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 | |
April 1, 2018 | December 31, 2017 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,560 | $ | 1,225 | |||
Short-term investments | 813 | 920 | |||||
Accounts receivable, net | 400 | 411 | |||||
Inventory | 350 | 333 | |||||
Prepaid expenses and other current assets | 71 | 91 | |||||
Total current assets | 3,194 | 2,980 | |||||
Property and equipment, net | 983 | 931 | |||||
Goodwill | 775 | 771 | |||||
Intangible assets, net | 168 | 175 | |||||
Deferred tax assets | 100 | 88 | |||||
Other assets | 322 | 312 | |||||
Total assets | $ | 5,542 | $ | 5,257 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 151 | $ | 160 | |||
Accrued liabilities | 388 | 432 | |||||
Build-to-suit lease liability | 21 | 144 | |||||
Long-term debt, current portion | 620 | 10 | |||||
Total current liabilities | 1,180 | 746 | |||||
Long-term debt | 710 | 1,182 | |||||
Other long-term liabilities | 364 | 360 | |||||
Redeemable noncontrolling interests | 215 | 220 | |||||
Stockholders’ equity: | |||||||
Common stock | 2 | 2 | |||||
Additional paid-in capital | 2,897 | 2,833 | |||||
Accumulated other comprehensive loss | (1 | ) | (1 | ) | |||
Retained earnings | 2,464 | 2,256 | |||||
Treasury stock, at cost | (2,354 | ) | (2,341 | ) | |||
Total Illumina stockholders’ equity | 3,008 | 2,749 | |||||
Noncontrolling interests | 65 | — | |||||
Total stockholders’ equity | 3,073 | 2,749 | |||||
Total liabilities and stockholders’ equity | $ | 5,542 | $ | 5,257 |
Three Months Ended | |||||||
April 1, 2018 | April 2, 2017 | ||||||
Revenue: | |||||||
Product revenue | $ | 628 | $ | 491 | |||
Service and other revenue | 154 | 107 | |||||
Total revenue | 782 | 598 | |||||
Cost of revenue: | |||||||
Cost of product revenue | 174 | 166 | |||||
Cost of service and other revenue | 62 | 53 | |||||
Amortization of acquired intangible assets | 8 | 11 | |||||
Total cost of revenue | 244 | 230 | |||||
Gross profit | 538 | 368 | |||||
Operating expense: | |||||||
Research and development | 137 | 145 | |||||
Selling, general and administrative | 183 | 171 | |||||
Total operating expense | 320 | 316 | |||||
Income from operations | 218 | 52 | |||||
Other income (expense): | |||||||
Interest income | 5 | 4 | |||||
Interest expense | (11 | ) | (8 | ) | |||
Other income, net | 9 | 455 | |||||
Total other income, net | 3 | 451 | |||||
Income before income taxes | 221 | 503 | |||||
Provision for income taxes | 24 | 155 | |||||
Consolidated net income | 197 | 348 | |||||
Add: Net loss attributable to noncontrolling interests | 11 | 19 | |||||
Net income attributable to Illumina stockholders | $ | 208 | $ | 367 | |||
Net income attributable to Illumina stockholders for earnings per share | $ | 208 | $ | 366 | |||
Earnings per share attributable to Illumina stockholders: | |||||||
Basic | $ | 1.42 | $ | 2.50 | |||
Diluted | $ | 1.41 | $ | 2.48 | |||
Shares used in computing earnings per share: | |||||||
Basic | 147 | 146 | |||||
Diluted | 148 | 147 |
Three Months Ended | |||||||
April 1, 2018 | April 2, 2017 | ||||||
Total consolidated net income and comprehensive income | $ | 197 | $ | 348 | |||
Add: Comprehensive loss attributable to noncontrolling interests | 11 | 19 | |||||
Comprehensive income attributable to Illumina stockholders | $ | 208 | $ | 367 |
Illumina Stockholders | |||||||||||||||||||||||||||
Additional | Accumulated Other | Total | |||||||||||||||||||||||||
Common | Paid-In | Comprehensive | Retained | Treasury | Noncontrolling | Stockholders’ | |||||||||||||||||||||
Stock | Capital | Loss | Earnings | Stock | Interests | Equity | |||||||||||||||||||||
Balance as of December 31, 2017 | $ | 2 | $ | 2,833 | $ | (1 | ) | $ | 2,256 | $ | (2,341 | ) | $ | — | $ | 2,749 | |||||||||||
Net income (loss) | — | — | — | 208 | — | (1 | ) | 207 | |||||||||||||||||||
Issuance of common stock, net of repurchases | — | 21 | — | — | (13 | ) | — | 8 | |||||||||||||||||||
Share-based compensation | — | 48 | — | — | — | — | 48 | ||||||||||||||||||||
Adjustment to the carrying value of redeemable noncontrolling interests | — | (5 | ) | — | — | — | — | (5 | ) | ||||||||||||||||||
Contributions from noncontrolling interest owners | — | — | — | — | — | 61 | 61 | ||||||||||||||||||||
Issuance of subsidiary shares | — | — | — | — | — | 5 | 5 | ||||||||||||||||||||
Balance as of April 1, 2018 | $ | 2 | $ | 2,897 | $ | (1 | ) | $ | 2,464 | $ | (2,354 | ) | $ | 65 | $ | 3,073 |
Three Months Ended | |||||||
April 1, 2018 | April 2, 2017 | ||||||
Cash flows from operating activities: | |||||||
Consolidated net income | $ | 197 | $ | 348 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Gain on deconsolidation of GRAIL | — | (453 | ) | ||||
Depreciation expense | 30 | 26 | |||||
Amortization of intangible assets | 9 | 12 | |||||
Share-based compensation expense | 48 | 50 | |||||
Accretion of debt discount | 8 | 7 | |||||
Deferred income taxes | (11 | ) | 86 | ||||
Impairment of intangible assets | — | 23 | |||||
Other | (6 | ) | (2 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 11 | 16 | |||||
Inventory | (17 | ) | 1 | ||||
Prepaid expenses and other current assets | (2 | ) | 2 | ||||
Other assets | (1 | ) | (1 | ) | |||
Accounts payable | 2 | (3 | ) | ||||
Accrued liabilities | (18 | ) | 52 | ||||
Other long-term liabilities | 5 | 4 | |||||
Net cash provided by operating activities | 255 | 168 | |||||
Cash flows from investing activities: | |||||||
Purchases of available-for-sale securities | (598 | ) | (61 | ) | |||
Sales of available-for-sale securities | 288 | 40 | |||||
Maturities of available-for-sale securities | 415 | 48 | |||||
Proceeds from sale of GRAIL securities | — | 278 | |||||
Deconsolidation of GRAIL cash | — | (52 | ) | ||||
Net purchases of strategic investments | (3 | ) | (7 | ) | |||
Purchases of property and equipment | (90 | ) | (83 | ) | |||
Net cash provided by investing activities | 12 | 163 | |||||
Cash flows from financing activities: | |||||||
Payments on financing obligations | (2 | ) | (1 | ) | |||
Common stock repurchases | — | (101 | ) | ||||
Taxes paid related to net share settlement of equity awards | (13 | ) | (22 | ) | |||
Proceeds from issuance of common stock | 21 | 22 | |||||
Contributions from noncontrolling interest owners | 61 | 16 | |||||
Net cash provided by (used in) financing activities | 67 | (86 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 1 | 1 | |||||
Net increase in cash and cash equivalents | 335 | 246 | |||||
Cash and cash equivalents at beginning of period | 1,225 | 735 | |||||
Cash and cash equivalents at end of period | $ | 1,560 | $ | 981 |
Three Months Ended | |||||||||||||||||||||||
April 1, 2018 | April 2, 2017 | ||||||||||||||||||||||
Sequencing | Microarray | Total | Sequencing | Microarray | Total | ||||||||||||||||||
Consumables | $ | 417 | $ | 87 | $ | 504 | $ | 318 | $ | 69 | $ | 387 | |||||||||||
Instruments | 112 | 6 | 118 | 95 | 5 | 100 | |||||||||||||||||
Other product | 5 | 1 | 6 | 4 | — | 4 | |||||||||||||||||
Total product revenue | 534 | 94 | 628 | 417 | 74 | 491 | |||||||||||||||||
Service and other | 96 | 58 | 154 | 78 | 29 | 107 | |||||||||||||||||
Total revenue | $ | 630 | $ | 152 | $ | 782 | $ | 495 | $ | 103 | $ | 598 |
Three Months Ended | |||||||
April 1, 2018 | April 2, 2017 | ||||||
United States | $ | 416 | $ | 325 | |||
Europe | 184 | 126 | |||||
Greater China (1) | 78 | 56 | |||||
Asia-Pacific (1) | 70 | 67 | |||||
Other markets | 34 | 24 | |||||
Total revenue | $ | 782 | $ | 598 |
Three Months Ended | |||||
April 1, 2018 | April 2, 2017 | ||||
Weighted average shares outstanding | 147 | 146 | |||
Effect of potentially dilutive common shares from: | |||||
Equity awards | 1 | 1 | |||
Weighted average shares used in calculating diluted earnings per share | 148 | 147 | |||
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | — | 1 |
April 1, 2018 | December 31, 2017 | ||||||||||||||||||||||
Amortized Cost | Gross Unrealized Losses | Estimated Fair Value | Amortized Cost | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||||||||
Available-for-sale debt securities: | |||||||||||||||||||||||
Debt securities in government sponsored entities | $ | 38 | $ | — | $ | 38 | $ | 67 | $ | — | $ | 67 | |||||||||||
Corporate debt securities | 375 | (2 | ) | 373 | 423 | (2 | ) | 421 | |||||||||||||||
U.S. Treasury securities | 403 | (1 | ) | 402 | 433 | (1 | ) | 432 | |||||||||||||||
Total available-for-sale debt securities | $ | 816 | $ | (3 | ) | $ | 813 | $ | 923 | $ | (3 | ) | $ | 920 |
Estimated Fair Value | |||
Due within one year | $ | 353 | |
After one but within five years | 460 | ||
Total | $ | 813 |
April 1, 2018 | December 31, 2017 | ||||||
Raw materials | $ | 95 | $ | 93 | |||
Work in process | 209 | 188 | |||||
Finished goods | 46 | 52 | |||||
Total inventory | $ | 350 | $ | 333 |
April 1, 2018 | December 31, 2017 | ||||||
Leasehold improvements | $ | 477 | $ | 331 | |||
Machinery and equipment | 331 | 316 | |||||
Computer hardware and software | 207 | 185 | |||||
Furniture and fixtures | 40 | 34 | |||||
Buildings | 269 | 155 | |||||
Construction in progress | 103 | 326 | |||||
Total property and equipment, gross | 1,427 | 1,347 | |||||
Accumulated depreciation | (444 | ) | (416 | ) | |||
Total property and equipment, net | $ | 983 | $ | 931 |
Goodwill | |||
Balance as of December 31, 2018 | $ | 771 | |
Current period acquisition | 4 | ||
Balance as of April 1, 2018 | $ | 775 |
April 1, 2018 | December 31, 2017 | ||||||
Contract liabilities, current portion | $ | 153 | $ | 150 | |||
Accrued compensation expenses | 125 | 177 | |||||
Accrued taxes payable | 59 | 50 | |||||
Other | 51 | 55 | |||||
Total accrued liabilities | $ | 388 | $ | 432 |
Three Months Ended | |||||||
April 1, 2018 | April 2, 2017 | ||||||
Balance at beginning of period | $ | 17 | $ | 13 | |||
Additions charged to cost of product revenue | 6 | 4 | |||||
Repairs and replacements | (7 | ) | (5 | ) | |||
Balance at end of period | $ | 16 | $ | 12 |
Redeemable Noncontrolling Interests | |||
Balance as of December 31, 2017 | $ | 220 | |
Net loss attributable to noncontrolling interests | (10 | ) | |
Adjustment up to the redemption value | 5 | ||
Balance as of April 1, 2018 | $ | 215 |
April 1, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Money market funds (cash equivalents) | $ | 1,282 | $ | — | $ | — | $ | 1,282 | $ | 957 | $ | — | $ | — | $ | 957 | |||||||||||||||
Debt securities in government-sponsored entities | — | 38 | — | 38 | — | 67 | — | 67 | |||||||||||||||||||||||
Corporate debt securities | — | 373 | — | 373 | — | 421 | — | 421 | |||||||||||||||||||||||
U.S. Treasury securities | 402 | — | — | 402 | 432 | — | — | 432 | |||||||||||||||||||||||
Deferred compensation plan assets | — | 35 | — | 35 | — | 35 | — | 35 | |||||||||||||||||||||||
Total assets measured at fair value | $ | 1,684 | $ | 446 | $ | — | $ | 2,130 | $ | 1,389 | $ | 523 | $ | — | $ | 1,912 | |||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Deferred compensation liability | $ | — | $ | 34 | $ | — | $ | 34 | $ | — | $ | 33 | $ | — | $ | 33 |
April 1, 2018 | December 31, 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 | (68 | ) | (75 | ) | |||
Net carrying amount of liability component of convertible senior notes | 1,082 | 1,075 | |||||
Obligations under financing leases | 244 | 113 | |||||
Other | 4 | 4 | |||||
Less: current portion | (620 | ) | (10 | ) | |||
Long-term debt | $ | 710 | $ | 1,182 | |||
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) | $ | 1,333 | $ | 1,305 | |||
Weighted-average remaining amortization period of discount on the liability component of convertible senior notes | 2.6 years | 2.8 years |
Three Months Ended | |||||||
April 1, 2018 | April 2, 2017 | ||||||
Cost of product revenue | $ | 4 | $ | 3 | |||
Cost of service and other revenue | 1 | — | |||||
Research and development | 15 | 14 | |||||
Selling, general and administrative | 28 | 33 | |||||
Share-based compensation expense before taxes | 48 | 50 | |||||
Related income tax benefits | (10 | ) | (11 | ) | |||
Share-based compensation expense, net of taxes | $ | 38 | $ | 39 |
Employee Stock Purchase Rights | |||
Risk-free interest rate | 0.83% - 1.89% | ||
Expected volatility | 28% - 44% | ||
Expected term | 0.5 - 1.0 year | ||
Expected dividends | 0 | % | |
Weighted-average fair value per share | $ | 55.83 |
Restricted Stock Units (RSU) | Performance Stock Units (PSU)(1) | Weighted-Average Grant-Date Fair Value per Share | |||||||||||
RSU | PSU | ||||||||||||
Outstanding at December 31, 2017 | 2,085 | 542 | $ | 172.92 | $ | 166.15 | |||||||
Awarded | 17 | 45 | $ | 228.79 | $ | 164.36 | |||||||
Vested | (61 | ) | — | $ | 151.01 | — | |||||||
Cancelled | (70 | ) | (15 | ) | $ | 168.15 | $ | 161.84 | |||||
Outstanding at April 1, 2018 | 1,971 | 572 | $ | 174.23 | $ | 166.12 |
(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 December 31, 2017 | 322 | $ | 46.93 | |||
Exercised | (17 | ) | $ | 41.91 | ||
Outstanding and exercisable at April 1, 2018 | 305 | $ | 47.20 |
Three Months Ended | |||||||
April 1, 2018 | April 2, 2017 | ||||||
Revenue: | |||||||
Core Illumina | $ | 783 | $ | 598 | |||
Consolidated VIEs | 3 | 1 | |||||
Elimination of intersegment revenue | (4 | ) | (1 | ) | |||
Consolidated revenue | $ | 782 | $ | 598 | |||
Income (loss) from operations: | |||||||
Core Illumina | $ | 238 | $ | 84 | |||
Consolidated VIEs | (21 | ) | (34 | ) | |||
Elimination of intersegment earnings | 1 | 2 | |||||
Consolidated income from operations | $ | 218 | $ | 52 |
April 1, 2018 | December 31, 2017 | ||||||
Core Illumina | $ | 5,465 | $ | 5,223 | |||
Consolidated VIEs | 155 | 45 | |||||
Elimination of intersegment assets | (78 | ) | (11 | ) | |||
Consolidated total assets | $ | 5,542 | $ | 5,257 |
• | 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 31% during Q1 2018 to $782 million compared to $598 million in Q1 2017 due to the growth in sales of our sequencing consumables and genotyping services, as well as increased shipments of our NovaSeq instrument, partially offset by lower shipments of our HiSeq instruments. We expect our revenue to continue to increase in 2018. |
• | Gross profit as a percentage of revenue (gross margin) was 68.8% in Q1 2018 compared to 61.5% in Q1 2017. The gross margin increase was primarily driven by favorable service margins and an increase in consumables, which generate higher gross margins, as a percentage of revenue. Gross margin also increased due to the impairment of an acquired intangible asset and inventory reserves related to product transitions that were recorded in Q1 2017. 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; 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 increased to 27.8% in Q1 2018 compared to 8.7% in Q1 2017 primarily due to increased revenue, improved gross margins, and a decrease in operating expenses as a result of the deconsolidation of GRAIL in Q1 2017. We expect research and development and selling, general and administrative expenses to continue to grow. |
• | For U.S. federal purposes the corporate statutory income tax rate was reduced from 35% to 21%, effective for our 2018 tax year. The provisional impact of U.S. Tax Reform is our current best estimate based on a preliminary review of the new law and is subject to revision based on our existing accounting for income taxes policy as further information is gathered, and interpretation and analysis of the tax legislation evolves. The Securities and Exchange Commission has issued rules allowing for a measurement period of up to one year after the enactment date of U.S. Tax Reform to finalize the recording of the related tax impacts. Any future changes to our provisional estimated impact of U.S. Tax Reform will be included as an adjustment to the provision for income taxes. |
• | Cash, cash equivalents, and short-term investments were $2 billion as of April 1, 2018, of which approximately $1 billion was held by our foreign subsidiaries. |
Q1 2018 | Q1 2017 | ||||
Revenue: | |||||
Product revenue | 80.3 | % | 82.1 | % | |
Service and other revenue | 19.7 | 17.9 | |||
Total revenue | 100.0 | 100.0 | |||
Cost of revenue: | |||||
Cost of product revenue | 22.3 | 27.8 | |||
Cost of service and other revenue | 7.9 | 8.9 | |||
Amortization of acquired intangible assets | 1.0 | 1.8 | |||
Total cost of revenue | 31.2 | 38.5 | |||
Gross profit | 68.8 | 61.5 | |||
Operating expense: | |||||
Research and development | 17.5 | 24.2 | |||
Selling, general and administrative | 23.5 | 28.6 | |||
Total operating expense | 41.0 | 52.8 | |||
Income from operations | 27.8 | 8.7 | |||
Other income (expense): | |||||
Interest income | 0.6 | 0.7 | |||
Interest expense | (1.4 | ) | (1.3 | ) | |
Other income, net | 1.2 | 76.0 | |||
Total other income, net | 0.4 | 75.4 | |||
Income before income taxes | 28.2 | 84.1 | |||
Provision for income taxes | 3.0 | 25.9 | |||
Consolidated net income | 25.2 | 58.2 | |||
Add: Net loss attributable to noncontrolling interests | 1.4 | 3.2 | |||
Net income attributable to Illumina stockholders | 26.6 | % | 61.4 | % |
(Dollars in millions) | Q1 2018 | Q1 2017 | Change | % Change | ||||||||||
Consumables | $ | 504 | $ | 387 | $ | 117 | 30 | % | ||||||
Instruments | 118 | 100 | 18 | 18 | ||||||||||
Other product | 6 | 4 | 2 | 50 | ||||||||||
Total product revenue | 628 | 491 | 137 | 28 | ||||||||||
Service and other revenue | 154 | 107 | 47 | 44 | ||||||||||
Total revenue | $ | 782 | $ | 598 | $ | 184 | 31 | % |
(Dollars in millions) | Q1 2018 | Q1 2017 | Change | % Change | |||||||||
Gross profit | $ | 538 | $ | 368 | $ | 170 | 46% | ||||||
Gross margin | 68.8 | % | 61.5 | % |
(Dollars in millions) | Q1 2018 | Q1 2017 | Change | % Change | ||||||||||
Research and development | $ | 137 | $ | 145 | $ | (8 | ) | (6 | )% | |||||
Selling, general and administrative | 183 | 171 | 12 | 7 | ||||||||||
Total operating expense | $ | 320 | $ | 316 | $ | 4 | 1 | % |
(Dollars in millions) | Q1 2018 | Q1 2017 | Change | % Change | ||||||||||
Interest income | $ | 5 | $ | 4 | $ | 1 | 25 | % | ||||||
Interest expense | (11 | ) | (8 | ) | (3 | ) | 38 | |||||||
Other income, net | 9 | 455 | (446 | ) | (98 | ) | ||||||||
Total other income, net | $ | 3 | $ | 451 | $ | (448 | ) | (99 | )% |
(Dollars in millions) | Q1 2018 | Q1 2017 | Change | % Change | ||||||||||
Income before income taxes | $ | 221 | $ | 503 | $ | (282 | ) | (56 | )% | |||||
Provision for income taxes | 24 | 155 | (131 | ) | (85 | ) | ||||||||
Consolidated net income | $ | 197 | $ | 348 | $ | (151 | ) | (43 | )% | |||||
Effective tax rate | 10.6 | % | 30.8 | % |
• | 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; |
• | the expansion needs of our facilities, including costs of leasing and building out additional facilities; |
• | repurchases of our outstanding common stock; and |
• | the one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred in accordance with the Tax Cuts and Jobs Act (U.S. Tax Reform) enacted on December 22, 2017. |
• | 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) | Q1 2018 | Q1 2017 | |||||
Net cash provided by operating activities | $ | 255 | $ | 168 | |||
Net cash provided by investing activities | 12 | 163 | |||||
Net cash provided by (used in) financing activities | 67 | (86 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 1 | 1 | |||||
Net increase in cash and cash equivalents | $ | 335 | $ | 246 |
• | our expectations as to our future financial performance, results of operations, or other operational results or metrics; |
• | our expectations regarding the launch of new products or services; |
• | the benefits that we expect will result from our business activities and certain transactions we have completed, such as product introductions, increased revenue, decreased expenses, and avoided expenses and expenditures; |
• | our expectations of the effect on our financial condition of claims, litigation, contingent liabilities, and governmental investigations, proceedings, and regulations; |
• | our strategies or expectations for product development, market position, financial results, and reserves; |
• | our expectations regarding the integration of any acquired technologies with our existing technology; and |
• | other expectations, beliefs, plans, strategies, anticipated developments, and other matters that are not historical facts. |
• | challenges inherent in developing, manufacturing, and launching new products and services, including expanding manufacturing operations and reliance on third-party suppliers for critical components; |
• | the timing and mix of customer orders among our products and services; |
• | the impact of recently launched or pre-announced products and services on existing products and services; |
• | our ability to develop and commercialize our instruments and consumables, to deploy new products, services, and applications, and to 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 December 31, 2017, or in information disclosed in public conference calls, the date and time of which are released beforehand. |
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. | ||
Third Amendment to Lease between BMR-Lincoln Center LP and Illumina, dated January 18, 2018 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase |
ILLUMINA, INC. (registrant) | |||
Date: | April 25, 2018 | /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 |
3 Months Ended | |
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Apr. 01, 2018 |
Apr. 20, 2018 |
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Document and Entity Information [Abstract] | ||
Entity Registrant Name | Illumina Inc | |
Entity Central Index Key | 0001110803 | |
Current Fiscal Year End Date | --12-30 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Apr. 01, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 147 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | |
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Apr. 01, 2018 |
Apr. 02, 2017 |
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Statement of Comprehensive Income [Abstract] | ||
Total consolidated net income and comprehensive income | $ 197 | $ 348 |
Add: Comprehensive loss attributable to noncontrolling interests | 11 | 19 |
Comprehensive income attributable to Illumina stockholders | $ 208 | $ 367 |
Condensed Consolidated Statement of Stockholders' Equity Statement - 3 months ended Apr. 01, 2018 - USD ($) $ in Millions |
Total |
Common Stock |
Additional Paid-in Capital |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Treasury Stock |
Noncontrolling Interests |
---|---|---|---|---|---|---|---|
Beginning balance at Dec. 31, 2017 | $ 2,749 | $ 2 | $ 2,833 | $ (1) | $ 2,256 | $ (2,341) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 207 | 208 | (1) | ||||
Issuance of common stock, net of repurchases | 8 | 21 | (13) | ||||
Share-based compensation | 48 | 48 | |||||
Adjustment to the carrying value of redeemable noncontrolling interests | (5) | (5) | |||||
Contributions from noncontrolling interest owners | 61 | 61 | |||||
Issuance of subsidiary shares | 5 | 5 | |||||
Ending balance at Apr. 01, 2018 | $ 3,073 | $ 2 | $ 2,897 | $ (1) | $ 2,464 | $ (2,354) | $ 65 |
Basis of Presentation and Summary of Significant Accounting Policies |
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Apr. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 audited consolidated financial statements and footnotes included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2017, from which the prior year 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 our accounts, our wholly-owned subsidiaries, majority-owned or controlled companies, and variable interest entities (VIEs) for which we are the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. 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. We evaluate our ownership, contractual, and other interests in entities that are not wholly-owned to determine if these entities are VIEs, and, if so, whether we are the primary beneficiary of the VIE. In determining whether we are the primary beneficiary of a VIE and therefore required to consolidate the VIE, a qualitative approach is applied that determines whether we have 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. We continuously assess whether we are the primary beneficiary of a VIE as changes to existing relationships or future transactions may result in the consolidation or deconsolidation of such VIE. During the three months ended April 1, 2018, our consolidated VIE, Helix, received additional cash contributions from us and third-party investors in exchange for voting equity interests in Helix. Therefore, we reassessed and concluded that Helix continues to be a variable interest entity and that we remain the primary beneficiary. We have not provided financial or other support during the periods presented to our VIEs that we were not previously contractually required to provide. The equity method is used to account for investments in which we have 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 our consolidated entity, Helix, that is not wholly-owned by us that is not attributable, directly or indirectly, to us. Noncontrolling interests with embedded contingent redemption features, such as put rights, that are not solely within our control are considered redeemable noncontrolling interests. Redeemable noncontrolling interests are presented outside of stockholders’ equity on the condensed consolidated balance sheets. Fiscal Year Our fiscal year is the 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 months ended April 1, 2018 and April 2, 2017 were both 13 weeks. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Significant Accounting Policies During the three months ended April 1, 2018, there have been no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, except as described below. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued 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 we expect to be entitled in exchange for the transfer of promised goods or services. We adopted Topic 606 using the modified retrospective transition method. The cumulative effect of applying the new revenue standard to all incomplete contracts as of January 1, 2018 was not material and, therefore, did not result in an adjustment to retained earnings. There was no material difference to the consolidated financial statements for the period ended April 1, 2018 due to the adoption of Topic 606. Furthermore, we expect the impact to be immaterial to our consolidated financial statements going forward. In January 2016, the FASB 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. This standard was effective for us beginning in the first quarter of 2018. Based on our elections, our strategic equity investments that do not have readily determinable fair values and do not qualify for the net asset value practical expedient for estimating fair value are measured at cost, less any impairments, plus or minus changes resulting from observable price changes in orderly transactions for identifiable or similar investments of the same issuer. The measurement alternative was applied prospectively and did not result in an adjustment to retained earnings. Recently Issued Accounting Pronouncements In February 2016, the FASB issued Accounting Standard Update (ASU) 2016-02, Leases (Topic 842). The new standard requires lessees to recognize most leases on their balance sheet as lease liabilities with corresponding right-of-use assets. ASU 2016-02 is effective for us beginning in the first quarter of 2019. Currently, the standard 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 FASB has proposed an alternative method to adopt the lease standard by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. While we are continuing to assess the effects of adoption, we believe the new standard will have a material effect on our consolidated financial statements and disclosures. We expect substantially all of our real-estate operating lease commitments will be recognized as lease liabilities with corresponding right-of-use assets upon adoption, resulting in a significant increase in the assets and liabilities on the consolidated balance sheet. We are currently evaluating the impact of Topic 842 on the consolidated financial statements as it relates to other aspects of our business. In June 2016, the FASB issued Accounting Standards Update (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 standard is effective for us beginning in the first quarter of 2020, with early adoption permitted. We are currently evaluating the impact of ASU 2016-13 on the consolidated financial statements. Revenue Our revenue is generated primarily from the sale of products and services. Product revenue primarily consists of sales of instruments and consumables used in genetic analysis. Service and other revenue primarily consists of revenue generated from genotyping and sequencing services and instrument service contracts. We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. We recognize revenue for satisfied performance obligations only when we determine there are no uncertainties regarding payment terms or transfer of control. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and the term between invoicing and when payment is due is not significant. In instances where right of payment or transfer of title is contingent upon the customer’s acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from genotyping and sequencing services is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer or agreed-upon milestones are reached. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expenses when incurred as the amortization period would have been one year or less. We regularly enter into contracts with multiple performance obligations. Such obligations are generally satisfied within a short time frame, approximately three to six months, after the contract execution date. Revenue recognition for contracts with multiple deliverables is based on the separate, distinct performance obligations within the contract. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. The contract price is allocated to each performance obligation in proportion to its stand-alone selling price. We determine our best estimate of stand-alone selling price using average selling prices over a rolling 12-month period coupled with an assessment of current market conditions. If the product or service has no history of sales or if the sales volume is not sufficient, we rely upon prices set by our pricing committee, adjusted for applicable discounts. Contract liabilities, which consists of deferred revenue and customer deposits, as of April 1, 2018 and December 31, 2017 were $184 million and $181 million, respectively, of which the short-term portions of $153 million and $150 million, respectively, were recorded in accrued liabilities and the remaining long-term portions were recorded in other long-term liabilities. Revenue recorded in the three months ended April 1, 2018 includes $68 million of previously deferred revenue that were included in contract liabilities as of December 31, 2017. Contract assets as of April 1, 2018 and December 31, 2017 were not material. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. The following table represents revenue by source (in millions):
Revenue related to our Consolidated VIEs is included in sequencing services and other revenue. The following table represents revenue by geographic area, based on region of destination (in millions):
(1) Revenue for the Greater China region, which consists of China, Taiwan, and Hong Kong, is reported separately from the Asia-Pacific region. 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 consolidated basic and diluted earnings per share computations based on our share of the VIE’s 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 our 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. The following is the calculation of weighted average shares used to calculate basic and diluted earnings per share (in millions):
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Balance Sheet Account Details |
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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 April 1, 2018 were as follows (in millions):
We have the ability, if necessary, to liquidate any of our cash equivalents and short-term investments to meet our liquidity needs in the next 12 months. Accordingly, those investments with contractual maturities greater than one year from the date of purchase are classified as short-term on the accompanying condensed consolidated balance sheets. Strategic Investments The carrying amounts of our strategic equity investments without readily determinable fair values are initially measured at cost and are remeasured for impairment and observable price changes in orderly transactions for identifiable or similar investments of the same issuer. As of April 1, 2018 and December 31, 2017, the aggregate carrying amounts of our strategic equity investments without readily determinable fair values were $256 million and $250 million, respectively, included in other assets. Revenue recognized from transactions with such companies for the three months ended April 1, 2018 and April 2, 2017 was $36 million and $23 million, respectively. We invest in a venture capital investment fund (the Fund) with a capital commitment of $100 million that is callable over ten years, of which $80 million remains as of April 1, 2018. Our investment in the Fund is accounted for as an equity-method investment. The carrying amounts of the Fund included in other assets were $19 million and $16 million as of April 1, 2018 and December 31, 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 $33 million and $60 million for the three months ended April 1, 2018 and April 2, 2017, respectively, which were excluded from the condensed consolidated statements of cash flows. Such non-cash expenditures included $6 million and $27 million recorded under build-to-suit lease accounting for the three months ended April 1, 2018 and April 2, 2017, respectively. Intangible Assets and Goodwill Changes to goodwill during the three months ended April 1, 2018 are as follows (in millions):
We perform regular reviews to determine if any event has occurred that may indicate our identifiable intangible assets are potentially impaired. During the three months ended April 2, 2017, we 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 three months ended April 2, 2017, we recorded a $5 million impairment charge in research and development related to an in-process research and development project that was determined to have no future alternative use. Derivatives We are exposed to foreign exchange rate risks in the normal course of business. We enter 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 current assets or accrued 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 April 1, 2018, we had foreign exchange forward contracts in place to hedge exposures in the euro, Japanese yen, Australian dollar, and Canadian dollar. As of April 1, 2018 and December 31, 2017, the total notional amounts of outstanding forward contracts in place for foreign currency purchases were $113 million and $88 million, respectively. Accrued Liabilities Accrued liabilities consist of the following (in millions):
Warranties We generally provide a one-year warranty on instruments. Additionally, we provide 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, an accrual is established for estimated warranty expenses based on historical experience as well as anticipated product performance. We periodically review the warranty reserve for adequacy and adjust 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 reserve for product warranties during the three months ended April 1, 2018 and April 2, 2017 are as follows (in millions):
Investments in Consolidated VIEs Helix Holdings I, LLC In July 2015, we 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. We determined that Helix is a VIE 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, we determined that we have (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, we are deemed to be the primary beneficiary of Helix and are required to consolidate Helix. As contractually committed, in July 2015, we 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 our control. Helix is financed through cash contributions made by us and the third-party investors in exchange for voting equity interests in Helix. During the three months ended April 1, 2018, we made an additional investment of $68 million in exchange for voting equity interests in Helix. As of April 1, 2018, the noncontrolling shareholders and Illumina each held 50% of Helix’s outstanding voting equity interests. Certain noncontrolling Helix investors may require us to redeem certain 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. As the contingent redemption is outside of our control, 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 fair value at each reporting date. The fair value of the redeemable noncontrolling interests is considered a Level 3 instrument. As of April 1, 2018, the accompanying condensed consolidated balance sheet includes $121 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 Illumina. The remaining assets and liabilities of Helix are not significant to our financial position as of April 1, 2018. Helix has an immaterial impact on our condensed consolidated statements of income and cash flows for the three months ended April 1, 2018. GRAIL, Inc. In 2016, we 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. We determined that GRAIL was a VIE as the entity lacked sufficient equity to finance its activities without additional support. Additionally, we determined that we 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, we were deemed to be the primary beneficiary of GRAIL and were required to consolidate GRAIL. On February 28, 2017, GRAIL completed the initial close of its Series B preferred stock financing. Concurrent with the financing, GRAIL repurchased from us 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, we ceased to have a controlling financial interest in GRAIL and our equity ownership was reduced from 52% to 19%. Additionally, our voting interest was reduced to 13%, and we no longer have representation on GRAIL’s board of directors. As a result, we deconsolidated GRAIL’s financial statements effective February 28, 2017 and recorded a pretax gain on deconsolidation of $453 million in other income, net. The carrying value of the remaining retained investment recorded in other assets was $185 million as of April 1, 2018 and December 31, 2017. The operations of GRAIL from January 2, 2017 up to February 28, 2017, the date of deconsolidation, are included in the accompanying condensed consolidated statements of income for the three months ended April 2, 2017. During this period, we absorbed approximately 50% of GRAIL’s losses based upon our proportional ownership of GRAIL’s common stock. Redeemable Noncontrolling Interests The activity of the redeemable noncontrolling interests during the three months ended April 1, 2018 is as follows (in millions):
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Fair Value Measurements |
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Fair Value Measurements | Fair Value Measurements The following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis as of April 1, 2018 and December 31, 2017 (in millions):
We hold available-for-sale securities that consist of highly-liquid, investment-grade debt securities. We consider information provided by our investment accounting and reporting service provider in the measurement of fair value of our 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. Our 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. We perform control procedures to corroborate the fair value of our holdings, including comparing valuations obtained from our investment service provider to valuations reported by our asset custodians, validation of pricing sources and models, and review of key model inputs, if necessary. |
Debt and Other Commitments |
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Debt and Other Commitments | Debt and Other Commitments Summary of debt obligations 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, we issued $633 million aggregate principal amount of 2019 Notes and $517 million aggregate principal amount of 2021 Notes. We 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 our 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 Notes for each day of such measurement period was less than 98% of the product of the last reported sale price of our 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 our 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 April 1, 2018 and had no dilutive impact during the three months ended April 1, 2018. If the 2019 and 2021 Notes were converted as of April 1, 2018, the if-converted value would not exceed the principal amount. During the three months ended April 1, 2018, the carrying value of the 2019 Notes was reclassified to short-term as they become convertible within twelve months of the balance sheet date. Build-to-suit leases We evaluate whether we are the accounting owner of leased assets during the construction period when we are involved in the construction of leased assets. We are considered the owner of a construction project for accounting purposes only under build-to-suit lease accounting due to certain indemnification obligations related to the construction. As of April 1, 2018, and December 31, 2017, we recorded $21 million and $144 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 three months ended April 1, 2018, construction of a build-to-suit property was completed. We concluded we did not qualify for “sale-leaseback” treatment and the lease is accounted for as a financing obligation. Accordingly, $132 million of construction in progress and build-to-suit lease liability were reclassified to building asset and obligations under financing lease, respectively. |
Share-based Compensation Expense |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Expense | Share-based Compensation Expense Share-based compensation expense is reported in our statements of income as follows (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 three months ended April 1, 2018 are as follows:
As of April 1, 2018, approximately $360 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 2.5 years. |
Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity As of April 1, 2018, approximately 5.5 million shares remained available for future grants under the 2015 Stock Plan. Restricted Stock Restricted stock activity and related information for the three months ended April 1, 2018 is as follows (units in thousands):
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Stock Options Stock option activity during the three months ended April 1, 2018 is as follows:
ESPP 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 three months ended April 1, 2018, approximately 0.1 million shares were issued under the ESPP. As of April 1, 2018, there were approximately 13.9 million shares available for issuance under the ESPP. Share Repurchases On July 28, 2016, our 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, we repurchased 0.6 million shares for $101 million, completing the share repurchase program. On May 4, 2017, our 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. Authorizations to repurchase $100 million of our common stock remained available as of April 1, 2018. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our 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 rate for the three months ended April 1, 2018 was 10.6%. The variance from the U.S. federal statutory tax rate of 21% 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 the discrete tax benefit associated with the recognition of prior year losses from our investment in Helix. We continue to evaluate the impacts of U.S. Tax Reform as we interpret the legislation, including the newly-enacted global intangible low-taxed income (GILTI) provisions which subject our foreign earnings to a minimum level of tax. Because of the complexities of the new legislation, we have not yet elected an accounting policy for GILTI and therefore have only included GILTI related to current year operations in our estimated provision for income taxes. Recent FASB guidance indicates that accounting for GILTI either as part of deferred taxes or as a period cost are both acceptable methods. Once further information is gathered and interpretation and analysis of the tax legislation evolves we will make an appropriate accounting method election. |
Legal Proceedings |
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Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Legal Proceedings We are 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, we assess, 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. We regularly review 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, we are 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 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 our 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) |
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Segment Information | Segment Information We have two reportable segments: Core Illumina and one segment related to the combined activities of our consolidated VIEs, GRAIL and Helix (Consolidated VIEs). Following the GRAIL deconsolidation on February 28, 2017, our Consolidated VIEs no longer include GRAIL. We report 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 our reportable segments. The CODM allocates resources and assesses the performance of each operating segment using information about its revenue and income (loss) from operations. Based on the information used by the CODM, we have determined our 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, excluding the results of the consolidated VIEs. Consolidated VIEs: 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. GRAIL: GRAIL was created to develop a blood test for early-stage cancer detection. GRAIL was in the early stages of developing this test and as such, had no revenues through the date of deconsolidation. Management evaluates the performance of our operating segments based upon income (loss) from operations. We do 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):
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Basis of Presentation and Summary of Significant Accounting Policies (Policies) |
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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 our accounts, our wholly-owned subsidiaries, majority-owned or controlled companies, and variable interest entities (VIEs) for which we are the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. 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 | We evaluate our ownership, contractual, and other interests in entities that are not wholly-owned to determine if these entities are VIEs, and, if so, whether we are the primary beneficiary of the VIE. In determining whether we are the primary beneficiary of a VIE and therefore required to consolidate the VIE, a qualitative approach is applied that determines whether we have 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. We continuously assess whether we are the primary beneficiary of a VIE as changes to existing relationships or future transactions may result in the consolidation or deconsolidation of such VIE. During the three months ended April 1, 2018, our consolidated VIE, Helix, received additional cash contributions from us and third-party investors in exchange for voting equity interests in Helix. Therefore, we reassessed and concluded that Helix continues to be a variable interest entity and that we remain the primary beneficiary. We have not provided financial or other support during the periods presented to our VIEs that we were not previously contractually required to provide. |
Equity Method Investments | The equity method is used to account for investments in which we have 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 our consolidated entity, Helix, that is not wholly-owned by us that is not attributable, directly or indirectly, to us. Noncontrolling interests with embedded contingent redemption features, such as put rights, that are not solely within our control are considered redeemable noncontrolling interests. Redeemable noncontrolling interests are presented outside of stockholders’ equity on the condensed consolidated balance sheets. |
Fiscal Year | Our fiscal year is the 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 months ended April 1, 2018 and April 2, 2017 were both 13 weeks. |
Reclassifications | Certain prior period amounts have been reclassified to conform to the current period presentation. |
Recently Adopted Accounting Pronouncements | In May 2014, the FASB issued 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 we expect to be entitled in exchange for the transfer of promised goods or services. We adopted Topic 606 using the modified retrospective transition method. The cumulative effect of applying the new revenue standard to all incomplete contracts as of January 1, 2018 was not material and, therefore, did not result in an adjustment to retained earnings. There was no material difference to the consolidated financial statements for the period ended April 1, 2018 due to the adoption of Topic 606. Furthermore, we expect the impact to be immaterial to our consolidated financial statements going forward. In January 2016, the FASB 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. This standard was effective for us beginning in the first quarter of 2018. Based on our elections, our strategic equity investments that do not have readily determinable fair values and do not qualify for the net asset value practical expedient for estimating fair value are measured at cost, less any impairments, plus or minus changes resulting from observable price changes in orderly transactions for identifiable or similar investments of the same issuer. The measurement alternative was applied prospectively and did not result in an adjustment to retained earnings. |
Recently Issued Accounting Pronouncements | In February 2016, the FASB issued Accounting Standard Update (ASU) 2016-02, Leases (Topic 842). The new standard requires lessees to recognize most leases on their balance sheet as lease liabilities with corresponding right-of-use assets. ASU 2016-02 is effective for us beginning in the first quarter of 2019. Currently, the standard 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 FASB has proposed an alternative method to adopt the lease standard by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. While we are continuing to assess the effects of adoption, we believe the new standard will have a material effect on our consolidated financial statements and disclosures. We expect substantially all of our real-estate operating lease commitments will be recognized as lease liabilities with corresponding right-of-use assets upon adoption, resulting in a significant increase in the assets and liabilities on the consolidated balance sheet. We are currently evaluating the impact of Topic 842 on the consolidated financial statements as it relates to other aspects of our business. In June 2016, the FASB issued Accounting Standards Update (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 standard is effective for us beginning in the first quarter of 2020, with early adoption permitted. We are currently evaluating the impact of ASU 2016-13 on the consolidated financial statements. |
Revenue Recognition | Our revenue is generated primarily from the sale of products and services. Product revenue primarily consists of sales of instruments and consumables used in genetic analysis. Service and other revenue primarily consists of revenue generated from genotyping and sequencing services and instrument service contracts. We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. We recognize revenue for satisfied performance obligations only when we determine there are no uncertainties regarding payment terms or transfer of control. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment and the term between invoicing and when payment is due is not significant. In instances where right of payment or transfer of title is contingent upon the customer’s acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from genotyping and sequencing services is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer or agreed-upon milestones are reached. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expenses when incurred as the amortization period would have been one year or less. We regularly enter into contracts with multiple performance obligations. Such obligations are generally satisfied within a short time frame, approximately three to six months, after the contract execution date. Revenue recognition for contracts with multiple deliverables is based on the separate, distinct performance obligations within the contract. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. The contract price is allocated to each performance obligation in proportion to its stand-alone selling price. We determine our best estimate of stand-alone selling price using average selling prices over a rolling 12-month period coupled with an assessment of current market conditions. If the product or service has no history of sales or if the sales volume is not sufficient, we rely upon prices set by our pricing committee, adjusted for applicable discounts. |
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 consolidated basic and diluted earnings per share computations based on our share of the VIE’s 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 our 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. |
Derivatives | We are exposed to foreign exchange rate risks in the normal course of business. We enter 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 current assets or accrued 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 | We generally provide a one-year warranty on instruments. Additionally, we provide 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, an accrual is established for estimated warranty expenses based on historical experience as well as anticipated product performance. We periodically review the warranty reserve for adequacy and adjust 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. |
Strategic Investments | The carrying amounts of our strategic equity investments without readily determinable fair values are initially measured at cost and are remeasured for impairment and observable price changes in orderly transactions for identifiable or similar investments of the same issuer. |
Basis of Presentation and Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue from External Customers | The following table represents revenue by source (in millions):
Revenue related to our Consolidated VIEs is included in sequencing services and other revenue. The following table represents revenue by geographic area, based on region of destination (in millions):
(1) Revenue for the Greater China region, which consists of China, Taiwan, and Hong Kong, is reported separately from the Asia-Pacific region. |
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Summary of Calculation of Weighted Average Shares used to Calculate Basic and Diluted Earnings Per Share, Earnings Per Share | The following is the calculation of weighted average shares used to calculate basic and diluted earnings per share (in millions):
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Summary of Calculation of Weighted Average Shares used to Calculate Basic and Diluted Earnings Per Share, Antidilutive Securities | The following is the calculation of weighted average shares used to calculate basic and diluted earnings per share (in millions):
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Balance Sheet Account Details (Tables) |
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Apr. 01, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Short-term Investments | The following is a summary of short-term investments (in millions):
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Summary of Contractual Maturities of Available-for-sale Debt Securities | Contractual maturities of available-for-sale debt securities as of April 1, 2018 were as follows (in millions):
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Summary of Inventory | Inventory consists of the following (in millions):
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Summary of Property and Equipment | Property and equipment, net consists of the following (in millions):
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Summary of Changes in Goodwill | Changes to goodwill during the three months ended April 1, 2018 are as follows (in millions):
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Summary of Accrued Liabilities | Accrued liabilities consist of the following (in millions):
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Summary of Changes in Reserve for Product Warranties | Changes in the reserve for product warranties during the three months ended April 1, 2018 and April 2, 2017 are as follows (in millions):
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Summary of Activity of Redeemable Noncontrolling Interests | The activity of the redeemable noncontrolling interests during the three months ended April 1, 2018 is as follows (in millions):
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Hierarchy for Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis as of April 1, 2018 and December 31, 2017 (in millions):
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Debt and Other Commitments (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Debt | Debt obligations consist of the following (dollars in millions):
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Share-based Compensation Expense (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Share-based Compensation Expense for all Stock Awards | Share-based compensation expense is reported in our statements of income as follows (in millions):
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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 three months ended April 1, 2018 are as follows:
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Stockholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restricted Stock Activity and Related Information, Restricted Stock | Restricted stock activity and related information for the three months ended April 1, 2018 is as follows (units in thousands):
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Summary of Restricted Stock Activity and Related Information, Performance Units | Restricted stock activity and related information for the three months ended April 1, 2018 is as follows (units in thousands):
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Summary of Stock Option Activity Under all Stock Option Plans | Stock option activity during the three months ended April 1, 2018 is as follows:
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Segment Information (Tables) |
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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):
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Basis of Presentation and Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
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Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Contract liability | $ 184 | $ 181 | |
Contract liabilities, current portion | 153 | $ 150 | $ 150 |
Revenue recognized, previously recorded as deferred revenue | $ 68 | ||
Minimum | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Expected timing of satisfaction, period | 3 months | ||
Maximum | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Expected timing of satisfaction, period | 6 months |
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 | |
---|---|---|
Apr. 01, 2018 |
Apr. 02, 2017 |
|
Weighted average shares used to calculate basic and diluted earnings per share | ||
Weighted average shares outstanding | 147 | 146 |
Effect of potentially dilutive common shares from: | ||
Equity awards | 1 | 1 |
Weighted average shares used in calculating diluted earnings per share | 148 | 147 |
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 |
Apr. 01, 2018 |
Apr. 02, 2017 |
---|---|---|
Available-for-sale securities: | ||
Amortized Cost | $ 816 | $ 923 |
Gross Unrealized Losses | 3 | 3 |
Estimated Fair Value | 813 | 920 |
Debt securities in government sponsored entities | ||
Available-for-sale securities: | ||
Amortized Cost | 38 | 67 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 38 | 67 |
Corporate debt securities | ||
Available-for-sale securities: | ||
Amortized Cost | 375 | 423 |
Gross Unrealized Losses | 2 | 2 |
Estimated Fair Value | 373 | 421 |
U.S. Treasury securities | ||
Available-for-sale securities: | ||
Amortized Cost | 403 | 433 |
Gross Unrealized Losses | 1 | 1 |
Estimated Fair Value | $ 402 | $ 432 |
Balance Sheet Account Details - Summary of Contractual Maturities of Available-for-sale Debt Securities (Details) - USD ($) $ in Millions |
Apr. 01, 2018 |
Apr. 02, 2017 |
---|---|---|
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract] | ||
Due within one year | $ 353 | |
After one but within five years | 460 | |
Total | $ 813 | $ 920 |
Balance Sheet Account Details - Narrative - Strategic Investments (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Apr. 01, 2018 |
Apr. 02, 2017 |
Dec. 31, 2017 |
|
Schedule of Investments [Line Items] | |||
Commitment in new venture capital investment fund | $ 100 | ||
Callable period | 10 years | ||
Remaining capital commitment | $ 80 | ||
Other Assets | |||
Schedule of Investments [Line Items] | |||
Strategic equity investments, without readily determinable fair values | 256 | $ 250 | |
Equity method investments | 19 | $ 16 | |
Investee | |||
Schedule of Investments [Line Items] | |||
Revenue from transactions with Company's cost-method investments in non-publicly traded companies | $ 36 | $ 23 |
Balance Sheet Account Details - Summary of Inventory (Details) - USD ($) $ in Millions |
Apr. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory [Abstract] | ||
Raw materials | $ 95 | $ 93 |
Work in process | 209 | 188 |
Finished goods | 46 | 52 |
Total inventory | $ 350 | $ 333 |
Balance Sheet Account Details - Summary of Property and Equipment (Details) - USD ($) $ in Millions |
Apr. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | $ 1,427 | $ 1,347 |
Accumulated depreciation | (444) | (416) |
Total property and equipment, net | 983 | 931 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 477 | 331 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 331 | 316 |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 207 | 185 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 40 | 34 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 269 | 155 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | $ 103 | $ 326 |
Balance Sheet Account Details - Narrative - Property and Equipment (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 01, 2018 |
Apr. 02, 2017 |
|
Property, Plant and Equipment [Line Items] | ||
Non-cash expenditures included in capital expenditures | $ 33 | $ 60 |
Construction In Progress And Build to Suit Lease Liability | ||
Property, Plant and Equipment [Line Items] | ||
Non-cash expenditures included in capital expenditures | $ 6 | $ 27 |
Balance Sheet Account Details - Summary of Changes in Goodwill (Details) $ in Millions |
3 Months Ended |
---|---|
Apr. 01, 2018
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 771 |
Current period acquisition | 4 |
Ending balance | $ 775 |
Balance Sheet Account Details - Narrative - Intangible Assets and Goodwill (Details) $ in Millions |
3 Months Ended |
---|---|
Apr. 02, 2017
USD ($)
| |
Finite-Lived Intangible Assets [Line Items] | |
Impairment of in-process research and development | $ 5 |
Cost of Sales | |
Finite-Lived Intangible Assets [Line Items] | |
Impairment of finite-lived intangible assets | $ 18 |
Balance Sheet Account Details - Narrative - Derivatives (Details) - USD ($) $ in Millions |
Apr. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Not Designated as Hedging Instrument | Foreign Exchange Forward | ||
Derivative [Line Items] | ||
Derivative, notional amount | $ 113 | $ 88 |
Balance Sheet Account Details - Summary of Accrued Liabilities (Details) - USD ($) $ in Millions |
Apr. 01, 2018 |
Dec. 31, 2017 |
Apr. 02, 2017 |
---|---|---|---|
Accrued Liabilities, Current [Abstract] | |||
Contract liabilities, current portion | $ 153 | $ 150 | $ 150 |
Accrued compensation expenses | 125 | 177 | |
Accrued taxes payable | 59 | 50 | |
Other | 51 | 55 | |
Total accrued liabilities | $ 388 | $ 432 |
Balance Sheet Account Details - Narrative - Warranties (Details) |
3 Months Ended |
---|---|
Apr. 01, 2018 | |
Instruments | |
Product Warranty Liability [Line Items] | |
Warranty period | 1 year |
Consumables | Minimum | |
Product Warranty Liability [Line Items] | |
Warranty period | 6 months |
Consumables | Maximum | |
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 | |
---|---|---|
Apr. 01, 2018 |
Apr. 02, 2017 |
|
Reserve for product warranties [Roll Forward] | ||
Balance at beginning of period | $ 17 | $ 13 |
Additions charged to cost of product revenue | 6 | 4 |
Repairs and replacements | (7) | (5) |
Balance at end of period | $ 16 | $ 12 |
Balance Sheet Account Details - Narrative - Investment in Consolidated Variable Interest Entities (Details) - USD ($) $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Apr. 01, 2018 |
Dec. 31, 2017 |
Apr. 02, 2017 |
Jan. 01, 2017 |
Jul. 31, 2015 |
|
Variable Interest Entity [Line Items] | |||||
Additional investment in exchange for voting equity interests | $ 68 | ||||
Cash and cash equivalents attributable to variable interest entities | $ 1,560 | $ 1,225 | $ 981 | $ 735 | |
Helix Holdings I, LLC | Variable Interest Entity, Primary Beneficiary | |||||
Variable Interest Entity [Line Items] | |||||
Ownership percentage by noncontrolling interest owners | 50.00% | ||||
Equity ownership interest percentage | 50.00% | 50.00% | |||
Cash and cash equivalents attributable to variable interest entities | $ 121 |
Balance Sheet Account Details - Summary of Activity of Redeemable Noncontrolling Interests (Details) $ in Millions |
3 Months Ended |
---|---|
Apr. 01, 2018
USD ($)
| |
Increase (Decrease) in Redeemable Noncontrolling Interests [Roll Forward] | |
Balance as of December 31, 2017 | $ 220 |
Net loss attributable to noncontrolling interests | (10) |
Adjustment up to the redemption value | 5 |
Balance as of April 1, 2018 | $ 215 |
Debt and Other Commitments - Build-to-suit leases Narrative (Details) - USD ($) $ in Millions |
Apr. 01, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Build-to-suit lease liability | $ 21 | $ 144 |
Build-to-suit lease, asset under construction | 21 | 144 |
Obligations under financing leases | 244 | $ 113 |
Construction In Progress And Build to Suit Lease Liability | ||
Debt Instrument [Line Items] | ||
Obligations under financing leases | $ 132 |
Share-based Compensation Expense - Summary of Share-based Compensation Expense for all Stock Awards (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 01, 2018 |
Apr. 02, 2017 |
|
Share-based Compensation | ||
Share-based compensation expense before taxes | $ 48 | $ 50 |
Related income tax benefits | (10) | (11) |
Share-based compensation expense, net of taxes | 38 | 39 |
Cost of product revenue | ||
Share-based Compensation | ||
Share-based compensation expense before taxes | 4 | 3 |
Cost of service and other revenue | ||
Share-based Compensation | ||
Share-based compensation expense before taxes | 1 | |
Research and development | ||
Share-based Compensation | ||
Share-based compensation expense before taxes | 15 | 14 |
Selling, general and administrative | ||
Share-based Compensation | ||
Share-based compensation expense before taxes | $ 28 | $ 33 |
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 |
3 Months Ended |
---|---|
Apr. 01, 2018
$ / shares
| |
Assumptions used to estimate the fair value per share of employee stock purchase rights granted | |
Expected volatility, minimum | 28.00% |
Expected volatility, maximum | 44.00% |
Expected dividends | 0.00% |
Weighted-average fair value per share (in dollars per share) | $ 55.83 |
Minimum | |
Assumptions used to estimate the fair value per share of employee stock purchase rights granted | |
Risk-free interest rate | 0.83% |
Expected term | 6 months |
Maximum | |
Assumptions used to estimate the fair value per share of employee stock purchase rights granted | |
Risk-free interest rate | 1.89% |
Expected term | 1 year |
Share-based Compensation Expense - Narrative (Details) $ in Millions |
3 Months Ended |
---|---|
Apr. 01, 2018
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 | $ 360 |
Weighted-average period of unrecognized compensation cost related to stock options, restricted stock, and ESPP shares granted to date | 2 years 6 months |
Stockholders' Equity - Narrative (Details) shares in Millions |
Apr. 01, 2018
shares
|
---|---|
2015 Stock Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares available for issuance (in shares) | 5.5 |
Stockholders' Equity - Summary of Stock Option Activity Under all Stock Option Plans (Details) shares in Thousands |
3 Months Ended |
---|---|
Apr. 01, 2018
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Options, Outstanding at period start (in shares) | shares | 322 |
Options, Exercised (in shares) | shares | (17) |
Options, Outstanding at period end (in shares) | shares | 305 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |
Weighted-Average Exercise Price, Options, Outstanding at period start (in dollars per share) | $ / shares | $ 46.93 |
Weighted-Average Exercise Price, Options, Exercised (in dollars per share) | $ / shares | 41.91 |
Weighted-Average Exercise Price, Options, Outstanding at period end (in dollars per share) | $ / shares | $ 47.20 |
Stockholders' Equity - Narrative - Employee Stock Purchase Plan (Details) - ESPP - Employee Stock shares in Millions |
3 Months Ended |
---|---|
Apr. 01, 2018
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) | 0.1 |
Shares available for issuance (in shares) | 13.9 |
Stockholders' Equity - Narrative - Share Repurchases (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Apr. 02, 2017 |
Apr. 01, 2018 |
May 04, 2017 |
Jul. 28, 2016 |
|
Class of Stock [Line Items] | ||||
Common stock repurchases | $ 101 | |||
Common Stock | ||||
Class of Stock [Line Items] | ||||
Dollar amount remaining in authorized stock repurchase program | $ 100 | |||
Common Stock | July 2016 Share Repurchase Plan | ||||
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 | May 2017 Share Repurchase Plan | ||||
Class of Stock [Line Items] | ||||
Stock repurchase program, authorized amount | $ 250 |
Stockholders' Equity - Stockholders Equity - Phantom (Details) shares in Thousands |
Apr. 01, 2018
$ / shares
shares
|
---|---|
Equity [Abstract] | |
Options, Exercisable at period end (in shares) | shares | 305 |
Weighted Average Exercise Price, Options, Exercisable at period end (in dollars per share) | $ / shares | $ 47.20 |
Income Taxes - Narrative (Details) |
3 Months Ended |
---|---|
Apr. 01, 2018 | |
Income Tax Disclosure [Abstract] | |
Effective tax rate | 10.60% |
Segment Information (Details) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Apr. 01, 2018
USD ($)
segments
|
Apr. 02, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
|
Segment Reporting Information [Line Items] | |||
Number of reportable segments | segments | 2 | ||
Segment revenue | $ 782 | $ 598 | |
Segment income (loss) from operations | 218 | 52 | |
Segment assets | 5,542 | $ 5,257 | |
Operating Segments | Core Illumina | |||
Segment Reporting Information [Line Items] | |||
Segment revenue | 783 | 598 | |
Segment income (loss) from operations | 238 | 84 | |
Segment assets | 5,465 | 5,223 | |
Operating Segments | Consolidated VIEs | |||
Segment Reporting Information [Line Items] | |||
Segment revenue | 3 | 1 | |
Segment income (loss) from operations | (21) | (34) | |
Segment assets | 155 | 45 | |
Elimination of intersegment revenue | |||
Segment Reporting Information [Line Items] | |||
Segment revenue | (4) | (1) | |
Segment income (loss) from operations | 1 | $ 2 | |
Segment assets | $ (78) | $ (11) |
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