10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 29, 2019

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from             to            

Commission File Number 001-35406 

Illumina, Inc.

(Exact name of registrant as specified in its charter)

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)

(858) 202-4500

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	ILMN	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ☑    No   ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13a of the Exchange Act. ☐    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    No   þ

As of October 18, 2019, there were 147 million shares of the registrant’s common stock outstanding.

ILLUMINA, INC.

INDEX

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Income	4
Condensed Consolidated Statements of Comprehensive Income	5
Condensed Consolidated Statement of Stockholders’ Equity	6
Condensed Consolidated Statements of Cash Flows	8
Notes to Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	30
Item 4. Controls and Procedures	30
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3. Defaults Upon Senior Securities	31
Item 4. Mine Safety Disclosures	31
Item 5. Other Information	31
Item 6. Exhibits	31
SIGNATURES	32

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

ILLUMINA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

	September 29, 2019			December 30, 2018
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,815		$	1,144
Short-term investments	1,351			2,368
Accounts receivable, net	541			514
Inventory	417			386
Prepaid expenses and other current assets	98			78
Total current assets	4,222			4,490
Property and equipment, net	875			1,075
Operating lease right-of-use assets	555			—
Goodwill	824			831
Intangible assets, net	152			185
Deferred tax assets, net	88			70
Other assets	373			308
Total assets	$	7,089		$	6,959
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	143		$	184
Accrued liabilities	476			513
Long-term debt, current portion	—			1,107
Total current liabilities	619			1,804
Operating lease liabilities	691			—
Long-term debt	1,131			890
Other long-term liabilities	209			359
Redeemable noncontrolling interests	—			61
Stockholders’ equity:
Common stock	2			2
Additional paid-in capital	3,510			3,290
Accumulated other comprehensive income (loss)	5			(1		)
Retained earnings	3,828			3,083
Treasury stock, at cost	(2,906		)	(2,616		)
Total Illumina stockholders’ equity	4,439			3,758
Noncontrolling interests	—			87
Total stockholders’ equity	4,439			3,845
Total liabilities and stockholders’ equity	$	7,089		$	6,959

See accompanying notes to condensed consolidated financial statements.

3

ILLUMINA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In millions, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 29, 2019			September 30, 2018			September 29, 2019			September 30, 2018
Revenue:
Product revenue	$	746		$	710		$	2,117		$	2,011
Service and other revenue	161			143			474			455
Total revenue	907			853			2,591			2,466
Cost of revenue:
Cost of product revenue	195			184			573			540
Cost of service and other revenue	55			62			185			190
Amortization of acquired intangible assets	9			10			28			26
Total cost of revenue	259			256			786			756
Gross profit	648			597			1,805			1,710
Operating expense:
Research and development	151			159			486			447
Selling, general and administrative	189			197			602			577
Total operating expense	340			356			1,088			1,024
Income from operations	308			241			717			686
Other (expense) income:
Interest income	16			14			59			31
Interest expense	(11		)	(15		)	(41		)	(37		)
Other (expense) income, net	(43		)	(8		)	114			5
Total other (expense) income, net	(38		)	(9		)	132			(1		)
Income before income taxes	270			232			849			685
Provision for income taxes	36			44			98			100
Consolidated net income	234			188			751			585
Add: Net loss attributable to noncontrolling interests	—			11			12			31
Net income attributable to Illumina stockholders	$	234		$	199		$	763		$	616
Earnings per share attributable to Illumina stockholders:
Basic	$	1.59		$	1.35		$	5.19		$	4.20
Diluted	$	1.58		$	1.33		$	5.13		$	4.15
Shares used in computing earnings per share:
Basic	147			147			147			147
Diluted	148			149			149			148

See accompanying notes to condensed consolidated financial statements.

4

ILLUMINA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In millions)

	Three Months Ended					Nine Months Ended
	September 29, 2019		September 30, 2018			September 29, 2019		September 30, 2018
Consolidated net income	$	234	$	188		$	751	$	585
Unrealized (loss) gain on available-for-sale debt securities, net of deferred tax	—		(1		)	6		(1		)
Total consolidated comprehensive income	234		187			757		584
Add: Comprehensive loss attributable to noncontrolling interests	—		11			12		31
Comprehensive income attributable to Illumina stockholders	$	234	$	198		$	769	$	615

See accompanying notes to condensed consolidated financial statements.

5

ILLUMINA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In millions)

	Illumina Stockholders
				Additional			Accumulated Other													Total
	Common Stock			Paid-In			Comprehensive			Retained		Treasury Stock					Noncontrolling			Stockholders’
	Shares	Amount		Capital			(Loss) Income			Earnings		Shares		Amount			Interests			Equity
Balance as of December 31, 2017	191	$	2	$	2,833		$	(1	)	$	2,256	(44	)	$	(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 in business combination	—	—		—			—			—		—		—			5			5
Balance as of April 1, 2018	191	2		2,897			(1		)	2,464		(44	)	(2,354		)	65			3,073
Net income (loss)	—	—		—			—			209		—		—			(2		)	207
Issuance of common stock, net of repurchases	—	—		1			—			—		—		(2		)	—			(1		)
Share-based compensation	—	—		50			—			—		—		—			—			50
Vesting of redeemable equity awards	—	—		(1		)	—			—		—		—			—			(1		)
Adjustment to the carrying value of redeemable noncontrolling interests	—	—		(8		)	—			—		—		—			—			(8		)
Contributions from noncontrolling interest owners	—	—		—			—			—		—		—			31			31
Balance as of July 1, 2018	191	2		2,939			(1		)	2,673		(44	)	(2,356		)	94			3,351
Net income (loss)	—	—		—			—			199		—		—			(3		)	196
Unrealized loss on available-for-sale debt securities, net of deferred tax	—	—		—			(1		)	—		—		—			—			(1		)
Issuance of common stock, net of repurchases	—	—		23			—			—		—		(106		)	—			(83		)
Share-based compensation	—	—		47			—			—		—		—			—			47
Vesting of redeemable equity awards	—	—		(1		)	—			—		—		—			—			(1		)
Adjustment to the carrying value of redeemable noncontrolling interests	—	—		(8		)	—			—		—		—			—			(8		)
Issuance of convertible senior notes, net of tax impact	—	—		93			—			—		—		—			—			93
Balance as of September 30, 2018	191	2		3,093			(2		)	2,872		(44	)	(2,462		)	91			3,594
Net income (loss)	—	—		—			—			210		—		—			(4		)	206
Unrealized gain on available-for-sale debt securities, net of deferred tax	—	—		—			1			—		—		—			—			1
Issuance of common stock, net of repurchases	1	—		1			—			—		(1	)	(154		)	—			(153		)
Share-based compensation	—	—		48			—			—		—		—			—			48
Adjustment to the carrying value of redeemable noncontrolling interests	—	—		148			—			—		—		—			—			148

6

Cumulative-effect adjustment from adoption of ASU 2016-01	—	—		—			—			1			—		—			—			1
Balance as of December 30, 2018	192	2		3,290			(1		)	3,083			(45	)	(2,616		)	87			3,845
Net income (loss)	—	—		—			—			233			—		—			(2		)	231
Unrealized gain on available-for-sale debt securities, net of deferred tax	—	—		—			3			—			—		—			—			3
Issuance of common stock, net of repurchases	—	—		27			—			—			—		(86		)	—			(59		)
Share-based compensation	—	—		51			—			—			—		—			—			51
Vesting of redeemable equity awards	—	—		(1		)	—			—			—		—			—			(1		)
Adjustment to the carrying value of redeemable noncontrolling interests	—	—		18			—			—			—		—			—			18
Cumulative-effect adjustment from adoption of ASU 2016-02, net of deferred tax	—	—		—			—			(18		)	—		—			—			(18		)
Balance as of March 31, 2019	192	2		3,385			2			3,298			(45	)	(2,702		)	85			4,070
Net income (loss)	—	—		—			—			296			—		—			(1		)	295
Unrealized gain on available-for-sale debt securities, net of deferred tax	—	—		—			3			—			—		—			—			3
Issuance of common stock, net of repurchases	1	—		3			—			—			—		(3		)	—			—
Share-based compensation	—	—		48			—			—			—		—			—			48
Adjustment to the carrying value of redeemable noncontrolling interests	—	—		(2		)	—			—			—		—			—			(2		)
Deconsolidation of Helix	—	—		2			—			—			—		—			(84		)	(82		)
Balance as of June 30, 2019	193	2		3,436			5			3,594			(45	)	(2,705		)	—			4,332
Net income	—	—		—			—			234			—		—			—			234
Issuance of common stock, net of repurchases	—	—		29			—			—			(1	)	(201		)	—			(172		)
Share-based compensation	—	—		45			—			—			—		—			—			45
Balance as of September 29, 2019	193	$	2	$	3,510		$	5		$	3,828		(46	)	$	(2,906	)	$	—		$	4,439

See accompanying notes to condensed consolidated financial statements.

7

ILLUMINA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)

	Nine Months Ended
	September 29, 2019			September 30, 2018
Cash flows from operating activities:
Consolidated net income	$	751		$	585
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	113			100
Amortization of intangible assets	30			29
Share-based compensation expense	145			146
Accretion of debt discount	36			26
Deferred income taxes	(13		)	(32		)
Unrealized gains on marketable equity securities	(57		)	—
Payment of accreted debt discount	(84		)	—
Gains on deconsolidation	(54		)	—
Other	(10		)	—
Changes in operating assets and liabilities:
Accounts receivable	(29		)	(24		)
Inventory	(33		)	(40		)
Prepaid expenses and other current assets	(14		)	7
Operating lease right-of-use assets and liabilities, net	(3		)	—
Other assets	(29		)	(9		)
Accounts payable	(46		)	13
Accrued liabilities	(81		)	45
Other long-term liabilities	(14		)	(4		)
Net cash provided by operating activities	608			842
Cash flows from investing activities:
Maturities of available-for-sale securities	1,262			710
Purchases of available-for-sale securities	(760		)	(2,352		)
Sales of available-for-sale securities	528			520
Purchases of property and equipment	(152		)	(231		)
Deconsolidation of Helix cash	(29		)	—
Proceeds from deconsolidation of GRAIL	15			—
Net purchases of strategic investments	(15		)	(12		)
Net cash paid for acquisitions	—			(100		)
Net cash provided by (used in) investing activities	849			(1,465		)
Cash flows from financing activities:
Payments on financing obligations	(550		)	(3		)
Net proceeds from issuance of debt	—			735
Common stock repurchases	(261		)	(103		)
Taxes paid related to net share settlement of equity awards	(30		)	(18		)
Proceeds from issuance of common stock	59			45
Contributions from noncontrolling interest owners	—			92
Net cash (used in) provided by financing activities	(782		)	748
Effect of exchange rate changes on cash and cash equivalents	(4		)	(4		)
Net increase in cash and cash equivalents	671			121
Cash and cash equivalents at beginning of period	1,144			1,225
Cash and cash equivalents at end of period	$	1,815		$	1,346
Supplemental cash flow information:
Cash paid for operating lease liabilities	$	63		$	—

See accompanying notes to condensed consolidated financial statements.

8

Illumina, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Unless the context requires otherwise, references in this report to “Illumina,” “we,” “us,” the “Company,” and “our” refer to Illumina, Inc. and its consolidated subsidiaries.

1. 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 30, 2018, 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 unaudited condensed consolidated 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, we apply a qualitative approach 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 perform this assessment, as changes to existing relationships or future transactions may result in the consolidation or deconsolidation of a VIE. Effective April 25, 2019, we deconsolidated the financial statements of Helix Holdings I, LLC (Helix). See note “2. Balance Sheet Account Details” for further details.

We use the equity method to account for investments through which we have the ability to exercise significant influence, but not control, over the investee. Such investments are recorded in other assets, and our share of net income or loss is recognized on a one quarter lag in other (expense) income, net.

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 and nine months ended September 29, 2019 and September 30, 2018 were both 13 and 26 weeks, respectively.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

Significant Accounting Policies

During the three and nine months ended September 29, 2019, there were no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended December 30, 2018, except as described below.

9

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on the balance sheet as lease liabilities with corresponding right-of-use assets and to disclose key information about leasing arrangements. We adopted Topic 842 on its effective date in the first quarter of 2019 using a modified retrospective approach by recognizing a cumulative-effect adjustment to retained earnings as of December 31, 2018. We elected the available package of practical expedients upon adoption, which allowed us to carry forward our historical assessment of whether existing agreements contained a lease and the classification of our existing operating leases. We continue to report our financial position as of December 30, 2018 under the former lease accounting standard (Topic 840) in our condensed consolidated balance sheet.

The following table summarizes the impact of Topic 842 on our condensed consolidated balance sheet upon adoption on December 31, 2018 (in millions):

	December 31, 2018 (unaudited)
	Pre-adoption		Adoption Impact			Post-adoption
ASSETS
Prepaid expenses and other current assets	$	78	$	(8	)	$	70
Property and equipment, net	1,075		(241		)	834
Operating lease right-of-use assets	—		579			579
Deferred tax assets, net	70		6			76
Total assets	$	1,223	$	336		$	1,559
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accrued liabilities	$	513	$	36		$	549
Operating lease liabilities	—		722			722
Long-term debt	1,107		(269		)	838
Other long-term liabilities	359		(135		)	224
Retained earnings	3,083		(18		)	3,065
Total liabilities and stockholders’ equity	$	5,062	$	336		$	5,398

The adoption impact summarized above was primarily due to the recognition of operating lease liabilities with corresponding right-of-use assets based on the present value of our remaining minimum lease payments, and the derecognition of existing fixed assets and financing obligations related to build-to-suit leasing arrangements that, under Topic 840, did not qualify for sale-leaseback accounting. The difference between these amounts, net of deferred tax, was recorded as a cumulative-effect adjustment to retained earnings.

Accounting Pronouncements Pending Adoption

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. We expect to adopt the standard on its effective date in the first quarter of 2020 using a modified retrospective approach.  We currently do not expect the adoption to have a material impact on our 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, instrument service contracts, and development and licensing agreements.

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

10

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.

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 payment is typically due within 60 days from invoice. 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 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. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, and payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied.

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 for such costs, if capitalized, would have been one year or less.

We regularly enter into contracts with multiple performance obligations. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. Most performance obligations are generally satisfied within a short time frame, approximately three to six months after the contract execution date. As of September 29, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations was $1,009 million, of which approximately 63% is expected to be converted to revenue in the next twelve months, approximately 10% in the following twelve months, and the remainder thereafter.

The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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 management, adjusted for applicable discounts.

Contract liabilities, which consist of deferred revenue and customer deposits, as of September 29, 2019 and December 30, 2018 were $193 million and $206 million, respectively, of which the short-term portions of $161 million and $175 million, respectively, were recorded in accrued liabilities and the remaining long-term portions were recorded in other long-term liabilities. Revenue recorded during the three and nine months ended September 29, 2019 included $27 million and $133 million, respectively, of previously deferred revenue that was included in contract liabilities as of December 30, 2018. Contract assets as of September 29, 2019 and December 30, 2018 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 by us. 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):

	Three Months Ended
	September 29, 2019						September 30, 2018
	Sequencing		Microarray		Total		Sequencing		Microarray		Total
Consumables	$	525	$	75	$	600	$	472	$	83	$	555
Instruments	142		4		146		138		17		155
Total product revenue	667		79		746		610		100		710
Service and other revenue	138		23		161		109		34		143
Total revenue	$	805	$	102	$	907	$	719	$	134	$	853

11

	Nine Months Ended
	September 29, 2019						September 30, 2018
	Sequencing		Microarray		Total		Sequencing		Microarray		Total
Consumables	$	1,503	$	224	$	1,727	$	1,353	$	256	$	1,609
Instruments	376		14		390		375		27		402
Total product revenue	1,879		238		2,117		1,728		283		2,011
Service and other revenue	353		121		474		312		143		455
Total revenue	$	2,232	$	359	$	2,591	$	2,040	$	426	$	2,466

Revenue related to our previously consolidated VIE, Helix, is included in sequencing service and other revenue up to April 25, 2019, the date of Helix’s deconsolidation.

The following table represents revenue by geographic area, based on region of destination (in millions):

	Three Months Ended				Nine Months Ended
	September 29, 2019		September 30, 2018		September 29, 2019		September 30, 2018
Americas	$	514	$	474	$	1,463	$	1,380
Europe, Middle East, and Africa	235		219		653		615
Greater China (1)	95		102		280		288
Asia-Pacific	63		58		195		183
Total revenue	$	907	$	853	$	2,591	$	2,466

____________________________________

(1) Region includes revenue from China, Taiwan, and Hong Kong.

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. Up to April 25, 2019, the date of Helix’s deconsolidation, per-share earnings of Helix were included in the consolidated basic and diluted earnings per share computations based on our share of Helix’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 table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in millions):

	Three Months Ended		Nine Months Ended
	September 29, 2019	September 30, 2018	September 29, 2019	September 30, 2018
Weighted average shares outstanding	147	147	147	147
Effect of potentially dilutive common shares from:
Equity awards	1	1	1	1
Convertible senior notes	—	1	1	—
Weighted average shares used in calculating diluted earnings per share	148	149	149	148

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2. Balance Sheet Account Details

Short-term Investments

Our short-term investments are primarily available-for-sale debt securities that consisted of the following (in millions):

	September 29, 2019						December 30, 2018
	Amortized Cost		Gross Unrealized Gains		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Debt securities in government-sponsored entities	$	31	$	—	$	31	$	21	$	—	$	—		$	21
Corporate debt securities	632		4		636		1,060		—		(2		)	1,058
U.S. Treasury securities	573		1		574		1,250		1		(1		)	1,250
Total	$	1,236	$	5	$	1,241	$	2,331	$	1	$	(3	)	$	2,329

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 September 29, 2019, were as follows (in millions):

	Estimated Fair Value
Due within one year	$	497
After one but within five years	744
Total	$	1,241

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

We have strategic investments in privately held companies (non-marketable equity securities) and companies that have completed initial public offerings (marketable equity securities).

Our marketable equity securities are measured at fair value. As of September 29, 2019 and December 30, 2018, the fair value of our marketable equity securities, included in short-term investments, totaled $110 million and $39 million, respectively. Total unrealized losses and gains on our marketable equity securities, included in other (expense) income, net, were $47 million and $57 million, respectively, for the three and nine months ended September 29, 2019.

Our non-marketable equity securities without readily determinable market values are initially measured at cost and adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment. As of September 29, 2019 and December 30, 2018, the aggregate carrying amounts of our non-marketable equity investments without readily determinable fair values, included in other assets, were $221 million and $231 million, respectively.

One of our non-marketable equity investments is a VIE for which we have concluded that we are not the primary beneficiary, and therefore, we do not consolidate this VIE in our consolidated financial statements. We have determined our maximum exposure to loss, as a result of our involvement with the VIE, to be the carrying value of our investment, which was $189 million as of September 29, 2019 and December 30, 2018.

We invest in two venture capital investment funds (the Funds) with capital commitments of $100 million callable through April 2026 and up to $160 million callable through July 2029, respectively, of which $55 million and up to $160 million, respectively, remained callable as of September 29, 2019. Our investments in the Funds are accounted for as equity-method investments. The aggregate carrying amounts of the Funds, included in other assets, were $49 million and $29 million as of September 29, 2019 and December 30, 2018, respectively.

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Revenue recognized from transactions with our strategic investees was $15 million and $49 million, respectively, for the three and nine months ended September 29, 2019 and $32 million and $104 million, respectively, for the three and nine months ended September 30, 2018.

Inventory

Inventory consisted of the following (in millions):

	September 29, 2019		December 30, 2018
Raw materials	$	123	$	117
Work in process	270		218
Finished goods	24		51
Total inventory	$	417	$	386

Property and Equipment

Property and equipment, net consisted of the following (in millions):

	September 29, 2019			December 30, 2018
Leasehold improvements	$	587		$	567
Machinery and equipment	389			382
Computer hardware and software	257			217
Furniture and fixtures	43			45
Buildings	44			285
Construction in progress	91			100
Total property and equipment, gross	1,411			1,596
Accumulated depreciation	(536		)	(521		)
Total property and equipment, net	$	875		$	1,075

Property and equipment, net included non-cash expenditures of $25 million and $38 million for the nine months ended September 29, 2019 and September 30, 2018, respectively, which were excluded from the condensed consolidated statements of cash flows. Such non-cash expenditures included $18 million recorded under build-to-suit lease accounting for the nine months ended September 30, 2018.

As of December 30, 2018, property and equipment, net included $241 million of project construction costs paid or reimbursed by our landlord related to our build-to-suit leases that did not qualify for sale-leaseback accounting under Topic 840. Upon adoption of Topic 842 on December 31, 2018, we derecognized the Buildings related to our build-to-suit leasing arrangements and began to account for these leases as operating leases. See note “1. Basis of Presentation and Summary of Significant Accounting Policies” for further details on the adoption impact of Topic 842.

Leases

We lease approximately 2.6 million square feet of office, lab, and manufacturing facilities under various non-cancellable operating lease agreements (real estate leases). Our real estate leases have remaining lease terms of 1 to 20 years, which represent the non-cancellable periods of the leases and include extension options that we determined are reasonably certain to be exercised. We exclude extension options that are not reasonably certain to be exercised from our lease terms, ranging from 6 months to 20 years. Our lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms as well as payments for common-area-maintenance and administrative services. We often receive customary incentives from our landlords, such as reimbursements for tenant improvements and rent abatement periods, which effectively reduce the total lease payments owed for these leases.

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Operating lease right-of-use assets and liabilities on our condensed consolidated balance sheets represent the present value of our remaining lease payments over the remaining lease terms. We do not allocate lease payments to non-lease components; therefore, fixed payments for common-area-maintenance and administrative services are included in our operating lease right-of-use assets and liabilities. We use our incremental borrowing rate to calculate the present value of our lease payments, as the implicit rates in our leases are not readily determinable.

As of September 29, 2019, the maturities of our operating lease liabilities were as follows (in millions):

	Remaining Lease Payments
2019	$	19
2020	83
2021	82
2022	84
2023	85
Thereafter	622
Total remaining lease payments (1)	975
Less: imputed interest	(235		)
Total operating lease liabilities	740
Less: current portion	(49		)
Long-term operating lease liabilities	$	691
Weighted-average remaining lease term	11.4 years
Weighted-average discount rate	4.6		%

____________________________________

(1) Total remaining lease payments exclude $47 million of legally binding minimum lease payments for leases signed but not yet commenced.

The components of our lease costs included in our condensed consolidated statements of income were as follows (in millions):

	Three Months Ended			Nine Months Ended
	September 29, 2019			September 29, 2019
Operating lease costs	$	21		$	63
Sublease income	(3		)	(9		)
Total lease costs	$	18		$	54

Operating lease costs consist of the fixed lease payments included in our operating lease liabilities and are recorded on a straight-line basis over the lease terms. We sublease certain real estate to third parties and this sublease income is also recorded on a straight-line basis.

Goodwill

We test the carrying value of goodwill in accordance with accounting rules on impairment of goodwill, which require us to estimate the fair value of each reporting unit annually, or when impairment indicators exist, and compare such amounts to their respective carrying values to determine if an impairment is required. We performed the annual assessment for goodwill impairment in the second quarter of 2019, noting no impairment. 

Changes to goodwill during the nine months ended September 29, 2019 were as follows (in millions):

	Goodwill
Balance as of December 30, 2018	$	831
Helix deconsolidation	(7		)
Balance as of September 29, 2019	$	824

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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 the derivatives are recognized in other (expense) income, net, along with the remeasurement gain or loss on the foreign currency denominated assets or liabilities.

As of September 29, 2019, we had foreign exchange forward contracts in place to hedge exposures in the euro, Japanese yen, Australian dollar, Canadian dollar, Singapore dollar, and British pound. As of September 29, 2019 and December 30, 2018, the total notional amounts of outstanding forward contracts in place for foreign currency purchases were $244 million and $122 million, respectively.

Accrued Liabilities

Accrued liabilities consisted of the following (in millions):

	September 29, 2019		December 30, 2018
Contract liabilities, current portion	$	161	$	175
Accrued compensation expenses	112		193
Accrued taxes payable	96		82
Operating lease liabilities, current portion	49		—
Other, including warranties	58		63
Total accrued liabilities	$	476	$	513

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 and nine months ended September 29, 2019 and September 30, 2018 were as follows (in millions):

	Three Months Ended						Nine Months Ended
	September 29, 2019			September 30, 2018			September 29, 2019			September 30, 2018
Balance at beginning of period	$	16		$	15		$	19		$	17
Additions charged to cost of product revenue	3			8			12			20
Repairs and replacements	(5		)	(6		)	(17		)	(20		)
Balance at end of period	$	14		$	17		$	14		$	17

Deconsolidation of Helix    

In July 2015, we obtained a 50% voting equity ownership interest in Helix. We determined that we had unilateral power over one of the activities that most significantly impacts the economic performance of Helix through its contractual arrangements and, as a result, we were deemed to be the primary beneficiary of Helix and were required to consolidate Helix. The operations of Helix, up to the date of the deconsolidation described below, are included in the accompanying condensed consolidated statements of income for the three and nine months ended September 29, 2019 and September 30, 2018. During these periods, we absorbed 50% of Helix’s losses.

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On April 25, 2019, we entered into an agreement to sell our interest in, and relinquish control over, Helix. As part of the agreement, (i) Helix repurchased all of our outstanding equity interests in exchange for a contingent value right with a 7-year term that entitles us to consideration dependent upon the outcome of Helix’s future financing and/or liquidity events, (ii) we ceased having a controlling financial interest in Helix, including unilateral power over one of the activities that most significantly impacts the economic performance of Helix, (iii) we were relieved of any potential obligation to redeem certain noncontrolling interests, and (iv) we no longer have representation on Helix’s board of directors. As a result, we deconsolidated Helix’s financial statements effective April 25, 2019 and recorded a gain on deconsolidation of $39 million in other (expense) income, net. The gain on deconsolidation included (i) the contingent value right received from Helix recorded at a fair value of approximately $30 million, (ii) the derecognition of the carrying amounts of Helix’s assets and liabilities, and (iii) the derecognition of the noncontrolling interests related to Helix.

As of September 29, 2019, the fair value of the contingent value right received from Helix was $28 million, included in other assets. During the three and nine months ended September 29, 2019, the fair value measurement resulted in a $2 million unrealized gain and a $1 million unrealized loss, respectively, included in other (expense) income, net.

Redeemable Noncontrolling Interests

The activity of the redeemable noncontrolling interests during the nine months ended September 29, 2019 was as follows (in millions):

	Redeemable Noncontrolling Interests
Balance as of December 30, 2018	$	61
Vesting of redeemable equity awards	1
Net loss attributable to noncontrolling interests	(9		)
Adjustment down to the redemption value	(16		)
Release of potential obligation to noncontrolling interests	(37		)
Balance as of September 29, 2019	$	—

3. Pending Acquisition

On November 1, 2018, we entered into an Agreement and Plan of Merger (the Merger Agreement) to acquire Pacific Biosciences of California, Inc. (PacBio) for an all-cash price of approximately $1.2 billion (or $8.00 per share). The transaction is subject to certain customary closing conditions, including the receipt of certain required antitrust approvals. The Merger Agreement contains certain termination rights and provides that, upon termination of the Merger Agreement under specified circumstances, including but not limited to, a termination of the Merger Agreement in connection with PacBio accepting a superior offer or due to the withdrawal by PacBio’s board of directors of its recommendation of the merger, PacBio will pay us a cash termination fee of $43 million. In certain other circumstances related to antitrust approvals, we may be required to pay PacBio a termination fee of $98 million assuming the other closing conditions not related to antitrust or competition laws have been satisfied.

On September 25, 2019, we entered into Amendment No. 1 to the Merger Agreement (the Amendment). The Amendment extended the End Time of the Merger Agreement (as defined in the Merger Agreement) to December 31, 2019 and provides that we make cash payments to PacBio of $6 million on or before each of October 1, 2019, November 1, 2019, and December 2, 2019. We may also unilaterally extend the End Time date until March 31, 2020 by making additional payments to PacBio totaling $34 million. Up to the full amount of these payments is repayable without interest only if: (1) the Merger Agreement is terminated and (2) within two years of termination, PacBio enters into certain change-of-control transactions with a third party or raises at least $100 million in equity or debt financing in a single transaction (with the amount repayable dependent on the amount raised by PacBio). On October 1, 2019, we made our first $6 million payment to PacBio.

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4. Fair Value Measurements

The following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis as of September 29, 2019 and December 30, 2018 (in millions):

	September 29, 2019								December 30, 2018
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Money market funds (cash equivalents)	$	1,541	$	—	$	—	$	1,541	$	832	$	—	$	—	$	832
Debt securities in government-sponsored entities	—		31		—		31		—		21		—		21
Corporate debt securities	—		636		—		636		—		1,058		—		1,058
U.S. Treasury securities	574		—		—		574		1,250		—		—		1,250
Marketable equity securities	110		—		—		110		39		—		—		39
Contingent value right	—		—		28		28		—		—		—		—
Deferred compensation plan assets	—		45		—		45		—		34		—		34
Total assets measured at fair value	$	2,225	$	712	$	28	$	2,965	$	2,121	$	1,113	$	—	$	3,234
Liabilities:
Deferred compensation plan liability	$	—	$	43	$	—	$	43	$	—	$	33	$	—	$	33

We hold available-for-sale securities that consist of highly-liquid, investment-grade debt securities and marketable equity 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 marketable equity securities are measured at fair value based on quoted trade prices in active markets. 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, validating pricing sources and models, and reviewing key model inputs, if necessary. We elected the fair value option to measure the contingent value right received from Helix. The fair value of our contingent value right is derived using a Monte Carlo simulation. Significant estimates and assumptions required for this valuation include, but are not limited to, probabilities related to the timing and outcome of future financing and/or liquidity events and an assumption regarding collectibility. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value.

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5. Debt and Other Commitments

Summary of debt obligations

Debt obligations consisted of the following (dollars in millions):

	September 29, 2019			December 30, 2018
Principal amount of 2023 Notes outstanding	$	750		$	750
Principal amount of 2021 Notes outstanding	517			517
Principal amount of 2019 Notes outstanding	—			633
Unamortized discount of liability component of convertible senior notes	(136		)	(175		)
Net carrying amount of liability component of convertible senior notes	1,131			1,725
Obligations under financing leases	—			269
Other	—			3
Less: current portion	—			(1,107		)
Long-term debt	$	1,131		$	890
Carrying value of equity component of convertible senior notes, net of debt issuance costs	$	213		$	287
Fair value of convertible senior notes outstanding (Level 2)	$	1,517		$	2,222
Weighted-average remaining amortization period of discount on the liability component of convertible senior notes	3.4 years			3.9 years

Convertible Senior Notes

0% Convertible Senior Notes due 2023 (2023 Notes)

On August 21, 2018, we issued $750 million aggregate principal amount of convertible senior notes due 2023 (2023 Notes). The 2023 Notes mature on August 15, 2023, and the implied estimated effective rate of the liability component of the Notes was 3.7%, assuming no conversion option.

The 2023 Notes will be convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, based on an initial conversion rate, subject to adjustment, of 2.1845 shares of common stock per $1,000 principal amount of notes (which represents an initial conversion price of approximately $457.77 per share of common stock), only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2018 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price in effect on each applicable trading day; (2) during the five business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2023 Notes for each trading day of the 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 trading day; (3) if we call any or all of the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events described in the indenture. Regardless of the foregoing circumstances, the holders may convert their notes on or after May 15, 2023 until August 11, 2023.

We may redeem for cash all or any portion of the 2023 Notes, at our option, on or after August 20, 2021 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect (currently $595.10) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus any accrued and unpaid special interest to, but excluding, the redemption date.

The 2023 Notes were not convertible as of September 29, 2019 and had no dilutive impact during the nine months ended September 29, 2019. If the 2023 Notes were converted as of September 29, 2019, the if-converted value would not exceed the principal amount.

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0.5% Convertible Senior Notes due 2021 (2021 Notes)

In June 2014, we issued $517 million aggregate principal amount of 2021 Notes. The 2021 Notes mature on June 15, 2021, and the implied estimated effective rates of the liability component of the Notes was 3.5%, assuming no conversion option.

The 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: (1) during any calendar quarter commencing after the calendar quarter ending September 30, 2014 (and only during such calendar quarter), 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; (2) during the 5 business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per 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 trading day; or (3) upon the occurrence of specified events described in the indenture for the 2021 Notes. Regardless of the foregoing circumstances, the holders of the 2021 Notes may convert their notes on or after March 15, 2021 until June 11, 2021.

The potential dilutive impact of the 2021 Notes has been included in our calculation of diluted earnings per share for the three and nine months ended September 29, 2019. If the 2021 Notes were converted as of September 29, 2019, the if-converted value would exceed the principal amount by $71 million.

0% Convertible Senior Notes due 2019 (2019 Notes)

In June 2014, we issued $633 million aggregate principal amount of 2019 Notes, and the implied estimated effective rate of the liability component of the Notes was 2.9%, assuming no conversion option. The 2019 Notes were convertible into cash, shares of common stock, or a combination of common stock, at our election, based on conversion rates as defined in the indenture. The 2019 Notes matured on June 15, 2019, by which time the principal had been converted and was repaid in cash. The excess of the conversion value over the principal amount was paid in shares of common stock.

The following table summarizes information about the conversion of the 2019 Notes during the nine months ended September 29, 2019 (in millions):

	2019 Notes
Cash paid for principal of notes converted	$	633
Conversion value over principal amount, paid in shares of common stock	$	153
Number of shares of common stock issued upon conversion	0.4

Obligations under financing leases

As of December 30, 2018, obligations under financing leases of $269 million represented project construction costs paid or reimbursed by our landlord related to our build-to-suit leases that did not qualify for sale-leaseback accounting under Topic 840. Upon adoption of Topic 842 on December 31, 2018, we derecognized the remaining financing obligations for our build-to-suit leasing arrangements and began to account for these leases as operating leases. See note “1. Basis of Presentation and Summary of Significant Accounting Policies” for further details on the adoption of Topic 842.

6. Stockholders’ Equity

As of September 29, 2019, approximately 4.9 million shares remained available for future grants under the 2015 Stock Plan.

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Restricted Stock

Restricted stock activity for the nine months ended September 29, 2019 was as follows (units in thousands):

	Restricted Stock Units (RSU)		Performance Stock Units (PSU)(1)		Weighted-Average Grant Date Fair Value per Share
					RSU		PSU
Outstanding at December 30, 2018	1,840		660		$	227.00	$	196.99
Awarded	70		(54	)	$	305.75	$	260.24
Vested	(96	)	—		$	197.49	—
Cancelled	(111	)	(62	)	$	220.55	$	178.85
Outstanding at September 29, 2019	1,703		544		$	232.31	$	192.83

______________________________________

(1) The number of units reflect the estimated number of shares to be issued at the end of the performance period.

Stock Options

Stock option activity during the nine months ended September 29, 2019 was as follows:

	Options (in thousands)		Weighted-Average Exercise Price
Outstanding at December 30, 2018	192		$	54.52
Exercised	(128	)	$	53.00
Outstanding and exercisable at September 29, 2019	64		$	57.58

ESPP

The price at which common stock is purchased under the Employee Stock Purchase Plan (ESPP) is equal to 85% of the fair market value of the common stock on the first day of the offering period or purchase date, whichever is lower. During the nine months ended September 29, 2019, approximately 0.2 million shares were issued under the ESPP. As of September 29, 2019, there were approximately 13.5 million shares available for issuance under the ESPP.

Share Repurchases

On February 6, 2019, our Board of Directors authorized a new share repurchase program, which supersedes all prior and available repurchase authorizations, to repurchase $550 million of outstanding common stock. The repurchases may be completed under a 10b5-1 plan or at management’s discretion. During the nine months ended September 29, 2019, we repurchased 0.9 million shares for approximately $261 million.  Authorizations to repurchase approximately $289 million of our common stock remained available as of September 29, 2019.

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Share-based Compensation

Share-based compensation expense reported in our condensed consolidated statements of income was as follows (in millions):

	Three Months Ended						Nine Months Ended
	September 29, 2019			September 30, 2018			September 29, 2019			September 30, 2018
Cost of product revenue	$	5		$	4		$	15		$	12
Cost of service and other revenue	1			1			3			3
Research and development	15			15			50			45
Selling, general and administrative	24			28			77			86
Share-based compensation expense before taxes	45			48			145			146
Related income tax benefits	(10		)	(8		)	(31		)	(29		)
Share-based compensation expense, net of taxes	$	35		$	40		$	114		$	117

The assumptions used for the specified reporting periods and the resulting estimates of weighted-average fair value per share for stock purchased under the ESPP during the nine months ended September 29, 2019 were as follows:

	Employee Stock Purchase Rights
Risk-free interest rate	1.88% - 2.56%
Expected volatility	30% - 38%
Expected term	0.5 - 1.0 year
Expected dividends	0		%
Weighted-average grant-date fair value per share	$	75.47

As of September 29, 2019, approximately $320 million of total unrecognized compensation cost related to restricted stock and ESPP shares issued to date was expected to be recognized over a weighted-average period of approximately 1.9 years.

7. 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 consolidated 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 resolutions 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 in consideration of many factors, which include, but are not limited to, past history, scientific and other evidence, and the specifics and status of each matter. We may change our estimates if our assessment of the various factors changes and the amount of ultimate loss may differ from our estimates, resulting in a material effect on our business, financial condition, results of operations, and/or cash flows.

8. 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 rates for the three and nine months ended September 29, 2019 were 13.2% and 11.5%, respectively. For the three and nine months ended September 29, 2019, the decrease 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 discrete tax benefits related to uncertain tax positions. For the nine months ended September 29, 2019, the decrease from the U.S. federal statutory tax rate was also attributable to excess tax benefits related to share-based compensation.

9. Segment Information

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 we have one reportable segment, Core Illumina, which relates to Illumina’s core operations. Prior to the Helix deconsolidation on April 25, 2019, our reportable segments included both Core Illumina and Helix.

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 of our operations, excluding the results of our previously consolidated VIE Helix.

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. Helix was deconsolidated on April 25, 2019. See note “2. Balance Sheet Account Details” for further details.

Management evaluates the performance of our reportable segments based upon income (loss) from operations. We do not allocate expenses between segments. Core Illumina sells products and provides services to Helix in accordance with contractual agreements between the entities.

The following table presents the operating performance of each reportable segment (in millions):

	Three Months Ended					Nine Months Ended
	September 29, 2019		September 30, 2018			September 29, 2019			September 30, 2018
Revenue:
Core Illumina	$	907	$	855		$	2,591		$	2,467
Helix	—		2			1			8
Elimination of intersegment revenue	—		(4		)	(1		)	(9		)
Consolidated revenue	$	907	$	853		$	2,591		$	2,466
Income (loss) from operations:
Core Illumina	$	308	$	264		$	740		$	748
Helix	—		(23		)	(24		)	(64		)
Elimination of intersegment earnings	—		—			1			2
Consolidated income from operations	$	308	$	241		$	717		$	686

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The following table presents the total assets of each reportable segment (in millions):

	September 29, 2019		December 30, 2018
Core Illumina	$	7,089	$	6,912
Helix	—		154
Elimination of intersegment assets	—		(107		)
Consolidated total assets	$	7,089	$	6,959

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) will help readers understand our results of operations, financial condition, and cash flow. It is provided in addition to the accompanying condensed consolidated financial statements and notes. This MD&A is organized as follows:

• 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 condensed consolidated 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 that we believe are important to understanding the assumptions and judgments underlying our condensed consolidated financial statements.

• Recent Accounting Pronouncements. Summary of recent accounting pronouncements applicable to our condensed consolidated financial statements.

This MD&A discussion contains forward-looking statements that involve risks and uncertainties. Please see “Consideration Regarding Forward-Looking Statements” preceding Item 3 of this report for additional factors relating to such statements. This MD&A should be read in conjunction with our condensed consolidated financial statements and accompanying notes included in this report and our Annual Report on Form 10-K for the fiscal year ended December 30, 2018. Operating results are not necessarily indicative of results that may occur in future periods.

Business Overview and Outlook

This overview and outlook provides a high-level discussion of our operating results and significant known trends that affect our business. We believe that an understanding of these trends is important to understanding our financial results for the periods being reported herein as well as our future financial performance. This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this report.

About Illumina

We have one reportable segment, Core Illumina, which relates to Illumina’s core operations. Prior to the Helix deconsolidation on April 25, 2019, our reportable segments included both Core Illumina and Helix.

Our focus on innovation has established us as the global leader in DNA sequencing and array-based technologies, serving customers in the research, clinical and applied markets. Our products are used for applications in the life sciences, oncology, reproductive health, agriculture and other emerging segments.

Our customers include a broad range of academic, government, pharmaceutical, biotechnology, and other leading institutions around the globe.

Our comprehensive line of products addresses the scale of experimentation and breadth of functional analysis to advance disease research, drug development, and the development of molecular tests. This portfolio of leading-edge sequencing and array-based solutions addresses a range of genomic complexity and throughput, enabling researchers and clinical practitioners to select the best solution for their scientific challenge.

On November 1, 2018, we entered into an Agreement and Plan of Merger to acquire Pacific Biosciences of California, Inc. (PacBio) for an all-cash price of approximately $1.2 billion (or $8.00 per share). We believe PacBio’s highly accurate long reads combined with our highly accurate and scalable short reads will provide researchers and clinicians with a more perfect view of the genome, enhancing their ability to make novel discoveries and broaden clinical utility across a range of applications. The transaction is subject to certain customary closing conditions, including the receipt of certain required antitrust approvals. See note “3. Pending Acquisition” in Part I, Item 1 of this report for further details.

Our financial results have been, and will continue to be, impacted by several significant trends, which are described below. While these trends are important to understanding and evaluating our financial results, this discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto in Item 1, Part I of this report, and the other transactions, events, and trends discussed in “Risk Factors” in Item 1A, Part II of this report and Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 30, 2018.

Financial Overview

Consolidated financial highlights for the first three quarters of 2019 included the following:

• Revenue increased 5% during the first three quarters of 2019 to $2,591 million compared to $2,466 million in the first three quarters of 2018 primarily due to growth in sequencing consumables. We expect our revenue, as compared to the prior year, to continue to increase in 2019, although we are anticipating ongoing weakness in the direct-to-consumer (DTC) market.

• Gross profit as a percentage of revenue (gross margin) was 69.7% in the first three quarters of 2019 compared to 69.4% in the first three quarters of 2018. The gross margin increase was driven primarily by an increase in revenue from development and licensing agreements as well as an increase in sequencing consumables as a percentage of total revenue, which generate higher gross margins, partially offset by lower average selling prices on instruments and consumables and lower volumes in our service business. Our gross margin in future periods will depend on several factors, including: market conditions that may impact our pricing; 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 was 27.7% in the first three quarters of 2019 compared to 27.8% in the first three quarters of 2018. The slight decrease was due to an increase in operating expenses as a percentage of revenue offset partially by an increase in gross margin. We expect our operating expenses, as compared to the prior year, to continue to grow on an absolute basis in 2019.

• Our effective tax rate was 11.5% in the first three quarters of 2019 compared to 14.6% in the first three quarters of 2018. In the first three quarters of 2019, 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, discrete tax benefits related to uncertain tax positions, and excess tax benefits related to share-based compensation.

• We ended the first three quarters of 2019 with cash, cash equivalents, and short-term investments totaling $3.2 billion as of September 29, 2019, of which approximately $618 million was held by our foreign subsidiaries.

Results of Operations

To enhance comparability, the following table sets forth unaudited condensed consolidated statement of operations data for the specified reporting periods, stated as a percentage of total revenue.

Q3 2019 Q3 2018 YTD 2019 YTD 2018

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Revenue:
Product revenue	82.2	%	83.2	%	81.7	%	81.5	%
Service and other revenue	17.8		16.8		18.3		18.5
Total revenue	100.0		100.0		100.0		100.0
Cost of revenue:
Cost of product revenue	21.5		21.6		22.1		21.9
Cost of service and other revenue	6.0		7.2		7.1		7.7
Amortization of acquired intangible assets	1.0		1.2		1.1		1.0
Total cost of revenue	28.5		30.0		30.3		30.6
Gross profit	71.5		70.0		69.7		69.4
Operating expense:
Research and development	16.7		18.6		18.8		18.1
Selling, general and administrative	20.9		23.2		23.2		23.5
Total operating expense	37.6		41.8		42.0		41.6
Income from operations	33.9		28.2		27.7		27.8
Other (expense) income:
Interest income	1.8		1.6		2.3		1.3
Interest expense	(1.2	)	(1.8	)	(1.6	)	(1.5	)
Other (expense) income, net	(4.8	)	(0.9	)	4.4		0.2
Total other (expense) income, net	(4.2	)	(1.1	)	5.1		—
Income before income taxes	29.7		27.1		32.8		27.8
Provision for income taxes	3.9		5.1		3.8		4.1
Consolidated net income	25.8		22.0		29.0		23.7
Add: Net loss attributable to noncontrolling interests	—		1.3		0.5		1.3
Net income attributable to Illumina stockholders	25.8	%	23.3	%	29.5	%	25.0	%

Percentages may not recalculate due to rounding

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 and nine month periods ended September 29, 2019 and September 30, 2018 were both 13 and 26 weeks, respectively.

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Revenue 

(Dollars in millions)	Q3 2019		Q3 2018		Change			% Change		YTD 2019		YTD 2018		Change			% Change
Consumables	$	600	$	555	$	45		8	%	$	1,727	$	1,609	$	118		7	%
Instruments	146		155		(9		)	(6	)	390		402		(12		)	(3	)
Total product revenue	746		710		36			5		2,117		2,011		106			5
Service and other revenue	161		143		18			13		474		455		19			4
Total revenue	$	907	$	853	$	54		6	%	$	2,591	$	2,466	$	125		5	%

Service and other revenue primarily consists of revenue generated from genotyping and sequencing services, instrument service contracts, and development and licensing agreements. Total revenue relates primarily to Core Illumina for all periods presented.

The increases in consumables revenue in Q3 2019 and the first three quarters of 2019 were primarily due to increases in sequencing consumables revenue of $53 million and $150 million, respectively, driven primarily by growth in the instrument installed base. The increases in sequencing consumables revenue were partially offset by decreases in microarray consumables revenue primarily due to ongoing weakness in the direct-to-consumer (DTC) market. Instruments revenue decreased in Q3 2019 and the first three quarters of 2019 primarily due to fewer shipments of our microarray instruments driven by a DTC customer scaling for anticipated demand in Q3 2018 as well as a lower average selling price for our NovaSeq instrument compared to its historic range. These decreases were partially offset by increased shipments of our NovaSeq instruments in Q3 2019 and increased shipments of our NextSeq instruments in the first three quarters of 2019. Service and other revenue increased in Q3 2019 and in the first three quarters of 2019, primarily due to increased revenue from development and licensing agreements, partially offset by decreased revenue from genotyping and sequencing services.

Gross Margin

(Dollars in millions)	Q3 2019			Q3 2018			Change		% Change	YTD 2019			YTD 2018			Change		% Change
Gross profit	$	648		$	597		$	51	9%	$	1,805		$	1,710		$	95	6%
Gross margin	71.5		%	70.0		%				69.7		%	69.4		%

The gross margin increases in Q3 2019 and the first three quarters of 2019 were driven primarily by an increase in revenue from development and licensing agreements as well as an increase in sequencing consumables as a percentage of total revenue, which generate higher gross margins, partially offset by lower average selling prices on instruments and consumables and lower volumes in our service business.

Operating Expense

(Dollars in millions)	Q3 2019		Q3 2018		Change			% Change		YTD 2019		YTD 2018		Change		% Change
Research and development	$	151	$	159	$	(8	)	(5	)%	$	486	$	447	$	39	9	%
Selling, general and administrative	189		197		(8		)	(4	)	602		577		25		4
Total operating expense	$	340	$	356	$	(16	)	(4	)%	$	1,088	$	1,024	$	64	6	%

Core Illumina R&D expense remained flat in Q3 2019, primarily due to an increase in headcount, offset by a decrease in performance-based compensation. Core Illumina R&D expense increased by $51 million, or 12%, in the first three quarters of 2019, primarily due to increased headcount, as we continue to invest in the research and development of new products and enhancements to existing products, partially offset by a decrease in performance-based compensation. Helix R&D expense decreased by $8 million in Q3 2019 and by $12 million in the first three quarters of 2019, primarily due to its deconsolidation on April 25, 2019.

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Core Illumina SG&A expense increased by $3 million, or 2%, in Q3 2019, and by $44 million, or 8%, in the first three quarters of 2019, primarily due to expenses related to the pending Pacific Biosciences acquisition, increased headcount, and investment in facilities to support the continued growth and scale of our operations, partially offset by a decrease in performance-based compensation. Helix SG&A expense decreased by $11 million in Q3 2019 and by $19 million in the first three quarters of 2019, primarily due to its deconsolidation on April 25, 2019.

Other (Expense) Income

(Dollars in millions)	Q3 2019			Q3 2018			Change			% Change		YTD 2019			YTD 2018			Change			% Change
Interest income	$	16		$	14		$	2		14	%	$	59		$	31		$	28		90	%
Interest expense	(11		)	(15		)	4			(27	)	(41		)	(37		)	(4		)	11
Other (expense) income, net	(43		)	(8		)	(35		)	438		114			5			109			2,180
Total other (expense) income, net	$	(38	)	$	(9	)	$	(29	)	322	%	$	132		$	(1	)	$	133		(13,300	)%

Other (expense) income relates primarily to Core Illumina for all periods presented.

Interest income increased in Q3 2019 and in the first three quarters of 2019 as a result of higher yields on our short-term debt securities and higher cash and cash-equivalent balances. Interest expense consisted primarily of accretion of discount on our convertible senior notes. The fluctuations in other (expense) income, net were primarily due to mark-to-market adjustments on our strategic investments in marketable equity securities. Additionally, during the first three quarters of 2019, we recorded a $39 million gain in Q2 2019 related to the deconsolidation of Helix and a $15 million gain in Q1 2019 from the settlement of a contingency related to the deconsolidation of GRAIL in 2017.

Provision for Income Taxes

(Dollars in millions)	Q3 2019			Q3 2018			Change			% Change		YTD 2019			YTD 2018			Change			% Change
Income before income taxes	$	270		$	232		$	38		16	%	$	849		$	685		$	164		24	%
Provision for income taxes	36			44			(8		)	(18	)	98			100			(2		)	(2	)
Consolidated net income	$	234		$	188		$	46		24	%	$	751		$	585		$	166		28	%
Effective tax rate	13.2		%	19.0		%						11.5		%	14.6		%

Our effective tax rate was 13.2% for Q3 2019 compared to 19.0% in Q3 2018. The variance from the U.S. federal statutory tax rate of 21% in Q3 2019 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, benefits related to prior year tax adjustments, and discrete tax benefits related to uncertain tax positions. For Q3 2018, 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 rates than the U.S. federal statutory rate, such as in Singapore and the United Kingdom, offset partially by the discrete tax expense associated with updating our 2017 estimates of the impact of U.S. Tax Reform.

Our effective tax rate was 11.5% for the first three quarters of 2019 compared to 14.6% for the first three quarters of 2018. For the first three quarters of 2019, 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, discrete tax benefits related to uncertain tax positions, and excess tax benefits related to share-based compensation. For the first three quarters of 2018, 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 rates than the U.S. federal statutory rate, such as in Singapore and the United Kingdom, and the discrete benefit associated with the recognition of prior year losses from our investment in Helix, offset partially by the discrete tax expense associated with updating our 2017 estimates of the impact of U.S. Tax Reform.

Our future effective tax rate may vary from the U.S. federal statutory tax rate due to the mix of earnings in tax jurisdictions with different statutory tax rates and the other factors discussed in the risk factor “We are subject to risks related to taxation in multiple jurisdictions” in Part I Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 30,

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2018. As a result of the Ninth Circuit decision on June 7, 2019 to overturn a U.S. Tax Court opinion provided in Q3 2015 that stock compensation should be excluded from cost sharing charges, we anticipate our effective tax rate may be adversely impacted. The final resolution of this case is uncertain, but if it is determined that the outcome of this decision is more likely than not, we anticipate a discrete tax expense of less than $30 million could be recorded.

Liquidity and Capital Resources

At September 29, 2019, we had approximately $1.8 billion in cash and cash equivalents, of which approximately $618 million was held by our foreign subsidiaries. Cash and cash equivalents increased by $0.7 billion from December 30, 2018, due to the factors described in the “Cash Flow Summary” below. Our primary source of liquidity, other than our holdings of cash, cash equivalents and investments, has been cash flows from operations and, from time to time, issuances of debt. Our ability to generate cash from operations provides us with the financial flexibility we need to meet operating, investing, and financing needs.

Historically, we have liquidated our short-term investments and/or issued debt and equity securities to finance our business needs as a supplement to cash provided by operating activities. As of September 29, 2019, we had $1.4 billion in short-term investments. Our short-term investments are predominantly comprised of marketable securities consisting of U.S. government-sponsored entities, corporate debt securities, and U.S. Treasury securities.

Our 2019 Notes matured on June 15, 2019, by which time the $633 million in principal had been converted and was paid in cash. The excess of the conversion value over the principal amount was paid in shares of common stock. Our convertible senior notes due in 2021 and 2023 were not convertible as of September 29, 2019.

We anticipate that our current cash, cash equivalents, and short-term investments, together with cash provided by operating activities are sufficient to fund our near-term capital and operating needs for at least the next 12 months including the pending acquisition of PacBio for a cash price of approximately $1.2 billion. Operating needs include the planned costs to operate our business, including amounts required to fund working capital and capital expenditures. Our primary short-term needs for capital, which are subject to change, include:

• support of commercialization efforts related to our current and future products;

• 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;

• repayment of debt obligations;

• the expansion needs of our facilities, including costs of leasing and building out additional facilities; and

• repurchases of our outstanding common stock.

On February 6, 2019, our Board of Directors authorized a new share repurchase program, which supersedes all prior and available repurchase authorizations, to repurchase $550 million of outstanding common stock. The repurchases may be completed under a 10b5-1 plan or at management’s discretion. Authorizations to repurchase $289 million of our common stock remained available as of September 29, 2019.

We had $55 million and up to $160 million, respectively, remaining in our capital commitments to two venture capital investment funds as of September 29, 2019 that are callable through April 2026 and July 2029, respectively.

We expect that our revenue and the resulting operating income, as well as the status of each of our new product development programs, will significantly impact our cash management decisions.

Our future capital requirements and the adequacy of our available funds will depend on many factors, including:

• 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

27

• the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings.

Cash Flow Summary

(In millions)	YTD 2019			YTD 2018
Net cash provided by operating activities	$	608		$	842
Net cash provided by (used in) investing activities	849			(1,465		)
Net cash (used in) provided by financing activities	(782		)	748
Effect of exchange rate changes on cash and cash equivalents	(4		)	(4		)
Net increase in cash and cash equivalents	$	671		$	121

Operating Activities

Net cash provided by operating activities in the first three quarters of 2019 primarily consisted of net income of $751 million plus net adjustments of $106 million, partially offset by net changes in operating assets and liabilities of $249 million. The primary adjustments to net income included unrealized gains on marketable equity securities of $57 million, payment of the accreted debt discount related to our 2019 Notes of $84 million, gains on deconsolidation of $54 million, and deferred income taxes of $13 million, partially offset by share-based compensation of $145 million, depreciation and amortization expenses of $143 million, and accretion of debt discount of $36 million. Cash flow impact from changes in net operating assets and liabilities were primarily driven by increases in inventory, accounts receivable, other assets, and prepaid expenses and other current assets and decreases in accrued liabilities, accounts payable, and other long-term liabilities.

Net cash provided by operating activities in the first three quarters of 2018 consisted of net income of $585 million plus net adjustments of $269 million, partially offset by net changes in operating assets and liabilities of $12 million. The primary adjustments to net income included depreciation and amortization expenses of $129 million, share-based compensation of $146 million, and accretion of debt discount of $26 million, partially offset by deferred income taxes of $32 million. Cash flow impact from changes in net operating assets and liabilities were primarily driven by increases in inventory, accounts receivable, and other assets, partially offset by increases in accounts payable and accrued liabilities.

Investing Activities

Net cash provided by investing activities totaled $849 million in the first three quarters of 2019. We purchased $760 million of available-for-sale securities and $1,790 million of our available-for-sale securities matured or were sold during the period. We received $15 million in proceeds from the settlement of a contingency related to the deconsolidation of GRAIL in 2017. We invested $152 million in capital expenditures, primarily associated with our investment in facilities and paid $15 million for strategic investments. We removed $29 million in cash from our balance sheet as a result of the deconsolidation of Helix.

Net cash used in investing activities in the first three quarters of 2018 totaled $1,465 million. We purchased $2,352 million of available-for-sale securities and $1,230 million of our available-for-sale securities matured or were sold during the period. Our net cash paid for acquisitions was $100 million, and we invested $231 million in capital expenditures, primarily associated with our investment in facilities.

Financing Activities

Net cash used in financing activities in the first three quarters of 2019 totaled $782 million. We used $550 million to repay financing obligations primarily related to our 2019 Notes, $261 million to repurchase our common stock, and $30 million to pay taxes related to net share settlement of equity awards. We received $59 million in proceeds from the issuance of common stock through the exercise of stock options and the sale of shares under our employee stock purchase plan.

Net cash provided by financing activities in the first three quarters of 2018 totaled $748 million. We received $735 million in net proceeds from the issuance of $750 million in principal amount of our 2023 Notes, and we used $103 million to repurchase our common stock concurrently with this debt offering. We received $45 million in proceeds from issuance of common stock through the exercise of stock options and the sale of shares under our employee stock purchase plan, and contributions from noncontrolling interest owners were $92 million. We used $18 million to pay taxes related to net share settlement of equity awards.

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Off-Balance Sheet Arrangements

We do not participate in any transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. During the first three quarters of 2019, we were not involved in any “off-balance sheet arrangements” within the meaning of the rules of the Securities and Exchange Commission.

Critical Accounting Policies and Estimates

In preparing our condensed consolidated financial statements, we make estimates, assumptions and judgments that can have a significant impact on our net revenue, operating income and net income, as well as on the value of certain assets and liabilities on our balance sheet. We believe that the estimates, assumptions and judgments involved in the accounting policies described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 30, 2018 have the greatest potential impact on our financial statements, so we consider them to be our critical accounting policies and estimates. There were no material changes to our critical accounting policies and estimates during the first three quarters of 2019.

Recent Accounting Pronouncements

For summary of recent accounting pronouncements applicable to our condensed consolidated financial statements, see note “1. Summary of Significant Accounting Policies” in Part I, Item 1, Notes to Condensed Consolidated Financial Statements, which is incorporated herein by reference.

Consideration Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains, and our officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “continue,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “potential,” “predict,” should,” “will,” or similar words or phrases, or the negatives of these words, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward looking.  Examples of forward-looking statements include, among others, statements we make regarding:

• our expectations as to our future financial performance, results of operations, cash flows 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;

• 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.

Forward-looking statements are neither historical facts nor assurances of future performance.  Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions.  Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control.  Our actual results and financial condition may differ materially from those indicated in the forward-looking statements.  Therefore, you should not rely on any of these forward-looking statements.  Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

• our expectations and beliefs regarding prospects and growth for our business and the markets in which we operate;

29

• the timing and mix of customer orders among our products and services;

• 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 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 regarding the pending acquisition of Pacific Biosciences of California, Inc.;

• 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 30, 2018, or in information disclosed in public conference calls, the date and time of which are released beforehand.

The foregoing factors should be considered together with other factors detailed in our filings with the Securities and Exchange Commission, including our most recent filings on Forms 10-K and 10-Q, or in information disclosed in public conference calls, the date and time of which are released beforehand.  We undertake no obligation, and do not intend, to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, or to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of any current financial quarter, in each case whether as a result of new information, future developments, or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There were no substantial changes to our market risks in the nine months ended September 29, 2019, when compared to the disclosures in Item 7A of our Annual Report on Form 10-K for the fiscal year ended December 30, 2018.

Item 4. Controls and Procedures.

We design our internal controls to provide reasonable assurance that (1) our transactions are properly authorized; (2) our assets are safeguarded against unauthorized or improper use; and (3) our transactions are properly recorded and reported in conformity with U.S. generally accepted accounting principles. We also maintain internal controls and procedures to ensure that we comply with applicable laws and our established financial policies.

Based on management’s evaluation (under the supervision and with the participation of our chief executive officer (CEO) and chief financial officer (CFO)), as of the end of the period covered by this report, our CEO and CFO concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

During Q3 2019, we continued to monitor and evaluate the design and operating effectiveness of key controls. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that materially affected or are reasonably likely to materially affect internal control over financial reporting.

30

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

See discussion of legal proceedings in note “7. Legal Proceedings” in Part I, Item 1, Notes to Condensed Consolidated Financial Statements, which is incorporated herein by reference.

Item 1A. Risk Factors.

Our business is subject to various risks, including those described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 30, 2018, which we strongly encourage you to review. There have been no material changes from the risk factors disclosed in Item 1A of our Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

None during the quarterly period ended September 29, 2019.

Purchases of Equity Securities by the Issuer

The following table summarizes shares repurchased pursuant to our share repurchase program during the three months ended September 29, 2019 (in thousands except for price per share):

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
July 1, 2019 - July 28, 2019	206	$	302.72	206	$	425,041
July 29, 2019 - August 25, 2019	210	$	298.57	210	$	362,500
August 26, 2019 - September 29, 2019	271	$	272.34	271	$	288,756
Total	687	$	289.47	687	$	288,756

______

(1) All shares repurchased were made in open-market transactions.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Number	Description of Document
3.4	Amended and Restated Bylaws
31.1	Certification of Francis A. deSouza pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Sam A. Samad pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	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.
32.2	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.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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

31

SIGNATURES

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

		ILLUMINA, INC. (registrant)
Date:	October 24, 2019		/s/ SAM A. SAMAD
			Sam A. Samad Senior Vice President and Chief Financial Officer

32

EX-3.4

BYLAWS
OF
ILLUMINA, INC.

Amended and Restated

as of June 6, 2019

TABLE OF CONTENTS
ARTICLE I CORPORATE OFFICES			1
	1.1	REGISTERED OFFICE	1
	1.2	OTHER OFFICES	1
ARTICLE II MEETINGS OF STOCKHOLDERS			1
	2.1	PLACE OF MEETINGS	1
	2.2	ANNUAL MEETING	1
	2.3	SPECIAL MEETING	1
	2.4	NOTICE OF STOCKHOLDERS’ MEETINGS	2
	2.5	MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE	2
	2.6	QUORUM	2
	2.7	ADJOURNED MEETING; NOTICE	2
	2.8	VOTING	2
	2.9	WAIVER OF NOTICE	3
	2.10	RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS	3
	2.11	PROXIES	4
	2.12	LIST OF STOCKHOLDERS ENTITLED TO VOTE	4
	2.13	NOMINATIONS FOR DIRECTORS	4
	2.14	PROXY ACCESS FOR DIRECTOR NOMINATIONS	7
	2.15	BUSINESS AT MEETINGS OF STOCKHOLDERS	15
ARTICLE III DIRECTORS			17
	3.1	POWERS	17
	3.2	NUMBER OF DIRECTORS; ELECTION; AND TERM OF OFFICE OF DIRECTORS	17
	3.3	QUALIFICATION OF DIRECTORS	18
	3.4	RESIGNATION AND VACANCIES	18
	3.5	PLACE OF MEETINGS; MEETINGS BY TELEPHONE	19
	3.6	FIRST MEETINGS	19
	3.7	REGULAR MEETINGS	19
	3.8	SPECIAL MEETINGS; NOTICE	19
	3.9.	QUORUM	20
	3.10	WAIVER OF NOTICE	20
	3.11	ADJOURNED MEETING; NOTICE	20
	3.12	BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING	20
	3.13	FEES AND COMPENSATION OF DIRECTORS	20
	3.14	APPROVAL OF LOANS TO OFFICERS	20
	3.15	REMOVAL OF DIRECTORS	21
	3.16	MAJORITY VOTING	21

ARTICLE IV COMMITTEES			21
	4.1	COMMITTEES OF DIRECTORS	21
	4.2	COMMITTEE MINUTES	22
	4.3	MEETINGS AND ACTION OF COMMITTEES	22

ARTICLE V OFFICERS			22
	5.1	OFFICERS	22
	5.2	ELECTION OF OFFICERS	23
	5.3	SUBORDINATE OFFICERS	23
	5.4	REMOVAL AND RESIGNATION OF OFFICERS	23
	5.5	VACANCIES IN OFFICES	23
	5.6	CHAIRMAN OF THE BOARD	23
	5.7	CHIEF EXECUTIVE OFFICER	23
	5.8	PRESIDENT	24
	5.9	VICE PRESIDENT	24
	5.10	SECRETARY	24
	5.11	TREASURER	24
	5.12	ASSISTANT SECRETARY	25
	5.13	ASSISTANT TREASURER	25
	5.14	AUTHORITY AND DUTIES OF OFFICERS	25
ARTICLE VI INDEMNITY			25
	6.1	INDEMNIFICATION OF DIRECTORS AND OFFICERS	25
	6.2	INDEMNIFICATION OF OTHERS	26
	6.3	INSURANCE	26
	6.4	ADVANCEMENT	26
ARTICLE VII RECORDS AND REPORTS			26
	7.1	MAINTENANCE AND INSPECTION OF RECORDS	26
	7.2	INSPECTION BY DIRECTORS	27
	7.3	ANNUAL STATEMENT TO STOCKHOLDERS	27
	7.4	REPRESENTATION OF SHARES OF OTHER CORPORATIONS	27
ARTICLE VIII GENERAL MATTERS			28
	8.1	CHECKS	28
	8.2	EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS	28
	8.3	STOCK CERTIFICATES; PARTLY PAID SHARES	28
	8.4	SPECIAL DESIGNATION ON CERTIFICATES	29
	8.5	LOST CERTIFICATES	29
	8.6	CONSTRUCTION; DEFINITIONS	29
	8.7	DIVIDENDS	29
	8.8	FISCAL YEAR	30
	8.9	SEAL	30
	8.10	TRANSFER OF STOCK	30
	8.11	STOCK TRANSFER AGREEMENTS	30
	8.12	REGISTERED STOCKHOLDERS	30

	8.13	SEVERABILITY	30
ARTICLE IX AMENDMENTS			31
ARTICLE X DISSOLUTION			31
ARTICLE XI CUSTODIAN			32
	11.1	APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES	32
	11.2	DUTIES OF CUSTODIAN	32
ARTICLE XI EXCLUSIVE FORUM FOR ADJUDICATION OF DISPUTES			32
	12.1	FORUM FOR ADJUDICATION OF DISPUTES	32

BYLAWS
OF
ILLUMINA, INC.

ARTICLE I
CORPORATE OFFICES

1.1REGISTERED OFFICE

The registered office of the corporation shall be 1209 Orange Street, in the City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the corporation at such location is Corporation Trust Company.

1.2OTHER OFFICES

The board of directors may at any time establish other offices at any place or places where the corporation is qualified to do business.

ARTICLE II
MEETINGS OF STOCKHOLDERS

2.1PLACE OF MEETINGS

Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the board of directors. The board of directors may, in its sole discretion, determine that the meeting shall not be held at any place but may instead be held by means of remote communication as authorized by Section 211 of the Delaware General Corporation Law, as amended. In the absence of any such designation, stockholders’ meetings shall be held at the registered office of the corporation.

2.2ANNUAL MEETING

The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. In the absence of such designation, the annual meeting of stockholders shall be held on the Second Tuesday of May in each year at 10:00 a.m. However, if such day falls on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding full business day. At the meeting, directors shall be elected and any other proper business may be transacted.

2.3SPECIAL MEETING

A special meeting of the stockholders may be called, at any time for any purpose or purposes, by the board of directors.

2.4NOTICE OF STOCKHOLDERS’ MEETINGS

All notices of meetings with stockholders shall be in writing and shall be sent or otherwise given in accordance with Section 2.5 of these bylaws not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, date, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Business transacted at a special meeting of stockholders shall be confined to the purpose or purposes of the meeting specified in the notice of meeting (or supplement or amendment thereto) given by or at the direction of the board of directors. Stockholders may not make nominations for directors or bring any business before a special meeting of stockholders.

2.5MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. An affidavit of the secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

2.6QUORUM

The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

2.7ADJOURNED MEETING; NOTICE

When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

2.8VOTING; PARTICIPATION

The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these bylaws, subject to the provisions of Sections 217 and 218 of the General

Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners of stock and to voting trusts and other voting agreements).

Except as may be otherwise provided in the certificate of incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.

If authorized by the board of directors, and subject to such guidelines and procedures as the board of directors may adopt, stockholders and proxy holders not physically present at a meeting of stockholders may, by means of remote communication, participate in the meeting and be deemed present in person and vote at the meeting, whether such meeting is to be held at a designated place or solely by means of remote communication; provided that (a) the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxy holder, (b) the corporation shall implement reasonable measures to provide such stockholders and proxy holders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (c) if any stockholder or proxy holder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.

2.9WAIVER OF NOTICE

Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice unless so required by the certificate of incorporation or these bylaws.

2.10 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS

In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action.

If the board of directors does not so fix a record date:

(a)	The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
(b)	The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is necessary, shall be the day on which the first written consent is expressed.

(c) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

2.11PROXIES

Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action may authorize another person or persons to act for him by a written proxy, signed by the stockholder and filed with the secretary of the corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder’s name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder or the stockholder’s attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(c) of the General Corporation Law of Delaware.

2.12LIST OF STOCKHOLDERS ENTITLED TO VOTE

The officer who has charge of the stock ledger of a corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

2.13NOMINATIONS FOR DIRECTORS

Nominations of persons for election to the board of directors of the corporation may be made only (i) by the board of directors at any meeting of stockholders and (ii) at an annual meeting of stockholders, by any stockholder of the corporation who is entitled to vote for the election of directors and who has complied with the procedures established by this Section 2.13. For a nomination to be properly brought before an annual meeting by

a stockholder, the stockholder intending to make the nomination or bring other business before a meeting of shareholders, as the case may be (the "Proponent") must have given timely and proper notice thereof in writing to the secretary of the corporation, in accordance with, and containing all information and the completed questionnaire provided for in, this Section 2.13.

To be timely, a Proponent's notice must be delivered to or mailed to the secretary of the corporation and received at the principal executive offices of the corporation prior to the close of business not less than 90 nor more than 120 days prior to the first anniversary of the preceding year's annual meeting of stockholders; provided, however, in the event the date of the annual meeting is advanced more than 30 days prior to such anniversary date or delayed more than 60 days after such anniversary date, then to be timely such notice must be received by the corporation not later than the close of business on the later of the 90^th day prior to the date of the meeting or the 10^th day following the date of Public Disclosure (defined below) of the date of the annual meeting. In no event shall any adjournment or postponement of an annual meeting of stockholders or announcement thereof commence a new time period or extend any time period for the giving of a Proponent's notice as required by this Section 2.13.

A Proponent's notice to the secretary shall set forth: (a) as to each person the Proponent proposes to nominate for election as a director at the annual meeting, (i) the name, age, business address, residence address and telephone number of such nominee and the name, business address and residence address of any Nominee Associated Persons (defined below), (ii) the principal occupation or employment of such nominee, (iii) the class and number of shares of stock of the corporation that are owned (beneficially and of record) by or on behalf of such nominee and by or on behalf of any Nominee Associated Person as of the date of the Proponent's notice, (iv) a description of such nominee's qualifications to be a director and (v) a statement as to whether such nominee would be an independent director, and the basis therefor, under the listing standards of the Nasdaq Global Market and the corporation's Corporate Governance Guidelines and (b) as to the Proponent and any Stockholder Associated Person (defined below) on whose behalf the nomination is being made, (i) the name and address of the Proponent, and any holder of record of the Proponent's shares of stock, as they appear on the corporation's books, and of any Stockholder Associated Person, (ii) the class and number of shares of stock of the corporation that are owned (beneficially and of record) by or on behalf of the Proponent and by or on behalf of any Stockholder Associated Person as of the date of the Proponent's notice, the date such shares were acquired and the investment intent with respect thereto, (iii) a representation and agreement that the Proponent will notify the corporation in writing of the class and number of shares of stock of the corporation that are owned (beneficially and of record) by or on behalf of the Proponent and by or on behalf of any Stockholder Associated Person as of the record date for the meeting, not later than the close of business on the third business day following the later of the record date or the date of Public Disclosure of the record date, (iv) a description of all purchases and sales of, or other transactions involving in any way, shares of stock of the corporation by or on behalf of the Proponent and by or on behalf of any Stockholder Associated Person during the twenty-four month period prior to the date of the Proponent's notice, including the date of the transactions, the class and number of shares and the consideration (without regard to whether such shares were or were not owned by the Proponent or any such person), (v) a description of any agreement, arrangement or understanding, including any Derivative Instrument (defined below), that has been entered into or is in effect as of the date of the Proponent's notice, by or on behalf of the Proponent, any Stockholder Associated Person, any nominee or any Nominee Associated Person, the effect or intent of which agreement, arrangement or understanding is to mitigate loss to, manage risk or benefit of stock price changes for, or increase or decrease the voting power of, the Proponent, any Stockholder Associated Person, any nominee or any Nominee Associated Person with respect to the corporation's securities, (vi) a representation and agreement that the

Proponent will notify the corporation in writing of any such agreement, arrangement or understanding, including any Derivative Instrument, that has been entered into or is in effect as of the record date for the meeting, not later than the close of business on the third business day following the later of the record date or the date of Public Disclosure of the record date, (vii) a description of any other agreement, arrangement or understanding that has been entered into or is in effect as of the date of the Proponent's notice, between or among the Proponent, any Stockholder Associated Person, any nominee, any Nominee Associated Person or any other person, and that relates to such nomination or such nominee's service as a director of the corporation, (viii) a representation and agreement that the Proponent will notify the corporation in writing of any agreement, arrangement or understanding of the type described in clause (vii) above that has been entered into or is in effect as of the record date for the meeting, not later than the close of business on the third business day following the later of the record date or the date of Public Disclosure of the record date, (ix) a representation that the Proponent is the holder of record or beneficial owner of shares of stock of the corporation entitled to vote for the election of directors at the annual meeting and intends to appear in person or by proxy at the meeting to nominate any such nominee and (x) a representation as to whether the Proponent intends to deliver a proxy statement and/or form of proxy to stockholders and/or otherwise to solicit proxies from stockholders in support of such nomination.

The Proponent's notice shall also include a completed questionnaire (in the form provided by the secretary of the corporation upon request by the Proponent) signed by such nominee with respect to information of the type required by the corporation's questionnaires for directors and officers of the corporation in connection with the annual meeting of stockholders and various reports to the Securities and Exchange Commission. The questionnaire shall also include a representation and agreement that such nominee (i) is not and will not become a party to (A) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such nominee, if elected as a director of the corporation, will act or vote on any issue or question (a "Voting Commitment") that has not been, or will not be within three business days thereafter, disclosed to the corporation or (B) any Voting Commitment that could limit or interfere with the nominee's ability to comply, if elected as a director of the corporation, with such nominee's fiduciary duties under applicable law, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director of the corporation that has not been, or will not be within three business days thereafter, disclosed to the corporation and (iii) in such nominee's individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the corporation, and will comply, with applicable law and all applicable corporate governance, code of conduct and ethics, conflict of interest, corporate opportunities, confidentiality and stock ownership and trading policies and guidelines of the corporation.

No person proposed to be nominated by a stockholder shall be eligible for election as a director of the corporation unless such person is nominated in accordance with the procedures set forth in this Section 2.13. If the Proponent intending to nominate a person for election as a director of the corporation at an annual meeting pursuant to this Section 2.13 does not give timely and proper notice thereof in writing to the secretary of the corporation, in accordance with, and containing all information and the completed questionnaire provided for in, this Section 2.13, or if the Proponent (or a qualified representative of the Proponent) does not appear at the meeting to nominate such person for election as a director of the corporation, then, in any such case, such proposed nomination shall not be made, notwithstanding the fact that proxies in respect of such nomination may have been solicited or obtained. The chairman of the meeting shall, if the facts warrant, determine that the nomination was

not properly made in accordance with the provisions of this Section 2.13, and, if the chairman should so determine, he or she shall declare to the meeting that such nomination was not properly made and shall be disregarded.

For purposes of these Bylaws:

"Derivative Instrument"means any option, warrant, convertible security, stock appreciation right, swap or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of stock of the corporation or with a value derived in whole or in part from the value of any class or series of shares of stock of the corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of shares of stock of the corporation or otherwise directly or indirectly owned and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of stock of the corporation.

"Nominee Associated Person" of any nominee for election as a director means (i) any affiliate or associate (as such terms are defined for purposes of the Exchange Act) of the nominee and any other person acting in concert with any of the foregoing, (ii) any beneficial owner of shares of stock of the corporation owned of record or beneficially by such nominee and (iii) any person controlling, controlled by or under common control with such Nominee Associated Person.

"Public Disclosure" means disclosure made in a press release reported by Dow Jones News Service, Associated Press or a comparable national news service or in a document filed by the corporation pursuant to Section 13, 14 or 15(d) of the Exchange Act.

"Stockholder Associated Person"of any stockholder means (i) any affiliate or associate (as such terms are defined for purposes of the Exchange Act) of the stockholder and any other person acting in concert with any of the foregoing, (ii) any beneficial owner of shares of stock of the corporation owned of record or beneficially by such stockholder and (iii) any person controlling, controlled by or under common control with such Stockholder Associated Person.

2.14PROXY ACCESS FOR DIRECTOR NOMINATIONS

Whenever the board of directors solicits proxies with respect to an annual meeting of stockholders, the corporation shall include in its proxy statement the name, together with the Required Information (defined below), of any Proxy Access Nominee (defined below) identified in a timely notice that satisfies this Section 2.14, delivered by one or more stockholders who at the time the request is delivered satisfy, or are acting on behalf of persons who satisfy, the ownership and other requirements of this Section 2.14 (such stockholder or stockholders, and any person on whose behalf they are acting, the “Eligible Stockholder”), and who expressly elects at the time of providing the notice required by this Section 2.14 (the “Notice of Proxy Access Nomination”) to have its nominee included in the corporation’s proxy materials pursuant to this Section 2.14.

To be timely, a Notice of Proxy Access Nomination must be delivered to the secretary of the corporation so as to be received at the principal executive offices of the corporation, in the case of an annual meeting, not later than the close of business on the 120th day, nor earlier than the close of business on the 150th day, prior to the anniversary date of the proxy statement for the immediately preceding annual meeting (the last day on which a Notice of Proxy Access Nomination may be delivered, the “Final Proxy Access Nomination Date”). In the event that the date of the regularly-scheduled annual meeting is advanced by more than 30 days or delayed

by more than 60 days from such anniversary date, notice by the Eligible Stockholder must be so delivered not earlier than the 150th day prior to such annual meeting and not later than the close of business on the later of (x) the 120th day prior to such annual meeting and (y) the 10th day following the day on which public announcement of the date of such meeting is first made to be timely. In the event that no annual meeting was held in the previous year, or in the case of a special meeting called for the purpose of electing directors, the Notice of Proxy Access Nomination must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever occurs first. In no event shall any adjournment or postponement of a meeting or the public disclosure thereof commence a new time period (or extend any time period) for the giving of a Notice of Proxy Access Nomination as described above.

For purposes of this Section 2.14, “Proxy Access Nominee” shall mean a person properly nominated for director by a stockholder in accordance with this Section 2.14. The “Required Information” that the corporation will include in its proxy statement is (i) the information concerning the Proxy Access Nominee and the Eligible Stockholder that, as determined by the corporation, would be required to be disclosed in a proxy statement or other filings required to be filed pursuant to Regulation 14A (the “Proxy Rules”) under the Exchange Act and (ii) if the Eligible Stockholder so elects, a Statement (defined below).

The corporation shall not be required to include a Proxy Access Nominee in its proxy materials for any meeting of stockholders for which (i) the secretary of the corporation receives a notice that the Eligible Stockholder has nominated a person for election to the board of directors pursuant to the notice requirements set forth in Section 2.13 of these bylaws and (ii) the Eligible Stockholder does not expressly elect at the time of providing the notice to have its nominee included in the corporation’s proxy materials pursuant to this Section 2.14.

The maximum number of Proxy Access Nominees (the “Permitted Number”) that must be included in the corporation’s proxy materials pursuant to this Section 2.14 shall not exceed the greater of two directors or 20% of the number of directors currently serving on the board as of the Final Proxy Access Nomination Date, rounded down to the nearest whole number. The following persons shall be considered Proxy Access Nominees for purposes of determining when the maximum number of Proxy Access Nominees provided for in this Section 2.14 has been reached: (1) any Proxy Access Nominee that was submitted by an Eligible Stockholder for inclusion in the corporation’s proxy materials pursuant to this Section 2.14 whom the board decides to nominate as a board nominee, (2) any Stockholder nominee whose nomination is subsequently withdrawn and (3) any director who had been a Proxy Access Nominee at any of the preceding three annual meetings and whose reelection at the upcoming annual meeting is being recommended by the Board. The Permitted Number shall be reduced by the number of director candidates for which the corporation shall have received one or more valid notices that a stockholder (other than an Eligible Stockholder) intends to nominate director candidates at such annual meeting of stockholders pursuant to Section 2.13; provided, further, that in the event that one or more vacancies for any reason occurs on the board of directors at any time after the Final Proxy Access Nomination Date and before the date of the applicable annual meeting of stockholders and the board of directors resolves to reduce the size of the board of directors in connection therewith, the Permitted Number shall be calculated based on the number of directors in office as so reduced.

In the event that the number of Proxy Access Nominees submitted by Eligible Stockholders pursuant to this Section 2.14 exceeds the Permitted Number, each Eligible Stockholder shall select one Proxy Access Nominee for inclusion in the corporation’s proxy materials until the maximum number is reached, going in the order of the

amount (largest to smallest) of shares of the corporation’s capital stock owned by each Eligible Stockholder as disclosed in the written notice of the nomination submitted to the corporation. If the maximum number is not reached after each Eligible Stockholder has selected one Proxy Access Nominee, this selection process shall continue as many times as necessary, following the same order each time, until the maximum number is reached.

An Eligible Stockholder must have owned 3% or more of the corporation’s outstanding capital stock continuously for at least three years (the “Required Shares”) as of both the date the written notice of the nomination is delivered to or mailed and received by the corporation in accordance with this Section 2.14, and the record date for determining stockholders entitled to vote at the meeting. For purposes of satisfying the foregoing ownership requirement under this Section 2.14, the shares of common stock owned by one or more stockholders, or by the person or persons who own shares of the corporation’s common stock and on whose behalf any stockholder is acting, may be aggregated, provided that the number of stockholders and other persons whose ownership of shares is aggregated for such purpose shall not exceed 20. Two or more funds that are (i) under common management and investment control, (ii) under common management and funded primarily by a single employer or (iii) a “group of investment companies,” as such term is defined in Section 12(d)(1)(G)(ii) of the Investment Company Act of 1940 (the “Investment Company Act”) (such funds together under each of (i), (ii) or (iii) comprising a “Qualifying Fund”) shall be treated as one owner for the purpose of determining the aggregate number of stockholders in this paragraph, and treated as one person for the purpose of determining “ownership” as defined in this Section 2.14, provided that each fund comprising a Qualifying Fund otherwise meets the requirements set forth in this Section 2.14. With respect to any one particular annual meeting, no person may be a member of more than one group of persons constituting an Eligible Stockholder under this Section 2.14.

For purposes of this Section 2.14, an Eligible Stockholder shall be deemed to “own” only those outstanding shares of the corporation’s capital stock as to which the stockholder possesses both (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares (x) sold by such Eligible Stockholder or any of its affiliates in any transaction that has not been settled or closed, (y) borrowed by such Eligible Stockholder or any of its affiliates for any purposes or purchased by such Eligible Stockholder or any of its affiliates pursuant to an agreement to resell or (z) subject to any option, warrant, forward contract, swap, contract of sale, other derivative or similar agreement entered into by such stockholder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of outstanding shares of the corporation’s capital stock, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of (1) reducing in any manner, to any extent or at any time in the future, such stockholder’s or affiliates’ full right to vote or direct the voting of any such shares, and/or (2) hedging, offsetting or altering to any degree gain or loss arising from the full economic ownership of such shares by such stockholder or affiliate. An Eligible Stockholder shall “own” shares held in the name of a nominee or other intermediary so long as the stockholder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. A stockholder’s ownership of shares shall be deemed to continue during any period in which (i) the person has loaned such shares, provided that the person has the power to recall such loaned shares on no more than five business days’ notice; or (ii) the person has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement that is revocable at any time by the person. Whether outstanding shares of the corporation’s capital stock are “owned” for these purposes shall be determined by the board of directors, which determination shall be conclusive and binding on the corporation and its stockholders. For purposes of this Section

2.14, the term “affiliate” shall have the meaning ascribed thereto in the regulations promulgated under the Exchange Act.

The Eligible Stockholder (including each member of a group of persons that is an Eligible Stockholder hereunder) must provide, with its timely notice of nomination, the following information in writing to the secretary: (in addition to the information required to be provided by Section 2.13):

(a)	one or more written statements from the record holder of the shares (and from each intermediary through which the shares are or have been held during the requisite three-year holding period) verifying that, as of a date within seven calendar days prior to the date the Notice of Proxy Access Nomination is delivered to or mailed and received by the corporation, the Eligible Stockholder owns, and has owned continuously for the preceding three years, the Required Shares, as well as the Eligible Stockholder’s agreement to provide: (i) within five business days after the record date for the meeting, written statements from the record holder and any intermediaries verifying the Eligible Stockholder’s continuous ownership of the Required Shares through the record date, and (ii) immediate notice if the Eligible Stockholder ceases to own any of the Required Shares prior to the date of the applicable annual meeting of stockholders;
(b)	documentation satisfactory to the corporation demonstrating that a group of funds treated as one stockholder for purposes of this Section 2.14 are under common management and investment control;
(c)	the written consent of each Proxy Access Nominee to be named in the proxy statement as a nominee and to serve as a director, if elected,
(d)	a copy of the Schedule 14N that has been filed with the SEC as required by Rule 14a-18 under the Exchange Act,
(e)	in the case of a nomination by a group of stockholders that together is an Eligible Stockholder, the designation by all group members of one group member that is authorized to act on behalf of all members of the nominating stockholder group with respect to the nomination and all matters related thereto, including withdrawal of the nomination;

(f)

representations that the Eligible Stockholder (including each member of any group of stockholders that together is an Eligible Stockholder hereunder): (i) acquired the Required Shares in the ordinary course of business and not with the intent to change or influence control at the corporation, and does not presently have such intent, (ii) has not nominated and will not nominate for election to the board of directors at the meeting any person other than the Proxy Access Nominee(s) being nominated pursuant to this Section 2.14, (iii) has not engaged and will not engage in, and has not and will not be, a “participant” in another person’s “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act in support of the election of any individual as a director at the meeting other than its Proxy Access Nominee or a board nominee, (iv) will not distribute to any stockholder any form of proxy for the meeting other than the form distributed by the corporation, (v) intends to continue to own the Required Shares through the date of the meeting, (vi) will provide facts, statements and other information in all communications with the corporation and its stockholders that are or will be true and correct in all material respects and do not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, (vii) is not and will not become party to (A) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such Proxy Access Nominee, if elected as a director of the corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the corporation or (B) any Voting Commitment that could limit or interfere with such Proxy Access Nominee’s ability to comply, if elected as a director of the corporation, with such person’s fiduciary duties under applicable law, (viii) is not and will not become a party to any compensatory, payment or other financial agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the corporation, and

(g)

an undertaking that the Eligible Stockholder agrees to (i) assume all liability stemming from any legal or regulatory violation arising out of the Eligible Stockholder’s communications with the corporation’s stockholders or out of the information that the Eligible Stockholder provided to the corporation, (ii) indemnify and hold harmless the corporation and each of its directors, officers and employees individually against any liability, loss or damages in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the corporation or any of its directors, officers or employees arising out of any nomination submitted by the Eligible Stockholder pursuant to this Section 2.14, (iii) file with the SEC all soliciting and other materials required under Rule 14a-6 under the Exchange Act and (iv) comply with all other applicable laws, rules, regulations and listing standards with respect to any solicitation in connection with the meeting. The inspector of elections shall not give effect to the Eligible Stockholder’s votes with respect to the election of directors if the Eligible Stockholder does not comply with each of the representations in clause (f) above.

The Eligible Stockholder may include with its timely notice of nomination a written statement for inclusion in the corporation’s proxy statement for the meeting, not to exceed 500 words, in support of the Proxy Access Nominee’s candidacy (the “Statement”). Notwithstanding anything to the contrary contained in this Section 2.14, the corporation may omit from its proxy materials any information or Statement that it believes would violate any applicable law, rule, regulation or listing standard.

Within the time period specified in this Section 2.14 for providing a Notice of Proxy Access Nomination, a Proxy Access Nominee must deliver to the secretary of the corporation a written representation and agreement that such Proxy Access Nominee: (i) is not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such Proxy Access Nominee, if elected as a director, will act or vote on any issue or question that has not been disclosed to the corporation, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement

or indemnification in connection with his or her candidacy for the board or his or her service or action as a director that has not been disclosed to the corporation, and (iii) will comply with applicable law and listing standards, all of the corporation’s corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines, and any other policies and guidelines applicable to directors. At the request of the corporation, the Proxy Access Nominee must submit all completed and signed questionnaires required of the corporation’s directors and officers. The corporation may also require that any Proxy Access Nominee furnish such other information as may reasonably be required by the corporation as necessary to permit the board of directors to determine whether each Proxy Access Nominee (i) is independent under applicable law, applicable listing standards, any applicable rules or regulations of the SEC and any publicly disclosed standards used by the board in determining and disclosing the independence of the corporation’s directors (the “Applicable Independence Standards”); (ii) such Proxy Access Nominee has any direct or indirect relationship with the corporation other than those relationships that the board of directors or a committee of the board deems to be permitted under the corporation’s policies and procedures, including its conflict of interest policies, and (iii) such Proxy Access Nominee is or has been subject to (A) any event specified in Item 401(f) of Regulation S-K under the Securities Act of 1933 (the “Securities Act”) or (B) any order of the type specified in Rule 506(d) of Regulation D under the Securities Act. If the board of directors determines that the Proxy Access Nominee is not independent under the applicable standards, the Proxy Access Nominee will not be eligible for inclusion in the corporation’s proxy materials. The corporation may also require any Proxy Access Nominee to furnish such other information as may reasonably be required by the corporation that the corporation reasonably believes could be material to a reasonable stockholder's understanding of (i) the independence, or lack thereof, of such Proxy Access Nominee and (ii) the qualifications or eligibility of such Proxy Access Nominee to serve as a director of the corporation.

In the event that any information or communications provided by the Eligible Stockholder or Proxy Access Nominee to the corporation or its stockholders ceases to be true and correct in any respect or omits a fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading, each Eligible Stockholder or Proxy Access Nominee, as the case may be, shall promptly notify the secretary of any such inaccuracy or omission in such previously provided information and of the information that is required to make such information or communication true and correct.

The corporation shall not be required to include, pursuant to this Section 2.14, a Proxy Access Nominee in its proxy materials (or, if the proxy statement has already been filed, to allow the nomination of a Proxy Access Nominee, notwithstanding that proxies in respect of such vote may have been received by the corporation):

(a)

for any meeting for which the secretary receives a notice that the Eligible Stockholder or any other stockholder has nominated a Proxy Access Nominee for election to the board of directors pursuant to the requirements of Section 2.13 and does not expressly elect at the time of providing the notice to have its nominee included in the corporation’s proxy materials pursuant to this Section 2.14,

(b)

if the Eligible Stockholder who has nominated such Proxy Access Nominee has nominated for election to the board of directors at the annual meeting any person pursuant to Section 2.13, or has or is currently engaged in, or has been or is a “participant” in another person’s, “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act in support of the election of any individual as a director at the meeting other than its Proxy Access Nominee(s) or a board nominee,

(c)	if the Proxy Access Nominee is or becomes a party to any compensatory, payment or other financial agreement, arrangement or understanding with any person or entity other than the corporation, or is receiving or will receive any such compensation or other payment from any person or entity other than the corporation, in each case in connection with service as a director of the corporation, and such agreement, arrangement or understanding has not been disclosed to the corporation,
(d)	if the Proxy Access Nominee is or becomes a party to any commitment or assurance to, any person or entity as to how such Proxy Access Nominee, if elected as a director, will act or vote on any issue or question, and such commitment or assurance has not been disclosed to the corporation,
(e)	who is not independent under the Applicable Independence Standards, as determined by the board of directors,
(f)	whose election as a member of the board of directors would cause the corporation to be in violation of these bylaws, the corporation’s certificate of incorporation, the listing standards of the principal exchange upon which the corporation’s capital stock is traded, or any applicable state or federal law, rule or regulation,
(g)	who is or has been, within the past three years, an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914,
(h)	whose then-current or within the preceding ten (10) years’ business or personal interests place such Proxy Access Nominee in a conflict of interest with the corporation or any of its subsidiaries that would cause such Proxy Access Nominee to violate any fiduciary duties of directors established pursuant to the General Corporation Law of Delaware, including but not limited to, the duty of loyalty and duty of care, as determined by the board of directors;
(i)	who is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or has been convicted in such a criminal proceeding within the past ten years,
(j)	who is subject to any order of the type specified in Rule 506(d) of Regulation D promulgated under the Securities Act
(k)	if such Proxy Access Nominee or the applicable Eligible Stockholder shall have provided information to the corporation in respect to such nomination that was untrue in any material respect or omitted to state a material fact necessary in order to make the statement made, in light of the circumstances under which they were made, not misleading, as determined by the board of directors, or
(l)	if the Eligible Stockholder or applicable Proxy Access Nominee otherwise contravenes any of the agreements or representations made by such Eligible Stockholder or Proxy Access Nominee or fails to comply with its obligations pursuant to Section 2.13 or this Section 2.14.

Notwithstanding anything to the contrary set forth herein, the board of directors or the person presiding at the meeting shall declare a nomination by an Eligible Stockholder to be invalid, and such nomination shall be disregarded notwithstanding that proxies in respect of such vote may have been received by the corporation, if (a the Proxy Access Nominee(s) and/or the applicable Eligible Stockholder shall have breached its or their obligations, agreements, representations, undertakings and/or obligations under Section 2.13 or this Section 2.14, as determined by the board of directors or the person presiding at the meeting, or (b) the Eligible Stockholder (or

a qualified representative thereof) does not appear at the meeting to present any nomination pursuant to this Section 2.14.

The Eligible Stockholder (including any person who owns shares that constitute part of the Eligible Stockholder’s ownership for purposes of satisfying this Section 2.14) shall file with the SEC any solicitation or other communication with the corporation’s stockholders relating to the meeting at which the Proxy Access Nominee will be nominated, regardless of whether any such filing is required under the Proxy Rules or whether any exemption from filing is available for such solicitation or other communication under the Proxy Rules.

The board of directors (and any other person or body authorized by the board of directors) shall have exclusive power and authority to interpret this Section 2.14 and to make any and all determinations necessary or advisable to apply this Section 2.14 to any persons, facts or circumstances, including the power to determine (a) whether a person or group of persons qualifies as an Eligible Stockholder; (b) whether outstanding shares of the corporation’s capital stock are “owned” for purposes of meeting the ownership requirements of this Section 2.14; (c) whether a notice complies with the requirements of this Section 2.14; (d) whether a person satisfies the qualifications and requirements to be a Proxy Access Nominee; (e) whether inclusion of the Required Information in the corporation’s proxy statement is consistent with all applicable laws, rules, regulations and listing standards; and (f) whether any and all requirements of Section 2.13 and 2.14 have been satisfied. Any such interpretation or determination adopted in good faith by the board of directors (or any other person or body authorized by the board of directors) shall be conclusive and binding on all persons, including the corporation and all record or beneficial owners of stock of the corporation.

2.15BUSINESS AT MEETINGS OF STOCKHOLDERS

At any meeting of stockholders, only such business shall be transacted as shall have been properly brought before the meeting. To be properly brought before a meeting of stockholders, business must be (a) specified in the notice of meeting (or any supplement or amendment thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors or (c) in the case of an annual meeting of stockholders, properly brought before the meeting by a stockholder who is entitled to vote and who has complied with the procedures established by this Section 2.15. For business to be properly brought before an annual meeting by a stockholder (other than the nomination of a person for election as a director, which is governed by Section 2.13 of these Bylaws), the Proponent (defined in Section 2.13) must have given timely and proper notice thereof in writing to the secretary of the corporation, in accordance with, and containing all information provided for, in this Section 2.15, and such business must be a proper matter for stockholder action under the General Corporation Law of Delaware.

To be timely, a Proponent's notice must be delivered to or mailed to the secretary of the corporation and received at the principal executive offices of the corporation prior to the close of business not less than 90 nor more than 120 days prior to the first anniversary of the preceding year's annual meeting of stockholders; provided, however, in the event the date of the annual meeting is advanced more than 30 days prior to such anniversary date or delayed more than 60 days after such anniversary date, then to be timely such notice must be received by the corporation not later than the close of business on the later of the 90^th day prior to the date of the meeting or the 10^th day following the date of Public Disclosure (defined in Section 2.13) of the date of the annual meeting. In no event shall any adjournment or postponement of an annual meeting of stockholders or announcement thereof

commence a new time period or extend any time period for the giving of a Proponent's notice as required by this Section 2.15.

A Proponent's notice to the secretary shall set forth: (a) as to each matter the Proponent proposes to bring before the annual meeting, a description of the business desired to be brought before the annual meeting, the reasons for transacting such business at the meeting and the text of any resolutions to be proposed, and whether the Proponent has communicated with any other stockholder or beneficial owner of shares of stock of the corporation regarding such business and (b) as to the Proponent and any Stockholder Associated Person (defined in Section 2.13) on whose behalf the proposal is being made, (i) the name and address of the Proponent, and any holder of record of the Proponent's shares of stock, as they appear on the corporation's books, and of any Stockholder Associated Person, (ii) the class and number of shares of stock of the corporation that are owned (beneficially and of record) by or on behalf of the Proponent and by or on behalf of any Stockholder Associated Person as of the date of the Proponent's notice, the date such shares were acquired and the investment intent with respect thereto, (iii) a representation and agreement that the Proponent will notify the corporation in writing of the class and number of shares of stock of the corporation that are owned (beneficially and of record) by or on behalf of the Proponent and by or on behalf of any Stockholder Associated Person as of the record date for the meeting, not later than the close of business on the third business day following the later of the record date or the date of Public Disclosure of the record date, (iv) a description of all purchases and sales of, or other transactions involving in any way, shares of stock of the corporation by or on behalf of the Proponent and by or on behalf of any Stockholder Associated Person during the twenty-four month period prior to the date of the Proponent's notice, including the date of the transactions, the class and number of shares and the consideration (without regard to whether such shares involved were or were not owned by the Proponent or any such person), (v) a description of any agreement, arrangement or understanding, including any Derivative Instrument (defined in Section 2.13), that has been entered into or is in effect as of the date of the Proponent's notice, by or on behalf of the Proponent or any Stockholder Associated Person, the effect or intent of which is to mitigate loss to, manage risk or benefit of stock price changes for, or increase or decrease the voting power of, the Proponent or any Stockholder Associated Person with respect to the corporation's securities, (vi) a representation and agreement that the Proponent will notify the corporation in writing of any such agreement, arrangement or understanding, including any Derivative Instrument, that has been entered into or is in effect as of the record date for the meeting, not later than the close of business on the third business day following the later of the record date or the date of Public Disclosure of the record date, (vii) any material interest of the Proponent or any Stockholder Associated Person in such business, (viii) a description of any other agreement, arrangement or understanding that has been entered into or is in effect as of the date of the Proponent's notice, between or among the Proponent, any Stockholder Associated Person or any other person, and that relates to such business, (ix) a representation and agreement that the Proponent will notify the corporation in writing of any agreement, arrangement or understanding of the type described in clause (viii) above that has been entered into or is in effect as of the record date for the meeting, not later than the close of business on the third business day following the later of the record date or the date of Public Disclosure of the record date, (x) a representation that the Proponent is the holder of record or beneficial owner of shares of stock of the corporation entitled to vote for the election of directors at the annual meeting and intends to appear in person or by proxy at the meeting to propose such business and (xi) a representation as to whether the Proponent intends to deliver a proxy statement and/or form of proxy to stockholders and/or otherwise to solicit proxies from stockholders in support of such proposal.

No business proposed by a stockholder shall be transacted at an annual meeting of stockholders except in accordance with the procedures set forth in this Section 2.15. If the Proponent intending to propose business at an annual meeting pursuant to this Section 2.15 does not give timely and proper notice thereof in writing to the secretary of the corporation, in accordance with, and containing all information provided for in, this Section 2.15, or if the Proponent (or a qualified representative of the Proponent) does not appear at the meeting to present the proposed business, then, in any such case, such business shall not be transacted, notwithstanding the fact that proxies in respect of such business may have been solicited or obtained. The chairman of the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with the provisions of this Section 2.15, and, if the chairman should so determine, he or she shall declare to the meeting that such business was not properly brought before the meeting and shall not be transacted.

The requirements of this Section 2.15 shall apply to any business to be brought before an annual meeting of stockholders by a stockholder (other than the nomination by a stockholder of a person for election as a director, which is governed by Section 2.13 of these Bylaws) without regard to whether such business also is intended to be included in the corporation's proxy statement pursuant to Rule 14a-8 of the Exchange Act or whether such business is presented to stockholders by means of a proxy solicitation by any person other than by or on behalf of the board of directors.

ARTICLE III
DIRECTORS

3.1POWERS

Subject to the provisions of the General Corporation Law of Delaware and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors.

3.2NUMBER OF DIRECTORS; ELECTION; AND TERM OF OFFICE OF DIRECTORS

The board of directors shall consist of such number of directors determined from time to time by resolution of the board of directors. The number of directors may be changed by resolution of the board of directors, by an amendment to this bylaw, duly adopted by the board of directors or by the stockholders, or by a duly adopted amendment to the certificate of incorporation. The term of each director so elected shall be set forth in the certificate of incorporation.

No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

Each director, including a director elected to fill a vacancy, shall hold office until such director’s term expires and until such director’s successor shall be elected and qualified or until such director’s earlier death, resignation, retirement, disqualification or removal.

3.3 QUALIFICATION OF DIRECTORS

Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws, wherein other qualifications for directors may be prescribed.

3.4 RESIGNATION AND VACANCIES

Any director may resign at any time upon written notice to the corporation.

Unless otherwise provided in the certificate of incorporation or these bylaws:

(a)

Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. So long as directors are divided into classes, such directors or director shall have the authority to appoint any newly appointed director to serve as a member of a particular class of directors.

(b)

Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. Directors appointed to fill a vacancy of such class or classes or series will be appointed to serve, so long as the directors are divided into classes, in the same class of directors as the director he or she is being appointed to replace.

If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware.

If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten (10) percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors

chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the General Corporation Law of Delaware as far as applicable.

3.5PLACE OF MEETINGS; MEETINGS BY TELEPHONE

The board of directors of the corporation may hold meetings, both regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

3.6FIRST MEETINGS

The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors.

3.7REGULAR MEETINGS

Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board.

3.8SPECIAL MEETINGS; NOTICE

Special meetings of the board may be called by the chairman of the board, or the chief executive officer, on three days’ notice to each director if provided either by mail or overnight courier, or on 24 hours’ notice if provided either personally, by telephone, or email; special meetings shall be called by the chief executive officer or secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director, in which case special meetings shall be called by the chief executive officer or secretary in like manner and on like notice on the written request of the sole director.

3.9QUORUM

At all meetings of the board of directors, a majority of the authorized number of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

3.10WAIVER OF NOTICE

Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice unless so required by the certificate of incorporation or these bylaws.

3.11ADJOURNED MEETING; NOTICE

If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

3.12BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the board or committee.

3.13FEES AND COMPENSATION OF DIRECTORS

Unless otherwise restricted by the certificate of incorporation or these bylaws, the board of directors shall have the authority to fix the compensation of directors.

3.14APPROVAL OF LOANS TO OFFICERS

The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing contained in this section shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.

3.15REMOVAL OF DIRECTORS

Unless otherwise restricted by statute, by the certificate of incorporation or by these bylaws, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

3.16MAJORITY VOTING

Each director shall be elected by the vote of the majority of the votes cast (meaning the number of shares voted "for" a nominee must exceed the number of shares voted "against" such nominee, with “abstentions” and “broker non-votes” not counted as votes cast either “for” or “against” such director’s election) at any meeting for the election of directors at which a quorum is present, provided, that in a contested election (meaning that the number of persons properly nominated to serve as directors exceeds the number of directors to be elected), the directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at such meeting and entitled to vote on the election of directors and recommended for adoption by the board of directors.

ARTICLE IV
COMMITTEES

4.1COMMITTEES OF DIRECTORS

The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, with each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she, or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in the bylaws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) amend the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets, (iv) recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution, or (v) amend the bylaws of the corporation; and, unless the board resolution establishing the committee, the bylaws or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of Delaware.

4.2COMMITTEE MINUTES

Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.

4.3MEETINGS AND ACTION OF COMMITTEES

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these bylaws, Section 3.5 (place of meetings and meetings by telephone), Section 3.7 (regular meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of adjournment), and Section 3.12 (action without a meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members (including its chairman) for the board of directors and its members (including its chairman); provided, however, that the time of regular meetings of committees may also be called by resolution of the board of directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

ARTICLE V
OFFICERS

5.1OFFICERS

The officers of the corporation shall be a chief executive officer, a president, one or more vice presidents, a secretary, and a treasurer. The corporation may also have, at the discretion of the board of directors, a chairman of the board, one or more assistant vice presidents, assistant secretaries, assistant treasurers, and any such other officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws. Any number of offices may be held by the same person.

5.2ELECTION OF OFFICERS

The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 or 5.5 of these bylaws, shall be chosen by the board of directors, subject to the rights, if any, of an officer under any contract of employment.

5.3SUBORDINATE OFFICERS

The board of directors may appoint, or empower the chief executive officer to appoint, such other officers and agents as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine.

5.4REMOVAL AND RESIGNATION OF OFFICERS

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any

regular or special meeting of the board or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors.

Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

5.5VACANCIES IN OFFICES

Any vacancy occurring in any office of the corporation shall be filled by the board of directors.

5.6CHAIRMAN OF THE BOARD

The chairman of the board, if such an officer be elected, shall, if present, preside at meetings of the board of directors and exercise and perform such other powers and duties as may from time to time be assigned to him by the board of directors or as may be prescribed by these bylaws. If there is no chief executive officer or president, then the chairman of the board shall also be the chief executive officer of the corporation and shall have the powers and duties prescribed in Section 5.7 of these bylaws.

5.7CHIEF EXECUTIVE OFFICER

Subject to such supervisory powers, if any, as may be given by the board of directors to the chairman of the board, if there be such an officer, the chief executive officer shall, subject to the control of the board of directors, shall be responsible for corporate policy and strategy and general supervision, direction, and control of the business. He or she shall preside at all meetings of the stockholders and, in the absence or nonexistence of a chairman of the board, at all meetings of the board of directors. He or she shall have the general powers and duties of management usually vested in the office of chief executive officer of a corporation and shall have such other powers and duties as may be prescribed by the board of directors or these bylaws.

5.8PRESIDENT

The president shall be the chief operating officer of the corporation, with general responsibility for the management and control of the operations of the corporation. The president shall, when requested, counsel with and advise the other officers of the corporation and shall perform such other duties as such officer may agree with the chief executive officer or as the board of directors may from time to time determine.

5.9VICE PRESIDENT

Each vice president shall have such powers and perform such duties as may be assigned to him or her from time to time by the chairman of the board, the chief executive officer, or the president.

5.10SECRETARY

The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors,

committees of directors, and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at stockholders’ meetings, and the proceedings thereof.

The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation.

The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors required to be given by law or by these bylaws. He or she shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by these bylaws.

5.11TREASURER

The treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director.

The treasurer shall deposit all money and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the board of directors. He or she shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the chief executive officer and directors, whenever they request it, an account of all of his transactions as treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these bylaws.

5.12ASSISTANT SECRETARY

The assistant secretary, or, if there is more than one, the assistant secretaries in the order determined by the stockholders or board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors or the stockholders may from time to time prescribe.

5.13ASSISTANT TREASURER

The assistant treasurer, or, if there is more than one, the assistant treasurers, in the order determined by the stockholders or board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the treasurer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors or the stockholders may from time to time prescribe.

5.14AUTHORITY AND DUTIES OF OFFICERS

In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors or the stockholders.

ARTICLE VI
INDEMNITY

6.1INDEMNIFICATION OF DIRECTORS AND OFFICERS

The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, indemnify each of its directors and officers against expenses (including attorneys’ fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.1, a “director” or “officer” of the corporation includes any person (i) who is or was a director or officer of the corporation, (ii) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

6.2INDEMNIFICATION OF OTHERS

The corporation shall have the power, to the extent and in the manner permitted by the General Corporation Law of Delaware, to indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys’ fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.2, an “employee” or “agent” of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

6.3INSURANCE

The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of the General Corporation Law of Delaware.

6.4ADVANCEMENT

The right to indemnification conferred in the certificate of incorporation and these bylaws shall include the right to be paid by the corporation the expenses incurred in defending any proceeding for which such right to indemnification is applicable in advance of its final disposition (an “Advancement of Expenses”); provided, however, that an Advancement of Expenses incurred by or on behalf of an indemnitee shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this Section 6.4 or otherwise.

ARTICLE VII
RECORDS AND REPORTS

7.1MAINTENANCE AND INSPECTION OF RECORDS

The corporation shall, either at its principal executive office or at such place or places as designated by the board of directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records.

Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business.

The officer who has charge of the stock ledger of a corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

7.2INSPECTION BY DIRECTORS

Any director shall have the right to examine the corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court

may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.

7.3ANNUAL STATEMENT TO STOCKHOLDERS

The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation.

7.4REPRESENTATION OF SHARES OF OTHER CORPORATIONS

The chairman of the board, the chief executive officer, the president, any vice president, the treasurer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the chief executive officer or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

ARTICLE VIII
GENERAL MATTERS

8.1CHECKS

From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments.

8.2EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS

The board of directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

8.3STOCK CERTIFICATES; PARTLY PAID SHARES

The shares of a corporation shall be represented by certificates, provided that the board of directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares

shall be entitled to have a certificate signed by, or in the name of the corporation by the chairman or vice-chairman of the board of directors, or the chief executive officer, president, or vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

8.4SPECIAL DESIGNATION ON CERTIFICATES

If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

8.5LOST CERTIFICATES

Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

8.6CONSTRUCTION; DEFINITIONS

Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Delaware General Corporation Law shall govern the construction of these bylaws. Without

limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

8.7DIVIDENDS

The directors of the corporation, subject to any restrictions contained in the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock pursuant to the General Corporation Law of Delaware. Dividends may be paid in cash, in property, or in shares of the corporation’s capital stock.

The directors of the corporation may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.

8.8FISCAL YEAR

The fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors.

8.9SEAL

The seal of the corporation shall be such as from time to time may be approved by the board of directors.

8.10TRANSFER OF STOCK

Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books.

8.11STOCK TRANSFER AGREEMENTS

The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the General Corporation Law of Delaware.

8.12REGISTERED STOCKHOLDERS

The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

8.13SEVERABILITY

If any provision of these bylaws (or any portion, including words or phrases, thereof) or the application of any provision (or any portion, including words or phrases, thereof) to any person or circumstance shall be held invalid, illegal or unenforceable in any respect under applicable law by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provisions hereof (or the remaining portion thereof) or the application of such provision to any other persons or circumstances, which unaffected provisions (or portions thereof) shall remain valid, legal and enforceable to the fullest extent permitted by law.  

ARTICLE IX
AMENDMENTS

The original or other bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws.

ARTICLE X
DISSOLUTION

If it should be deemed advisable in the judgment of the board of directors of the corporation that the corporation should be dissolved, the board, after the adoption of a resolution to that effect by a majority of the whole board at any meeting called for that purpose, shall cause notice to be mailed to each stockholder entitled to vote thereon of the adoption of the resolution and of a meeting of stockholders to take action upon the resolution.

At the meeting a vote shall be taken for and against the proposed dissolution. If a majority of the outstanding stock of the corporation entitled to vote thereon votes for the proposed dissolution, then a certificate stating that the dissolution has been authorized in accordance with the provisions of Section 275 of the General Corporation Law of Delaware and setting forth the names and residences of the directors and officers shall be executed, acknowledged, and filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such certificate’s becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the corporation shall be dissolved.

Whenever all the stockholders entitled to vote on a dissolution consent in writing, either in person or by duly authorized attorney, to a dissolution, no meeting of directors or stockholders shall be necessary. The consent shall be filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such consent’s becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the corporation shall be dissolved. If the consent is signed by an attorney, then the original power of attorney or a photocopy thereof shall be attached to and filed with the consent. The consent filed with the Secretary of State shall have attached to it the affidavit of the secretary or some other officer of the corporation stating that the consent has been signed by or on behalf of all the stockholders entitled to vote on a dissolution;

in addition, there shall be attached to the consent a certification by the secretary or some other officer of the corporation setting forth the names and residences of the directors and officers of the corporation.

ARTICLE XI
CUSTODIAN

11.1APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES

The Court of Chancery, upon application of any stockholder, may appoint one or more persons to be custodians and, if the corporation is insolvent, to be receivers, of and for the corporation when:

(a)	at any meeting held for the election of directors the stockholders are so divided that they have failed to elect successors to directors whose terms have expired or would have expired upon qualification of their successors; or
(b)	the business of the corporation is suffering or is threatened with irreparable injury because the directors are so divided respecting the management of the affairs of the corporation that the required vote for action by the board of directors cannot be obtained and the stockholders are unable to terminate this division; or
(c)	the corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets.

11.2DUTIES OF CUSTODIAN

The custodian shall have all the powers and title of a receiver appointed under Section 291 of the General Corporation Law of Delaware, but the authority of the custodian shall be to continue the business of the corporation and not to liquidate its affairs and distribute its assets, except when the Court of Chancery otherwise orders and except in cases arising under Sections 226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.

ARTICLE XII
EXCLUSIVE FORUM FOR ADJUDICATION OF DISPUTES

12.1FORUM FOR ADJUDICATION OF DISPUTES

Unless the board of directors of the corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court located within the State of Delaware, or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation; (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee or agent of the corporation to the corporation or the corporation’s stockholders; (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, the certificate of incorporation of the corporation or these bylaws (as any such may be amended

from time to time); or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said court having personal jurisdiction over the indispensable parties named as defendants therein.

EX-31.1

Exhibit 31.1

CERTIFICATION OF FRANCIS A. DESOUZA PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Francis A. deSouza, certify that:

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.

Dated: October 24, 2019

By:	/s/ FRANCIS A. DESOUZA
	Francis A. deSouza
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF SAM A. SAMAD PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Sam A. Samad, certify that:

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.

Dated: October 24, 2019

By:	/s/ SAM A. SAMAD
	Sam A. Samad
	Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

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

In connection with the Quarterly Report of Illumina, Inc. (the “Company”) on Form 10-Q for the quarter ended September 29, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Francis A. deSouza, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(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.

Dated: October 24, 2019

By:	/s/ FRANCIS A. DESOUZA
	Francis A. deSouza
	President and Chief Executive Officer

This certification accompanying the Report is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities such Section, and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before, on or after the date of the Report), irrespective of any general incorporation language contained in such filing.

EX-32.2

Exhibit 32.2

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

In connection with the Quarterly Report of Illumina, Inc. (the “Company”) on Form 10-Q for the quarter ended September 29, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sam A. Samad, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(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.

Dated: October 24, 2019

By:	/s/ SAM A. SAMAD
	Sam A. Samad
	Senior Vice President and Chief Financial Officer

This certification accompanying the Report is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities such Section, and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before, on or after the date of the Report), irrespective of any general incorporation language contained in such filing.

XML

Legal Proceedings

9 Months Ended

Sep. 29, 2019

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 consolidated 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 resolutions 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 in consideration of many factors, which include, but are not limited to, past history, scientific and other evidence, and the specifics and status of each matter. We may change our estimates if our assessment of the various factors changes and the amount of ultimate loss may differ from our estimates, resulting in a material effect on our business, financial condition, results of operations, and/or cash flows.

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Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 29, 2019

Accounting Policies [Abstract]

Summary of Impact of Topic 842

The following table summarizes the impact of Topic 842 on our condensed consolidated balance sheet upon adoption on December 31, 2018 (in millions):

	December 31, 2018 (unaudited)
	Pre-adoption		Adoption Impact			Post-adoption
ASSETS
Prepaid expenses and other current assets	$	78	$	(8	)	$	70
Property and equipment, net	1,075		(241		)	834
Operating lease right-of-use assets	—		579			579
Deferred tax assets, net	70		6			76
Total assets	$	1,223	$	336		$	1,559
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accrued liabilities	$	513	$	36		$	549
Operating lease liabilities	—		722			722
Long-term debt	1,107		(269		)	838
Other long-term liabilities	359		(135		)	224
Retained earnings	3,083		(18		)	3,065
Total liabilities and stockholders’ equity	$	5,062	$	336		$	5,398

Disaggregation of Revenue from External Customers

The following table represents revenue by source (in millions):

	Three Months Ended
	September 29, 2019						September 30, 2018
	Sequencing		Microarray		Total		Sequencing		Microarray		Total
Consumables	$	525	$	75	$	600	$	472	$	83	$	555
Instruments	142		4		146		138		17		155
Total product revenue	667		79		746		610		100		710
Service and other revenue	138		23		161		109		34		143
Total revenue	$	805	$	102	$	907	$	719	$	134	$	853

	Nine Months Ended
	September 29, 2019						September 30, 2018
	Sequencing		Microarray		Total		Sequencing		Microarray		Total
Consumables	$	1,503	$	224	$	1,727	$	1,353	$	256	$	1,609
Instruments	376		14		390		375		27		402
Total product revenue	1,879		238		2,117		1,728		283		2,011
Service and other revenue	353		121		474		312		143		455
Total revenue	$	2,232	$	359	$	2,591	$	2,040	$	426	$	2,466

Revenue related to our previously consolidated VIE, Helix, is included in sequencing service and other revenue up to April 25, 2019, the date of Helix’s deconsolidation.

The following table represents revenue by geographic area, based on region of destination (in millions):

	Three Months Ended				Nine Months Ended
	September 29, 2019		September 30, 2018		September 29, 2019		September 30, 2018
Americas	$	514	$	474	$	1,463	$	1,380
Europe, Middle East, and Africa	235		219		653		615
Greater China (1)	95		102		280		288
Asia-Pacific	63		58		195		183
Total revenue	$	907	$	853	$	2,591	$	2,466

____________________________________

(1) Region includes revenue from China, Taiwan, and Hong Kong.

Summary of Calculation of Weighted Average Shares used to Calculate Basic and Diluted Earnings Per Share, Earnings Per Share

The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in millions):

	Three Months Ended		Nine Months Ended
	September 29, 2019	September 30, 2018	September 29, 2019	September 30, 2018
Weighted average shares outstanding	147	147	147	147
Effect of potentially dilutive common shares from:
Equity awards	1	1	1	1
Convertible senior notes	—	1	1	—
Weighted average shares used in calculating diluted earnings per share	148	149	149	148

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Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 29, 2019

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 30, 2018, 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 unaudited condensed consolidated 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, we apply a qualitative approach 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 perform this assessment, as changes to existing relationships or future transactions may result in the consolidation or deconsolidation of a VIE. Effective April 25, 2019, we deconsolidated the financial statements of Helix Holdings I, LLC (Helix). See note “2. Balance Sheet Account Details” for further details.

We use the equity method to account for investments through which we have the ability to exercise significant influence, but not control, over the investee. Such investments are recorded in other assets, and our share of net income or loss is recognized on a one quarter lag in other (expense) income, net.

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 and nine months ended September 29, 2019 and September 30, 2018 were both 13 and 26 weeks, respectively.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

Significant Accounting Policies

During the three and nine months ended September 29, 2019, there were no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended December 30, 2018, except as described below.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on the balance sheet as lease liabilities with corresponding right-of-use assets and to disclose key information about leasing arrangements. We adopted Topic 842 on its effective date in the first quarter of 2019 using a modified retrospective approach by recognizing a cumulative-effect adjustment to retained earnings as of December 31, 2018. We elected the available package of practical expedients upon adoption, which allowed us to carry forward our historical assessment of whether existing agreements contained a lease and the classification of our existing operating leases. We continue to report our financial position as of December 30, 2018 under the former lease accounting standard (Topic 840) in our condensed consolidated balance sheet.

The following table summarizes the impact of Topic 842 on our condensed consolidated balance sheet upon adoption on December 31, 2018 (in millions):

	December 31, 2018 (unaudited)
	Pre-adoption		Adoption Impact			Post-adoption
ASSETS
Prepaid expenses and other current assets	$	78	$	(8	)	$	70
Property and equipment, net	1,075		(241		)	834
Operating lease right-of-use assets	—		579			579
Deferred tax assets, net	70		6			76
Total assets	$	1,223	$	336		$	1,559
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accrued liabilities	$	513	$	36		$	549
Operating lease liabilities	—		722			722
Long-term debt	1,107		(269		)	838
Other long-term liabilities	359		(135		)	224
Retained earnings	3,083		(18		)	3,065
Total liabilities and stockholders’ equity	$	5,062	$	336		$	5,398

The adoption impact summarized above was primarily due to the recognition of operating lease liabilities with corresponding right-of-use assets based on the present value of our remaining minimum lease payments, and the derecognition of existing fixed assets and financing obligations related to build-to-suit leasing arrangements that, under Topic 840, did not qualify for sale-leaseback accounting. The difference between these amounts, net of deferred tax, was recorded as a cumulative-effect adjustment to retained earnings.

Accounting Pronouncements Pending Adoption

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. We expect to adopt the standard on its effective date in the first quarter of 2020 using a modified retrospective approach.  We currently do not expect the adoption to have a material impact on our 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, instrument service contracts, and development and licensing agreements.

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.

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 payment is typically due within 60 days from invoice. 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 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. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, and payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied.

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 for such costs, if capitalized, would have been one year or less.

We regularly enter into contracts with multiple performance obligations. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. Most performance obligations are generally satisfied within a short time frame, approximately three to six months after the contract execution date. As of September 29, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations was $1,009 million, of which approximately 63% is expected to be converted to revenue in the next twelve months, approximately 10% in the following twelve months, and the remainder thereafter.

The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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 management, adjusted for applicable discounts.

Contract liabilities, which consist of deferred revenue and customer deposits, as of September 29, 2019 and December 30, 2018 were $193 million and $206 million, respectively, of which the short-term portions of $161 million and $175 million, respectively, were recorded in accrued liabilities and the remaining long-term portions were recorded in other long-term liabilities. Revenue recorded during the three and nine months ended September 29, 2019 included $27 million and $133 million, respectively, of previously deferred revenue that was included in contract liabilities as of December 30, 2018. Contract assets as of September 29, 2019 and December 30, 2018 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 by us. 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):

	Three Months Ended
	September 29, 2019						September 30, 2018
	Sequencing		Microarray		Total		Sequencing		Microarray		Total
Consumables	$	525	$	75	$	600	$	472	$	83	$	555
Instruments	142		4		146		138		17		155
Total product revenue	667		79		746		610		100		710
Service and other revenue	138		23		161		109		34		143
Total revenue	$	805	$	102	$	907	$	719	$	134	$	853

	Nine Months Ended
	September 29, 2019						September 30, 2018
	Sequencing		Microarray		Total		Sequencing		Microarray		Total
Consumables	$	1,503	$	224	$	1,727	$	1,353	$	256	$	1,609
Instruments	376		14		390		375		27		402
Total product revenue	1,879		238		2,117		1,728		283		2,011
Service and other revenue	353		121		474		312		143		455
Total revenue	$	2,232	$	359	$	2,591	$	2,040	$	426	$	2,466

Revenue related to our previously consolidated VIE, Helix, is included in sequencing service and other revenue up to April 25, 2019, the date of Helix’s deconsolidation.

The following table represents revenue by geographic area, based on region of destination (in millions):

	Three Months Ended				Nine Months Ended
	September 29, 2019		September 30, 2018		September 29, 2019		September 30, 2018
Americas	$	514	$	474	$	1,463	$	1,380
Europe, Middle East, and Africa	235		219		653		615
Greater China (1)	95		102		280		288
Asia-Pacific	63		58		195		183
Total revenue	$	907	$	853	$	2,591	$	2,466

____________________________________

(1) Region includes revenue from China, Taiwan, and Hong Kong.

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. Up to April 25, 2019, the date of Helix’s deconsolidation, per-share earnings of Helix were included in the consolidated basic and diluted earnings per share computations based on our share of Helix’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 table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in millions):

	Three Months Ended		Nine Months Ended
	September 29, 2019	September 30, 2018	September 29, 2019	September 30, 2018
Weighted average shares outstanding	147	147	147	147
Effect of potentially dilutive common shares from:
Equity awards	1	1	1	1
Convertible senior notes	—	1	1	—
Weighted average shares used in calculating diluted earnings per share	148	149	149	148

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Balance Sheet Account Details - Narrative - Derivatives (Details) - USD ($) $ in Millions	Sep. 29, 2019	Dec. 30, 2018
Not Designated as Hedging Instrument | Foreign Exchange Forward
Derivative [Line Items]
Derivative, notional amount	$ 244	$ 122

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Condensed Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2019	Sep. 30, 2018	Sep. 29, 2019	Sep. 30, 2018
Revenue:
Total revenue	$ 907	$ 853	$ 2,591	$ 2,466
Cost of revenue:
Amortization of acquired intangible assets	9	10	28	26
Total cost of revenue	259	256	786	756
Gross profit	648	597	1,805	1,710
Operating expense:
Research and development	151	159	486	447
Selling, general and administrative	189	197	602	577
Total operating expense	340	356	1,088	1,024
Income from operations	308	241	717	686
Other (expense) income:
Interest income	16	14	59	31
Interest expense	(11)	(15)	(41)	(37)
Other (expense) income, net	(43)	(8)	114	5
Total other (expense) income, net	(38)	(9)	132	(1)
Income before income taxes	270	232	849	685
Provision for income taxes	36	44	98	100
Consolidated net income	234	188	751	585
Add: Net loss attributable to noncontrolling interests	0	11	12	31
Net income attributable to Illumina stockholders	$ 234	$ 199	$ 763	$ 616
Earnings per share attributable to Illumina stockholders:
Basic (in dollars per share)	$ 1.59	$ 1.35	$ 5.19	$ 4.20
Diluted (in dollars per share)	$ 1.58	$ 1.33	$ 5.13	$ 4.15
Shares used in computing earnings per share:
Basic (in shares)	147	147	147	147
Diluted (in shares)	148	149	149	148
Product revenue
Revenue:
Total revenue	$ 746	$ 710	$ 2,117	$ 2,011
Cost of revenue:
Cost of revenue	195	184	573	540
Service and other revenue
Revenue:
Total revenue	161	143	474	455
Cost of revenue:
Cost of revenue	$ 55	$ 62	$ 185	$ 190

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Balance Sheet Account Details - Narrative - Leases (Details) ft² in Millions	9 Months Ended
	Sep. 29, 2019 ft²
Lessee, Lease, Description [Line Items]
Leased office space (in square feet)	2.6
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms	1 year
Terms of extension options	6 months
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms	20 years
Terms of extension options	20 years

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Balance Sheet Account Details - Narrative - Strategic Investments (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 29, 2019 USD ($) fund	Sep. 30, 2018 USD ($)	Dec. 30, 2018 USD ($)
Schedule of Investments [Line Items]
Marketable equity securities	$ 110		$ 110		$ 39
Marketable equity securities unrealized losses and gains	47		57	$ 0
Carrying value of investment	189		189		189
Investee
Schedule of Investments [Line Items]
Revenue from transactions with strategic investees	15	$ 32	$ 49	$ 104
Venture Capital Investment Fund (the Fund)
Schedule of Investments [Line Items]
Number of venture capital investment funds | fund			2
Commitment in new venture capital investment fund	100		$ 100
Remaining capital commitment	55		55
Second Venture Capital Investment Fund
Schedule of Investments [Line Items]
Commitment in new venture capital investment fund	160		160
Remaining capital commitment	160		160
Other Assets
Schedule of Investments [Line Items]
Strategic equity investments, without readily determinable fair values	221		221		231
Equity method investments	$ 49		$ 49		$ 29

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Stockholders' Equity - Summary of Restricted Stock Activity and Related Information (Details) shares in Thousands	9 Months Ended
	Sep. 29, 2019 $ / shares shares
Restricted Stock Units (RSU)
Stock Units
Outstanding at period start (in shares) | shares	1,840
Awarded (in shares) | shares	70
Vested (in shares) | shares	(96)
Cancelled (in shares) | shares	(111)
Outstanding at period end (in shares) | shares	1,703
Weighted-Average Grant Date Fair Value per Share
Outstanding at period start (in dollars per share) | $ / shares	$ 227.00
Awarded (in dollars per share) | $ / shares	305.75
Vested (in dollars per share) | $ / shares	197.49
Cancelled (in dollars per share) | $ / shares	220.55
Outstanding at period end (in dollars per share) | $ / shares	$ 232.31
Performance Stock Units (PSU)
Stock Units
Outstanding at period start (in shares) | shares	660
Awarded (in shares) | shares	(54)
Cancelled (in shares) | shares	(62)
Outstanding at period end (in shares) | shares	544
Weighted-Average Grant Date Fair Value per Share
Outstanding at period start (in dollars per share) | $ / shares	$ 196.99
Awarded (in dollars per share) | $ / shares	260.24
Cancelled (in dollars per share) | $ / shares	178.85
Outstanding at period end (in dollars per share) | $ / shares	$ 192.83

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Stockholders' Equity - Summary of Share-based Compensation Expense for all Stock Awards (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2019	Sep. 30, 2018	Sep. 29, 2019	Sep. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense before taxes	$ 45	$ 48	$ 145	$ 146
Related income tax benefits	(10)	(8)	(31)	(29)
Share-based compensation expense, net of taxes	35	40	114	117
Cost of product revenue
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense before taxes	5	4	15	12
Cost of service and other revenue
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense before taxes	1	1	3	3
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense before taxes	15	15	50	45
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense before taxes	$ 24	$ 28	$ 77	$ 86

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Debt and Other Commitments - Summary of Debt Conversions (Details) - 2019 shares in Millions, $ in Millions	9 Months Ended
	Sep. 29, 2019 USD ($) shares
Short-term Debt [Line Items]
Cash paid for principal of notes converted	$ 633
Conversion value over principal amount, paid in shares of common stock	$ 153
Number of shares of common stock issued upon conversion (in shares) | shares	0.4

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Pending Acquisition (Details) - Pacific Biosciences of California, Inc (PacBio) - USD ($) $ / shares in Units, $ in Millions					2 Months Ended
	Mar. 31, 2020	Oct. 01, 2019	Sep. 25, 2019	Nov. 01, 2018	Dec. 02, 2019
Business Acquisition [Line Items]
Cash payments to PacBio				$ 1,200
Share price (in dollars per share)				$ 8.00
Potential fee paid to Illumina if contract terminates				$ 43
Potential fee paid by Illumina if contract terminates				$ 98
Business acquisition termination term			2 years
Equity or debt financing to be raised			$ 100
Scenario, Forecast
Business Acquisition [Line Items]
Cash payments to PacBio	$ 34				$ 6
Subsequent Event
Business Acquisition [Line Items]
Cash payments to PacBio		$ 6

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Balance Sheet Account Details - Narrative - Warranties (Details)	9 Months Ended
	Sep. 29, 2019
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

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 29, 2019

Equity [Abstract]

Summary of Restricted Stock Activity and Related Information, Restricted Stock

Restricted stock activity for the nine months ended September 29, 2019 was as follows (units in thousands):

	Restricted Stock Units (RSU)		Performance Stock Units (PSU)(1)		Weighted-Average Grant Date Fair Value per Share
					RSU		PSU
Outstanding at December 30, 2018	1,840		660		$	227.00	$	196.99
Awarded	70		(54	)	$	305.75	$	260.24
Vested	(96	)	—		$	197.49	—
Cancelled	(111	)	(62	)	$	220.55	$	178.85
Outstanding at September 29, 2019	1,703		544		$	232.31	$	192.83

______________________________________

(1) The number of units reflect the estimated number of shares to be issued at the end of the performance period.

Summary of Restricted Stock Activity and Related Information, Performance Units

Restricted stock activity for the nine months ended September 29, 2019 was as follows (units in thousands):

	Restricted Stock Units (RSU)		Performance Stock Units (PSU)(1)		Weighted-Average Grant Date Fair Value per Share
					RSU		PSU
Outstanding at December 30, 2018	1,840		660		$	227.00	$	196.99
Awarded	70		(54	)	$	305.75	$	260.24
Vested	(96	)	—		$	197.49	—
Cancelled	(111	)	(62	)	$	220.55	$	178.85
Outstanding at September 29, 2019	1,703		544		$	232.31	$	192.83

______________________________________

(1)

The number of units reflect the estimated number of shares to be issued at the end of the performance period.

Summary of Stock Option Activity Under all Stock Option Plans

Stock option activity during the nine months ended September 29, 2019 was as follows:

	Options (in thousands)		Weighted-Average Exercise Price
Outstanding at December 30, 2018	192		$	54.52
Exercised	(128	)	$	53.00
Outstanding and exercisable at September 29, 2019	64		$	57.58

Summary of Share-based Compensation Expense for all Stock Awards

Share-based compensation expense reported in our condensed consolidated statements of income was as follows (in millions):

	Three Months Ended						Nine Months Ended
	September 29, 2019			September 30, 2018			September 29, 2019			September 30, 2018
Cost of product revenue	$	5		$	4		$	15		$	12
Cost of service and other revenue	1			1			3			3
Research and development	15			15			50			45
Selling, general and administrative	24			28			77			86
Share-based compensation expense before taxes	45			48			145			146
Related income tax benefits	(10		)	(8		)	(31		)	(29		)
Share-based compensation expense, net of taxes	$	35		$	40		$	114		$	117

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 ESPP during the nine months ended September 29, 2019 were as follows:

	Employee Stock Purchase Rights
Risk-free interest rate	1.88% - 2.56%
Expected volatility	30% - 38%
Expected term	0.5 - 1.0 year
Expected dividends	0		%
Weighted-average grant-date fair value per share	$	75.47

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Basis of Presentation and Summary of Significant Accounting Policies - Narrative - Revenue, Remaining Performance Obligation (Details) $ in Millions	Sep. 29, 2019 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-09-30
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation	$ 1,009
Percent of remaining performance obligation	63.00%
Expected timing of remaining performance obligation	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-09-30
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Percent of remaining performance obligation	10.00%
Expected timing of remaining performance obligation	12 months

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Balance Sheet Account Details - Summary of Contractual Maturities of Available-for-sale Debt Securities (Details) - USD ($) $ in Millions	Sep. 29, 2019	Dec. 30, 2018
Estimated Fair Value
Due within one year	$ 497
After one but within five years	744
Total	$ 1,241	$ 2,329

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Fair Value Measurements (Details) - USD ($) $ in Millions	Sep. 29, 2019	Dec. 30, 2018
Assets:
Available-for-sale securities	$ 1,241	$ 2,329
Marketable equity securities	110	39
Debt securities in government-sponsored entities
Assets:
Available-for-sale securities	31	21
Corporate debt securities
Assets:
Available-for-sale securities	636	1,058
U.S. Treasury securities
Assets:
Available-for-sale securities	574	1,250
Fair Value, Measurements, Recurring
Assets:
Marketable equity securities	110	39
Contingent value right	28
Deferred compensation plan assets	45	34
Total assets measured at fair value	2,965	3,234
Liabilities:
Deferred compensation plan liability	43	33
Fair Value, Measurements, Recurring | Debt securities in government-sponsored entities
Assets:
Available-for-sale securities	31	21
Fair Value, Measurements, Recurring | Corporate debt securities
Assets:
Available-for-sale securities	636	1,058
Fair Value, Measurements, Recurring | U.S. Treasury securities
Assets:
Available-for-sale securities	574	1,250
Fair Value, Measurements, Recurring | Money market funds (cash equivalents)
Assets:
Money market funds (cash equivalents)	1,541	832
Fair Value, Measurements, Recurring | Level 1
Assets:
Marketable equity securities	110	39
Total assets measured at fair value	2,225	2,121
Fair Value, Measurements, Recurring | Level 1 | U.S. Treasury securities
Assets:
Available-for-sale securities	574	1,250
Fair Value, Measurements, Recurring | Level 1 | Money market funds (cash equivalents)
Assets:
Money market funds (cash equivalents)	1,541	832
Fair Value, Measurements, Recurring | Level 2
Assets:
Deferred compensation plan assets	45	34
Total assets measured at fair value	712	1,113
Liabilities:
Deferred compensation plan liability	43	33
Fair Value, Measurements, Recurring | Level 2 | Debt securities in government-sponsored entities
Assets:
Available-for-sale securities	31	21
Fair Value, Measurements, Recurring | Level 2 | Corporate debt securities
Assets:
Available-for-sale securities	636	$ 1,058
Fair Value, Measurements, Recurring | Level 3
Assets:
Contingent value right	28
Total assets measured at fair value	$ 28

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Balance Sheet Account Details - Summary of Changes in Reserve for Product Warranties (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2019	Sep. 30, 2018	Sep. 29, 2019	Sep. 30, 2018
Reserve for product warranties [Roll Forward]
Balance at beginning of period	$ 16	$ 15	$ 19	$ 17
Additions charged to cost of product revenue	3	8	12	20
Repairs and replacements	(5)	(6)	(17)	(20)
Balance at end of period	$ 14	$ 17	$ 14	$ 17

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Debt and Other Commitments - Narrative - Obligations Under Financing Leases (Details) $ in Millions	Dec. 30, 2018 USD ($)
Debt Disclosure [Abstract]
Obligations under financing leases	$ 269

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Balance Sheet Account Details - Summary of Short-term Investments (Details) - USD ($) $ in Millions	Sep. 29, 2019	Dec. 30, 2018
Available-for-sale debt securities:
Amortized Cost	$ 1,236	$ 2,331
Gross Unrealized Gains	5	1
Gross Unrealized Losses		(3)
Estimated Fair Value	1,241	2,329
Debt securities in government-sponsored entities
Available-for-sale debt securities:
Amortized Cost	31	21
Gross Unrealized Gains	0	0
Gross Unrealized Losses		0
Estimated Fair Value	31	21
Corporate debt securities
Available-for-sale debt securities:
Amortized Cost	632	1,060
Gross Unrealized Gains	4	0
Gross Unrealized Losses		(2)
Estimated Fair Value	636	1,058
U.S. Treasury securities
Available-for-sale debt securities:
Amortized Cost	573	1,250
Gross Unrealized Gains	1	1
Gross Unrealized Losses		(1)
Estimated Fair Value	$ 574	$ 1,250

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Debt and Other Commitments (Tables)

9 Months Ended

Sep. 29, 2019

Debt Disclosure [Abstract]

Summary of Debt Obligations

Debt obligations consisted of the following (dollars in millions):

	September 29, 2019			December 30, 2018
Principal amount of 2023 Notes outstanding	$	750		$	750
Principal amount of 2021 Notes outstanding	517			517
Principal amount of 2019 Notes outstanding	—			633
Unamortized discount of liability component of convertible senior notes	(136		)	(175		)
Net carrying amount of liability component of convertible senior notes	1,131			1,725
Obligations under financing leases	—			269
Other	—			3
Less: current portion	—			(1,107		)
Long-term debt	$	1,131		$	890
Carrying value of equity component of convertible senior notes, net of debt issuance costs	$	213		$	287
Fair value of convertible senior notes outstanding (Level 2)	$	1,517		$	2,222
Weighted-average remaining amortization period of discount on the liability component of convertible senior notes	3.4 years			3.9 years

Schedule of Debt Conversions

The following table summarizes information about the conversion of the 2019 Notes during the nine months ended September 29, 2019 (in millions):

	2019 Notes
Cash paid for principal of notes converted	$	633
Conversion value over principal amount, paid in shares of common stock	$	153
Number of shares of common stock issued upon conversion	0.4

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Basis of Presentation and Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 29, 2019	Sep. 29, 2019	Dec. 30, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Contract liability	$ 193	$ 193	$ 206
Contract liabilities, current portion	161	161	$ 175
Revenue recognized, previously deferred	$ 27	$ 133
Minimum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Product or service delivery period		3 months
Maximum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Product or service delivery period		6 months
Product revenue
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Payment period from invoice		60 days

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Stockholders' Equity

9 Months Ended

Sep. 29, 2019

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

As of September 29, 2019, approximately 4.9 million shares remained available for future grants under the 2015 Stock Plan.

Restricted Stock

Restricted stock activity for the nine months ended September 29, 2019 was as follows (units in thousands):

	Restricted Stock Units (RSU)		Performance Stock Units (PSU)(1)		Weighted-Average Grant Date Fair Value per Share
					RSU		PSU
Outstanding at December 30, 2018	1,840		660		$	227.00	$	196.99
Awarded	70		(54	)	$	305.75	$	260.24
Vested	(96	)	—		$	197.49	—
Cancelled	(111	)	(62	)	$	220.55	$	178.85
Outstanding at September 29, 2019	1,703		544		$	232.31	$	192.83

______________________________________

(1) The number of units reflect the estimated number of shares to be issued at the end of the performance period.

Stock Options

Stock option activity during the nine months ended September 29, 2019 was as follows:

	Options (in thousands)		Weighted-Average Exercise Price
Outstanding at December 30, 2018	192		$	54.52
Exercised	(128	)	$	53.00
Outstanding and exercisable at September 29, 2019	64		$	57.58

ESPP

The price at which common stock is purchased under the Employee Stock Purchase Plan (ESPP) is equal to 85% of the fair market value of the common stock on the first day of the offering period or purchase date, whichever is lower. During the nine months ended September 29, 2019, approximately 0.2 million shares were issued under the ESPP. As of September 29, 2019, there were approximately 13.5 million shares available for issuance under the ESPP.

Share Repurchases

On February 6, 2019, our Board of Directors authorized a new share repurchase program, which supersedes all prior and available repurchase authorizations, to repurchase $550 million of outstanding common stock. The repurchases may be completed under a 10b5-1 plan or at management’s discretion. During the nine months ended September 29, 2019, we repurchased 0.9 million shares for approximately $261 million.  Authorizations to repurchase approximately $289 million of our common stock remained available as of September 29, 2019.

Share-based Compensation

Share-based compensation expense reported in our condensed consolidated statements of income was as follows (in millions):

	Three Months Ended						Nine Months Ended
	September 29, 2019			September 30, 2018			September 29, 2019			September 30, 2018
Cost of product revenue	$	5		$	4		$	15		$	12
Cost of service and other revenue	1			1			3			3
Research and development	15			15			50			45
Selling, general and administrative	24			28			77			86
Share-based compensation expense before taxes	45			48			145			146
Related income tax benefits	(10		)	(8		)	(31		)	(29		)
Share-based compensation expense, net of taxes	$	35		$	40		$	114		$	117

The assumptions used for the specified reporting periods and the resulting estimates of weighted-average fair value per share for stock purchased under the ESPP during the nine months ended September 29, 2019 were as follows:

	Employee Stock Purchase Rights
Risk-free interest rate	1.88% - 2.56%
Expected volatility	30% - 38%
Expected term	0.5 - 1.0 year
Expected dividends	0		%
Weighted-average grant-date fair value per share	$	75.47

As of September 29, 2019, approximately $320 million of total unrecognized compensation cost related to restricted stock and ESPP shares issued to date was expected to be recognized over a weighted-average period of approximately 1.9 years.

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 29, 2019

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 unaudited condensed consolidated 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, we apply a qualitative approach 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 perform this assessment, as changes to existing relationships or future transactions may result in the consolidation or deconsolidation of a VIE.

Equity Method Investments

We use the equity method to account for investments through which we have the ability to exercise significant influence, but not control, over the investee. Such investments are recorded in other assets, and our share of net income or loss is recognized on a one quarter lag in other (expense) income, net.

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.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

Recently Adopted Accounting Pronouncements and Accounting Pronouncements Pending Adoption

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on the balance sheet as lease liabilities with corresponding right-of-use assets and to disclose key information about leasing arrangements. We adopted Topic 842 on its effective date in the first quarter of 2019 using a modified retrospective approach by recognizing a cumulative-effect adjustment to retained earnings as of December 31, 2018. We elected the available package of practical expedients upon adoption, which allowed us to carry forward our historical assessment of whether existing agreements contained a lease and the classification of our existing operating leases. We continue to report our financial position as of December 30, 2018 under the former lease accounting standard (Topic 840) in our condensed consolidated balance sheet.

The following table summarizes the impact of Topic 842 on our condensed consolidated balance sheet upon adoption on December 31, 2018 (in millions):

	December 31, 2018 (unaudited)
	Pre-adoption		Adoption Impact			Post-adoption
ASSETS
Prepaid expenses and other current assets	$	78	$	(8	)	$	70
Property and equipment, net	1,075		(241		)	834
Operating lease right-of-use assets	—		579			579
Deferred tax assets, net	70		6			76
Total assets	$	1,223	$	336		$	1,559
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accrued liabilities	$	513	$	36		$	549
Operating lease liabilities	—		722			722
Long-term debt	1,107		(269		)	838
Other long-term liabilities	359		(135		)	224
Retained earnings	3,083		(18		)	3,065
Total liabilities and stockholders’ equity	$	5,062	$	336		$	5,398

The adoption impact summarized above was primarily due to the recognition of operating lease liabilities with corresponding right-of-use assets based on the present value of our remaining minimum lease payments, and the derecognition of existing fixed assets and financing obligations related to build-to-suit leasing arrangements that, under Topic 840, did not qualify for sale-leaseback accounting. The difference between these amounts, net of deferred tax, was recorded as a cumulative-effect adjustment to retained earnings.

Accounting Pronouncements Pending Adoption

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. We expect to adopt the standard on its effective date in the first quarter of 2020 using a modified retrospective approach.  We currently do not expect the adoption to have a material impact on our 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, instrument service contracts, and development and licensing agreements.

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.

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 payment is typically due within 60 days from invoice. 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 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. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from development and licensing agreements generally includes upfront and periodic licensing fees, contract research and development services, and payments for development and regulatory milestones. Revenue for these agreements is recognized when each distinct performance obligation is satisfied.

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 for such costs, if capitalized, would have been one year or less.

We regularly enter into contracts with multiple performance obligations. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. Most performance obligations are generally satisfied within a short time frame, approximately three to six months after the contract execution date. As of September 29, 2019, the aggregate amount of the transaction price allocated to remaining performance obligations was $1,009 million, of which approximately 63% is expected to be converted to revenue in the next twelve months, approximately 10% in the following twelve months, and the remainder thereafter.

The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone 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 management, adjusted for applicable discounts.

Contract liabilities, which consist of deferred revenue and customer deposits, as of September 29, 2019 and December 30, 2018 were $193 million and $206 million, respectively, of which the short-term portions of $161 million and $175 million, respectively, were recorded in accrued liabilities and the remaining long-term portions were recorded in other long-term liabilities. Revenue recorded during the three and nine months ended September 29, 2019 included $27 million and $133 million, respectively, of previously deferred revenue that was included in contract liabilities as of December 30, 2018. Contract assets as of September 29, 2019 and December 30, 2018 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 by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers.

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. Up to April 25, 2019, the date of Helix’s deconsolidation, per-share earnings of Helix were included in the consolidated basic and diluted earnings per share computations based on our share of Helix’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.

Strategic Investments

We have strategic investments in privately held companies (non-marketable equity securities) and companies that have completed initial public offerings (marketable equity securities).

Our marketable equity securities are measured at fair value. As of September 29, 2019 and December 30, 2018, the fair value of our marketable equity securities, included in short-term investments, totaled $110 million and $39 million, respectively. Total unrealized losses and gains on our marketable equity securities, included in other (expense) income, net, were $47 million and $57 million, respectively, for the three and nine months ended September 29, 2019.

Our non-marketable equity securities without readily determinable market values are initially measured at cost and adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment. As of September 29, 2019 and December 30, 2018, the aggregate carrying amounts of our non-marketable equity investments without readily determinable fair values, included in other assets, were $221 million and $231 million, respectively.

One of our non-marketable equity investments is a VIE for which we have concluded that we are not the primary beneficiary, and therefore, we do not consolidate this VIE in our consolidated financial statements. We have determined our maximum exposure to loss, as a result of our involvement with the VIE, to be the carrying value of our investment, which was $189 million as of September 29, 2019 and December 30, 2018.

Leases

We lease approximately 2.6 million square feet of office, lab, and manufacturing facilities under various non-cancellable operating lease agreements (real estate leases). Our real estate leases have remaining lease terms of 1 to 20 years, which represent the non-cancellable periods of the leases and include extension options that we determined are reasonably certain to be exercised. We exclude extension options that are not reasonably certain to be exercised from our lease terms, ranging from 6 months to 20 years. Our lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms as well as payments for common-area-maintenance and administrative services. We often receive customary incentives from our landlords, such as reimbursements for tenant improvements and rent abatement periods, which effectively reduce the total lease payments owed for these leases.

Operating lease right-of-use assets and liabilities on our condensed consolidated balance sheets represent the present value of our remaining lease payments over the remaining lease terms. We do not allocate lease payments to non-lease components; therefore, fixed payments for common-area-maintenance and administrative services are included in our operating lease right-of-use assets and liabilities. We use our incremental borrowing rate to calculate the present value of our lease payments, as the implicit rates in our leases are not readily determinable.

As of September 29, 2019, the maturities of our operating lease liabilities were as follows (in millions):

	Remaining Lease Payments
2019	$	19
2020	83
2021	82
2022	84
2023	85
Thereafter	622
Total remaining lease payments (1)	975
Less: imputed interest	(235		)
Total operating lease liabilities	740
Less: current portion	(49		)
Long-term operating lease liabilities	$	691
Weighted-average remaining lease term	11.4 years
Weighted-average discount rate	4.6		%

____________________________________

(1) Total remaining lease payments exclude $47 million of legally binding minimum lease payments for leases signed but not yet commenced.

The components of our lease costs included in our condensed consolidated statements of income were as follows (in millions):

	Three Months Ended			Nine Months Ended
	September 29, 2019			September 29, 2019
Operating lease costs	$	21		$	63
Sublease income	(3		)	(9		)
Total lease costs	$	18		$	54

Operating lease costs consist of the fixed lease payments included in our operating lease liabilities and are recorded on a straight-line basis over the lease terms. We sublease certain real estate to third parties and this sublease income is also recorded on a straight-line basis.

Goodwill

We test the carrying value of goodwill in accordance with accounting rules on impairment of goodwill, which require us to estimate the fair value of each reporting unit annually, or when impairment indicators exist, and compare such amounts to their respective carrying values to determine if an impairment is required.

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 the derivatives are recognized in other (expense) 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.

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Balance Sheet Account Details - Summary of Leases (Details) - USD ($) $ in Millions	Sep. 29, 2019	Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
2019	$ 19
2020	83
2021	82
2022	84
2023	85
Thereafter	622
Total remaining lease payments	975
Less: imputed interest	(235)
Total operating lease liabilities	740	$ 722
Less: current portion	(49)
Long-term operating lease liabilities	$ 691
Weighted-average remaining lease term	11 years 4 months 24 days
Weighted-average discount rate	4.60%
Lease payments for leases not yet commenced	$ 47

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Balance Sheet Account Details - Summary of Inventory (Details) - USD ($) $ in Millions	Sep. 29, 2019	Dec. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 123	$ 117
Work in process	270	218
Finished goods	24	51
Total inventory	$ 417	$ 386

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Balance Sheet Account Details - Summary of Accrued Liabilities (Details) - USD ($) $ in Millions	Sep. 29, 2019	Dec. 31, 2018	Dec. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Contract liabilities, current portion	$ 161		$ 175
Accrued compensation expenses	112		193
Accrued taxes payable	96		82
Operating lease liabilities, current portion	49
Other, including warranties	58		63
Total accrued liabilities	$ 476	$ 549	$ 513

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 29, 2019	Sep. 30, 2018
Cash flows from operating activities:
Consolidated net income	$ 751	$ 585
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	113	100
Amortization of intangible assets	30	29
Share-based compensation expense	145	146
Accretion of debt discount	36	26
Deferred income taxes	(13)	(32)
Unrealized gains on marketable equity securities	(57)	0
Payment of accreted debt discount	(84)	0
Gains on deconsolidation	(54)	0
Other	(10)	0
Changes in operating assets and liabilities:
Accounts receivable	(29)	(24)
Inventory	(33)	(40)
Prepaid expenses and other current assets	(14)	7
Operating lease right-of-use assets and liabilities, net	(3)	0
Other assets	(29)	(9)
Accounts payable	(46)	13
Accrued liabilities	(81)	45
Other long-term liabilities	(14)	(4)
Net cash provided by operating activities	608	842
Cash flows from investing activities:
Maturities of available-for-sale securities	1,262	710
Purchases of available-for-sale securities	(760)	(2,352)
Sales of available-for-sale securities	528	520
Purchases of property and equipment	(152)	(231)
Deconsolidation of Helix cash	(29)	0
Proceeds from deconsolidation of GRAIL	15	0
Net purchases of strategic investments	(15)	(12)
Net cash paid for acquisitions	0	(100)
Net cash provided by (used in) investing activities	849	(1,465)
Cash flows from financing activities:
Payments on financing obligations	(550)	(3)
Net proceeds from issuance of debt	0	735
Common stock repurchases	(261)	(103)
Taxes paid related to net share settlement of equity awards	(30)	(18)
Proceeds from issuance of common stock	59	45
Contributions from noncontrolling interest owners	0	92
Net cash (used in) provided by financing activities	(782)	748
Effect of exchange rate changes on cash and cash equivalents	(4)	(4)
Net increase in cash and cash equivalents	671	121
Cash and cash equivalents at beginning of period	1,144	1,225
Cash and cash equivalents at end of period	1,815	1,346
Supplemental cash flow information:
Cash paid for operating lease liabilities	$ 63	$ 0

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Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 29, 2019	Dec. 30, 2018
Current assets:
Cash and cash equivalents	$ 1,815	$ 1,144
Short-term investments	1,351	2,368
Accounts receivable, net	541	514
Inventory	417	386
Prepaid expenses and other current assets	98	78
Total current assets	4,222	4,490
Property and equipment, net	875	1,075
Operating lease right-of-use assets	555
Goodwill	824	831
Intangible assets, net	152	185
Deferred tax assets, net	88	70
Other assets	373	308
Total assets	7,089	6,959
Current liabilities:
Accounts payable	143	184
Accrued liabilities	476	513
Long-term debt, current portion	0	1,107
Total current liabilities	619	1,804
Operating lease liabilities	691
Long-term debt	1,131	890
Other long-term liabilities	209	359
Redeemable noncontrolling interests	0	61
Stockholders’ equity:
Common stock	2	2
Additional paid-in capital	3,510	3,290
Accumulated other comprehensive income (loss)	5	(1)
Retained earnings	3,828	3,083
Treasury stock, at cost	(2,906)	(2,616)
Total Illumina stockholders’ equity	4,439	3,758
Noncontrolling interests	0	87
Total stockholders’ equity	4,439	3,845
Total liabilities and stockholders’ equity	$ 7,089	$ 6,959

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Segment Information (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 29, 2019 USD ($) segment	Sep. 30, 2018 USD ($)	Dec. 30, 2018 USD ($)
Segment Reporting [Abstract]
Number of reportable segments | segment			1
Segment Reporting Information [Line Items]
Revenue	$ 907	$ 853	$ 2,591	$ 2,466
Income (loss) from operations	308	241	717	686
Assets	7,089		7,089		$ 6,959
Operating Segments | Core Illumina
Segment Reporting Information [Line Items]
Revenue	907	855	2,591	2,467
Income (loss) from operations	308	264	740	748
Assets	7,089		7,089		6,912
Operating Segments | Helix
Segment Reporting Information [Line Items]
Revenue	0	2	1	8
Income (loss) from operations	0	(23)	(24)	(64)
Assets	0		0		154
Elimination of intersegment
Segment Reporting Information [Line Items]
Revenue	0	(4)	(1)	(9)
Income (loss) from operations	0	$ 0	1	$ 2
Assets	$ 0		$ 0		$ (107)

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Stockholders' Equity - Narrative (Details) shares in Millions	Sep. 29, 2019 shares
2015 Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for issuance	4.9

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Stockholders' Equity - Narrative - Share Repurchases (Details) - USD ($) shares in Millions, $ in Millions	9 Months Ended
	Sep. 29, 2019	Sep. 30, 2018	Feb. 06, 2019
Class of Stock [Line Items]
Common stock repurchases	$ 261	$ 103
Common Stock
Class of Stock [Line Items]
Stock repurchase program, authorized amount			$ 550
Repurchased common stock (in shares)	0.9
Common stock repurchases	$ 261
Dollar amount remaining in authorized stock repurchase program	$ 289

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Debt and Other Commitments - Narrative (Details) - Convertible Senior Notes $ / shares in Units, $ in Millions		1 Months Ended	9 Months Ended
	Aug. 21, 2018 USD ($) day $ / shares	Jun. 29, 2014 USD ($) day $ / shares	Sep. 29, 2019 USD ($)	Dec. 30, 2018 USD ($)
2023
Debt Instrument [Line Items]
Stated rate			0.00%
Principal amount of notes outstanding | $	$ 750		$ 750	$ 750
Effective interest rate used to measure fair value of convertible senior note	3.70%
Conversion rate	0.0021845
Conversion price (in dollars per share) | $ / shares	$ 457.77
Threshold common stock trading days	20
Threshold consecutive common stock trading days	30
Threshold percentage of common stock price trigger	130.00%
Threshold note trading days	5
Threshold consecutive note trading days	10
Threshold percentage of note price trigger	98.00%
Convertible stock price trigger (in dollars per share) | $ / shares	$ 595.10
Redemption price, percentage	100.00%
2021
Debt Instrument [Line Items]
Stated rate			0.50%
Principal amount of notes outstanding | $		$ 517	$ 517	517
Effective interest rate used to measure fair value of convertible senior note		3.50%
Conversion rate		0.0039318
Conversion price (in dollars per share) | $ / shares		$ 254.34
Threshold common stock trading days		20
Threshold consecutive common stock trading days		30
Threshold percentage of common stock price trigger		130.00%
Threshold note trading days		5
Threshold consecutive note trading days		10
Threshold percentage of note price trigger		98.00%
If-converted value in excess of principal | $			$ 71
2019
Debt Instrument [Line Items]
Stated rate			0.00%
Principal amount of notes outstanding | $		$ 633	$ 0	$ 633
Effective interest rate used to measure fair value of convertible senior note		2.90%

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Balance Sheet Account Details - Summary of Activity of Redeemable Noncontrolling Interests (Details) $ in Millions	9 Months Ended
	Sep. 29, 2019 USD ($)
Increase (Decrease) in Redeemable Noncontrolling Interests [Roll Forward]
Balance as of December 30, 2018	$ 61
Vesting of redeemable equity awards	1
Net loss attributable to noncontrolling interests	(9)
Adjustment down to the redemption value	(16)
Release of potential obligation to noncontrolling interests	(37)
Balance as of September 29, 2019	$ 0

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Segment Information (Tables)

9 Months Ended

Sep. 29, 2019

Segment Reporting [Abstract]

Summary of Operating Performance and Assets by Segment

The following table presents the operating performance of each reportable segment (in millions):

	Three Months Ended					Nine Months Ended
	September 29, 2019		September 30, 2018			September 29, 2019			September 30, 2018
Revenue:
Core Illumina	$	907	$	855		$	2,591		$	2,467
Helix	—		2			1			8
Elimination of intersegment revenue	—		(4		)	(1		)	(9		)
Consolidated revenue	$	907	$	853		$	2,591		$	2,466
Income (loss) from operations:
Core Illumina	$	308	$	264		$	740		$	748
Helix	—		(23		)	(24		)	(64		)
Elimination of intersegment earnings	—		—			1			2
Consolidated income from operations	$	308	$	241		$	717		$	686

The following table presents the total assets of each reportable segment (in millions):

	September 29, 2019		December 30, 2018
Core Illumina	$	7,089	$	6,912
Helix	—		154
Elimination of intersegment assets	—		(107		)
Consolidated total assets	$	7,089	$	6,959

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Basis of Presentation and Summary of Significant Accounting Policies - Recently Adopted Accounting Principles (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2019	Sep. 30, 2018	Sep. 29, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Revenue	$ 907	$ 853	$ 2,591	$ 2,466
Americas
Disaggregation of Revenue [Line Items]
Revenue	514	474	1,463	1,380
Europe, Middle East, and Africa
Disaggregation of Revenue [Line Items]
Revenue	235	219	653	615
Greater China
Disaggregation of Revenue [Line Items]
Revenue	95	102	280	288
Asia-Pacific
Disaggregation of Revenue [Line Items]
Revenue	63	58	195	183
Sequencing
Disaggregation of Revenue [Line Items]
Revenue	805	719	2,232	2,040
Microarray
Disaggregation of Revenue [Line Items]
Revenue	102	134	359	426
Total product revenue
Disaggregation of Revenue [Line Items]
Revenue	746	710	2,117	2,011
Total product revenue | Sequencing
Disaggregation of Revenue [Line Items]
Revenue	667	610	1,879	1,728
Total product revenue | Microarray
Disaggregation of Revenue [Line Items]
Revenue	79	100	238	283
Consumables
Disaggregation of Revenue [Line Items]
Revenue	600	555	1,727	1,609
Consumables | Sequencing
Disaggregation of Revenue [Line Items]
Revenue	525	472	1,503	1,353
Consumables | Microarray
Disaggregation of Revenue [Line Items]
Revenue	75	83	224	256
Instruments
Disaggregation of Revenue [Line Items]
Revenue	146	155	390	402
Instruments | Sequencing
Disaggregation of Revenue [Line Items]
Revenue	142	138	376	375
Instruments | Microarray
Disaggregation of Revenue [Line Items]
Revenue	4	17	14	27
Service and other revenue
Disaggregation of Revenue [Line Items]
Revenue	161	143	474	455
Service and other revenue | Sequencing
Disaggregation of Revenue [Line Items]
Revenue	138	109	353	312
Service and other revenue | Microarray
Disaggregation of Revenue [Line Items]
Revenue	$ 23	$ 34	$ 121	$ 143

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Balance Sheet Account Details

9 Months Ended

Sep. 29, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Account Details

Balance Sheet Account Details

Short-term Investments

Our short-term investments are primarily available-for-sale debt securities that consisted of the following (in millions):

	September 29, 2019						December 30, 2018
	Amortized Cost		Gross Unrealized Gains		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Debt securities in government-sponsored entities	$	31	$	—	$	31	$	21	$	—	$	—		$	21
Corporate debt securities	632		4		636		1,060		—		(2		)	1,058
U.S. Treasury securities	573		1		574		1,250		1		(1		)	1,250
Total	$	1,236	$	5	$	1,241	$	2,331	$	1	$	(3	)	$	2,329

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 September 29, 2019, were as follows (in millions):

	Estimated Fair Value
Due within one year	$	497
After one but within five years	744
Total	$	1,241

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

We have strategic investments in privately held companies (non-marketable equity securities) and companies that have completed initial public offerings (marketable equity securities).

Our marketable equity securities are measured at fair value. As of September 29, 2019 and December 30, 2018, the fair value of our marketable equity securities, included in short-term investments, totaled $110 million and $39 million, respectively. Total unrealized losses and gains on our marketable equity securities, included in other (expense) income, net, were $47 million and $57 million, respectively, for the three and nine months ended September 29, 2019.

Our non-marketable equity securities without readily determinable market values are initially measured at cost and adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment. As of September 29, 2019 and December 30, 2018, the aggregate carrying amounts of our non-marketable equity investments without readily determinable fair values, included in other assets, were $221 million and $231 million, respectively.

One of our non-marketable equity investments is a VIE for which we have concluded that we are not the primary beneficiary, and therefore, we do not consolidate this VIE in our consolidated financial statements. We have determined our maximum exposure to loss, as a result of our involvement with the VIE, to be the carrying value of our investment, which was $189 million as of September 29, 2019 and December 30, 2018.

We invest in two venture capital investment funds (the Funds) with capital commitments of $100 million callable through April 2026 and up to $160 million callable through July 2029, respectively, of which $55 million and up to $160 million, respectively, remained callable as of September 29, 2019. Our investments in the Funds are accounted for as equity-method investments. The aggregate carrying amounts of the Funds, included in other assets, were $49 million and $29 million as of September 29, 2019 and December 30, 2018, respectively.

Revenue recognized from transactions with our strategic investees was $15 million and $49 million, respectively, for the three and nine months ended September 29, 2019 and $32 million and $104 million, respectively, for the three and nine months ended September 30, 2018.

Inventory

Inventory consisted of the following (in millions):

	September 29, 2019		December 30, 2018
Raw materials	$	123	$	117
Work in process	270		218
Finished goods	24		51
Total inventory	$	417	$	386

Property and Equipment

Property and equipment, net consisted of the following (in millions):

	September 29, 2019			December 30, 2018
Leasehold improvements	$	587		$	567
Machinery and equipment	389			382
Computer hardware and software	257			217
Furniture and fixtures	43			45
Buildings	44			285
Construction in progress	91			100
Total property and equipment, gross	1,411			1,596
Accumulated depreciation	(536		)	(521		)
Total property and equipment, net	$	875		$	1,075

Property and equipment, net included non-cash expenditures of $25 million and $38 million for the nine months ended September 29, 2019 and September 30, 2018, respectively, which were excluded from the condensed consolidated statements of cash flows. Such non-cash expenditures included $18 million recorded under build-to-suit lease accounting for the nine months ended September 30, 2018.

As of December 30, 2018, property and equipment, net included $241 million of project construction costs paid or reimbursed by our landlord related to our build-to-suit leases that did not qualify for sale-leaseback accounting under Topic 840. Upon adoption of Topic 842 on December 31, 2018, we derecognized the Buildings related to our build-to-suit leasing arrangements and began to account for these leases as operating leases. See note “1. Basis of Presentation and Summary of Significant Accounting Policies” for further details on the adoption impact of Topic 842.

Leases

We lease approximately 2.6 million square feet of office, lab, and manufacturing facilities under various non-cancellable operating lease agreements (real estate leases). Our real estate leases have remaining lease terms of 1 to 20 years, which represent the non-cancellable periods of the leases and include extension options that we determined are reasonably certain to be exercised. We exclude extension options that are not reasonably certain to be exercised from our lease terms, ranging from 6 months to 20 years. Our lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms as well as payments for common-area-maintenance and administrative services. We often receive customary incentives from our landlords, such as reimbursements for tenant improvements and rent abatement periods, which effectively reduce the total lease payments owed for these leases.

Operating lease right-of-use assets and liabilities on our condensed consolidated balance sheets represent the present value of our remaining lease payments over the remaining lease terms. We do not allocate lease payments to non-lease components; therefore, fixed payments for common-area-maintenance and administrative services are included in our operating lease right-of-use assets and liabilities. We use our incremental borrowing rate to calculate the present value of our lease payments, as the implicit rates in our leases are not readily determinable.

As of September 29, 2019, the maturities of our operating lease liabilities were as follows (in millions):

	Remaining Lease Payments
2019	$	19
2020	83
2021	82
2022	84
2023	85
Thereafter	622
Total remaining lease payments (1)	975
Less: imputed interest	(235		)
Total operating lease liabilities	740
Less: current portion	(49		)
Long-term operating lease liabilities	$	691
Weighted-average remaining lease term	11.4 years
Weighted-average discount rate	4.6		%

____________________________________

(1) Total remaining lease payments exclude $47 million of legally binding minimum lease payments for leases signed but not yet commenced.

The components of our lease costs included in our condensed consolidated statements of income were as follows (in millions):

	Three Months Ended			Nine Months Ended
	September 29, 2019			September 29, 2019
Operating lease costs	$	21		$	63
Sublease income	(3		)	(9		)
Total lease costs	$	18		$	54

Operating lease costs consist of the fixed lease payments included in our operating lease liabilities and are recorded on a straight-line basis over the lease terms. We sublease certain real estate to third parties and this sublease income is also recorded on a straight-line basis.

Goodwill

We test the carrying value of goodwill in accordance with accounting rules on impairment of goodwill, which require us to estimate the fair value of each reporting unit annually, or when impairment indicators exist, and compare such amounts to their respective carrying values to determine if an impairment is required. We performed the annual assessment for goodwill impairment in the second quarter of 2019, noting no impairment. 

Changes to goodwill during the nine months ended September 29, 2019 were as follows (in millions):

	Goodwill
Balance as of December 30, 2018	$	831
Helix deconsolidation	(7		)
Balance as of September 29, 2019	$	824

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 the derivatives are recognized in other (expense) income, net, along with the remeasurement gain or loss on the foreign currency denominated assets or liabilities.

As of September 29, 2019, we had foreign exchange forward contracts in place to hedge exposures in the euro, Japanese yen, Australian dollar, Canadian dollar, Singapore dollar, and British pound. As of September 29, 2019 and December 30, 2018, the total notional amounts of outstanding forward contracts in place for foreign currency purchases were $244 million and $122 million, respectively.

Accrued Liabilities

Accrued liabilities consisted of the following (in millions):

	September 29, 2019		December 30, 2018
Contract liabilities, current portion	$	161	$	175
Accrued compensation expenses	112		193
Accrued taxes payable	96		82
Operating lease liabilities, current portion	49		—
Other, including warranties	58		63
Total accrued liabilities	$	476	$	513

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 and nine months ended September 29, 2019 and September 30, 2018 were as follows (in millions):

	Three Months Ended						Nine Months Ended
	September 29, 2019			September 30, 2018			September 29, 2019			September 30, 2018
Balance at beginning of period	$	16		$	15		$	19		$	17
Additions charged to cost of product revenue	3			8			12			20
Repairs and replacements	(5		)	(6		)	(17		)	(20		)
Balance at end of period	$	14		$	17		$	14		$	17

Deconsolidation of Helix    

In July 2015, we obtained a 50% voting equity ownership interest in Helix. We determined that we had unilateral power over one of the activities that most significantly impacts the economic performance of Helix through its contractual arrangements and, as a result, we were deemed to be the primary beneficiary of Helix and were required to consolidate Helix. The operations of Helix, up to the date of the deconsolidation described below, are included in the accompanying condensed consolidated statements of income for the three and nine months ended September 29, 2019 and September 30, 2018. During these periods, we absorbed 50% of Helix’s losses.

On April 25, 2019, we entered into an agreement to sell our interest in, and relinquish control over, Helix. As part of the agreement, (i) Helix repurchased all of our outstanding equity interests in exchange for a contingent value right with a 7-year term that entitles us to consideration dependent upon the outcome of Helix’s future financing and/or liquidity events, (ii) we ceased having a controlling financial interest in Helix, including unilateral power over one of the activities that most significantly impacts the economic performance of Helix, (iii) we were relieved of any potential obligation to redeem certain noncontrolling interests, and (iv) we no longer have representation on Helix’s board of directors. As a result, we deconsolidated Helix’s financial statements effective April 25, 2019 and recorded a gain on deconsolidation of $39 million in other (expense) income, net. The gain on deconsolidation included (i) the contingent value right received from Helix recorded at a fair value of approximately $30 million, (ii) the derecognition of the carrying amounts of Helix’s assets and liabilities, and (iii) the derecognition of the noncontrolling interests related to Helix.

As of September 29, 2019, the fair value of the contingent value right received from Helix was $28 million, included in other assets. During the three and nine months ended September 29, 2019, the fair value measurement resulted in a $2 million unrealized gain and a $1 million unrealized loss, respectively, included in other (expense) income, net.

Redeemable Noncontrolling Interests

The activity of the redeemable noncontrolling interests during the nine months ended September 29, 2019 was as follows (in millions):

	Redeemable Noncontrolling Interests
Balance as of December 30, 2018	$	61
Vesting of redeemable equity awards	1
Net loss attributable to noncontrolling interests	(9		)
Adjustment down to the redemption value	(16		)
Release of potential obligation to noncontrolling interests	(37		)
Balance as of September 29, 2019	$	—

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Balance Sheet Account Details - Summary of Changes in Goodwill (Details) $ in Millions	9 Months Ended
	Sep. 29, 2019 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 831
Helix deconsolidation	(7)
Goodwill, ending balance	$ 824

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Balance Sheet Account Details - Narrative - Property and Equipment (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 29, 2019	Sep. 30, 2018	Dec. 31, 2018	Dec. 30, 2018
Property, Plant and Equipment [Line Items]
Non-cash expenditures included in capital expenditures	$ 25	$ 38
Property and equipment, net	$ 875		$ 834	$ 1,075
Construction in Progress and Build to Suit Lease Liability
Property, Plant and Equipment [Line Items]
Non-cash expenditures included in capital expenditures		$ 18
ASU 2016-02
Property, Plant and Equipment [Line Items]
Property and equipment, net			$ (241)

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2019	Sep. 30, 2018	Sep. 29, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Consolidated net income	$ 234	$ 188	$ 751	$ 585
Unrealized (loss) gain on available-for-sale debt securities, net of deferred tax	0	(1)	6	(1)
Total consolidated comprehensive income	234	187	757	584
Add: Comprehensive loss attributable to noncontrolling interests	0	11	12	31
Comprehensive income attributable to Illumina stockholders	$ 234	$ 198	$ 769	$ 615

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Fair Value Measurements

9 Months Ended

Sep. 29, 2019

Fair Value Disclosures [Abstract]

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 September 29, 2019 and December 30, 2018 (in millions):

	September 29, 2019								December 30, 2018
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Money market funds (cash equivalents)	$	1,541	$	—	$	—	$	1,541	$	832	$	—	$	—	$	832
Debt securities in government-sponsored entities	—		31		—		31		—		21		—		21
Corporate debt securities	—		636		—		636		—		1,058		—		1,058
U.S. Treasury securities	574		—		—		574		1,250		—		—		1,250
Marketable equity securities	110		—		—		110		39		—		—		39
Contingent value right	—		—		28		28		—		—		—		—
Deferred compensation plan assets	—		45		—		45		—		34		—		34
Total assets measured at fair value	$	2,225	$	712	$	28	$	2,965	$	2,121	$	1,113	$	—	$	3,234
Liabilities:
Deferred compensation plan liability	$	—	$	43	$	—	$	43	$	—	$	33	$	—	$	33

We hold available-for-sale securities that consist of highly-liquid, investment-grade debt securities and marketable equity 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 marketable equity securities are measured at fair value based on quoted trade prices in active markets. 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, validating pricing sources and models, and reviewing key model inputs, if necessary. We elected the fair value option to measure the contingent value right received from Helix. The fair value of our contingent value right is derived using a Monte Carlo simulation. Significant estimates and assumptions required for this valuation include, but are not limited to, probabilities related to the timing and outcome of future financing and/or liquidity events and an assumption regarding collectibility. These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect our own assumptions in measuring fair value.

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Income Taxes

9 Months Ended

Sep. 29, 2019

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 rates for the three and nine months ended September 29, 2019 were 13.2% and 11.5%, respectively. For the three and nine months ended September 29, 2019, the decrease 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 discrete tax benefits related to uncertain tax positions. For the nine months ended September 29, 2019, the decrease from the U.S. federal statutory tax rate was also attributable to excess tax benefits related to share-based compensation.

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Balance Sheet Account Details (Tables)

9 Months Ended

Sep. 29, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Short-term Investments

Our short-term investments are primarily available-for-sale debt securities that consisted of the following (in millions):

	September 29, 2019						December 30, 2018
	Amortized Cost		Gross Unrealized Gains		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Debt securities in government-sponsored entities	$	31	$	—	$	31	$	21	$	—	$	—		$	21
Corporate debt securities	632		4		636		1,060		—		(2		)	1,058
U.S. Treasury securities	573		1		574		1,250		1		(1		)	1,250
Total	$	1,236	$	5	$	1,241	$	2,331	$	1	$	(3	)	$	2,329

Summary of Contractual Maturities of Available-for-sale Debt Securities

Contractual maturities of available-for-sale debt securities, as of September 29, 2019, were as follows (in millions):

	Estimated Fair Value
Due within one year	$	497
After one but within five years	744
Total	$	1,241

Summary of Inventory

Inventory consisted of the following (in millions):

	September 29, 2019		December 30, 2018
Raw materials	$	123	$	117
Work in process	270		218
Finished goods	24		51
Total inventory	$	417	$	386

Summary of Property and Equipment

Property and equipment, net consisted of the following (in millions):

	September 29, 2019			December 30, 2018
Leasehold improvements	$	587		$	567
Machinery and equipment	389			382
Computer hardware and software	257			217
Furniture and fixtures	43			45
Buildings	44			285
Construction in progress	91			100
Total property and equipment, gross	1,411			1,596
Accumulated depreciation	(536		)	(521		)
Total property and equipment, net	$	875		$	1,075

Summary of Leases

As of September 29, 2019, the maturities of our operating lease liabilities were as follows (in millions):

	Remaining Lease Payments
2019	$	19
2020	83
2021	82
2022	84
2023	85
Thereafter	622
Total remaining lease payments (1)	975
Less: imputed interest	(235		)
Total operating lease liabilities	740
Less: current portion	(49		)
Long-term operating lease liabilities	$	691
Weighted-average remaining lease term	11.4 years
Weighted-average discount rate	4.6		%

____________________________________

(1) Total remaining lease payments exclude $47 million of legally binding minimum lease payments for leases signed but not yet commenced.

Components of Lease Costs

The components of our lease costs included in our condensed consolidated statements of income were as follows (in millions):

	Three Months Ended			Nine Months Ended
	September 29, 2019			September 29, 2019
Operating lease costs	$	21		$	63
Sublease income	(3		)	(9		)
Total lease costs	$	18		$	54

Summary of Changes to Goodwill

Changes to goodwill during the nine months ended September 29, 2019 were as follows (in millions):

	Goodwill
Balance as of December 30, 2018	$	831
Helix deconsolidation	(7		)
Balance as of September 29, 2019	$	824

Summary of Accrued Liabilities

Accrued liabilities consisted of the following (in millions):

	September 29, 2019		December 30, 2018
Contract liabilities, current portion	$	161	$	175
Accrued compensation expenses	112		193
Accrued taxes payable	96		82
Operating lease liabilities, current portion	49		—
Other, including warranties	58		63
Total accrued liabilities	$	476	$	513

Summary of Changes in Reserve for Product Warranties

Changes in the reserve for product warranties during the three and nine months ended September 29, 2019 and September 30, 2018 were as follows (in millions):

	Three Months Ended						Nine Months Ended
	September 29, 2019			September 30, 2018			September 29, 2019			September 30, 2018
Balance at beginning of period	$	16		$	15		$	19		$	17
Additions charged to cost of product revenue	3			8			12			20
Repairs and replacements	(5		)	(6		)	(17		)	(20		)
Balance at end of period	$	14		$	17		$	14		$	17

Summary of Activity of Redeemable Noncontrolling Interests

The activity of the redeemable noncontrolling interests during the nine months ended September 29, 2019 was as follows (in millions):

	Redeemable Noncontrolling Interests
Balance as of December 30, 2018	$	61
Vesting of redeemable equity awards	1
Net loss attributable to noncontrolling interests	(9		)
Adjustment down to the redemption value	(16		)
Release of potential obligation to noncontrolling interests	(37		)
Balance as of September 29, 2019	$	—

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Stockholders' Equity - Summary of Stock Option Activity Under all Stock Option Plans (Details) shares in Thousands	9 Months Ended
	Sep. 29, 2019 $ / shares shares
Options
Outstanding at period start (in shares) | shares	192
Exercised (in shares) | shares	(128)
Outstanding at period end (in shares) | shares	64
Options, Exercisable (in shares) | shares	64
Weighted-Average Exercise Price
Outstanding at period start (in dollars per share) | $ / shares	$ 54.52
Exercised (in dollars per share) | $ / shares	53.00
Outstanding at period end (in dollars per share) | $ / shares	57.58
Weighted-Average Exercise Price, Exercisable (in dollars per share) | $ / shares	$ 57.58

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Stockholders' Equity - Summary of Assumptions Used to Estimate the Weighted Average Fair Value Per Share (Details) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 29, 2019 USD ($) $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to stock options, restricted stock, and ESPP shares granted to date | $	$ 320
Weighted-average period of unrecognized compensation cost related to stock options, restricted stock, and ESPP shares granted to date	1 year 10 months 24 days
Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility, minimum	30.00%
Expected volatility, maximum	38.00%
Expected dividends	0.00%
Weighted-average fair value per share (in dollars per share) | $ / shares	$ 75.47
Minimum | Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	1.88%
Expected term	6 months
Maximum | Employee Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	2.56%
Expected term	1 year

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Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive (Loss) Income	Retained Earnings	Treasury Stock	Noncontrolling Interests
Beginning balance (in shares) at Dec. 31, 2017		191				44
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 in business combination	5						5
Ending balance (in shares) at Apr. 01, 2018		191				44
Ending balance at Apr. 01, 2018	3,073	$ 2	2,897	(1)	2,464	$ (2,354)	65
Beginning balance (in shares) at Dec. 31, 2017		191				44
Beginning balance at Dec. 31, 2017	2,749	$ 2	2,833	(1)	2,256	$ (2,341)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax	(1)
Ending balance (in shares) at Sep. 30, 2018		191				44
Ending balance at Sep. 30, 2018	3,594	$ 2	3,093	(2)	2,872	$ (2,462)	91
Beginning balance (in shares) at Apr. 01, 2018		191				44
Beginning balance at Apr. 01, 2018	3,073	$ 2	2,897	(1)	2,464	$ (2,354)	65
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	207				209		(2)
Issuance of common stock, net of repurchases	(1)		1			$ (2)
Share-based compensation	50		50
Vesting of redeemable equity awards	(1)		(1)
Adjustment to the carrying value of redeemable noncontrolling interests	(8)		(8)
Contributions from noncontrolling interest owners	31						31
Ending balance (in shares) at Jul. 01, 2018		191				44
Ending balance at Jul. 01, 2018	3,351	$ 2	2,939	(1)	2,673	$ (2,356)	94
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	196				199		(3)
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax	(1)			(1)
Issuance of common stock, net of repurchases	(83)		23			$ (106)
Share-based compensation	47		47
Vesting of redeemable equity awards	(1)		(1)
Adjustment to the carrying value of redeemable noncontrolling interests	(8)		(8)
Issuance of convertible senior notes, net of tax impact	93		93
Ending balance (in shares) at Sep. 30, 2018		191				44
Ending balance at Sep. 30, 2018	3,594	$ 2	3,093	(2)	2,872	$ (2,462)	91
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	206				210		(4)
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax	1			1
Issuance of common stock, net of repurchases (in shares)		1				(1)
Issuance of common stock, net of repurchases	(153)		1			$ (154)
Share-based compensation	48		48
Adjustment to the carrying value of redeemable noncontrolling interests	148		148
Cumulative-effect adjustment from adoption of ASU	1				1
Ending balance (in shares) at Dec. 30, 2018		192				45
Ending balance at Dec. 30, 2018	3,845	$ 2	3,290	(1)	3,083	$ (2,616)	87
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	231				233		(2)
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax	3			3
Issuance of common stock, net of repurchases	(59)		27			$ (86)
Share-based compensation	51		51
Vesting of redeemable equity awards	(1)		(1)
Adjustment to the carrying value of redeemable noncontrolling interests	18		18
Cumulative-effect adjustment from adoption of ASU	(18)				(18)
Ending balance (in shares) at Mar. 31, 2019		192				45
Ending balance at Mar. 31, 2019	4,070	$ 2	3,385	2	3,298	$ (2,702)	85
Beginning balance (in shares) at Dec. 30, 2018		192				45
Beginning balance at Dec. 30, 2018	3,845	$ 2	3,290	(1)	3,083	$ (2,616)	87
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax	6
Ending balance (in shares) at Sep. 29, 2019		193				46
Ending balance at Sep. 29, 2019	4,439	$ 2	3,510	5	3,828	$ (2,906)	0
Beginning balance (in shares) at Mar. 31, 2019		192				45
Beginning balance at Mar. 31, 2019	4,070	$ 2	3,385	2	3,298	$ (2,702)	85
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	295				296		(1)
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax	3			3
Issuance of common stock, net of repurchases (in shares)		1
Issuance of common stock, net of repurchases	0		3			$ (3)
Share-based compensation	48		48
Adjustment to the carrying value of redeemable noncontrolling interests	(2)		(2)
Deconsolidation of Helix	(82)		2				(84)
Ending balance (in shares) at Jun. 30, 2019		193				45
Ending balance at Jun. 30, 2019	4,332	$ 2	3,436	5	3,594	$ (2,705)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	234				234
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax	0
Issuance of common stock, net of repurchases (in shares)						(1)
Issuance of common stock, net of repurchases	(172)		29			$ (201)
Share-based compensation	45		45
Ending balance (in shares) at Sep. 29, 2019		193				46
Ending balance at Sep. 29, 2019	$ 4,439	$ 2	$ 3,510	$ 5	$ 3,828	$ (2,906)	$ 0

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Cover Page - shares shares in Millions	9 Months Ended
	Sep. 29, 2019	Oct. 18, 2019
Cover page.
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 29, 2019
Document Transition Report	false
Entity File Number	001-35406
Entity Registrant Name	Illumina, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	33-0804655
Entity Address, Address Line One	5200 Illumina Way
Entity Address, City or Town	San Diego
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92122
City Area Code	858
Local Phone Number	202-4500
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	ILMN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		147
Entity Central Index Key	0001110803
Current Fiscal Year End Date	--12-29
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Balance Sheet Account Details - Summary of Lease Costs (Details) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 29, 2019	Sep. 29, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Operating lease costs	$ 21	$ 63
Sublease income	(3)	(9)
Total lease costs	$ 18	$ 54

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Pending Acquisition

9 Months Ended

Sep. 29, 2019

Business Combinations [Abstract]

Pending Acquisition

Pending Acquisition

On November 1, 2018, we entered into an Agreement and Plan of Merger (the Merger Agreement) to acquire Pacific Biosciences of California, Inc. (PacBio) for an all-cash price of approximately $1.2 billion (or $8.00 per share). The transaction is subject to certain customary closing conditions, including the receipt of certain required antitrust approvals. The Merger Agreement contains certain termination rights and provides that, upon termination of the Merger Agreement under specified circumstances, including but not limited to, a termination of the Merger Agreement in connection with PacBio accepting a superior offer or due to the withdrawal by PacBio’s board of directors of its recommendation of the merger, PacBio will pay us a cash termination fee of $43 million. In certain other circumstances related to antitrust approvals, we may be required to pay PacBio a termination fee of $98 million assuming the other closing conditions not related to antitrust or competition laws have been satisfied.

On September 25, 2019, we entered into Amendment No. 1 to the Merger Agreement (the Amendment). The Amendment extended the End Time of the Merger Agreement (as defined in the Merger Agreement) to December 31, 2019 and provides that we make cash payments to PacBio of $6 million on or before each of October 1, 2019, November 1, 2019, and December 2, 2019. We may also unilaterally extend the End Time date until March 31, 2020 by making additional payments to PacBio totaling $34 million. Up to the full amount of these payments is repayable without interest only if: (1) the Merger Agreement is terminated and (2) within two years of termination, PacBio enters into certain change-of-control transactions with a third party or raises at least $100 million in equity or debt financing in a single transaction (with the amount repayable dependent on the amount raised by PacBio). On October 1, 2019, we made our first $6 million payment to PacBio.

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Balance Sheet Account Details - Summary of Property and Equipment (Details) - USD ($) $ in Millions	Sep. 29, 2019	Dec. 31, 2018	Dec. 30, 2018
Property, Plant and Equipment [Line Items]
Total property and equipment, gross	$ 1,411		$ 1,596
Accumulated depreciation	(536)		(521)
Total property and equipment, net	875	$ 834	1,075
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total property and equipment, gross	587		567
Machinery and equipment
Property, Plant and Equipment [Line Items]
Total property and equipment, gross	389		382
Computer hardware and software
Property, Plant and Equipment [Line Items]
Total property and equipment, gross	257		217
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total property and equipment, gross	43		45
Buildings
Property, Plant and Equipment [Line Items]
Total property and equipment, gross	44		285
Construction in progress
Property, Plant and Equipment [Line Items]
Total property and equipment, gross	$ 91		$ 100

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 29, 2019

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 September 29, 2019 and December 30, 2018 (in millions):

	September 29, 2019								December 30, 2018
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Money market funds (cash equivalents)	$	1,541	$	—	$	—	$	1,541	$	832	$	—	$	—	$	832
Debt securities in government-sponsored entities	—		31		—		31		—		21		—		21
Corporate debt securities	—		636		—		636		—		1,058		—		1,058
U.S. Treasury securities	574		—		—		574		1,250		—		—		1,250
Marketable equity securities	110		—		—		110		39		—		—		39
Contingent value right	—		—		28		28		—		—		—		—
Deferred compensation plan assets	—		45		—		45		—		34		—		34
Total assets measured at fair value	$	2,225	$	712	$	28	$	2,965	$	2,121	$	1,113	$	—	$	3,234
Liabilities:
Deferred compensation plan liability	$	—	$	43	$	—	$	43	$	—	$	33	$	—	$	33

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Debt and Other Commitments

9 Months Ended

Sep. 29, 2019

Debt Disclosure [Abstract]

Debt and Other Commitments

Debt and Other Commitments

Summary of debt obligations

Debt obligations consisted of the following (dollars in millions):

	September 29, 2019			December 30, 2018
Principal amount of 2023 Notes outstanding	$	750		$	750
Principal amount of 2021 Notes outstanding	517			517
Principal amount of 2019 Notes outstanding	—			633
Unamortized discount of liability component of convertible senior notes	(136		)	(175		)
Net carrying amount of liability component of convertible senior notes	1,131			1,725
Obligations under financing leases	—			269
Other	—			3
Less: current portion	—			(1,107		)
Long-term debt	$	1,131		$	890
Carrying value of equity component of convertible senior notes, net of debt issuance costs	$	213		$	287
Fair value of convertible senior notes outstanding (Level 2)	$	1,517		$	2,222
Weighted-average remaining amortization period of discount on the liability component of convertible senior notes	3.4 years			3.9 years

Convertible Senior Notes

0% Convertible Senior Notes due 2023 (2023 Notes)

On August 21, 2018, we issued $750 million aggregate principal amount of convertible senior notes due 2023 (2023 Notes). The 2023 Notes mature on August 15, 2023, and the implied estimated effective rate of the liability component of the Notes was 3.7%, assuming no conversion option.

The 2023 Notes will be convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, based on an initial conversion rate, subject to adjustment, of 2.1845 shares of common stock per $1,000 principal amount of notes (which represents an initial conversion price of approximately $457.77 per share of common stock), only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2018 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price in effect on each applicable trading day; (2) during the five business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2023 Notes for each trading day of the 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 trading day; (3) if we call any or all of the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events described in the indenture. Regardless of the foregoing circumstances, the holders may convert their notes on or after May 15, 2023 until August 11, 2023.

We may redeem for cash all or any portion of the 2023 Notes, at our option, on or after August 20, 2021 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect (currently $595.10) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus any accrued and unpaid special interest to, but excluding, the redemption date.

The 2023 Notes were not convertible as of September 29, 2019 and had no dilutive impact during the nine months ended September 29, 2019. If the 2023 Notes were converted as of September 29, 2019, the if-converted value would not exceed the principal amount.

0.5% Convertible Senior Notes due 2021 (2021 Notes)

In June 2014, we issued $517 million aggregate principal amount of 2021 Notes. The 2021 Notes mature on June 15, 2021, and the implied estimated effective rates of the liability component of the Notes was 3.5%, assuming no conversion option.

The 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: (1) during any calendar quarter commencing after the calendar quarter ending September 30, 2014 (and only during such calendar quarter), 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; (2) during the 5 business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per 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 trading day; or (3) upon the occurrence of specified events described in the indenture for the 2021 Notes. Regardless of the foregoing circumstances, the holders of the 2021 Notes may convert their notes on or after March 15, 2021 until June 11, 2021.

The potential dilutive impact of the 2021 Notes has been included in our calculation of diluted earnings per share for the three and nine months ended September 29, 2019. If the 2021 Notes were converted as of September 29, 2019, the if-converted value would exceed the principal amount by $71 million.

0% Convertible Senior Notes due 2019 (2019 Notes)

In June 2014, we issued $633 million aggregate principal amount of 2019 Notes, and the implied estimated effective rate of the liability component of the Notes was 2.9%, assuming no conversion option. The 2019 Notes were convertible into cash, shares of common stock, or a combination of common stock, at our election, based on conversion rates as defined in the indenture. The 2019 Notes matured on June 15, 2019, by which time the principal had been converted and was repaid in cash. The excess of the conversion value over the principal amount was paid in shares of common stock.

The following table summarizes information about the conversion of the 2019 Notes during the nine months ended September 29, 2019 (in millions):

	2019 Notes
Cash paid for principal of notes converted	$	633
Conversion value over principal amount, paid in shares of common stock	$	153
Number of shares of common stock issued upon conversion	0.4

Obligations under financing leases

As of December 30, 2018, obligations under financing leases of $269 million represented project construction costs paid or reimbursed by our landlord related to our build-to-suit leases that did not qualify for sale-leaseback accounting under Topic 840. Upon adoption of Topic 842 on December 31, 2018, we derecognized the remaining financing obligations for our build-to-suit leasing arrangements and began to account for these leases as operating leases. See note “1. Basis of Presentation and Summary of Significant Accounting Policies” for further details on the adoption of Topic 842.

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Segment Information

9 Months Ended

Sep. 29, 2019

Segment Reporting [Abstract]

Segment Information

Segment Information

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 we have one reportable segment, Core Illumina, which relates to Illumina’s core operations. Prior to the Helix deconsolidation on April 25, 2019, our reportable segments included both Core Illumina and Helix.

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 of our operations, excluding the results of our previously consolidated VIE Helix.

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. Helix was deconsolidated on April 25, 2019. See note “2. Balance Sheet Account Details” for further details.

Management evaluates the performance of our reportable segments based upon income (loss) from operations. We do not allocate expenses between segments. Core Illumina sells products and provides services to Helix in accordance with contractual agreements between the entities.

The following table presents the operating performance of each reportable segment (in millions):

	Three Months Ended					Nine Months Ended
	September 29, 2019		September 30, 2018			September 29, 2019			September 30, 2018
Revenue:
Core Illumina	$	907	$	855		$	2,591		$	2,467
Helix	—		2			1			8
Elimination of intersegment revenue	—		(4		)	(1		)	(9		)
Consolidated revenue	$	907	$	853		$	2,591		$	2,466
Income (loss) from operations:
Core Illumina	$	308	$	264		$	740		$	748
Helix	—		(23		)	(24		)	(64		)
Elimination of intersegment earnings	—		—			1			2
Consolidated income from operations	$	308	$	241		$	717		$	686

The following table presents the total assets of each reportable segment (in millions):

	September 29, 2019		December 30, 2018
Core Illumina	$	7,089	$	6,912
Helix	—		154
Elimination of intersegment assets	—		(107		)
Consolidated total assets	$	7,089	$	6,959

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Stockholders' Equity - Narrative - Employee Stock Purchase Plan (Details) - ESPP - Employee Stock shares in Millions	9 Months Ended
	Sep. 29, 2019 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	0.2
Shares available for issuance	13.5

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Income Taxes (Details)	3 Months Ended	9 Months Ended
	Sep. 29, 2019	Sep. 29, 2019
Income Tax Disclosure [Abstract]
Effective tax rate	13.20%	11.50%

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Debt and Other Commitments - Summary of Debt Obligations (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 29, 2019	Dec. 30, 2018	Aug. 21, 2018	Jun. 29, 2014
Debt Instrument [Line Items]
Obligations under financing leases	$ 0
Obligations under financing leases		$ 269
Other	0	3
Less: current portion	0	(1,107)
Long-term debt	1,131	890
Convertible Senior Notes
Debt Instrument [Line Items]
Unamortized discount of liability component of convertible senior notes	(136)	(175)
Net carrying amount of liability component of convertible senior notes	1,131	1,725
Carrying value of equity component, net of debt issuance cost	$ 213	$ 287
Weighted-average remaining amortization period of discount on the liability component of convertible senior notes	3 years 4 months 24 days	3 years 10 months 24 days
Level 2 | Convertible Senior Notes
Debt Instrument [Line Items]
Fair value of convertible senior notes outstanding (Level 2)	$ 1,517	$ 2,222
2023 | Convertible Senior Notes
Debt Instrument [Line Items]
Principal amount of notes outstanding	750	750	$ 750
2021 | Convertible Senior Notes
Debt Instrument [Line Items]
Principal amount of notes outstanding	517	517		$ 517
2019 | Convertible Senior Notes
Debt Instrument [Line Items]
Principal amount of notes outstanding	$ 0	$ 633		$ 633

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Balance Sheet Account Details - Narrative - Deconsolidation of Helix (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
	Apr. 25, 2019	Sep. 29, 2019	Sep. 30, 2018	Sep. 29, 2019	Sep. 30, 2018	Jul. 31, 2015
Variable Interest Entity [Line Items]
Gains on deconsolidation				$ 54	$ 0
Fair Value, Measurements, Recurring
Variable Interest Entity [Line Items]
Contingent value right		$ 28		28
Helix Holdings I, LLC
Variable Interest Entity [Line Items]
Contingent value right, terms	7 years
Gains on deconsolidation	$ 39
Contingent value right	$ 30
Unrealized gain (loss) from contingent value right		$ 2		$ (1)
Helix Holdings I, LLC | Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Equity ownership interest percentage						50.00%
Absorbed Helix's losses percentage		50.00%	50.00%	50.00%	50.00%

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Basis of Presentation and Summary of Significant Accounting Policies - Summary of Impact of Topic 842 (Details) - USD ($) $ in Millions	Sep. 29, 2019	Dec. 31, 2018	Dec. 30, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Prepaid expenses and other current assets	$ 98	$ 70	$ 78
Property and equipment, net	875	834	1,075
Operating lease right-of-use assets	555	579
Deferred tax assets, net	88	76	70
Total assets		1,559
Accrued liabilities	476	549	513
Operating lease liabilities	740	722
Long-term debt		838
Other long-term liabilities	209	224	359
Retained earnings	$ 3,828	3,065	$ 3,083
Total liabilities and stockholders’ equity		5,398
ASU 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Prepaid expenses and other current assets		(8)
Property and equipment, net		(241)
Operating lease right-of-use assets		579
Deferred tax assets, net		6
Total assets		336
Accrued liabilities		36
Operating lease liabilities		722
Long-term debt		(269)
Other long-term liabilities		(135)
Retained earnings		(18)
Total liabilities and stockholders’ equity		336
Pre-adoption
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Prepaid expenses and other current assets		78
Property and equipment, net		1,075
Deferred tax assets, net		70
Total assets		1,223
Accrued liabilities		513
Long-term debt		1,107
Other long-term liabilities		359
Retained earnings		3,083
Total liabilities and stockholders’ equity		$ 5,062

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Basis of Presentation and Summary of Significant Accounting Policies - Summary of Calculation of Weighted Average Shares used to Calculate Basic and Diluted Earnings Per Share (Details) - shares shares in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2019	Sep. 30, 2018	Sep. 29, 2019	Sep. 30, 2018
Weighted average shares used to calculate basic and diluted earnings per share
Weighted average shares outstanding	147	147	147	147
Effect of potentially dilutive common shares from:
Equity awards	1	1	1	1
Convertible senior notes	0	1	1	0
Weighted average shares used in calculating diluted earnings per share	148	149	149	148