Investments (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
Jan. 01, 2017 |
|
Schedule of Investments [Line Items] | |||||
Commitment in new venture capital investment fund | $ 100 | $ 100 | |||
Callable period | 10 years | ||||
Equity method investments | 14 | $ 14 | $ 10 | ||
Cost-Method Investee [Member] | |||||
Schedule of Investments [Line Items] | |||||
Revenue from transactions with Company's cost-method investments in non-publicly traded companies | 38 | $ 12 | 96 | $ 42 | |
Other Assets [Member] | |||||
Schedule of Investments [Line Items] | |||||
Company's cost-method investments in non-publicly traded companies | $ 250 | $ 250 | $ 57 |
Balance Sheet Account Details - Summary of Inventory (Details) - USD ($) $ in Millions |
Oct. 01, 2017 |
Jan. 01, 2017 |
---|---|---|
Inventory [Abstract] | ||
Raw materials | $ 90 | $ 102 |
Work in process | 192 | 161 |
Finished goods | 45 | 37 |
Total inventory | $ 327 | $ 300 |
Balance Sheet Account Details - Summary of Property and Equipment (Details) - USD ($) $ in Millions |
Oct. 01, 2017 |
Jan. 01, 2017 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | $ 1,253 | $ 1,040 |
Accumulated depreciation | (391) | (327) |
Total property and equipment, net | 862 | 713 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 320 | 270 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 301 | 274 |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 178 | 156 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 34 | 24 |
Building | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 147 | 9 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | $ 273 | $ 307 |
Balance Sheet Account Details - Narrative - Property and Equipment (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
|
Property, Plant and Equipment [Line Items] | ||
Non-cash expenditures included in capital expenditures | $ 94 | $ 194 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Non-cash expenditures included in capital expenditures | $ 60 | $ 169 |
Balance Sheet Account Details - Summary of Changes in Goodwill (Details) $ in Millions |
9 Months Ended |
---|---|
Oct. 01, 2017
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 776 |
GRAIL deconsolidation | (5) |
Ending balance | $ 771 |
Balance Sheet Account Details - Narrative - Intangible Assets and Goodwill (Details) $ in Millions |
9 Months Ended |
---|---|
Oct. 01, 2017
USD ($)
| |
Finite-Lived Intangible Assets [Line Items] | |
Impairment of in-process research and development | $ 5 |
Cost of Sales [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Impairment of finite-lived intangible assets | $ 18 |
Balance Sheet Account Details - Narrative - Derivatives (Details) - USD ($) $ in Millions |
Oct. 01, 2017 |
Jan. 01, 2017 |
---|---|---|
Not Designated as Hedging Instrument [Member] | Foreign Exchange Forward [Member] | ||
Derivative [Line Items] | ||
Derivative, notional amount | $ 79 | $ 69 |
Balance Sheet Account Details - Summary of Accrued Liabilities (Details) - USD ($) $ in Millions |
Oct. 01, 2017 |
Jan. 01, 2017 |
---|---|---|
Accrued Liabilities, Current [Abstract] | ||
Accrued compensation expenses | $ 138 | $ 112 |
Deferred revenue, current portion | 131 | 121 |
Accrued taxes payable | 41 | 32 |
Customer deposits | 18 | 20 |
Other | 53 | 57 |
Total accrued liabilities | $ 381 | $ 342 |
Balance Sheet Account Details - Narrative - Warranties (Details) |
9 Months Ended |
---|---|
Oct. 01, 2017 | |
Instruments [Member] | |
Product Warranty Liability [Line Items] | |
Warranty period | 1 year |
Consumables [Member] | Minimum [Member] | |
Product Warranty Liability [Line Items] | |
Warranty period | 6 months |
Consumables [Member] | Maximum [Member] | |
Product Warranty Liability [Line Items] | |
Warranty period | 12 months |
Balance Sheet Account Details - Summary of Changes in Reserve for Product Warranties (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
Reserve for product warranties [Roll Forward] | ||||
Balance at beginning of period | $ 14 | $ 16 | $ 13 | $ 17 |
Additions charged to cost of product revenue | 7 | 4 | 18 | 17 |
Repairs and replacements | (5) | (6) | (15) | (20) |
Balance at end of period | $ 16 | $ 14 | $ 16 | $ 14 |
Balance Sheet Account Details - Summary of Changes in Facility Exit Obligation Related to the Former Headquarters Lease (Details) - Facility Exit Obligation [Member] - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
Headquarter Facility Exit Obligation [Roll Forward] | ||||
Balance at beginning of period | $ 18 | $ 21 | $ 19 | $ 22 |
Accretion of interest expense | 0 | 0 | 0 | 1 |
Cash payments | (1) | (1) | (2) | (3) |
Balance at end of period | $ 17 | $ 20 | $ 17 | $ 20 |
Balance Sheet Account Details - Narrative - Leases (Details) - February2017 Lease Agreements [Member] $ in Millions |
Feb. 22, 2017
USD ($)
|
---|---|
Lessee, Lease, Description [Line Items] | |
Finance lease term | 15 years |
Future minimum payment due for lease addition in period | $ 46 |
Balance Sheet Account Details - Summary of Activity of Redeemable Noncontrolling Interests (Details) $ in Millions |
9 Months Ended |
---|---|
Oct. 01, 2017
USD ($)
| |
Increase (Decrease) in Redeemable Noncontrolling Interests [Roll Forward] | |
Balance as of January 1, 2017 | $ 44 |
Amount released from escrow | 79 |
Vesting of redeemable equity awards | 12 |
Net loss attributable to noncontrolling interests | (30) |
Adjustment up to the redemption value | 30 |
Deconsolidation of GRAIL | (11) |
Balance as of October 1, 2017 | $ 124 |
Debt - Build-to-suit leases Narrative (Details) $ in Millions |
Oct. 01, 2017
USD ($)
Leases
|
Feb. 28, 2017
USD ($)
|
Jan. 01, 2017
USD ($)
|
---|---|---|---|
Debt Instrument [Line Items] | |||
Number of projects accounted for under build-to-suit lease accounting | Leases | 2 | ||
Build-to-suit lease liability | $ 124 | $ 223 | |
Build-to-suit lease asset under construction | 124 | 223 | |
Obligations under financing leases | 111 | $ 9 | |
Construction In Progress And Build to Suit Lease Liability [Member] | |||
Debt Instrument [Line Items] | |||
Obligations under financing leases | $ 102 | ||
GRAIL, Inc. [Member] | |||
Debt Instrument [Line Items] | |||
Build-to-suit lease liability | $ 58 | ||
Build-to-suit lease asset under construction | $ 58 |
Share-based Compensation Expense - Summary of Share-based Compensation Expense for all Stock Awards (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
|
Share-based Compensation | ||||
Share-based compensation expense before taxes | $ 34 | $ 35 | $ 123 | $ 102 |
Related income tax benefits | (11) | (8) | (34) | (23) |
Share-based compensation expense, net of taxes | 23 | 27 | 89 | 79 |
Cost of product revenue [Member] | ||||
Share-based Compensation | ||||
Share-based compensation expense before taxes | 3 | 2 | 9 | 6 |
Cost of service and other revenue [Member] | ||||
Share-based Compensation | ||||
Share-based compensation expense before taxes | 1 | 1 | 2 | 2 |
Research and development [Member] | ||||
Share-based Compensation | ||||
Share-based compensation expense before taxes | 12 | 12 | 38 | 33 |
Selling, general and administrative [Member] | ||||
Share-based Compensation | ||||
Share-based compensation expense before taxes | $ 18 | $ 20 | $ 74 | $ 61 |
Share-based Compensation Expense - Summary of Assumptions used to Estimate the Weighted-Average Fair Value Per Share for Stock Purchase under the Employee Stock Purchase Plan (Details) - Employee Stock [Member] |
9 Months Ended |
---|---|
Oct. 01, 2017
$ / shares
| |
Assumptions used to estimate the fair value per share of employee stock purchase rights granted | |
Expected volatility, minimum | 29.00% |
Expected volatility, maximum | 44.00% |
Expected dividends | 0.00% |
Weighted-average fair value per share (in dollars per share) | $ 46.85 |
Minimum [Member] | |
Assumptions used to estimate the fair value per share of employee stock purchase rights granted | |
Risk-free interest rate | 0.50% |
Expected term | 6 months |
Maximum [Member] | |
Assumptions used to estimate the fair value per share of employee stock purchase rights granted | |
Risk-free interest rate | 1.22% |
Expected term | 1 year |
Share-based Compensation Expense - Narrative (Details) $ in Millions |
9 Months Ended |
---|---|
Oct. 01, 2017
USD ($)
| |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Unrecognized compensation cost related to stock options, restricted stock, and ESPP shares granted to date | $ 242 |
Weighted-average period of unrecognized compensation cost related to stock options, restricted stock, and ESPP shares granted to date | 2 years 2 months |
Stockholders' Equity - Narrative (Details) shares in Millions |
Oct. 01, 2017
shares
|
---|---|
2015 Illumina and 2005 Solexa Plans [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares available for issuance (in shares) | 6.3 |
Stockholders' Equity - Narrative - Employee Stock Purchase Plan (Details) - ESPP [Member] - Employee Stock [Member] shares in Millions |
9 Months Ended |
---|---|
Oct. 01, 2017
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Specified percentage of the fair market value of the common stock on the first or last day of the offering period whichever is lower at which stock is purchased | 85.00% |
Total shares issued under the ESPP (in shares) | 0.3 |
Shares available for issuance (in shares) | 14.0 |
Stockholders' Equity - Narrative - Share Repurchases (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Oct. 01, 2017 |
Apr. 02, 2017 |
Oct. 01, 2017 |
Oct. 02, 2016 |
May 04, 2017 |
Jul. 28, 2016 |
|
Class of Stock [Line Items] | ||||||
Common stock repurchases | $ 176 | $ 113 | ||||
Common Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Dollar amount remaining in authorized stock repurchase program | $ 175 | $ 175 | ||||
Common Stock [Member] | July 2016 Share Repurchase Plan [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock repurchase program, authorized amount | $ 250 | |||||
Repurchase of common shares (in shares) | 0.6 | |||||
Common stock repurchases | $ 101 | |||||
Common Stock [Member] | May 2017 Share Repurchase Plan [Member] | ||||||
Class of Stock [Line Items] | ||||||
Stock repurchase program, authorized amount | $ 250 | |||||
Repurchase of common shares (in shares) | 0.4 | |||||
Common stock repurchases | $ 75 |
Income Taxes - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Oct. 01, 2017 |
Oct. 01, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 12.90% | 24.30% |
U.S. federal statutory tax rate | 35.00% | 35.00% |
Tax impact from the gain on the deconsolidation of GRAIL | $ 150 |
Segment Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Oct. 01, 2017 |
Oct. 02, 2016 |
Oct. 01, 2017 |
Oct. 02, 2016 |
Jan. 01, 2017 |
|
Segment Reporting Information [Line Items] | |||||
Segment revenues | $ 714 | $ 607 | $ 1,975 | $ 1,779 | |
Segment operating income (loss) | 181 | 161 | 376 | 444 | |
Segment assets | 5,046 | 5,046 | $ 4,281 | ||
Intersegment Eliminations | |||||
Segment Reporting Information [Line Items] | |||||
Segment revenues | (2) | (8) | (7) | (13) | |
Segment operating income (loss) | (5) | 1 | (8) | ||
Segment assets | (12) | (12) | (66) | ||
Operating Segments [Member] | Core Illumina | |||||
Segment Reporting Information [Line Items] | |||||
Segment revenues | 715 | 615 | 1,978 | 1,792 | |
Segment operating income (loss) | 203 | 191 | 447 | 502 | |
Segment assets | 4,999 | 4,999 | 4,167 | ||
Operating Segments [Member] | Consolidated VIEs | |||||
Segment Reporting Information [Line Items] | |||||
Segment revenues | 1 | 4 | |||
Segment operating income (loss) | (22) | $ (25) | (72) | $ (50) | |
Segment assets | $ 59 | $ 59 | $ 180 |
>2?(2V^2[,W,N,_?,P/)4-]_;G;7=[$=5'MK[^:[KCG>>UVYVMBK:
M17VTA_X_3W53%5W_LWGVVF-CB^T85)4>^7[D5<7^,%\MQVM?F]6R?NG*_<%^
M;6;M2U45S7^I+>O3_5S-WRY\VS_ONN&"MUH>BV?[I^W^.GYM^E_>I97MOK*'
M=E\?9HU]NI\_J+M @ 3)]-.>@@3IA-.>
M&BIU-TV$]EAG)D+WTD1$L!#DPE72!:1JJ%.C@WT7[P//OJ(C/B*V^Q]BSQC1Q4[5SYD&^G
MW'?,CF7-G1T5\OK4E]R!4@&R\-F3K+F0@[7?$#@(M9S+-6O'2[L1M.DF)^K'
M=_8/4$L#!!0 ( "U\64LUH!4BI ( ,<* 9 >&PO=V]R:W-H965T
M
38N_&SOMJV/_NZ44*LHM
--1^Y![FT^@X3:?&L\!#>8 1X[&H@.Q\SB'>!7#Y/:[ /;
MR5F(5QM\K0L46D- H=*6@9CE H] J24R-OXLG&B5M(7;_97]V?5N>CD3!8^"
M_NYKW17H'@4U-&2D^D5,7V#I)T7!TOPWN U<.O$:%2"*O<;5*/2@BTLQ@HC
M;_/:<[=."_^US%\0+P7Q6A"[ CP+.>=/1),REV(*Y'SV [%_<72(S=E4-NF.
MPGTSYI7)7LHT27-\L40+YCACX@TF6A'8L*\2L4_B&'\J3Z.]GV#O];AW!/L/
M!*F?(/$2)(X@^=!D=M.D#W/G%TF](JF'X/Y&9,9$H0-Q!PIW_SF+S*N2?5:)
M;EN9,>E&)$IN-/#F?C"0K9L,%51BY&XJ-]EU^!YB=[_>X?/D?B>R[;D*SD*;
M6^KN4B.$!N,DW!D3G7DLUH!"H^WVSNSE/#)SH,6PO 9X?9+*?U!+ P04
M" M?%E+?U7[D;X" !T"@ &0 'AL+W=O
V4NB:VC)3X;[.X]O,2*I5IW>I^4AYTL.LZN%N-1.VWP-JIC\]X6HK@R
MC(<4N"Y6%^PD?+W_6Y^RM7RS]ZMN8="PB*(R*9QU$56:0*68YOE,UH*:-H3>
MT4<;SZ&.8P-:Z?4CA1&NMVF7:=5;\574DAG=63OKK50;I:!#D<6/HG2QC99N
M028#;K2%EK(G8:!+]4)Y,R_NXHJM?D'M)1R.N8BIHF*O27R%J;"&W&[!]'>]
M4!=OS/*H#7Y=E_ 79"6\ 69HPHE9^X)-6,^MZ-EY.[8/<-IA??3? AUJ_@0,
M,Z^F19T'7