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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Delaware
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33-0804655
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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5200 Illumina Way
San Diego, California
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92122
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.01 par value
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The NASDAQ Global Select Market
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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Page
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•
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our expectations as to our future financial performance, results of operations, or other operational results or metrics;
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the benefits that we expect will result from our business activities and certain transactions we have completed, such as product introductions, increased revenue, decreased expenses, and avoided expenses and expenditures;
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our expectations of the effect on our financial condition of claims, litigation, contingent liabilities, and governmental investigations, proceedings, and regulations;
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our strategies or expectations for product development, market position, financial results, and reserves; and
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•
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other expectations, beliefs, plans, strategies, anticipated developments, and other matters that are not historical facts.
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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;
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our ability to manufacture robust instrumentation and consumables;
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our ability to identify and integrate acquired technologies, products, or businesses successfully;
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our expectations and beliefs regarding prospects and growth for the business and its markets;
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the assumptions underlying our critical accounting policies and estimates;
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our assessments and estimates that determine our effective tax rate;
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our assessments and beliefs regarding the outcome of pending legal proceedings and any liability, that we may incur as a result of those proceedings;
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uncertainty, or adverse economic and business conditions, including as a result of slowing or uncertain economic growth in the United States or worldwide; and
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other factors detailed in our filings with the SEC, including the risks, uncertainties, and assumptions described in Item 1A “Risk Factors” below, or in information disclosed in public conference calls, the date and time of which are released beforehand.
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GenoLogics Life Sciences Software Inc., a developer of industry-leading laboratory information management systems, in August 2015;
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Myraqa, Inc., a regulatory and quality consulting firm specializing in IVDs and companion diagnostics, in July 2014;
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•
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NextBio, a provider of clinical and genomic informatics, in November 2013;
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•
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Advanced Liquid Logic Inc., a developer of digital microfluidics and liquid handling solutions, in July 2013;
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Verinata Health, Inc., a provider of non-invasive tests for the early identification of fetal chromosomal abnormalities, in February 2013; and
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BlueGnome Ltd., a provider of cytogenetics and in vitro fertilization screening solutions, in September 2012.
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ITEM 1A.
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Risk Factors.
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•
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availability, quality, and price relative to competing products and services;
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•
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the functionality and performance of new and existing products and services;
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•
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the timing of introduction of new products or services relative to competing products and services;
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scientists’ and customers’ opinions of the utility of new products or services;
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citation of new products or services in published research;
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regulatory trends and approvals; and
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general trends in life sciences research and applied markets.
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•
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not experimental or investigational;
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medically necessary;
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appropriate for the specific patient;
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•
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cost-effective;
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•
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supported by peer-reviewed publications; and
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included in clinical practice guidelines.
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•
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difficulties in integrating new operations, technologies, products, and personnel;
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•
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lack of synergies or the inability to realize expected synergies and cost-savings;
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•
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difficulties in managing geographically dispersed operations;
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•
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underperformance of any acquired technology, product, or business relative to our expectations and the price we paid;
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•
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negative near-term impacts on financial results after an acquisition, including acquisition-related earnings charges;
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•
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the potential loss of key employees, customers, and strategic partners of acquired companies;
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claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction;
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•
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the issuance of dilutive securities, assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash;
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•
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diversion of management’s attention and company resources from existing operations of the business;
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•
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inconsistencies in standards, controls, procedures, and policies;
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•
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the impairment of intangible assets as a result of technological advancements, or worse-than-expected performance of acquired companies; and
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•
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assumption of, or exposure to, known or unknown contingent liabilities or liabilities that are difficult to identify or accurately quantify.
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•
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decreased demand for our products;
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•
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injury to our reputation;
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•
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increased product liability insurance costs;
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•
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costs of related litigation; and
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substantial monetary awards to plaintiffs.
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•
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longer payment cycles and difficulties in collecting accounts receivable outside of the United States;
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longer sales cycles due to the volume of transactions taking place through public tenders;
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•
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challenges in staffing and managing foreign operations;
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•
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tariffs and other trade barriers;
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•
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unexpected changes in legislative or regulatory requirements of foreign countries into which we sell our products;
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•
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difficulties in obtaining export licenses or in overcoming other trade barriers and restrictions resulting in delivery delays; and
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significant taxes or other burdens of complying with a variety of foreign laws.
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ITEM 1B.
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Unresolved Staff Comments.
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ITEM 2.
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Properties.
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Location
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Approximate Square Feet
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Operation
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Lease
Expiration Dates
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San Diego, CA*
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902,000
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R&D, Manufacturing, Warehouse, Distribution, and Administrative
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2018 – 2031
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San Francisco Bay Area, CA*
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274,000
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R&D, Manufacturing, Warehouse, and Administrative
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2018 – 2026
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Singapore
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211,000
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R&D, Manufacturing, Warehouse, Distribution, and Administrative
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2018 – 2021
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Cambridge, United Kingdom*
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105,000
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R&D, Manufacturing, and Administrative
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2017 – 2024
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Eindhoven, the Netherlands
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42,000
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Distribution and Administrative
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2020
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Madison, WI
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73,000
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R&D, Manufacturing, Warehouse, Distribution, and Administrative
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2018 – 2019
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Other
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47,000
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Administrative
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2017 – 2019
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ITEM 3.
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Legal Proceedings.
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ITEM 4.
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Mine Safety Disclosures.
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ITEM 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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2016
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2015
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||||||||||||
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High
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Low
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High
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Low
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||||||||
First Quarter
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$
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188.25
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$
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130.37
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$
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213.33
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$
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178.52
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Second Quarter
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$
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178.77
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$
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127.10
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$
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223.08
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$
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178.68
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Third Quarter
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$
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182.67
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$
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132.65
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$
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242.37
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$
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170.29
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Fourth Quarter
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$
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186.88
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$
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119.37
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$
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196.47
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$
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130.00
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Period
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Total Number
of Shares
Purchased (1) |
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Average Price Paid per Share |
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Total Number of
Shares Purchased as Part of Publicly Announced Programs |
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Approximate Dollar
Value of Shares that May Yet Be Purchased Under the Programs |
||||||
October 3, 2016 - October 30, 2016
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—
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—
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—
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$
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236,926,941
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October 31, 2016 - November 27, 2016
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—
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—
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—
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$
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236,926,941
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November 28, 2016 - January 1, 2017
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1,056,021
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$
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129.02
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1,056,021
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$
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100,680,660
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Total
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1,056,021
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$
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129.02
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1,056,021
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$
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100,680,660
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ITEM 6.
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Selected Financial Data.
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Years Ended
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||||||||||||||||||
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January 1, 2017 (52 weeks)
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January 3, 2016 (53 weeks)
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December 28, 2014 (52 weeks)
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December 29, 2013 (52 weeks)
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December 30, 2012 (52 weeks)
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(In thousands, except per share data)
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||||||||||||||||||
Total revenue
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$
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2,398,373
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$
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2,219,762
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$
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1,861,358
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$
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1,421,178
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$
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1,148,516
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Income from operations
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$
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587,032
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$
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612,841
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$
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514,711
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$
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134,107
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$
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200,752
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Consolidated net income
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$
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428,090
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$
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457,390
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$
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353,351
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$
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125,308
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$
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151,254
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Net income attributable to Illumina stockholders
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$
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462,649
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$
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461,559
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$
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353,351
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$
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125,308
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$
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151,254
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Net income attributable to Illumina stockholders for earnings per share
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$
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454,106
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$
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461,526
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$
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353,351
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$
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125,308
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$
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151,254
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Earnings per share attributable to Illumina stockholders:
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||||||
Basic
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$
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3.09
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$
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3.19
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$
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2.61
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$
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1.00
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$
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1.23
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Diluted
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$
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3.07
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$
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3.10
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$
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2.37
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$
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0.90
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$
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1.13
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Shares used in calculating earnings per share:
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|||||||
Basic
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146,788
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|
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144,826
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135,553
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125,076
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122,999
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|||||
Diluted
|
148,040
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149,069
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|
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148,977
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|
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139,936
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133,693
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|
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January 1,
2017 |
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January 3,
2016 |
|
December 28,
2014 |
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December 29,
2013 |
|
December 30,
2012 |
||||||||||
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(In thousands)
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||||||||||||||||||
Cash, cash equivalents and short-term investments
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$
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1,558,724
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$
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1,386,220
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$
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1,338,371
|
|
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$
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1,165,603
|
|
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$
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1,350,204
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Total assets
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$
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4,280,600
|
|
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$
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3,687,747
|
|
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$
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3,339,640
|
|
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$
|
3,019,006
|
|
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$
|
2,566,085
|
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Long-term debt, less current portion
|
$
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1,047,805
|
|
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$
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1,015,649
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|
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$
|
986,780
|
|
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$
|
839,305
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|
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$
|
805,406
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Redeemable noncontrolling interest
|
$
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43,940
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|
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$
|
32,546
|
|
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—
|
|
|
—
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|
|
—
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|
|||
Total stockholders’ equity
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$
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2,197,229
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|
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$
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1,848,553
|
|
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$
|
1,462,798
|
|
|
$
|
1,533,202
|
|
|
$
|
1,318,581
|
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ITEM 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
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Business Overview and Outlook
. High level discussion of our operating results and significant known trends that affect our business.
|
•
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Results of Operations
. Detailed discussion of our revenues and expenses.
|
•
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Liquidity and Capital Resources
. Discussion of key aspects of our statements of cash flows, changes in our financial position, and our financial commitments.
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•
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Off-Balance Sheet Arrangements
. We have no off-balance sheet arrangements.
|
•
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Contractual Obligations.
Tabular disclosure of known contractual obligations as of
January 1, 2017
.
|
•
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Critical Accounting Policies and Estimates
. Discussion of significant changes we believe are important to understanding the assumptions and judgments underlying our financial statements.
|
•
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Recent Accounting Pronouncements.
|
•
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Net revenue
increased
8.0%
in
2016
over
2015
due to the growth in sales of our sequencing consumables and services, partially offset by lower shipments of our high-throughput platforms. We expect our revenue to continue to increase in
2017
.
|
•
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Gross profit as a percentage of revenue (gross margin) decreased to
69.5%
in
2016
from
69.8%
in
2015
. Gross margins in
2016
decreased primarily due to our increased manufacturing capacity, which was partially offset by a greater mix of sequencing consumables. Our gross margin in future periods will depend on several factors, including: market conditions that may impact our pricing power; sales mix changes among consumables, instruments, and services; product mix changes between established products and new products in new markets; excess and obsolete inventories; royalties; our cost structure for manufacturing operations; and product support obligations.
|
•
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Income from operations as a percentage of revenue
decreased
to
24.5%
in
2016
compared to
27.6%
in
2015
primarily due to the increase in research and development and selling, general, and administrative expenses as a percentage of revenue. We expect research and development and selling, general and administrative expenses to continue to grow.
|
•
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Our effective tax rate was
23.7%
and
21.6%
in
2016
and
2015
, respectively. The variance from the U.S. federal statutory tax rate of 35% was primarily attributable to the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore and the United Kingdom, partially offset by the tax impact associated with the investments in our consolidated variable interest entities.
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•
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We ended
2016
with cash, cash equivalents, and short-term investments totaling
$1.6 billion
, of which approximately
$749.7 million
was held by our foreign subsidiaries. Cash and cash equivalents held by our consolidated VIEs as of
January 1, 2017
were
$75.9 million
.
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|
2016
|
|
2015
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|
2014
|
|||
Revenue:
|
|
|
|
|
|
|
|
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Product revenue
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84.7
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%
|
|
85.2
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%
|
|
87.0
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%
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Service and other revenue
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15.3
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|
|
14.8
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|
|
13.0
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Total revenue
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100.0
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|
|
100.0
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|
100.0
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
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Cost of product revenue
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22.3
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|
|
22.1
|
|
|
23.2
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|
Cost of service and other revenue
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6.4
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|
|
6.0
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|
|
5.0
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Amortization of acquired intangible assets
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1.8
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|
|
2.1
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|
|
2.1
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Total cost of revenue
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30.5
|
|
|
30.2
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|
|
30.3
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|
Gross profit
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69.5
|
|
|
69.8
|
|
|
69.7
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Operating expense:
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|
|
|
|
|
|
|
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Research and development
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21.0
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|
|
18.1
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|
|
20.8
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|
Selling, general and administrative
|
24.3
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|
|
23.6
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|
|
25.1
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|
Legal contingencies
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(0.4
|
)
|
|
0.9
|
|
|
(4.0
|
)
|
Acquisition related gain, net
|
—
|
|
|
(0.3
|
)
|
|
(0.1
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)
|
Headquarter relocation
|
0.1
|
|
|
(0.1
|
)
|
|
0.3
|
|
Total operating expense
|
45.0
|
|
|
42.2
|
|
|
42.1
|
|
Income from operations
|
24.5
|
|
|
27.6
|
|
|
27.6
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest income
|
0.4
|
|
|
0.2
|
|
|
0.3
|
|
Interest expense
|
(1.4
|
)
|
|
(1.9
|
)
|
|
(2.2
|
)
|
Cost-method investment gain, net
|
—
|
|
|
0.7
|
|
|
0.2
|
|
Other expense, net
|
(0.1
|
)
|
|
(0.3
|
)
|
|
(1.8
|
)
|
Total other expense, net
|
(1.1
|
)
|
|
(1.3
|
)
|
|
(3.5
|
)
|
Income before income taxes
|
23.4
|
|
|
26.3
|
|
|
24.1
|
|
Provision for income taxes
|
5.6
|
|
|
5.7
|
|
|
5.1
|
|
Consolidated net income
|
17.8
|
|
|
20.6
|
|
|
19.0
|
|
Add: Net loss attributable to noncontrolling interests
|
1.5
|
|
|
0.2
|
|
|
—
|
|
Net income attributable to Illumina stockholders
|
19.3
|
%
|
|
20.8
|
%
|
|
19.0
|
%
|
|
2016 - 2015
|
|
2015 - 2014
|
||||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
% Change
|
|
2014
|
|
Change
|
|
% Change
|
||||||||||||
Product revenue
|
$
|
2,031,997
|
|
|
$
|
1,890,633
|
|
|
$
|
141,364
|
|
|
7
|
%
|
|
$
|
1,619,511
|
|
|
$
|
271,122
|
|
|
17
|
%
|
Service and other revenue
|
366,376
|
|
|
329,129
|
|
|
37,247
|
|
|
11
|
|
|
241,847
|
|
|
87,282
|
|
|
36
|
|
|||||
Total revenue
|
$
|
2,398,373
|
|
|
$
|
2,219,762
|
|
|
$
|
178,611
|
|
|
8
|
%
|
|
$
|
1,861,358
|
|
|
$
|
358,404
|
|
|
19
|
%
|
|
2016 - 2015
|
|
2015 - 2014
|
||||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
% Change
|
|
2014
|
|
Change
|
|
% Change
|
||||||||||||
Total gross profit
|
$
|
1,666,448
|
|
|
$
|
1,549,290
|
|
|
$
|
117,158
|
|
|
8
|
%
|
|
$
|
1,297,710
|
|
|
$
|
251,580
|
|
|
19
|
%
|
Total gross margin
|
69.5
|
%
|
|
69.8
|
%
|
|
|
|
|
|
69.7
|
%
|
|
|
|
|
|
2016 - 2015
|
|
2015 - 2014
|
||||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
% Change
|
|
2014
|
|
Change
|
|
% Change
|
||||||||||||
Research and development
|
$
|
504,415
|
|
|
$
|
401,527
|
|
|
$
|
102,888
|
|
|
26
|
%
|
|
$
|
388,055
|
|
|
$
|
13,472
|
|
|
3
|
%
|
Selling, general and administrative
|
583,005
|
|
|
524,657
|
|
|
58,348
|
|
|
11
|
|
|
466,283
|
|
|
58,374
|
|
|
13
|
|
|||||
Legal contingencies
|
(9,490
|
)
|
|
19,000
|
|
|
(28,490
|
)
|
|
(150
|
)
|
|
(74,338
|
)
|
|
93,338
|
|
|
(126
|
)
|
|||||
Acquisition related gain, net
|
—
|
|
|
(6,124
|
)
|
|
6,124
|
|
|
(100
|
)
|
|
(2,639
|
)
|
|
(3,485
|
)
|
|
132
|
|
|||||
Headquarter relocation
|
1,486
|
|
|
(2,611
|
)
|
|
4,097
|
|
|
(157
|
)
|
|
5,638
|
|
|
(8,249
|
)
|
|
(146
|
)
|
|||||
Total operating expense
|
$
|
1,079,416
|
|
|
$
|
936,449
|
|
|
$
|
142,967
|
|
|
15
|
%
|
|
$
|
782,999
|
|
|
$
|
153,450
|
|
|
20
|
%
|
|
2016 - 2015
|
|
2015 - 2014
|
||||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
% Change
|
|
2014
|
|
Change
|
|
% Change
|
||||||||||||
Interest income
|
$
|
9,799
|
|
|
$
|
5,024
|
|
|
$
|
4,775
|
|
|
95
|
%
|
|
$
|
3,901
|
|
|
$
|
1,123
|
|
|
29
|
%
|
Interest expense
|
(33,181
|
)
|
|
(42,121
|
)
|
|
8,940
|
|
|
(21
|
)
|
|
(41,728
|
)
|
|
(393
|
)
|
|
1
|
|
|||||
Cost-method investment gain, net
|
—
|
|
|
15,601
|
|
|
(15,601
|
)
|
|
(100
|
)
|
|
4,427
|
|
|
11,174
|
|
|
252
|
|
|||||
Other expense, net
|
(2,472
|
)
|
|
(8,203
|
)
|
|
5,731
|
|
|
(70
|
)
|
|
(32,553
|
)
|
|
24,350
|
|
|
(75
|
)
|
|||||
Total other expense, net
|
$
|
(25,854
|
)
|
|
$
|
(29,699
|
)
|
|
$
|
3,845
|
|
|
(13
|
)%
|
|
$
|
(65,953
|
)
|
|
$
|
36,254
|
|
|
(55
|
)%
|
|
2016 - 2015
|
|
2015 - 2014
|
||||||||||||||||||||||
(Dollars in thousands)
|
2016
|
|
2015
|
|
Change
|
|
% Change
|
|
2014
|
|
Change
|
|
% Change
|
||||||||||||
Income before income taxes
|
$
|
561,178
|
|
|
$
|
583,142
|
|
|
$
|
(21,964
|
)
|
|
(4
|
)%
|
|
$
|
448,758
|
|
|
$
|
134,384
|
|
|
30
|
%
|
Provision for income taxes
|
133,088
|
|
|
125,752
|
|
|
7,336
|
|
|
6
|
|
|
95,407
|
|
|
30,345
|
|
|
32
|
|
|||||
Consolidated net income
|
$
|
428,090
|
|
|
$
|
457,390
|
|
|
$
|
(29,300
|
)
|
|
(6
|
)%
|
|
$
|
353,351
|
|
|
$
|
104,039
|
|
|
29
|
%
|
Effective tax rate
|
23.7
|
%
|
|
21.6
|
%
|
|
|
|
|
|
21.3
|
%
|
|
|
|
|
•
|
support of commercialization efforts related to our current and future products, including expansion of our direct sales force and field support resources both in the United States and abroad;
|
•
|
acquisitions of equipment and other fixed assets for use in our current and future manufacturing and research and development facilities;
|
•
|
the continued advancement of research and development efforts;
|
•
|
potential strategic acquisitions and investments;
|
•
|
potential early repayment of debt obligations as a result of conversions;
|
•
|
the expansion needs of our facilities, including costs of leasing and building out additional facilities; and
|
•
|
repurchases of our outstanding common stock.
|
•
|
our ability to successfully commercialize and further develop our technologies and create innovative products in our markets;
|
•
|
scientific progress in our research and development programs and the magnitude of those programs;
|
•
|
competing technological and market developments; and
|
•
|
the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings.
|
(In thousands)
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash provided by operating activities
|
$
|
687,238
|
|
|
$
|
659,596
|
|
|
$
|
501,271
|
|
Net cash used in investing activities
|
(514,539
|
)
|
|
(106,146
|
)
|
|
(406,624
|
)
|
|||
Net cash used in financing activities
|
(204,713
|
)
|
|
(418,762
|
)
|
|
(166,748
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(2,240
|
)
|
|
(2,072
|
)
|
|
(3,382
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
$
|
(34,254
|
)
|
|
$
|
132,616
|
|
|
$
|
(75,483
|
)
|
|
|
Payments Due by Period(1)
|
||||||||||||||||||
|
|
|
|
Less Than
|
|
|
|
|
|
More Than
|
||||||||||
Contractual Obligation
|
|
Total
|
|
1 Year
|
|
1 – 3 Years
|
|
3 – 5 Years
|
|
5 Years
|
||||||||||
Debt obligations(2)
|
|
$
|
1,161,644
|
|
|
$
|
2,588
|
|
|
$
|
637,675
|
|
|
$
|
521,381
|
|
|
$
|
—
|
|
Operating leases
|
|
661,931
|
|
|
42,759
|
|
|
91,981
|
|
|
91,586
|
|
|
435,605
|
|
|||||
Build-to-suit leases
|
|
376,857
|
|
|
12,244
|
|
|
53,297
|
|
|
56,488
|
|
|
254,828
|
|
|||||
License agreements
|
|
77,225
|
|
|
12,920
|
|
|
41,155
|
|
|
23,150
|
|
|
—
|
|
|||||
Purchase obligations
|
|
22,458
|
|
|
18,503
|
|
|
3,955
|
|
|
—
|
|
|
—
|
|
|||||
Amounts due under executive deferred compensation plan
|
|
29,223
|
|
|
29,223
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Contingent consideration payments related to acquisitions
|
|
4,139
|
|
|
—
|
|
|
4,139
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
2,333,477
|
|
|
$
|
118,237
|
|
|
$
|
832,202
|
|
|
$
|
692,605
|
|
|
$
|
690,433
|
|
(1)
|
The table excludes
$65.0 million
of uncertain tax positions,
$43.9 million
of redeemable noncontrolling interest, and
$89.5 million
of capital commitments for the Venture Fund as the timing and amounts of the settlement remained uncertain as of
January 1, 2017
. See note “10. Income Taxes” and note “2. Balance Sheet Account Details” in Part II, Item 8 of this Form 10-K for further discussions of these items.
|
(2)
|
Debt obligations include the principal amount of our convertible senior notes due 2019 and 2021, as well as interest payments to be made under the notes. Although these notes mature in 2019 and 2021, respectively, they may be converted into cash and shares of our common stock prior to maturity if certain conditions are met. Any conversion prior to maturity can result in repayments of the principal amounts sooner than the scheduled repayments as indicated in the table. See note “5. Convertible Senior Notes” in Part II, Item 8 of this Form 10-K for further discussion of the terms of the convertible senior notes.
|
ITEM 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
ITEM 8.
|
Financial Statements and Supplementary Data.
|
|
Page
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
734,516
|
|
|
$
|
768,770
|
|
Short-term investments
|
824,208
|
|
|
617,450
|
|
||
Accounts receivable, net
|
381,316
|
|
|
385,529
|
|
||
Inventory
|
300,170
|
|
|
270,777
|
|
||
Prepaid expenses and other current assets
|
77,881
|
|
|
54,297
|
|
||
Total current assets
|
2,318,091
|
|
|
2,096,823
|
|
||
Property and equipment, net
|
713,334
|
|
|
342,694
|
|
||
Goodwill
|
775,995
|
|
|
752,629
|
|
||
Intangible assets, net
|
242,652
|
|
|
273,621
|
|
||
Deferred tax assets
|
123,317
|
|
|
134,515
|
|
||
Other assets
|
107,211
|
|
|
87,465
|
|
||
Total assets
|
$
|
4,280,600
|
|
|
$
|
3,687,747
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
137,930
|
|
|
$
|
139,226
|
|
Accrued liabilities
|
342,751
|
|
|
386,844
|
|
||
Build-to-suit lease liability
|
222,734
|
|
|
9,495
|
|
||
Long-term debt, current portion
|
1,250
|
|
|
74,929
|
|
||
Total current liabilities
|
704,665
|
|
|
610,494
|
|
||
Long-term debt
|
1,047,805
|
|
|
1,015,649
|
|
||
Other long-term liabilities
|
213,955
|
|
|
180,505
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Redeemable noncontrolling interests
|
43,940
|
|
|
32,546
|
|
||
Stockholders’ equity:
|
|
|
|
|
|||
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued and outstanding at January 1, 2017 and January 3, 2016
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 320,000 shares authorized; 188,759 shares issued and 146,196 outstanding at January 1, 2017; 186,663 shares issued and 146,584 outstanding at January 3, 2016
|
1,887
|
|
|
1,859
|
|
||
Additional paid-in capital
|
2,733,394
|
|
|
2,497,501
|
|
||
Accumulated other comprehensive (loss) income
|
(1,037
|
)
|
|
36
|
|
||
Retained earnings
|
1,485,414
|
|
|
1,022,765
|
|
||
Treasury stock, 42,563 shares and 40,079 shares at cost at January 1, 2017 and January 3, 2016, respectively
|
(2,022,429
|
)
|
|
(1,673,608
|
)
|
||
Total Illumina stockholders’ equity
|
2,197,229
|
|
|
1,848,553
|
|
||
Noncontrolling interests
|
73,006
|
|
|
—
|
|
||
Total stockholders’ equity
|
2,270,235
|
|
|
1,848,553
|
|
||
Total liabilities and stockholders’ equity
|
$
|
4,280,600
|
|
|
$
|
3,687,747
|
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||
Product revenue
|
$
|
2,031,997
|
|
|
$
|
1,890,633
|
|
|
$
|
1,619,511
|
|
Service and other revenue
|
366,376
|
|
|
329,129
|
|
|
241,847
|
|
|||
Total revenue
|
2,398,373
|
|
|
2,219,762
|
|
|
1,861,358
|
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|||
Cost of product revenue
|
534,199
|
|
|
490,812
|
|
|
431,920
|
|
|||
Cost of service and other revenue
|
154,762
|
|
|
133,850
|
|
|
92,355
|
|
|||
Amortization of acquired intangible assets
|
42,964
|
|
|
45,810
|
|
|
39,373
|
|
|||
Total cost of revenue
|
731,925
|
|
|
670,472
|
|
|
563,648
|
|
|||
Gross profit
|
1,666,448
|
|
|
1,549,290
|
|
|
1,297,710
|
|
|||
Operating expense:
|
|
|
|
|
|
|
|
|
|||
Research and development
|
504,415
|
|
|
401,527
|
|
|
388,055
|
|
|||
Selling, general and administrative
|
583,005
|
|
|
524,657
|
|
|
466,283
|
|
|||
Legal contingencies
|
(9,490
|
)
|
|
19,000
|
|
|
(74,338
|
)
|
|||
Acquisition related gain, net
|
—
|
|
|
(6,124
|
)
|
|
(2,639
|
)
|
|||
Headquarter relocation
|
1,486
|
|
|
(2,611
|
)
|
|
5,638
|
|
|||
Total operating expense
|
1,079,416
|
|
|
936,449
|
|
|
782,999
|
|
|||
Income from operations
|
587,032
|
|
|
612,841
|
|
|
514,711
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|||
Interest income
|
9,799
|
|
|
5,024
|
|
|
3,901
|
|
|||
Interest expense
|
(33,181
|
)
|
|
(42,121
|
)
|
|
(41,728
|
)
|
|||
Cost-method investment gain, net
|
—
|
|
|
15,601
|
|
|
4,427
|
|
|||
Other expense, net
|
(2,472
|
)
|
|
(8,203
|
)
|
|
(32,553
|
)
|
|||
Total other expense, net
|
(25,854
|
)
|
|
(29,699
|
)
|
|
(65,953
|
)
|
|||
Income before income taxes
|
561,178
|
|
|
583,142
|
|
|
448,758
|
|
|||
Provision for income taxes
|
133,088
|
|
|
125,752
|
|
|
95,407
|
|
|||
Consolidated net income
|
428,090
|
|
|
457,390
|
|
|
353,351
|
|
|||
Add: Net loss attributable to noncontrolling interests
|
34,559
|
|
|
4,169
|
|
|
—
|
|
|||
Net income attributable to Illumina stockholders
|
$
|
462,649
|
|
|
$
|
461,559
|
|
|
$
|
353,351
|
|
Net income attributable to Illumina stockholders for earnings per share
|
$
|
454,106
|
|
|
$
|
461,526
|
|
|
$
|
353,351
|
|
Earnings per share attributable to Illumina stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
3.09
|
|
|
$
|
3.19
|
|
|
$
|
2.61
|
|
Diluted
|
$
|
3.07
|
|
|
$
|
3.10
|
|
|
$
|
2.37
|
|
Shares used in computing earnings per common share:
|
|
|
|
|
|
||||||
Basic
|
146,788
|
|
|
144,826
|
|
|
135,553
|
|
|||
Diluted
|
148,040
|
|
|
149,069
|
|
|
148,977
|
|
|
|
Years Ended
|
||||||||||
|
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Consolidated net income
|
|
$
|
428,090
|
|
|
$
|
457,390
|
|
|
$
|
353,351
|
|
Unrealized (loss) gain on available-for-sale securities, net of deferred tax
|
|
(1,073
|
)
|
|
1,116
|
|
|
(2,314
|
)
|
|||
Total consolidated comprehensive income
|
|
427,017
|
|
|
458,506
|
|
|
351,037
|
|
|||
Add: Comprehensive loss attributable to noncontrolling interests
|
|
34,559
|
|
|
4,169
|
|
|
—
|
|
|||
Comprehensive income attributable to Illumina stockholders
|
|
$
|
461,576
|
|
|
$
|
462,675
|
|
|
$
|
351,037
|
|
|
Illumina Stockholders
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
Additional
|
|
Accumulated Other
|
|
|
|
|
|
|
|
|
|
Total
|
||||||||||||||||
|
Common Stock
|
|
Paid-In
|
|
Comprehensive
|
|
Retained
|
|
Treasury Stock
|
|
Noncontrolling
|
|
Stockholders’
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Capital
|
|
Income (Loss)
|
|
Earnings
|
|
Shares
|
|
Amount
|
|
Interests
|
|
Equity
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||||
Balance as of December 29, 2013
|
175,205
|
|
|
$
|
1,753
|
|
|
$
|
2,562,705
|
|
|
$
|
1,234
|
|
|
$
|
207,855
|
|
|
(47,482
|
)
|
|
$
|
(1,240,345
|
)
|
|
$
|
—
|
|
|
$
|
1,533,202
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
353,351
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
353,351
|
|
|||||||
Unrealized loss on available-for-sale securities, net of deferred tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,314
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,314
|
)
|
|||||||
Issuance of common stock, net of repurchases
|
6,127
|
|
|
52
|
|
|
96,204
|
|
|
—
|
|
|
—
|
|
|
(2,696
|
)
|
|
(247,221
|
)
|
|
—
|
|
|
(150,965
|
)
|
|||||||
Tax impact from the issuance, repurchase and conversion of convertible notes
|
—
|
|
|
—
|
|
|
(58,354
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58,354
|
)
|
|||||||
Reclassification of conversion option subject to cash settlement
|
—
|
|
|
—
|
|
|
282
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
282
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
153,189
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
153,189
|
|
|||||||
Net incremental tax benefit related to share-based compensation
|
—
|
|
|
—
|
|
|
126,477
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
126,477
|
|
|||||||
Equity based contingent compensation
|
—
|
|
|
—
|
|
|
2,621
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,621
|
|
|||||||
Warrant exercises
|
—
|
|
|
—
|
|
|
(215,493
|
)
|
|
—
|
|
|
—
|
|
|
12,475
|
|
|
215,493
|
|
|
—
|
|
|
—
|
|
|||||||
Repurchase of convertible notes, net of issuances
|
—
|
|
|
—
|
|
|
(494,691
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(494,691
|
)
|
|||||||
Balance as of December 28, 2014
|
181,332
|
|
|
1,805
|
|
|
2,172,940
|
|
|
(1,080
|
)
|
|
561,206
|
|
|
(37,703
|
)
|
|
(1,272,073
|
)
|
|
—
|
|
|
1,462,798
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
461,559
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
461,559
|
|
|||||||
Unrealized gain on available-for-sale securities, net of deferred tax
|
—
|
|
|
—
|
|
|
—
|
|
|
1,116
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,116
|
|
|||||||
Issuance of common stock, net of repurchases
|
5,331
|
|
|
54
|
|
|
69,870
|
|
|
—
|
|
|
—
|
|
|
(2,376
|
)
|
|
(401,535
|
)
|
|
—
|
|
|
(331,611
|
)
|
|||||||
Tax impact from the conversion of convertible notes
|
—
|
|
|
—
|
|
|
373
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
373
|
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
133,454
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
133,454
|
|
|||||||
Net incremental tax benefit related to share-based compensation
|
—
|
|
|
—
|
|
|
125,451
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
125,451
|
|
|||||||
Vesting of redeemable equity awards
|
—
|
|
|
—
|
|
|
(418
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(418
|
)
|
|||||||
Adjustment to the carrying value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(4,169
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,169
|
)
|
|||||||
Balance as of January 3, 2016
|
186,663
|
|
|
1,859
|
|
|
2,497,501
|
|
|
36
|
|
|
1,022,765
|
|
|
(40,079
|
)
|
|
(1,673,608
|
)
|
|
—
|
|
|
1,848,553
|
|
|||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
462,649
|
|
|
—
|
|
|
—
|
|
|
(13,817
|
)
|
|
448,832
|
|
|||||||
Unrealized loss on available-for-sale securities, net of deferred tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,073
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,073
|
)
|
|||||||
Issuance of common stock, net of repurchases
|
2,096
|
|
|
28
|
|
|
47,599
|
|
|
—
|
|
|
—
|
|
|
(2,506
|
)
|
|
(349,167
|
)
|
|
—
|
|
|
(301,540
|
)
|
|||||||
Tax impact from the conversion of convertible notes
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
128,538
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
128,538
|
|
|||||||
Net incremental tax benefit related to share-based compensation
|
—
|
|
|
—
|
|
|
86,872
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86,872
|
|
|||||||
Adjustment to the carrying value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(21,194
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,194
|
)
|
|||||||
Vesting of redeemable equity awards
|
—
|
|
|
—
|
|
|
(1,942
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,942
|
)
|
|||||||
Vesting of non-redeemable equity awards
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|||||||
Issuance of subsidiary shares in business combination
|
—
|
|
|
—
|
|
|
2,102
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
198
|
|
|
2,300
|
|
|||||||
Issuance of treasury stock
|
—
|
|
|
—
|
|
|
3,554
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
346
|
|
|
—
|
|
|
3,900
|
|
|||||||
Contributions from noncontrolling interest owners
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80,000
|
|
|
80,000
|
|
|||||||
Proceeds from early exercise of equity awards from a subsidiary
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,558
|
|
|
6,558
|
|
|||||||
Tax impact of deemed dividend from GRAIL, Inc.
|
—
|
|
|
—
|
|
|
(9,561
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,561
|
)
|
|||||||
Balance as of January 1, 2017
|
188,759
|
|
|
$
|
1,887
|
|
|
$
|
2,733,394
|
|
|
$
|
(1,037
|
)
|
|
$
|
1,485,414
|
|
|
(42,563
|
)
|
|
$
|
(2,022,429
|
)
|
|
$
|
73,006
|
|
|
$
|
2,270,235
|
|
ILLUMINA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|||||||||||
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|||
Consolidated net income
|
$
|
428,090
|
|
|
$
|
457,390
|
|
|
$
|
353,351
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation expense
|
89,955
|
|
|
72,687
|
|
|
61,905
|
|
|||
Amortization of intangible assets
|
50,960
|
|
|
53,732
|
|
|
50,669
|
|
|||
Share-based compensation expense
|
129,065
|
|
|
132,593
|
|
|
152,551
|
|
|||
Accretion of debt discount
|
29,732
|
|
|
38,517
|
|
|
38,069
|
|
|||
Loss on extinguishment of debt
|
113
|
|
|
4,062
|
|
|
31,360
|
|
|||
Incremental tax benefit related to share-based compensation
|
(91,332
|
)
|
|
(126,659
|
)
|
|
(126,479
|
)
|
|||
Deferred income tax expense
|
93,562
|
|
|
80,504
|
|
|
99,846
|
|
|||
Change in fair value of contingent consideration
|
(1,161
|
)
|
|
(6,124
|
)
|
|
(5,356
|
)
|
|||
Cost-method investment gain, net
|
—
|
|
|
(15,601
|
)
|
|
(4,427
|
)
|
|||
Gain on litigation settlement
|
(11,490
|
)
|
|
—
|
|
|
(109,363
|
)
|
|||
Other
|
14,759
|
|
|
6,937
|
|
|
15,618
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
3,239
|
|
|
(95,913
|
)
|
|
(50,381
|
)
|
|||
Inventory
|
(29,686
|
)
|
|
(80,545
|
)
|
|
(36,542
|
)
|
|||
Prepaid expenses and other current assets
|
(1,204
|
)
|
|
(10,876
|
)
|
|
6,619
|
|
|||
Other assets
|
(6,882
|
)
|
|
(1,418
|
)
|
|
(36,256
|
)
|
|||
Accounts payable
|
(1,969
|
)
|
|
46,296
|
|
|
(2,106
|
)
|
|||
Accrued liabilities
|
(24,250
|
)
|
|
98,791
|
|
|
60,332
|
|
|||
Other long-term liabilities
|
15,737
|
|
|
5,223
|
|
|
1,861
|
|
|||
Net cash provided by operating activities
|
687,238
|
|
|
659,596
|
|
|
501,271
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|||
Purchases of available-for-sale securities
|
(894,369
|
)
|
|
(797,022
|
)
|
|
(791,252
|
)
|
|||
Sales of available-for-sale securities
|
543,252
|
|
|
582,528
|
|
|
391,655
|
|
|||
Maturities of available-for-sale securities
|
139,642
|
|
|
294,224
|
|
|
150,229
|
|
|||
Net cash paid for acquisitions
|
(17,841
|
)
|
|
(36,581
|
)
|
|
(3,285
|
)
|
|||
Net purchases of strategic investments
|
(13,842
|
)
|
|
(6,048
|
)
|
|
(11,755
|
)
|
|||
Purchases of property and equipment
|
(259,891
|
)
|
|
(142,847
|
)
|
|
(105,996
|
)
|
|||
Cash paid for intangible assets
|
(11,490
|
)
|
|
(400
|
)
|
|
(36,220
|
)
|
|||
Net cash used in investing activities
|
(514,539
|
)
|
|
(106,146
|
)
|
|
(406,624
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||
Payments on financing obligations
|
(65,897
|
)
|
|
(244,952
|
)
|
|
(29,991
|
)
|
|||
Payments on acquisition related contingent consideration liability
|
(29,200
|
)
|
|
(2,900
|
)
|
|
—
|
|
|||
Proceeds from issuance of debt
|
5,000
|
|
|
—
|
|
|
1,132,378
|
|
|||
Repurchase of convertible notes
|
—
|
|
|
—
|
|
|
(1,244,721
|
)
|
|||
Incremental tax benefit related to share-based compensation
|
91,332
|
|
|
126,659
|
|
|
126,479
|
|
|||
Common stock repurchases
|
(249,342
|
)
|
|
(274,324
|
)
|
|
(237,183
|
)
|
|||
Taxes paid related to net share settlement of equity awards
|
(99,825
|
)
|
|
(127,212
|
)
|
|
(10,038
|
)
|
|||
Proceeds from issuance of common stock
|
47,661
|
|
|
71,839
|
|
|
96,328
|
|
|||
Proceeds from early exercise of equity awards from a subsidiary
|
6,558
|
|
|
—
|
|
|
—
|
|
|||
Contributions from noncontrolling interest owners
|
89,000
|
|
|
32,128
|
|
|
—
|
|
|||
Net cash used in financing activities
|
(204,713
|
)
|
|
(418,762
|
)
|
|
(166,748
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(2,240
|
)
|
|
(2,072
|
)
|
|
(3,382
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(34,254
|
)
|
|
132,616
|
|
|
(75,483
|
)
|
|||
Cash and cash equivalents at beginning of year
|
768,770
|
|
|
636,154
|
|
|
711,637
|
|
|||
Cash and cash equivalents at end of year
|
$
|
734,516
|
|
|
$
|
768,770
|
|
|
$
|
636,154
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|||
Cash paid for income taxes
|
$
|
59,749
|
|
|
$
|
16,913
|
|
|
$
|
17,886
|
|
1.
|
Organization and Summary of Significant Accounting Policies
|
•
|
Level 1 —
Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 —
Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
•
|
Level 3 —
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
|
Estimated Useful Lives
|
Building and leasehold improvements
|
4 to 30 years
|
Machinery and equipment
|
3 to 5 years
|
Computer hardware and software
|
3 to 7 years
|
Furniture and fixtures
|
7 years
|
|
Years Ended
|
|||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
|||
Weighted average shares outstanding
|
146,788
|
|
|
144,826
|
|
|
135,553
|
|
Effect of potentially dilutive common shares from:
|
|
|
|
|
|
|||
Convertible senior notes
|
60
|
|
|
1,661
|
|
|
3,489
|
|
Equity awards
|
1,192
|
|
|
2,582
|
|
|
4,340
|
|
Warrants
|
—
|
|
|
—
|
|
|
5,595
|
|
Weighted average shares used in calculating diluted earnings per share
|
148,040
|
|
|
149,069
|
|
|
148,977
|
|
Potentially dilutive shares excluded from calculation due to anti-dilutive effect
|
459
|
|
|
139
|
|
|
124
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Foreign currency translation adjustments
|
$
|
1,289
|
|
|
$
|
1,289
|
|
Unrealized (loss) gain on available-for-sale securities, net of deferred tax
|
(2,326
|
)
|
|
(1,253
|
)
|
||
Total accumulated other comprehensive (loss) income
|
$
|
(1,037
|
)
|
|
$
|
36
|
|
2.
|
Balance Sheet Account Details
|
|
January 1, 2017
|
|
January 3, 2016
|
||||||||||||||||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||||||||||
Available-for-sale securities:
|
|||||||||||||||||||||||||||||||
Debt securities in government-sponsored entities
|
$
|
33,862
|
|
|
$
|
—
|
|
|
$
|
(162
|
)
|
|
$
|
33,700
|
|
|
$
|
14,634
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
14,626
|
|
Corporate debt securities
|
478,159
|
|
|
42
|
|
|
(1,959
|
)
|
|
476,242
|
|
|
422,177
|
|
|
44
|
|
|
(1,127
|
)
|
|
421,094
|
|
||||||||
U.S. Treasury securities
|
315,502
|
|
|
31
|
|
|
(1,267
|
)
|
|
314,266
|
|
|
182,144
|
|
|
3
|
|
|
(417
|
)
|
|
181,730
|
|
||||||||
Total available-for-sale securities
|
$
|
827,523
|
|
|
$
|
73
|
|
|
$
|
(3,388
|
)
|
|
$
|
824,208
|
|
|
$
|
618,955
|
|
|
$
|
47
|
|
|
$
|
(1,552
|
)
|
|
$
|
617,450
|
|
|
Estimated Fair Value
|
||
Due within one year
|
$
|
362,143
|
|
After one but within five years
|
462,065
|
|
|
Total
|
$
|
824,208
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Accounts receivable from product and service sales
|
$
|
385,164
|
|
|
$
|
393,106
|
|
Other receivables
|
386
|
|
|
636
|
|
||
Total accounts receivable, gross
|
385,550
|
|
|
393,742
|
|
||
Allowance for doubtful accounts
|
(4,234
|
)
|
|
(8,213
|
)
|
||
Total accounts receivable, net
|
$
|
381,316
|
|
|
$
|
385,529
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Raw materials
|
$
|
101,999
|
|
|
$
|
97,740
|
|
Work in process
|
161,087
|
|
|
138,322
|
|
||
Finished goods
|
37,084
|
|
|
34,715
|
|
||
Total inventory
|
$
|
300,170
|
|
|
$
|
270,777
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Leasehold improvements
|
$
|
270,453
|
|
|
$
|
178,019
|
|
Machinery and equipment
|
274,376
|
|
|
224,158
|
|
||
Computer hardware and software
|
155,602
|
|
|
136,550
|
|
||
Furniture and fixtures
|
24,023
|
|
|
18,539
|
|
||
Building
|
9,015
|
|
|
7,670
|
|
||
Construction in progress
|
306,678
|
|
|
44,501
|
|
||
Total property and equipment, gross
|
1,040,147
|
|
|
609,437
|
|
||
Accumulated depreciation
|
(326,813
|
)
|
|
(266,743
|
)
|
||
Total property and equipment, net
|
$
|
713,334
|
|
|
$
|
342,694
|
|
|
Goodwill
|
||
Balance as of December 28, 2014
|
$
|
724,904
|
|
Current period acquisitions
|
27,725
|
|
|
Balance as of January 3, 2016
|
752,629
|
|
|
Current period acquisitions
|
23,366
|
|
|
Balance as of January 1, 2017
|
$
|
775,995
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Deferred revenue, current portion
|
$
|
120,621
|
|
|
$
|
96,654
|
|
Accrued compensation expenses
|
111,800
|
|
|
120,662
|
|
||
Accrued taxes payable
|
32,040
|
|
|
44,159
|
|
||
Customer deposits
|
20,528
|
|
|
20,901
|
|
||
Acquisition related contingent liability
|
2,768
|
|
|
35,000
|
|
||
Other
|
54,994
|
|
|
69,468
|
|
||
Total accrued liabilities
|
$
|
342,751
|
|
|
$
|
386,844
|
|
|
Redeemable Noncontrolling Interests
|
||
Balance as of December 28, 2014
|
$
|
—
|
|
Cash contributions
|
56,875
|
|
|
Amount held in escrow by third party
|
(24,747
|
)
|
|
Vesting of redeemable equity awards
|
418
|
|
|
Net loss attributable to noncontrolling interests
|
(4,169
|
)
|
|
Adjustment up to the redemption value
|
4,169
|
|
|
Balance as of January 3, 2016
|
32,546
|
|
|
Cash contributions
|
9,000
|
|
|
Vesting of redeemable equity awards
|
1,942
|
|
|
Net loss attributable to noncontrolling interests
|
(20,742
|
)
|
|
Adjustment up to the redemption value
|
21,194
|
|
|
Balance as of January 1, 2017
|
$
|
43,940
|
|
3.
|
Intangible Assets
|
|
January 1, 2017
|
|
January 3, 2016
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Intangibles,
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Intangibles,
Net
|
||||||||||||
Licensed technologies
|
$
|
95,021
|
|
|
$
|
(63,717
|
)
|
|
$
|
31,304
|
|
|
$
|
83,956
|
|
|
$
|
(53,226
|
)
|
|
$
|
30,730
|
|
Core technologies
|
328,098
|
|
|
(141,961
|
)
|
|
186,137
|
|
|
324,898
|
|
|
(109,706
|
)
|
|
215,192
|
|
||||||
Customer relationships
|
33,216
|
|
|
(22,103
|
)
|
|
11,113
|
|
|
34,246
|
|
|
(17,558
|
)
|
|
16,688
|
|
||||||
License agreements
|
13,688
|
|
|
(6,271
|
)
|
|
7,417
|
|
|
15,442
|
|
|
(6,289
|
)
|
|
9,153
|
|
||||||
Trade name
|
4,779
|
|
|
(3,398
|
)
|
|
1,381
|
|
|
5,379
|
|
|
(3,521
|
)
|
|
1,858
|
|
||||||
Total finite-lived intangible assets, net
|
$
|
474,802
|
|
|
$
|
(237,450
|
)
|
|
$
|
237,352
|
|
|
$
|
463,921
|
|
|
$
|
(190,300
|
)
|
|
$
|
273,621
|
|
|
Estimated Annual Amortization
|
||
2017
|
$
|
47,360
|
|
2018
|
37,967
|
|
|
2019
|
34,532
|
|
|
2020
|
26,795
|
|
|
2021
|
22,768
|
|
|
Thereafter
|
67,930
|
|
|
Total
|
$
|
237,352
|
|
4.
|
Fair Value Measurements
|
|
January 1, 2017
|
|
January 3, 2016
|
||||||||||||||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds (cash equivalent)
|
$
|
385,455
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
385,455
|
|
|
$
|
391,246
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
391,246
|
|
Debt securities in government-sponsored entities
|
—
|
|
|
33,700
|
|
|
—
|
|
|
33,700
|
|
|
—
|
|
|
14,626
|
|
|
—
|
|
|
14,626
|
|
||||||||
Corporate debt securities
|
—
|
|
|
476,242
|
|
|
—
|
|
|
476,242
|
|
|
—
|
|
|
421,094
|
|
|
—
|
|
|
421,094
|
|
||||||||
U.S. Treasury securities
|
314,266
|
|
|
—
|
|
|
—
|
|
|
314,266
|
|
|
181,730
|
|
|
—
|
|
|
—
|
|
|
181,730
|
|
||||||||
Deferred compensation plan assets
|
—
|
|
|
30,859
|
|
|
—
|
|
|
30,859
|
|
|
—
|
|
|
26,245
|
|
|
—
|
|
|
26,245
|
|
||||||||
Total assets measured at fair value
|
$
|
699,721
|
|
|
$
|
540,801
|
|
|
$
|
—
|
|
|
$
|
1,240,522
|
|
|
$
|
572,976
|
|
|
$
|
461,965
|
|
|
$
|
—
|
|
|
$
|
1,034,941
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Acquisition related contingent consideration liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,139
|
|
|
$
|
4,139
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,000
|
|
|
$
|
35,000
|
|
Deferred compensation liability
|
—
|
|
|
29,223
|
|
|
—
|
|
|
29,223
|
|
|
—
|
|
|
24,925
|
|
|
—
|
|
|
24,925
|
|
||||||||
Total liabilities measured at fair value
|
$
|
—
|
|
|
$
|
29,223
|
|
|
$
|
4,139
|
|
|
$
|
33,362
|
|
|
$
|
—
|
|
|
$
|
24,925
|
|
|
$
|
35,000
|
|
|
$
|
59,925
|
|
|
Contingent
Consideration
Liability
(Level 3
Measurement)
|
||
Balance as of December 29, 2013
|
$
|
49,480
|
|
Change in estimated fair value, recorded in acquisition related gain, net
|
(5,356
|
)
|
|
Balance as of December 28, 2014
|
44,124
|
|
|
Change in estimated fair value, recorded in acquisition related gain, net
|
(6,124
|
)
|
|
Cash payments
|
(3,000
|
)
|
|
Balance as of January 3, 2016
|
35,000
|
|
|
Additional liability recorded as a result of a current period acquisition
|
5,300
|
|
|
Change in estimated fair value, recorded in selling, general and administrative expenses
|
(1,161
|
)
|
|
Cash payments
|
(35,000
|
)
|
|
Balance as of January 1, 2017
|
$
|
4,139
|
|
5.
|
Debt
|
|
2016 Notes
|
||
Cash paid for principal of notes converted
|
$
|
75,543
|
|
Conversion value over principal amount paid in shares of common stock
|
$
|
63,753
|
|
Number of shares of common stock issued upon conversion
|
409
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Principal amount of convertible notes outstanding
|
$
|
1,150,000
|
|
|
$
|
1,225,547
|
|
Unamortized discount of liability component
|
(105,312
|
)
|
|
(134,969
|
)
|
||
Net carrying amount of liability component
|
1,044,688
|
|
|
1,090,578
|
|
||
Less: current portion
|
—
|
|
|
(74,929
|
)
|
||
Long-term debt
|
$
|
1,044,688
|
|
|
$
|
1,015,649
|
|
Carrying value of equity component, net of issuance costs
|
$
|
161,237
|
|
|
$
|
213,811
|
|
Fair value of outstanding notes
|
$
|
1,107,671
|
|
|
$
|
1,456,451
|
|
Weighted average remaining amortization period of discount on the liability component
|
3.6 years
|
|
|
4.6 years
|
|
6.
|
Commitments
|
|
Operating
Leases
|
|
Sublease
Income
|
|
Net Operating
Leases
|
|
Build-to-suit Leases
|
||||||||
2017
|
$
|
42,759
|
|
|
$
|
(7,042
|
)
|
|
$
|
35,717
|
|
|
$
|
12,244
|
|
2018
|
45,214
|
|
|
(9,878
|
)
|
|
35,336
|
|
|
28,760
|
|
||||
2019
|
46,767
|
|
|
(10,175
|
)
|
|
36,592
|
|
|
24,537
|
|
||||
2020
|
46,166
|
|
|
(10,369
|
)
|
|
35,797
|
|
|
27,928
|
|
||||
2021
|
45,420
|
|
|
(10,338
|
)
|
|
35,082
|
|
|
28,560
|
|
||||
Thereafter
|
435,605
|
|
|
(26,360
|
)
|
|
409,245
|
|
|
254,828
|
|
||||
Total minimum lease payments
|
$
|
661,931
|
|
|
$
|
(74,162
|
)
|
|
$
|
587,769
|
|
|
$
|
376,857
|
|
|
Facility Exit Obligation
|
||
Balance as of December 29, 2013
|
$
|
38,218
|
|
Adjustment to facility exit obligation
|
2,555
|
|
|
Accretion of interest expense
|
2,638
|
|
|
Cash payments
|
(5,711
|
)
|
|
Balance as of December 28, 2014
|
37,700
|
|
|
Adjustment to facility exit obligation
|
(5,303
|
)
|
|
Accretion of interest expense
|
2,294
|
|
|
Cash payments
|
(12,531
|
)
|
|
Balance as of January 3, 2016
|
22,160
|
|
|
Adjustment to facility exit obligation
|
190
|
|
|
Accretion of interest expense
|
1,296
|
|
|
Cash payments
|
(4,723
|
)
|
|
Balance as of January 1, 2017
|
$
|
18,923
|
|
|
Minimum Payments
|
||
2017
|
$
|
12,920
|
|
2018
|
18,055
|
|
|
2019
|
23,100
|
|
|
2020
|
23,150
|
|
|
Total minimum royalty payments
|
$
|
77,225
|
|
|
Warranty Reserve
|
||
Balance as of December 29, 2013
|
$
|
10,407
|
|
Additions charged to cost of revenue
|
24,150
|
|
|
Repairs and replacements
|
(18,941
|
)
|
|
Balance as of December 28, 2014
|
15,616
|
|
|
Additions charged to cost of revenue
|
27,574
|
|
|
Repairs and replacements
|
(26,473
|
)
|
|
Balance as of January 3, 2016
|
16,717
|
|
|
Additions charged to cost of revenue
|
21,243
|
|
|
Repairs and replacements
|
(24,721
|
)
|
|
Balance as of January 1, 2017
|
$
|
13,239
|
|
7.
|
Share-based Compensation Expense
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Cost of product revenue
|
$
|
9,070
|
|
|
$
|
9,841
|
|
|
$
|
9,451
|
|
Cost of service and other revenue
|
1,584
|
|
|
1,609
|
|
|
1,204
|
|
|||
Research and development
|
42,295
|
|
|
42,001
|
|
|
50,880
|
|
|||
Selling, general and administrative
|
76,116
|
|
|
79,142
|
|
|
91,016
|
|
|||
Share-based compensation expense before taxes
|
129,065
|
|
|
132,593
|
|
|
152,551
|
|
|||
Related income tax benefits
|
(40,969
|
)
|
|
(38,986
|
)
|
|
(44,194
|
)
|
|||
Share-based compensation expense, net of taxes
|
$
|
88,096
|
|
|
$
|
93,607
|
|
|
$
|
108,357
|
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Risk-free interest rate
|
0.40% - 0.50%
|
|
|
0.07%-0.33%
|
|
|
0.05% - 0.13%
|
|
|||
Expected volatility
|
40% - 44%
|
|
|
29% - 38%
|
|
|
38% - 41%
|
|
|||
Expected term
|
0.5 - 1.0 year
|
|
|
0.5 -1.0 year
|
|
|
0.5 - 1.0 year
|
|
|||
Expected dividends
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|||
Weighted-average grant-date fair value per share
|
$
|
48.29
|
|
|
$
|
53.92
|
|
|
$
|
44.64
|
|
8.
|
Stockholders’ Equity
|
|
Restricted
Stock Awards
(RSA)
|
|
Restricted
Stock Units
(RSU)
|
|
Performance
Stock Units
(PSU)(1)
|
|
Weighted-Average
Grant-Date Fair Value per Share
|
|||||||||||||
|
|
|
|
RSA
|
|
RSU
|
|
PSU
|
||||||||||||
Outstanding at December 29, 2013
|
248
|
|
|
3,628
|
|
|
1,101
|
|
|
$
|
53.46
|
|
|
$
|
59.66
|
|
|
$
|
54.64
|
|
Awarded
|
—
|
|
|
780
|
|
|
968
|
|
|
—
|
|
|
$
|
172.53
|
|
|
$
|
104.52
|
|
|
Vested
|
(140
|
)
|
|
(1,383
|
)
|
|
(753
|
)
|
|
$
|
47.90
|
|
|
$
|
55.44
|
|
|
$
|
49.52
|
|
Cancelled
|
—
|
|
|
(184
|
)
|
|
(59
|
)
|
|
—
|
|
|
$
|
65.09
|
|
|
$
|
52.87
|
|
|
Outstanding at December 28, 2014
|
108
|
|
|
2,841
|
|
|
1,257
|
|
|
$
|
56.62
|
|
|
$
|
92.35
|
|
|
$
|
96.21
|
|
Awarded
|
—
|
|
|
756
|
|
|
194
|
|
|
—
|
|
|
$
|
184.10
|
|
|
$
|
183.29
|
|
|
Vested
|
(87
|
)
|
|
(1,138
|
)
|
|
(741
|
)
|
|
$
|
58.72
|
|
|
$
|
75.29
|
|
|
$
|
60.80
|
|
Cancelled
|
—
|
|
|
(253
|
)
|
|
(127
|
)
|
|
—
|
|
|
$
|
99.50
|
|
|
$
|
99.30
|
|
|
Outstanding at January 3, 2016
|
21
|
|
|
2,206
|
|
|
583
|
|
|
$
|
47.93
|
|
|
$
|
131.80
|
|
|
$
|
169.41
|
|
Awarded
|
22
|
|
|
1,245
|
|
|
172
|
|
|
$
|
179.00
|
|
|
$
|
132.47
|
|
|
$
|
113.56
|
|
Vested
|
(11
|
)
|
|
(928
|
)
|
|
(199
|
)
|
|
$
|
47.93
|
|
|
$
|
105.49
|
|
|
$
|
148.99
|
|
Cancelled
|
—
|
|
|
(230
|
)
|
|
(96
|
)
|
|
—
|
|
|
$
|
139.74
|
|
|
$
|
163.05
|
|
|
Outstanding at January 1, 2017
|
32
|
|
|
2,293
|
|
|
460
|
|
|
$
|
136.30
|
|
|
$
|
141.80
|
|
|
$
|
158.66
|
|
(1)
|
The number of units reflect the estimated number of shares to be issued at the end of the performance period.
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Pre-tax intrinsic value of outstanding restricted stock:
|
|
|
|
|
|
||||||
RSA
|
$
|
4,138
|
|
|
$
|
4,041
|
|
|
$
|
20,321
|
|
RSU
|
$
|
293,592
|
|
|
$
|
423,391
|
|
|
$
|
534,708
|
|
PSU
|
$
|
58,838
|
|
|
$
|
111,958
|
|
|
$
|
236,606
|
|
|
|
|
|
|
|
||||||
Fair value of restricted stock vested:
|
|
|
|
|
|
||||||
RSA
|
$
|
505
|
|
|
$
|
5,104
|
|
|
$
|
6,712
|
|
RSU
|
$
|
97,952
|
|
|
$
|
85,683
|
|
|
$
|
76,646
|
|
PSU
|
$
|
29,668
|
|
|
$
|
45,014
|
|
|
$
|
37,313
|
|
|
Options
(in thousands)
|
|
Weighted-
Average
Exercise Price
|
|||
Outstanding at December 29, 2013
|
5,724
|
|
|
$
|
32.64
|
|
Exercised
|
(2,478
|
)
|
|
$
|
29.93
|
|
Cancelled
|
(35
|
)
|
|
$
|
31.73
|
|
Outstanding at December 28, 2014
|
3,211
|
|
|
$
|
34.74
|
|
Exercised
|
(1,529
|
)
|
|
$
|
28.54
|
|
Cancelled
|
(83
|
)
|
|
$
|
10.31
|
|
Outstanding at January 3, 2016
|
1,599
|
|
|
$
|
41.95
|
|
Exercised
|
(552
|
)
|
|
$
|
29.41
|
|
Cancelled
|
(2
|
)
|
|
$
|
46.35
|
|
Outstanding at January 1, 2017
|
1,045
|
|
|
$
|
48.56
|
|
9.
|
Legal Proceedings
|
10.
|
Income Taxes
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
United States
|
$
|
120,147
|
|
|
$
|
217,674
|
|
|
$
|
176,974
|
|
Foreign
|
441,031
|
|
|
365,468
|
|
|
271,784
|
|
|||
Total income before income taxes
|
$
|
561,178
|
|
|
$
|
583,142
|
|
|
$
|
448,758
|
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Current:
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
71,474
|
|
|
$
|
106,062
|
|
|
$
|
60,984
|
|
State
|
9,980
|
|
|
18,240
|
|
|
12,381
|
|
|||
Foreign
|
44,942
|
|
|
46,397
|
|
|
41,815
|
|
|||
Total current provision
|
126,396
|
|
|
170,699
|
|
|
115,180
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|||
Federal
|
15,935
|
|
|
(11,534
|
)
|
|
(3,191
|
)
|
|||
State
|
(5,254
|
)
|
|
(31,779
|
)
|
|
(4,974
|
)
|
|||
Foreign
|
(3,989
|
)
|
|
(1,634
|
)
|
|
(11,608
|
)
|
|||
Total deferred expense (benefit)
|
6,692
|
|
|
(44,947
|
)
|
|
(19,773
|
)
|
|||
Total tax provision
|
$
|
133,088
|
|
|
$
|
125,752
|
|
|
$
|
95,407
|
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Tax at federal statutory rate
|
$
|
196,412
|
|
|
$
|
204,100
|
|
|
$
|
157,065
|
|
State, net of federal benefit
|
9,685
|
|
|
8,821
|
|
|
5,023
|
|
|||
Research and other credits
|
(13,650
|
)
|
|
(19,853
|
)
|
|
(16,144
|
)
|
|||
Change in valuation allowance
|
4,677
|
|
|
(3,750
|
)
|
|
(4,212
|
)
|
|||
Impact of foreign operations
|
(85,766
|
)
|
|
(42,356
|
)
|
|
(42,215
|
)
|
|||
Cost sharing adjustment
|
(6,696
|
)
|
|
(24,813
|
)
|
|
—
|
|
|||
Investments in consolidated variable interest entities
|
25,059
|
|
|
1,376
|
|
|
—
|
|
|||
Other
|
3,367
|
|
|
2,227
|
|
|
(4,110
|
)
|
|||
Total tax provision
|
$
|
133,088
|
|
|
$
|
125,752
|
|
|
$
|
95,407
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
Deferred tax assets:
|
|
|
|
|
|
||
Net operating losses
|
$
|
20,419
|
|
|
$
|
35,448
|
|
Tax credits
|
43,245
|
|
|
40,590
|
|
||
Other accruals and reserves
|
23,805
|
|
|
42,223
|
|
||
Stock compensation
|
37,536
|
|
|
52,199
|
|
||
Deferred rent
|
38,310
|
|
|
30,355
|
|
||
Cost sharing adjustment
|
31,509
|
|
|
24,813
|
|
||
Other amortization
|
16,396
|
|
|
32,782
|
|
||
Other
|
37,622
|
|
|
27,727
|
|
||
Total gross deferred tax assets
|
248,842
|
|
|
286,137
|
|
||
Valuation allowance on deferred tax assets
|
(18,069
|
)
|
|
(13,392
|
)
|
||
Total deferred tax assets
|
230,773
|
|
|
272,745
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
||
Purchased intangible amortization
|
(53,159
|
)
|
|
(78,270
|
)
|
||
Convertible debt
|
(37,261
|
)
|
|
(47,863
|
)
|
||
Property and equipment
|
(17,422
|
)
|
|
(15,090
|
)
|
||
Other
|
(482
|
)
|
|
(825
|
)
|
||
Total deferred tax liabilities
|
(108,324
|
)
|
|
(142,048
|
)
|
||
Net deferred tax assets
|
$
|
122,449
|
|
|
$
|
130,697
|
|
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Balance at beginning of year
|
$
|
56,142
|
|
|
$
|
52,088
|
|
|
$
|
49,046
|
|
Increases related to prior year tax positions
|
—
|
|
|
2,185
|
|
|
426
|
|
|||
Decreases related to prior year tax positions
|
(1,674
|
)
|
|
(1,115
|
)
|
|
(804
|
)
|
|||
Increases related to current year tax positions
|
12,912
|
|
|
10,584
|
|
|
8,756
|
|
|||
Decreases related to lapse of statute of limitations
|
(2,354
|
)
|
|
(7,600
|
)
|
|
(5,336
|
)
|
|||
Balance at end of year
|
$
|
65,026
|
|
|
$
|
56,142
|
|
|
$
|
52,088
|
|
11.
|
Employee Benefit Plans
|
12.
|
Segment Information, Geographic Data, and Significant Customers
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Revenues:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
2,428,024
|
|
|
$
|
2,219,762
|
|
|
$
|
1,861,358
|
|
Consolidated VIEs
|
—
|
|
|
—
|
|
|
—
|
|
|||
Elimination of intersegment revenues
|
(29,651
|
)
|
|
—
|
|
|
—
|
|
|||
Consolidated revenues
|
$
|
2,398,373
|
|
|
$
|
2,219,762
|
|
|
$
|
1,861,358
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
137,585
|
|
|
$
|
126,342
|
|
|
$
|
112,574
|
|
Consolidated VIEs
|
4,345
|
|
|
77
|
|
|
—
|
|
|||
Total depreciation and amortization
|
$
|
141,930
|
|
|
$
|
126,419
|
|
|
$
|
112,574
|
|
|
|
|
|
|
|
||||||
Operating income (loss):
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
683,790
|
|
|
$
|
621,215
|
|
|
$
|
514,711
|
|
Consolidated VIEs
|
(81,114
|
)
|
|
(8,374
|
)
|
|
—
|
|
|||
Elimination of intersegment earnings
|
(15,644
|
)
|
|
—
|
|
|
—
|
|
|||
Consolidated operating income
|
$
|
587,032
|
|
|
$
|
612,841
|
|
|
$
|
514,711
|
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
Total assets:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
4,167,230
|
|
|
$
|
3,657,953
|
|
|
$
|
3,339,640
|
|
Consolidated VIEs
|
179,725
|
|
|
30,447
|
|
|
—
|
|
|||
Elimination of intersegment assets
|
(66,355
|
)
|
|
(653
|
)
|
|
—
|
|
|||
Consolidated total assets
|
$
|
4,280,600
|
|
|
$
|
3,687,747
|
|
|
$
|
3,339,640
|
|
|
|
|
|
|
|
||||||
Capital expenditures:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
238,420
|
|
|
$
|
141,607
|
|
|
$
|
105,996
|
|
Consolidated VIEs
|
22,385
|
|
|
1,240
|
|
|
—
|
|
|||
Total capital expenditures
|
$
|
260,805
|
|
|
$
|
142,847
|
|
|
$
|
105,996
|
|
|
Years Ended
|
||||||||||
|
January 1,
2017 |
|
January 3,
2016 |
|
December 28,
2014 |
||||||
United States
|
$
|
1,294,178
|
|
|
$
|
1,207,373
|
|
|
$
|
950,703
|
|
Europe
|
553,217
|
|
|
527,406
|
|
|
466,536
|
|
|||
Asia-Pacific
|
456,380
|
|
|
379,575
|
|
|
342,702
|
|
|||
Other markets
|
94,598
|
|
|
105,408
|
|
|
101,417
|
|
|||
Total
|
$
|
2,398,373
|
|
|
$
|
2,219,762
|
|
|
$
|
1,861,358
|
|
|
January 1,
2017 |
|
January 3,
2016 |
||||
United States
|
$
|
636,318
|
|
|
$
|
273,193
|
|
Singapore
|
44,263
|
|
|
30,127
|
|
||
United Kingdom
|
27,490
|
|
|
33,271
|
|
||
Other countries
|
5,263
|
|
|
6,103
|
|
||
Total
|
$
|
713,334
|
|
|
$
|
342,694
|
|
13.
|
Quarterly Financial Information (unaudited)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue
|
$
|
571,763
|
|
|
$
|
600,124
|
|
|
$
|
607,139
|
|
|
$
|
619,347
|
|
Gross profit
|
$
|
397,054
|
|
|
$
|
423,805
|
|
|
$
|
426,150
|
|
|
$
|
419,439
|
|
Consolidated net income
|
$
|
87,219
|
|
|
$
|
116,394
|
|
|
$
|
116,935
|
|
|
$
|
107,542
|
|
Net income attributable to Illumina stockholders
|
$
|
89,587
|
|
|
$
|
120,412
|
|
|
$
|
128,888
|
|
|
$
|
123,762
|
|
Earnings per share attributable to Illumina stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.61
|
|
|
$
|
0.83
|
|
|
$
|
0.88
|
|
|
$
|
0.84
|
|
Diluted
|
$
|
0.60
|
|
|
$
|
0.82
|
|
|
$
|
0.87
|
|
|
$
|
0.84
|
|
2015
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
538,565
|
|
|
$
|
539,378
|
|
|
$
|
550,271
|
|
|
$
|
591,548
|
|
Gross profit
|
$
|
375,027
|
|
|
$
|
376,365
|
|
|
$
|
387,539
|
|
|
$
|
410,359
|
|
Consolidated net income
|
$
|
136,658
|
|
|
$
|
102,247
|
|
|
$
|
115,621
|
|
|
$
|
102,864
|
|
Net income attributable to Illumina stockholders
|
$
|
136,658
|
|
|
$
|
102,247
|
|
|
$
|
118,177
|
|
|
$
|
104,477
|
|
Earnings per share attributable to Illumina stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.95
|
|
|
$
|
0.71
|
|
|
$
|
0.81
|
|
|
$
|
0.72
|
|
Diluted
|
$
|
0.92
|
|
|
$
|
0.69
|
|
|
$
|
0.79
|
|
|
$
|
0.70
|
|
ITEM 9A.
|
Controls and Procedures.
|
ITEM 9B.
|
Other Information.
|
ITEM 10.
|
Directors, Executive Officers, and Corporate Governance.
|
ITEM 11.
|
Executive Compensation.
|
ITEM 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
ITEM 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
ITEM 14.
|
Principal Accountant Fees and Services.
|
ITEM 15.
|
Exhibits, Financial Statement Schedules.
|
|
Balance at
Beginning of
Period
|
|
Additions Charged
to Expenses/(Reductions from
Revenue)(1)
|
|
Deductions(2)
|
|
Balance at
End of
Period
|
||||||
|
(In thousands)
|
||||||||||||
Year ended January 1, 2017
|
|
|
|
|
|
|
|
||||||
Allowance for doubtful accounts
|
$
|
8,213
|
|
|
2,953
|
|
|
(6,932
|
)
|
|
$
|
4,234
|
|
Year ended January 3, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||
Allowance for doubtful accounts
|
$
|
5,459
|
|
|
3,213
|
|
|
(459
|
)
|
|
$
|
8,213
|
|
Year ended December 28, 2014
|
|
|
|
|
|
|
|
|
|
|
|
||
Allowance for doubtful accounts
|
$
|
3,680
|
|
|
1,870
|
|
|
(91
|
)
|
|
$
|
5,459
|
|
(1)
|
Additions to and reductions from allowance for doubtful accounts are recorded to selling, general and administrative expense.
|
(2)
|
Deductions for allowance for doubtful accounts are for accounts receivable written off.
|
INDEX TO EXHIBITS — (Continued)
|
|||||||||||||
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit
|
|
|
|
|
|
|
|
|
|
Filing
|
|
Filed
|
|
Number
|
|
Exhibit Description
|
|
Form
|
|
File Number
|
|
Exhibit
|
|
Date
|
|
Herewith
|
|
+10.12
|
|
The Solexa Unapproved Company Share Option Plan
|
|
8-K
|
|
000-30361
|
|
99.3
|
|
|
11/26/2007
|
|
|
+10.13
|
|
The Solexa Share Option Plan for Consultants
|
|
8-K
|
|
000-30361
|
|
99.4
|
|
|
11/26/2007
|
|
|
+10.14
|
|
Solexa Limited Enterprise Management Incentive Plan
|
|
8-K
|
|
000-30361
|
|
99.5
|
|
|
11/26/2007
|
|
|
+10.15
|
|
Amended and Restated Solexa 2005 Equity Incentive Plan
|
|
10-K
|
|
000-30361
|
|
10.25
|
|
|
2/26/2009
|
|
|
+10.16
|
|
Amended and Restated Solexa 1992 Stock Option Plan
|
|
10-K
|
|
000-30361
|
|
10.26
|
|
|
2/26/2009
|
|
|
10,170
|
|
Amended and Restated Lease between BMR-9885 Towne Centre Drive LLC and Illumina for the 9885 Towne Centre Drive property, dated January 26, 2007
|
|
10-Q
|
|
000-30361
|
|
10.41
|
|
|
5/3/2007
|
|
|
10.18
|
|
Lease between BMR-9885 Towne Centre Drive LLC and Illumina for the 9865 Towne Centre Drive property, dated January 26, 2007
|
|
10-Q
|
|
000-30361
|
|
10.42
|
|
|
5/3/2007
|
|
|
10.19
|
|
Amended and Restated Lease Agreement, dated March 27, 2012, between ARE-SD Region No. 32, LLC and Illumina
|
|
10-Q
|
|
001-35406
|
|
10.1
|
|
|
5/3/2012
|
|
|
10.20
|
|
First Amendment to Amended and Restated Lease Agreement, dated March 27, 2012, between ARE-SD Region No. 32, LLC and Illumina
|
|
10-K
|
|
001-35406
|
|
10.23
|
|
|
2/18/2015
|
|
|
10.21
|
|
Second Amendment to Amended and Restated Lease Agreement, dated March 27, 2012, between ARE-SD Region No. 32, LLC and Illumina
|
|
10-K
|
|
001-35406
|
|
10.24
|
|
|
2/18/2015
|
|
|
+10.22
|
|
Deferred Compensation Plan, effective December 1, 2007
|
|
14D-9
|
|
005-60457
|
|
99(e)(6)
|
|
|
2/7/2012
|
|
|
10.23
|
|
Lease between BMR-Lincoln Centre LP and Illumina, dated December 30, 2014
|
|
10-K
|
|
001-35406
|
|
10.26
|
|
|
2/18/2015
|
|
|
10.24
|
|
Pooled Patents Agreement between Illumina and Sequenom, Inc., dated December 2, 2014 (with certain confidential portions omitted)
|
|
10-K
|
|
001-35406
|
|
10.27
|
|
|
2/18/2015
|
|
|
10.25
|
|
Agreement for Lease between Granta Park Park Jco 1 Limited and Illumina, dated June 25, 2015
|
|
10-Q
|
|
001-35406
|
|
10.1
|
|
|
7/31/2015
|
|
|
10.26
|
|
Third Amendment to Lease between ARE-SD Region No. 32, LLC and Illumina, dated September 2, 2015
|
|
10-K
|
|
001-35406
|
|
10.29
|
|
|
3/2/2016
|
|
|
10.27
|
|
First Amendment to Lease between BMR-Lincoln Center LP and Illumina, dated February 23, 2016
|
|
10-K
|
|
001-35406
|
|
10.30
|
|
|
3/2/2016
|
|
|
10.28
|
|
Fourth Amendment to Lease between ARE-SD Region No. 32, LLC and Illumina, dated April 14, 2016
|
|
|
|
|
|
|
|
|
|
X
|
|
10.29
|
|
Second Amendment to Lease between BMR-Lincoln Center LP and Illumina dated August 15, 2016
|
|
|
|
|
|
|
|
|
|
X
|
INDEX TO EXHIBITS — (Continued)
|
|||||||||||||
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit
|
|
|
|
|
|
|
|
|
|
Filing
|
|
Filed
|
|
Number
|
|
Exhibit Description
|
|
Form
|
|
File Number
|
|
Exhibit
|
|
Date
|
|
Herewith
|
|
10.30
|
|
Deed of Variation to the Agreement for Lease between Granta Park Jco 1 Limited and Illumina dated October 24, 2016
|
|
|
|
|
|
|
|
|
|
X
|
|
10.31
|
|
Separation Agreement and General Release of All Claims between Illumina and Christian Henry
|
|
|
|
|
|
|
|
|
|
X
|
|
21.1
|
|
Subsidiaries of Illumina
|
|
|
|
|
|
|
|
|
|
|
X
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
|
X
|
24.1
|
|
Power of Attorney (included on the signature page)
|
|
|
|
|
|
|
|
|
|
|
X
|
31.1
|
|
Certification of Francis A. deSouza pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Certification of Sam A. Samad pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
X
|
32.1
|
|
Certification of Frances A. deSouza pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
|
X
|
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
|
|
|
|
|
|
|
|
|
|
|
X
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
|
|
|
|
|
X
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
|
|
|
|
|
X
|
+
|
|
Management contract or corporate plan or arrangement
|
|
ILLUMINA
, I
NC.
|
|
|
|
|
|
By
|
/s/ F
RANCIS
A.
DE
S
OUZA
|
|
|
Francis A. deSouza
President and Chief Executive Officer
|
/s/ F
RANCIS
A.
DE
S
OUZA
|
|
President, Chief Executive Officer, and Director
(Principal Executive Officer)
|
|
February 13, 2017
|
Francis A. deSouza
|
|
|
|
|
|
|
|
|
|
/s/ S
AM
A. S
AMAD
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
February 13, 2017
|
Sam A. Samad
|
|
|
|
|
|
|
|
|
|
/s/ M
ICHEL
B
OUCHARD
|
|
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
|
February 13, 2017
|
Michel Bouchard
|
|
|
|
|
|
|
|
|
|
/s/ J
AY
T. F
LATLEY
|
|
Executive Chairman of the Board of Directors
|
|
February 13, 2017
|
Jay T. Flatley
|
|
|
|
|
|
|
|
|
|
/s/
F
RANCES
A
RNOLD
|
|
Director
|
|
February 13, 2017
|
Frances Arnold
|
|
|
|
|
|
|
|
|
|
/s/ A. B
LAINE
B
OWMAN
|
|
Director
|
|
February 13, 2017
|
A. Blaine Bowman
|
|
|
|
|
|
|
|
|
|
/s/ D
ANIEL
M. B
RADBURY
|
|
Director
|
|
February 13, 2017
|
Daniel M. Bradbury
|
|
|
|
|
|
|
|
|
|
/s/ C
AROLINE
D. D
ORSA
|
|
Director
|
|
February 13, 2017
|
Caroline D. Dorsa
|
|
|
|
|
|
|
|
|
|
/s/ K
ARIN
E
ASTHAM
|
|
Director
|
|
February 13, 2017
|
Karin Eastham
|
|
|
|
|
|
|
|
|
|
/s/ R
OBERT
S. E
PSTEIN
|
|
Director
|
|
February 13, 2017
|
Robert S. Epstein
|
|
|
|
|
|
|
|
|
|
/s/ P
HILIP
W. S
CHILLER
|
|
Director
|
|
February 13, 2017
|
Philip W. Schiller
|
|
|
|
|
|
|
|
|
|
/s/ R
OY
W
HITFIELD
|
|
Director
|
|
February 13, 2017
|
Roy Whitfield
|
|
|
|
|
1.
|
Construction of P2 Phase 1 Parking Structure
. Tenant shall construct, which construction is being performed at Tenant’s election and for Tenant’s benefit, the P2 Phase 1 Parking Structure, at Tenant’s sole cost and expense, pursuant to the terms of the P2 Phase 1 Parking Structure Work Letter attached to this Fourth Amendment as
Exhibit A
. Tenant shall complete the P2 Phase 1 Parking Structure in a good and workman like manner and in compliance with all Legal Requirements. Tenant shall use commercially reasonable efforts to cause the P2 Phase 1 Parking Structure Improvements and the Visitor’s Center Tenant Improvements to be Substantially Completed (all as defined in the P2 Phase 1 Parking Structure Work Letter) by the date set forth in the Schedule attached to the P2 Phase 1 Parking Structure Work Letter for the Substantial Completion of the P2 Phase 1 Parking Structure Improvements and the Visitor’s Center Tenant Improvements (as such date may be extended by Force Majeure delays). Tenant’s failure to Substantially Complete the P2 Phase 1 Parking Structure Improvements and the Visitor’s Center Tenant Improvements on or before the date that is 180 days after the date set forth in the Schedule attached to the P2 Phase 1 Parking Structure Work Letter for the Substantial Completion of the P2 Phase 1 Parking Structure Improvements and the Visitor’s Center Tenant Improvements (as such date may be extended by Force Majeure delays) shall constitute a Default by Tenant under the Lease.
|
2.
|
P2 Phase 1 Parking Structure Costs
. Tenant shall be responsible for all Parking Structure Costs (as defined in the P2 Phase 1 Parking Structure Work Letter) incurred, whether incurred by Landlord or Tenant, in connection with the P2 Phase 1 Parking Structure, including, without limitation, costs incurred in connection with the design, permitting and construction of the P2 Phase 1 Parking Structure (and including, without limitation, the cost of the Visitor’s Center Tenant Improvements).
|
3.
|
No Removal or Restoration
. Notwithstanding anything to the contrary contained in the Lease, Tenant shall have no obligation or right to remove the P2 Phase 1 Parking Structure, including, without limitation, the Visitor’s Center Tenant Improvements, security equipment serving the P2 Phase 1 Parking Structure, or site work at the Project associated with the construction of the P2 Phase 1 Parking Structure, and Tenant shall be required, at Tenant’s sole cost and expense, to maintain the P2 Phase 1 Parking Structure (including, without limitation, the Visitor’s Center Tenant Improvements and the security equipment serving the P2 Phase 1 Parking Structure) at all times in good condition and repair during the Term.
|
4.
|
Parking
. Commencing on the Substantial Completion of the P2 Phase 1 Parking Structure Improvements and the Visitor’s Center Tenant Improvements, the second paragraph of
Section 10
of the Lease is hereby deleted and replaced with the following:
|
5.
|
Operating Expenses
. For the avoidance of any doubt, Tenant shall continue to be required to pay all Operating Expenses with respect to the Project, including any and all Operating Expenses relating the to P2 Phase 1 Parking Structure.
|
6.
|
Signage
. Subject to Tenant obtaining all applicable governmental approvals, Tenant may install, at Tenant’s sole cost and expense, signage bearing Tenant’s name and logo on the P2 Phase 1 Parking Structure (the “
P2 Phase 1 Signage
”). So long as Tenant is the sole tenant of the Project, Tenant shall continue to have the right to have the P2 Phase 1 Signage on the P2 Phase 1 Parking Structure. Tenant acknowledges and agrees that the P2 Phase 1 Signage, including, without limitation, the size, color and location, shall be subject to Landlord’s signage program at the Project and all applicable Legal Requirements, and shall otherwise be reasonably acceptable to Landlord. Tenant shall be responsible, at Tenant’s sole cost and expense, for the maintenance of the P2 Phase 1 Signage, for the removal of the P2 Phase 1 Signage upon the earlier of (i) the date that Tenant is no longer the sole tenant of the Project, or (ii) at the expiration or earlier termination of the Term of the Lease, and for the repair of all damage (excluding discoloration of the façade of the P2 Phase 1 Parking Structure) resulting from such removal.
|
7.
|
Project Development Costs
. Tenant acknowledges that Landlord previously entered into an agreement with DGA pursuant to which DGA provided services, for the benefit of Tenant, in connection with the master planning and entitlements for the Project (the “
DGA Contract
”). Tenant approved the DGA Contract and acknowledges and agrees that there are outstanding costs and fees due under the DGA Contract in the amount of $58,570.00 (the “
Outstanding DGA Costs
”). Tenant shall reimburse Landlord for the full amount of the Outstanding DGA Costs on or before the date that is 10 days after the mutual execution and delivery of this Fourth Amendment by the parties.
|
8.
|
Brokers
. Landlord and Tenant each represents and warrants that it has not dealt with any broker, agent or other person (collectively, “
Broker
”) in connection with the transaction reflected in this Fourth Amendment and that no Broker brought about this transaction, other than Cushman & Wakefield. Landlord and Tenant each hereby agrees to indemnify and hold the other harmless from and against any claims by any Broker claiming a commission or other form of compensation by virtue of having dealt with Tenant or Landlord, as applicable, with regard to this leasing transaction. Tenant shall be responsible for all commissions, if any, due to Cushman & Wakefield arising out of the execution of this Fourth Amendment.
|
9.
|
Disclosure
. For purposes of Section 1938 of the California Civil Code, as of the date of this Amendment, Tenant acknowledges having been advised by Landlord that the Project has not been inspected by a certified access specialist.
|
10.
|
OFAC
. Landlord and Tenant are currently (a) in compliance with and shall at all times during the Term of the Lease remain in compliance with the regulations of the Office of Foreign Assets Control (“
OFAC
”) of the U.S. Department of Treasury and any statute, executive order, or regulation relating thereto (collectively, the “
OFAC Rules
”), (b) not listed on, and shall not during the term of the Lease be listed on, the Specially Designated Nationals and Blocked Persons List, Foreign Sanctions Evaders List or the Sectoral Sanctions Identifications List, which are all maintained by OFAC and/or on any other similar list maintained by OFAC or other governmental authority pursuant to any authorizing statute, executive order, or regulation, and (c) not a person or entity with whom a U.S. person is prohibited from conducting business under the OFAC Rules.
|
11.
|
Miscellaneous
.
|
By:
|
ARE-QRS CORP.,
|
Task No.
|
Date
|
Responsible Party
|
Milestone Description
|
14
|
11/16/2016
|
Landlord
|
TI Ready Condition
|
15
|
2/16/2017
|
Landlord
|
Project and Base Building Work Substantial Completion
|
16
|
11/16/2017
|
Tenant
|
Tenant Improvement Substantial Completion
|
|
1
|
|
|
DATED 24 October 2016
|
•
GRANTA PARK JCO 1 LIMITED
(2)
BIOMED REALTY, L.P
(3)
ILLUMINA CAMBRIDGE LIMITED
(4)
ILLUMINA, INC.
|
|
EXECUTED as a DEED by
GRANTA PARK JCO 1 LIMITED
a company incorporated in Jersey by BMR LLC as sole shareholder, being a person who in accordance with the laws of that territory is acting under the authority of the company:
|
)
) ) ) ) ) |
/s/ Karen A. Sztralcher
|
|
|
|
EXECUTED as a DEED on behalf of
BIOMED REALTY, L.P.
a Maryland Limited Partnership by being a person who in accordance with the laws of that territory is acting under the authority of the company:
|
)
) ) ) ) ) |
/s/ Karen A. Sztralcher
|
|
|
Authorised signatory (or signatories)
|
|
|
Karen A. Sztraclcher
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Name
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Executive Vice President
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Title
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EXECUTED as a DEED on behalf of
ILLUMINA CAMBRIDGE LIMITED
by the signature of a director:
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)
) ) ) ) ) |
/s/ Charles Dadswell
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Director
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Director/Company Secretary
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EXECUTED as a DEED by
ILLUMINA, INC
a company incorporated in Delaware by Marc Stapley being a person who in accordance with the laws of that territory is acting under the authority of the company:
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)
) ) ) ) |
/s/ Marc Stapley
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Director
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/s/ Charles Dadswell
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Director/Company Secretary
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(1)
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GRANTA PARK JCO 1 LIMITED
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(2)
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BIOMED REALTY, L.P.
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(3)
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ILLUMINA CAMBRIDGE LIMITED
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(4)
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ILLUMINA, INC.
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1
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DEFINITIONS AND INTERPRETATION 1
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2
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CONDITION PRECEDENT
34
32
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3
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OBTAINING SATISFACTORY PLANNING CONSENTS
35
33
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4
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CO-OPERATION OF TENANT
35
34
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5
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NOTIFICATION OF PLANNING DECISIONS
36
34
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6
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PLANNING AGREEMENTS
36
35
|
7
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HISTORIC PLANNING PERMISSIONS AND AGREEMENTS
38
36
|
8
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INDEPENDENT SURVEYOR
39
37
|
9
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TERMINATION
40
38
|
10
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THE WORKS
40
38
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11
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MEASUREMENT OF THE DEMISED PREMISES
40
38
|
12
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GRANT OF THE LEASE AND ISSUE OF THE SIDE LETTER
40
39
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13
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FORM OF THE LEASE
41
39
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14
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OPTION TO CALL FOR THE LEASE
42
40
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15
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LIMITATIONS ON LANDLORD’S LIABILITY
43
41
|
16
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CONFIDENTIALITY
44
42
|
17
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REGISTRATION OF THE AGREEMENT AT LAND REGISTRY
45
43
|
18
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PPD1 BUILDING
45
43
|
19
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REGISTRATIONS
45
43
|
20
|
TERMINATION
46
44
|
21
|
ACKNOWLEDGEMENT
51
49
|
22
|
MATTERS AFFECTING THE DEMISED PREMISES
52
50
|
23
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DISPUTES
53
51
|
24
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NO DEMISE
54
51
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25
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NON-MERGER
54
52
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26
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CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
54
52
|
27
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GOVERNING LAW
54
52
|
28
|
CAPITAL ALLOWANCES
54
52
|
29
|
VAT
55
52
|
30
|
INTEREST
55
53
|
31
|
CIS
55
53
|
32
|
GUARANTEE (TENANT)
56
54
|
33
|
GUARANTEE (LANDLORD)
57
55
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34
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NOTICES
58
56
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35
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OPINION LETTERS
58
56
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SCHEDULE 1
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6,159
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Part 1 The Works
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6,159
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Part 2 The
Consultants96
Consultant
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95
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Part 3 Requirements for Practical Completion
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9,796
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Part 4 Design Sub-Contractor Packages
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9,998
|
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Part 5 Relevant Levels of Professional Indemnity Insurance
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10,099
|
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Part 6 Project Costs
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101,100
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SCHEDULE 2 THE LEASE
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103,102
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SCHEDULE 3 SCHEDULE OF AMENDMENTS TO BUILDING CONTRACT
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104,103
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SCHEDULE 4
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105,104
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Part 1 Contractor Collateral Warranty
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105,104
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Part 2 Design Sub-Contractor Collateral Warranty
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106,105
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Part 3 Consultant Collateral Warranties
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107,106
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Part 4 Design Sub-Consultant Collateral Warranties
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108,107
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SCHEDULE 5 CONSTRUCTION PROGRAMME
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109,108
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SCHEDULE 6 CORE WORKS OUTLINE SPECIFICATION AND DRAWINGS
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110,109
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SCHEDULE 7 ENABLING INFRASTRUCTURE WORKS SPECIFICATION
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111,110
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SCHEDULE 8 LANDLORD’S WORKS SPECIFICATION
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112,111
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SCHEDULE 9 OPINION LETTERS
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113,112
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SCHEDULE 10 PRE-CONSTRUCTION SERVICES AGREEMENT
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114,113
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SCHEDULE 11 SIDE LETTER
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115,114
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SCHEDULE 12 TENANT’S CONSULTANTS APPROVED TERMS
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116,115
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SCHEDULE 13
T ENANT ’S DES IG N DE LI VERY PROGRAMME117
NOT USED
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116
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SCHEDULE 14 LANDLORD’S CONSULTANTS APPROVED TERMS
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118,117
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SCHEDULE 15 TENANT’S WORKS SPECIFICATION
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119,118
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SCHEDULE 16 LANDLORD’S LEDGER
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120,119
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18560750.22
WKS/102220859.3
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(1)
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GRANTA PARK JCO 1 LIMITED
incorporated in Jersey with registration number 110676 of Ogier House, The Esplanade, St Helier, Jersey JE4 9WG (the “
Landlord
”);
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(2)
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BIOMED REALTY, L.P.
incorporated under the laws of the State of Maryland, United States of America with registered number M07931959 whose registered office is at c/o The Corporation Trust Incorporated, 351 West Camden Street, Baltimore, Maryland 21201, United States of America (the “
Landlord’s Guarantor
”);
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(3)
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ILLUMINA CAMBRIDGE LIMITED
Company registration number 03625145 whose registered office is at Chesterford Research Park, Little Chesterford, Saffron Walden,
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(4)
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ILLUMINA, INC.
incorporated under the laws of the State of Delaware, United States of America with registered number 3228889 whose registered office is c/o The Corporation Trust Company, Corporation Trust Centre, 1209 Orange Street, Wilmington, New Castle, Delaware 19801, United States of America (the “
Guarantor
”).
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1
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DEFINITIONS AND INTERPRETATION
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2006 Agreement
:
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means the section 106 agreement dated 2 March 2006 entered into by Granta Park Limited, MEPC Limited, South Cambridgeshire District Council and Cambridgeshire County
Council as varied
;
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Adjudicator:
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means an adjudicator as may be nominated by the then- president of the Technology and Construction Solicitors’ Association;
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Amenity Building:
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means a new two storey amenity building (in the approximate
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;
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Array Land:
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the property which is to be demised to the Landlord by a head lease made between (1) GPEL and (2) the Landlord which comprises the Demised Premises and other land and which is shown edged red and cross hatched blue on Plan 3 attached at Schedule 17;
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Building:
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means the building constructed or to be constructed on part of the Demised Premises by the Landlord and being Plots D and E The Array as shown outlined in black and marked “D” and “E” on Plan 4 attached at Schedule 17 for identification purposes only
)
;
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Building C:
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means the third building for which planning permission has been applied for within the Planning Phase 1 Consent (as shown cross hatched black on Plan 4 attached at Schedule 17 for identification purposes only);
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Building Contract:
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means each building contract in a Design and Build Joint Contracts Tribunal Form 2011 or such other form as may be agreed between the Parties (acting reasonably) to be entered into as a deed by the Landlord with any Contractor in respect of the Landlord’s Works and/or the Tenant’s Works (as the context requires) PROVIDED THAT such contract shall be amended by a schedule of amendments substantially in the form annexed at Schedule 3 and the Landlord shall seek the Tenant’s written approval (such approval is not to be unreasonably withheld) to:
(a)
any amendments to such schedule which would materially adversely affect the rights of the Tenant under the Collateral Warranty from the Contractor to be delivered to the Tenant pursuant to paragraph 17 of Schedule 1 Part 1 (including but not limited to the Tenant’s rights in respect of the copyright licence to be granted to the Tenant under such Collateral Warranty);
(b)
the level of professional indemnity or product liability insurance which the Contractor is to procure each Design Sub-Contractor shall maintain provided that the
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;
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CIL Requirement:
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means a requirement to pay CIL pursuant to a grant and implementation of any of the Planning Consents;
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Collateral Warranty:
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means:
(a)
in respect of each of the Contractor and each Design Sub-contractor, a collateral warranty substantially in the relevant form comprised in the
Pre-Construction
Services Agreement and
Building Contract and annexed in Schedule 4 Part 1 and Part 2;
(b)
in respect of each Consultant a collateral warranty substantially in the relevant form annexed to the relevant appointment and annexed in Schedule 4 Part 3 and the Landlord agrees to seek each Consultant’s consent to the inclusion of step-in rights substantially in the form included in the Collateral Warranty from the Contractor;
(c)
in respect of
each of
the Design
Sub-Consultant
Sub-
Consultants
a collateral warranty substantially in the relevant form annexed
to the appointment of the
Architect and annexed
in Schedule 4 Part 4
in each case with amendments as may be proposed by the relevant warrantor and their insurers and which the Tenant (acting reasonably) may approve;
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Commissioning Engineer:
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means commissioning engineer experienced in works of a similar nature and complexity to the Work and as the parties (acting reasonably) may agree to jointly appoint as the engineer to carry out the Pre-Practical Completion Testing and/or the Post-Practical Completion Testing on terms proposed by the Landlord (to include a requirement on the Commissioning Engineer to maintain professional indemnity insurance at an appropriate level) and approved by the Tenant (such consent not to be unreasonably withheld and/or delayed) and the Tenant agrees that such appointment shall provide that each of the Landlord and the Tenant shall be responsible for 50% of the fees of the Commissioning Engineer and that the Tenant shall not issue any instruction to the Commissioning Engineer which might delay the carrying out and completion of the Pre-Practical Completion Commissioning and/or the Post-Practical Completion Commissioning and/or Practical Completion save:
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Defect:
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means any defect, shrinkage or other fault appearing in the Works within the Rectification Period and which the Contractor is obliged to make good under the terms of the Building Contract;
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Demised Premises:
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means the land and any buildings situated thereon from time to time as is shown edged red on Plan 1 attached at Schedule 17 which will be demised to the Tenant by the Lease;
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Design Documents:
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means the Tenant’s Design
Document
Documents
and the Landlord’s Design Documents;
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Design
Sub-
Consultant
Sub-
Consultants
:
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means Buro Happold Limited (Company No.
02049511);
means in relation to the initial Building Contract for
the Landlord’s Works Feilden + Mawson LLP (Company
Number: OC300486), Kershaw Mechanical Services Limited
(Company Number: 540706) and MLM Consulting Engineers
Limited (Company Number: 3057104), and in relation to the
Building Cont r act f or t he r emainder of t he Landlord’s W orks
and t he T enant ’s W orks all sub -consultants engaged by the Contractor with material responsibility for design;
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Design Sub- Contractor:
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each sub-contractor with responsibility for the design packages listed in Schedule 1 Part
44
4
;
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Determining Authority:
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means the local planning authority for the area within which the Demised Premises are situated or other authority with statutory authority to determine a Planning Application;
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Development Ledger:
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means the documentation recording all Tenant’s Works Costs to be properly maintained and updated by the Landlord at the Landlord’s direction and submitted to the Tenant in accordance with paragraph 13 of Schedule 1 Part 1 and each such iteration of the ledger shall identify each Tenant’s Works Costs incurred at the date of the iteration and for the avoidance of doubt each such iteration of the ledger will identify any amounts applied for and where appropriate certified for payment together with copies of any monthly report by the Employer’s Agent relating to the actual and forecast of the costs of the Tenant’s Works Costs and shall identify the aggregate
of
such costs incurred and/or paid to date which constitute the Tenant’s Works Allowance;
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Document Management System:
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means the electronic document management system which (at no cost to the Tenant):
(a)
(f)
the Tenant is to be given appropriate access (and
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;
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|||
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Gonville Break
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means a break clause in the Gonville Lease which may be
exercised by the Tenant during the Gonville Break Period;
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Gonville Break Period
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means the period from and including 20 July 2018 to and including 19 October 2018;
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Gonville Costs
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means the principal rent, service charge, insurance rent and other outgoings payable by the Tenant (or as the case may be the Guarantor) under paragraphs 2 and 3.2.1 of the Gonville
Lease;
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Gonville Lease
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means a lease dated 1 July 2009 made between Aviva Life & Pensions UK Limited (1) Illumina Cambridge Limited (2) and
Illumina, Inc. (3) of the Gonville Premises;
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Gonville Premises
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means Building 200, Chesterford Park, Little Chesterford, otherwise known as the Gonville Building more particularly comprised in the Gonville Lease;
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GPEL:
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means Granta Park Estates Limited (Company No. 02558329)
the freeholder of the Demised Premises;
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GPEL Design Guide:
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means the design guide to be provided by GPEL and disclosed to the Tenant and the Landlord (as may be updated from time to time by GPEL);
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Group Company:
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means:
(a)
(a)
in respect of the Landlord any company which is a direct or indirect subsidiary of BioMed Realty, L.P. or a company which is a Subsidiary or Holding Company of the Landlord or any Subsidiary of such Holding Company from time to time (and for this purpose “
Subsidiary
” and “
Holding Company
” have the meanings given to them in section 1159 and Schedule 6 of the Companies Act 2006) or a company in which a person has a controlling interest where the same person also holds a controlling interest in the Landlord or the Landlord’s Guarantor and for this purpose a person has a controlling interest if (had that person been a company) the other company and the Landlord would have each been its Subsidiary;
(b)
(b)
in respect of the Tenant any company which is a direct or indirect subsidiary of Illumina Inc. or a company which is a Subsidiary or Holding Company of the Tenant or any Subsidiary of such Holding Company
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from time to time (and for this purpose “
Subsidiary
” and “
Holding Company
” have the meanings given to them in section 1159 and Schedule 6 of the Companies Act 2006) or a company in which a person has a controlling interest where the same person also holds a controlling interest in the Tenant or the Guarantor and for this purpose a person has a controlling interest if (had that person been a company) the other company and the Tenant would have each been its Subsidiary;
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Guarantor:
|
means the party so described at the head of this Agreement;
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Historic Planning Agreement:
|
means any agreement relating to the Demised Premises pursuant to (a) section 106 of the Planning Act (b) section 111 of the Local Government Act 1972 (c) section 38, 184 or 278 Highways Act 1980 (d) section 33 Local Government (Miscellaneous Provisions) Act 1982 (e) section 98 or 104 Water Industry Act 1991 or (f) section 2 of the Local Government Act 2000 granted prior to the Tenant entering into the Lease (other than a Planning Agreement);
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Historic Planning Permission:
|
means any planning permission granted prior to the Tenant entering into the Lease (other than the Planning Consents) which relates to the Demised Premises;
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Independent Surveyor:
|
means the surveyor appointed under clause 8 hereof;
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Insolvency Event:
|
means the relevant person:
(a)
(o)
is struck off the register of companies; or
(b)
(p)
has an application for an administration order made or an administration order is made; or
(c)
(q)
has a notice of intention to appoint an administrator given or the prescribed documents in connection with the appointment of an administrator are filed at court or an administrator is appointed; or
(d)
(r)
has a winding up order made against it or it otherwise enters into a voluntary winding up (other than a voluntary winding up of a solvent company for the purpose of amalgamation or reconstruction); or
(e)
(s)
has a receiver or administrative receiver appointed over all of any of its assets or has an encumbrancer take possession or exercise any power of sale over all
|
Ledger:
|
at the Landlord’s direction and submitted to the Tenant in accordance with paragraph 13.9 of Schedule 1 Part 1 and each such iteration of the ledger shall identify all Project Costs incurred at the date of the iteration and for the avoidance of doubt each such iteration of the ledger will identify any amounts applied for and where appropriate certified for payment under the Building Contract together with copies of any monthly report by the Employer’s Agent relating to the actual and forecast of the costs of the Project Costs;
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Landlord’s Solicitors:
|
means Charles Russell Speechlys LLP of
6 New Street
Square
5 Fleet Place
London EC4A 3LX (reference: LAW/FKE/358505);
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Landlord’s Unacceptable Condition:
|
means a condition imposed on any of the Planning Consents and/or a provision or obligation in a Planning Agreement and/or a CIL Requirement which will or in the Landlord’s reasonable opinion is likely (either individually or when considered together) to:
(a)
(w)
prevent the Landlord’s adjoining land (excluding the land subject of the Phase 2 Development and the land on which the Amenity Building is to be sited) from being used for its current use or make it materially more expensive (i.e. by more than 10% of its existing expenses) to continue using it for that use;
(b)
(x)
cause a delay of more than four weeks from the current estimate to the construction and opening of the Phase 1 Development as anticipated in the Construction Programme;
(c)
(y)
prevent or limit the occupation or use of the whole or any part of the Phase 1 Development to any designated person or occupier;
(d)
(zz)
cause the Planning Phase 1 Consent (once implemented) to be for a limited period;
(e)
(aa)
require the construction of the entire Phase 1 Development in a single phase (such that the Building cannot be constructed as a first phase);
(f)
(bb)
require the submission or obtaining of any reserved matters approvals pursuant to the Planning Phase 2 Consent ahead of construction or use of the Enabling Infrastructure Works;
(g)
(cc)
require the Phase 1 Development to be constructed
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other than in accordance with the Specification; or
(h)
(dd)
prevent the entirety of the Phase 1 Development from being used for purposes within Use Class B1(b) in accordance with the Planning Application for the Phase
1 Development or limit, restrict or prevent ancillary uses;
|
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Landlord’s Works:
|
means those works for the construction of the shell of the Building, the Core Works and the relevant on and off site improvements (including dealing with any issues relating to contaminated land in respect of the Demies Premises), parking spaces, and landscaping and matters ancillary thereto on the Demised Premises set out in the Landlord’s Works Specification and the Core Works Specification;
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Landlord’s Works Specification:
|
means the RIBA Work Stage 2 drawings and Array Multiplex Shell and Site Specification as annexed at Schedule 8, with such variations (if any) and design development as may be carried out under the terms of this Agreement;
|
Lease:
|
means the underlease of the Demised Premises to be granted to the Tenant pursuant to clause 12 in the form of the draft comprising Schedule 2 subject only to such minor amendments as are agreed between the parties acting reasonably;
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Loss:
|
means any and all liabilities incurred, any and all damage and/or loss suffered, any and all claims, demands, actions and proceedings made or brought, or for any costs, disbursements and expenses incurred;
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Material:
|
means all drawings, designs, reports, specifications, calculations and other similar documents and written information (including all information stored on any disk, computer or word processing facility) whatsoever obtained or provided in connection with the Works;
|
Measurement Surveyor:
|
means such firm as the Landlord may appoint with the Tenant’s prior approval (such approval not to be unreasonably withheld or delayed) from time to time;
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Necessary Consents:
|
means Satisfactory Planning Consents and all consents, licences, permissions, approvals and authorisations necessary to enable the Works to be commenced, carried out, completed and maintained as contemplated by this Agreement;
|
Notice of Completion of
|
means the notice issued by the Employer’s Agent under the Building Contract that Defects which have appeared within the
|
Making Good:
|
;
|
Nursery Lease:
|
means a lease dated 27 January 2012 and made between (1) Granta Park Limited and (2) Sunhill Daycare (Europe) Limited of part of the Nursery Site;
|
Nursery Site:
|
means that portion of the Array Land which is shown cross- hatched green on Plan 5 attached at Schedule 17 part of which is currently subject to the Nursery Lease;
|
Option:
|
means the option of the Tenant in accordance with clause 14;
|
Phase 1 Development:
|
means the construction of a minimum of 225,000 square feet floor space for use for Use Class B1(b) purposes on the Demised Premises together with parking and landscaping in accordance with the Specification;
|
Phase 2 Development:
|
means the erection on the remainder of GPEL’s land (as shown outlined in red on Plan 6 attached at Schedule 17) (but not on the Demised Premises) of research and development buildings (Use Class B1(b) with a combined floor area of up to 34,220 square meters (GEFA) excluding plant) including means of access (with the provision of an internal link road), strategic landscaping and associated infrastructure including parking and including the Enabling Infrastructure Works;
|
Planning Act:
|
means the Town and Country Planning Act 1990 as amended;
|
Planning Agreement:
|
means an agreement or unilateral undertaking under section
106 of the Planning Act required to obtain the grant of the Planning Consents;
|
Planning Amenity Building Consent:
|
means full planning permission for the Amenity Building which is satisfactory to the Landlord in its discretion
|
Planning Appeal:
|
means:
(a)
(a)
submission of an appeal to the Secretary of State pursuant to the Planning Act following a Refusal; or
(b)
(b)
reference of a Planning Application to the Secretary of State under section 77 of the Planning Act; or
(c)
(c)
submission of an application under Section 73 of the Planning Act for the grant of permission without complying with an Unacceptable Condition;
|
Planning
|
means an application for any of the Planning Consents in accordance with the terms of this Agreement which term shall
|
Application:
|
;
|
Planning Condition:
|
means the grant of Satisfactory Planning Consents in respect of the Phase 1 Development and the Phase 2 Development and:
(a)
(a)
the expiry of the Review Period in respect of each such Satisfactory Planning Consent without Proceedings being instituted; or
(b)
(b)
if any Proceedings are instituted during any Review Period those Proceedings being finally disposed of leaving in place extant Satisfactory Planning Consents in respect of the Phase 1 Development and the Phase
2 Development and the expiry of any period during
which any further Proceedings can be instituted, without such Proceedings being instituted;
|
Planning Consent/s:
|
means the Planning Phase 1 Consent and the Planning Phase 2 Consent (or any one of them as the context so admits);
|
Planning Long Stop Date:
|
means 31 December 2015 unless extended in accordance with clause 2.4;
|
Planning Phase 1 Consent:
|
means full planning permission for the Phase 1 Development granted pursuant to planning application reference S/1109/15/FL or other Planning Application submitted pursuant to this Agreement;
|
Planning Phase 2 Consent:
|
means outline planning permission for the Phase 2 Development including detailed planning permission for the Enabling Infrastructure Works (by way of approval of detailed drawings and not subject to reserved matters) pursuant to planning application reference S/1110/15/OL or other Planning Application submitted pursuant to this Agreement;
|
Post-Practical Completion Testing:
|
means the testing and commissioning programme in respect of the Works (but excluding any Tenant’s Variation) which can be carried out only with assumed loadings or once the Building is occupied to be carried out by the Commissioning Engineer as soon as reasonably practicable after the Certificate Date which commissioning and testing the Tenant and the Landlord (acting reasonably) shall agree as soon as reasonably practicable after the date of this Agreement and in any event prior to the date of the Building Contract which incorporates
|
;
|
|
PPD1 Building:
|
means the building demised by the PPD Lease;
|
PPD Lease:
|
means the lease dated 30 September 2014 and relating to Unit 11 Granta Park Great Abington Cambridge made between (1) Granta Park JCo 1 Limited and (2) Illumina Cambridge Limited;
|
Practical Completion:
|
means the Works have achieved practical completion under the Building Contract PROVIDED THAT practical completion shall not be deemed to have been achieved until the conditions referred to in Schedule 1 Part 3 have been complied with to the reasonable satisfaction of the Employer’s Agent and “
Practically Complete
” and “
Practically Completed
” shall be construed accordingly;
|
Practical Completion Statement:
|
means the statement to be issued by the Employer’s Agent in accordance with the Building Contract that in its opinion the Works have reached Practical Completion;
|
Pre-Construction Services Agreement:
|
means the pre-construction services agreement
substantially
in the form annexed at Schedule 10
and the Tenant shall be
given a reasonable opportunity to make representations in
relation to any amendments that may be proposed to such
agreement prior to its completion and the Landlord shall have
due regard to such representations but shall not be fettered by
them (provided always that the Tenant shall not be entitled to
comm ent upon m att ers r elating solely t o the Landlord’s Works);
in respect of the enabling works and part of the
Landlord’s W orks ;
|
Pre-Construction
Services:
|
means the pre-construction services the Contractor is to
perform under the Building Contract entered into following completion of the Contractor’s services under the Pre- Construction Services Agreement, such pre-construction services to be performed in respect of the remainder of the Landlord’s Works and all of the Tenant’s Works such services to be agreed by the Tenant (acting reasonably);
|
Pre-Practical
Completion Testing:
|
means the testing and commissioning programme in respect of
the Works (but excluding any Tenant’s Variation) to be carried out by the Commissioning Engineer prior to Practical Completion which commissioning and testing the Tenant and the Landlord (acting reasonably) shall agree as soon as reasonably practicable after the date of this Agreement and in any event prior to the date of the Building Contract which
|
;
|
|
President:
|
means the president for the time being of the Royal Institution of Chartered Surveyors (unless the context otherwise requires);
|
Proceedings:
|
means all or any of the following instituted by a Third Party:
(a)
(ee)
an application for judicial review under Part 54 of the Civil Procedure Rules 1998 or successor provision arising from the grant of a Planning Consent; or
(b)
(ff)
an application pursuant to section 288 of the Planning Act arising from the grant of Planning Consent or a Refusal by the Secretary of State;
including in the case of both paragraphs (
ee
a
) and (
ff
b
) any appeals to a higher court following a judgment of a lower court;
(a)
(gg)
proceedings under Part 5 of the Planning and Compulsory Purchase Act 2004 or successor provision for the correction of an error in relation to a Satisfactory Planning Consent;
(b)
(hh)
any reconsideration by the Determining Authority of a Planning Application or the Secretary of State of a Planning Appeal (as the case may be) following a Planning Consent or a Refusal being quashed pursuant to an application within the meaning of paragraph (
ee
a
) or (
ff
b
) above and the matter being remitted to the Determining Authority or the Secretary of State (as the case may be);
an application (within the meaning of paragraph (
ee
a
) or (
ff
b
) above) arising from the grant of Planning Consent or a Refusal following a reconsideration of a Planning Application by the Determining Authority or a Planning Appeal by the Secretary of State pursuant to paragraph (
hh
b
) above or a decision of the Secretary of State to issue a correction notice pursuant to section 57 of the Planning and Compulsory Purchase Act 2004 or successor provision;
|
Product Guarantees:
|
means (to the extent that any are available) product guarantees on which the Tenant can rely from the manufacturers of plant and machinery at the Building including, but not limited to roof and wall cladding systems, electrical lobby doors and roller shutter doors together with any other product guarantees obtained by the Landlord in respect
|
;
|
|
Prohibited Materials:
|
means materials which:
(a)
(a)
do not accord with any relevant recommendations contained or referred to in the latest version (at the time the Building Contract is or was entered into) of “Good Practice in the Selection of Construction Materials” sponsored by the British Property Federation and the British Council for Offices; or
(b)
(b)
are not in accordance with British Standards and Codes of Practice, good building practice or having been supplied or placed in the market in breach of the Construction Products Regulations; or
(c)
(c)
are generally known within the UK construction industry to be deleterious at the time of specification or selection or use; or
(d)
(d)
are generally known within the UK construction industry at the relevant time to be injurious to human health and safety or posing a threat to the structural stability, performance or physical integrity of the Works;
|
Project Costs:
|
is defined in Schedule 1 Part 6;
|
Rectification Period:
|
means the period of 12 months following the Certificate Date;
|
Refusal:
|
means any of the following:
(a)
(a)
a refusal by the Determining Authority to grant planning permission pursuant to any Planning Application;
(b)
(b)
a refusal by or on behalf of the Secretary of State to grant planning permission following a Planning Appeal;
(c)
(c)
a refusal by the Determining Authority to vary or remove an Unacceptable Condition pursuant to an application under section 73 or 96A of the Planning Act;
(d)
(d)
a failure by the Determining Authority to determine the Planning Application within the period required under section 78(2) of the Planning Act or any extended period agreed by the Landlord;
(e)
(e)
the grant of a Planning Consent which has been agreed or determined pursuant to this Agreement not to
|
be a Satisfactory Planning Consent;
|
|
Remedial Works:
|
means those works comprising the making good of Snagging Items and Defects in each case which the Contractor is obliged to carry out under the terms of the Building Contract;
|
Rent Commencement Date:
|
means:
(a)
(a)
the date that is six months after the Term Commencement Date; or
(b)
(b)
in the event that the Lease is granted pursuant to clause 14 the date that is six months after the Certificate Date;
or in both cases such earlier or later date as is ascertained in accordance with sub-clause 13.3.2 and/or paragraph 8.6 of Schedule 1 Part 1;
|
Review Period:
|
means seven weeks following the date of issue of a Planning Consent;
|
RICS:
|
means the Royal Institution of Chartered Surveyors;
|
Satisfactory Planning Consent:
|
means the grant of a Planning Consent which (together with any associated Planning Agreement and CIL Requirement) are free from:
(a)
(a)
any Landlord’s Unacceptable Condition (unless all Landlord’s Unacceptable Conditions are waived by the Landlord or deemed or determined not to be a Landlord’s Unacceptable Condition in accordance with this Agreement); and
(b)
(b)
any Tenant’s Unacceptable Condition (unless all Tenant’s Unacceptable Conditions are waived by the Tenant or deemed or determined not to be a Tenant’s Unacceptable Condition in accordance with this Agreement);
|
Secretary of State:
|
means the Secretary of State for Communities and Local Government or such other minister or office holder who at the relevant time is the person to whom an appeal may be made under s.78(1) Planning Act in respect of the Demised Premises or an inspector appointed by any such person;
|
Side Letter
|
means the side letter in the form annexed at Schedule 11;
|
Snagging Items:
|
means those snagging items set out in any list which accompanies the Practical Completion Statement or subject to
|
;
|
|||
|
Specification:
|
|
means in respect of the Landlord’s Works, the Landlord’s Works Specification and the Core Works Specification and in respect of the Tenant’s Works the Tenant’s Works Specification;
|
|
Stage 4 Approval
Documents:
|
|
means the Tenant’s Works Specification, the VE Schedule and
the Stage 4 Cost Plan Report;
|
|
Stage 4 Cost Plan Report:
|
|
means the report dated 4 October 2016 as against the Cost Plan dated 4 October 2016 number 5 revision 4 and any later revision approved by the Tenant (acting reasonably);
|
|
Stage 4
Submission Date:
|
|
means 17 October 2016 or such later date as the parties may
agree acting reasonably;
|
|
Standard
Conditions:
|
|
means the Standard Commercial Property Conditions (Second
Edition);
|
|
Superior Lease:
|
|
means the lease to be granted by GPEL to the Landlord out of which interest the Lease will be granted;
|
|
Target Area:
|
|
means 155,000 square feet being the anticipated Internal Area;
|
|
Tenant:
|
|
means the party so described at the head of this Agreement;
|
|
Tenant’s Breach:
|
|
means any and all material breaches of the Tenant of its obligations under this Agreement (whether by act or omission) including but not limited to any failure by the Tenant to respond to a request for approval either within the timescale prescribed by this Agreement or where there is no timescale prescribed, as soon as reasonably practicable after receipt of the request for approval or consent (including but not limited to any rights of approval of the Contract Sum (as defined in the Building Contract) for the Building Contract which incorporates any of the Tenant’s Works);
|
|
Tenant’s Consultant:
|
|
means Gensler;
|
|
Tenant’s
Consultants Approved Terms:
|
|
means the terms of appointment, substantially in the form
annexed at Schedule 12 and the Tenant shall seek the Landlord’s written approval to:
(ii) the services and any amendments to such appointment which would materially adversely affect the rights of the Landlord and/or the Contractor under the collateral warranties from the Tenant’s Consultant to be delivered
|
(b)
|
(mm)
prevent or limit the occupation or use of the whole or any part of the Phase 1 Development to any designated person or occupier (not including any restriction by reference to Use Class B1(b));
|
(c)
|
(nn)
cause the Planning Consent for the Phase 1 Development (once implemented) to be for a limited period only;
|
(d)
|
(oo)
require the construction of the entire Phase 1 Development in a single phase (such that the Building cannot be constructed as a first phase);
|
(e)
|
(pp)
require the Phase 1 Development to be constructed other than in accordance with the Specification save in respect of deviations from the Specification approved by the Tenant (acting reasonably) during the course of the Planning Application;
|
(f)
|
(qq)
prevent the entirety of the Phase 1 Development from being used for purposes within Use Class B1(b) or limit, restrict or prevent ancillary uses;
|
(g)
|
(rr)
restrict the use within the Phase 1 Development for purposes within Use Class B1(b) to less than 225,000 square feet;
|
(h)
|
(ss)
prevent the provision and use of 600 car parking spaces as part of the Phase 1 Development save where the Landlord agrees to provide the shortfall in a reasonable alternative location (such location to be no further than a 5 minute walk from the Building);
|
(i)
|
(tt)
prevent restrict or delay reasonable access by vehicles or on foot to the Building for all purposes authorised by the Planning Phase 1 Consent;
|
(j)
|
(uu)
prevent the use of the Amenity Building by the Tenant for its intended use;
|
Tenant’s Variation Costs:
|
means the total additional reasonable and proper costs arising from the implementation of a Tenant’s Variation (as properly certified by the Employer’s Agent acting reasonably) including (but not limited to):
(a)
(vv)
the costs, fees and expenses properly incurred by the Landlord and/or the Landlord in the design, pricing and procurement of the Tenant’s Variation and its integration with the Landlord’s Works and other Tenant’s Works (including the fees of the Consultants and other advisors);
(b)
(ww)
the amounts properly paid to the Contractor in accordance with the Building Contract to design, carry out and complete the Tenant’s Variation under the Building Contract and to integrate it with the Landlord’s Works and other Tenant’s Works, including any claims for loss and expense;
(c)
(xx)
VAT on the above costs fees or expenses which is not capable of being recovered or in respect of which credit cannot be obtained from HMRC;
less any Tenant’s Variation Deductions
|
Tenant’s Variation Deductions:
|
means any:
(a)
(yy)
savings associated with Tenant’s Variations; and
(b)
(zzz)
savings on professional fees;
as a result of the implementation of any Tenant’s Variation and agreed by the Landlord and Tenant or in the absence of agreement properly certified by the Employer’s Agent (acting reasonably);
|
Tenant’s Works:
|
means the category A and category B works in the Tenant’s Works Specification which are to be carried out and completed under the Building Contract;
|
Tenant’s Works Allowance:
|
means the VAT exclusive sum of one million one hundred thousand pounds (£1,100,000) in relation to the Tenant’s Works as may be increased in accordance with paragraph
13.9 of Schedule 1 Part 1;
|
Tenant’s Works Costs:
|
means the total reasonable and proper costs arising from the carrying out of the Tenant’s Works by the Landlord (as properly certified by the Employer’s Agent acting reasonably) being together:
|
(b)
(fff)
the total value of all sums paid to the Contractor prior to the date of termination;
in each case as valued by the Employer’s Agent and the total sums (including fees and expenses) paid to the Consultants together with any amounts due to the Consultant not included in such total value;
|
||
Third Party:
|
|
means a person other than (a) GPEL (b) the Landlord (c) the Tenant or (d) anyone acting on GPEL’s the Landlord’s or the Tenant’s direction;
|
Unacceptable Condition:
|
|
means a Landlord’s Unacceptable Condition or a Tenant’s Unacceptable Condition;
|
Unconditional Date:
|
|
means the working day following the later of the date of satisfaction of the Planning Condition and the date of grant of the Superior Lease;
|
Use Class:
|
|
means a use class as set out in the Schedule to the Town and Country Planning (Use Classes) Order 1987 as in force at the date of this Agreement;
|
VAT:
|
|
means value added tax;
|
VE Schedule:
|
|
means the value engineering schedule attached at
Schedule 21;
|
Works:
|
|
means the Landlord’s Works and the Tenant’s Works;
|
Works Cost Estimate:
|
|
has the meaning given at paragraph 13.9 of Schedule 1 Part 1;
|
Works Long Stop Date:
|
|
means
1 April 2018
30 January 2019
or such later date as the parties may agree or be ascertained in accordance with paragraph 14.2 of Schedule 1 Part 1 and/or as may be extended in accordance with
sub-paragraph
sub-paragraphs
8.5 and/or
11.2.1
and/or Schedule 1Part 14.2.2(d)
of Schedule 1 Part 1;
|
Work Stage:
|
|
means the relevant work stage in the RIBA Plan of Works 2013;
|
Works Target Date:
|
|
means
1 October 2017
30 November 2018
or such later date as may be extended in accordance with paragraph 8 of Schedule 1 Part 1 and/or sub-paragraph 11.2.1 of Schedule 1 Part 1 by an Extension of Time
(whether in respect of sub-
paragraph 4.2.2 of Schedule 1 Part 1 or otherwise)
and/or such later date as the parties may agree or may be ascertained in accordance with Schedule 1 Part 1 paragraph
|
1.7
|
References to the “
Yearly Rent
”, the “
Insurance Rent
” and the “
Service Charge Rent
” are to the rents reserved by and so described in the Lease.
|
2
|
CONDITION PRECEDENT
|
2.4.1
|
the Review Period has not expired in relation to either the Planning Phase 1 Consent or the Planning Phase 2 Consent; or
|
2.4.2
|
it has not been agreed or determined pursuant to the terms of this Agreement whether each of the Planning Phase 1 Consent and the Planning Phase 2 Consent comprise a Satisfactory Planning Consent
|
2.4.3
|
expiry of the Review Period in respect of each of the Planning Phase 1 Consent and the Planning Phase 2 Consent; and
|
2.4.4
|
agreement or determination in accordance with clause 8 as to whether each of the Planning Phase 1 Consent and the Planning Phase 2 Consent comprise a Satisfactory Planning Consent
|
3
|
OBTAINING SATISFACTORY PLANNING CONSENTS
|
3.2.1
|
providing to the Tenant (at the Landlord’s cost) copies (which may be electronic) of all material draft and final documents and reports (including drawings, plans, specifications and design details) and correspondence relating to Planning Applications and Proceedings and draft and final Planning Agreements; and
|
3.2.2
|
giving the Tenant where possible at least five working days’ notice of any meetings to be held with any Determining Authority and inviting the Tenant (who may nominate a nominee) to attend and participate in any material meetings with the Determining Authority and shall provide the tenant with a copy of any minutes of any meetings with the Determining Authority.
|
4
|
CO-OPERATION OF TENANT
|
5
|
NOTIFICATION OF PLANNING DECISIONS
|
6
|
PLANNING AGREEMENTS
|
6.3.1
|
the Landlord has first confirmed to the Tenant that the draft Planning Agreement and any draft Planning Phase 1 Consent does not contain any Landlord’s Unacceptable Condition (unless waived by the Landlord or determined not to contain a Landlord’s Unacceptable pursuant to clause 8 and subject to clause 6.8);
|
6.3.2
|
the Planning Agreement does not contain any Tenant’s Unacceptable Condition (unless waived by the Tenant or determined not to contain a Tenant’s Unacceptable Condition pursuant to clause 8 and subject to clause 6.8); and
|
6.3.3
|
any liabilities on the Tenant (i) are expressed to be dependent on the Tenant taking the Lease of the Demised Premises or the Tenant implementing the Planning Consent and (ii) shall cease on the disposal of the Tenant’s interest in the Demised Premises (save in respect of antecedent breaches).
|
7
|
HISTORIC PLANNING PERMISSIONS AND AGREEMENTS
|
7.3.1
|
the Tenant shall promptly notify and keep the Landlord informed of any Indemnity Claims and pay full regard to representations made by the Landlord; and
|
7.3.2
|
the Tenant shall not settle any Indemnity Claims without the consent of the Landlord (not to be unreasonably withheld or delayed); and
|
7.3.3
|
the indemnity in this clause shall not apply in respect of any Indemnity Claims arising or to the extent that any Indemnity Claim is contributed to by a breach by the Tenant of clause 7.4; and
|
7.3.4
|
this indemnity shall not apply to any liabilities incurred by the Tenant arising out of paragraph 4 of the second schedule to the 2006 Agreement.
|
7.3.5
|
this indemnity shall not compensate the Tenant for its share of the estate service charge which is attributable to performance by the Landlord or GPEL with the provisions of paragraph 3 of the second schedule to the 2006 Agreement.
|
8
|
INDEPENDENT SURVEYOR
|
8.2.1
|
an Independent Surveyor shall be appointed by agreement between the Landlord and the Tenant or, in the absence of agreement, either of them may request the appointment to be made by the President;
|
8.2.2
|
the Independent Surveyor must be a Fellow of the RICS, with at least ten years’ post qualification experience including experience in development of the same type as the Phase 1 Development;
|
8.2.3
|
if an Independent Surveyor appointed dies or becomes unwilling or incapable of acting, or does not deliver the decision within the time required by this clause, then either the Landlord or the Tenant may apply to the President to discharge the appointed Independent Surveyor and to appoint a replacement Independent Surveyor;
|
8.2.4
|
the Independent Surveyor shall act as an expert and shall be required to;
|
(a)
|
decide whether or not there is an Unacceptable Condition; and
|
(b)
|
prepare a written note of the decision and give a copy of the decision to both the Landlord and the Tenant.
|
8.2.5
|
the Landlord and the Tenant shall each be entitled to make written representations to the Independent Surveyor and to make counter representations on the representations of the other;
|
8.2.6
|
the Independent Surveyor shall set the timetable for determination of the dispute provided that the decision shall be made within 20 working days of his appointment;
|
8.2.7
|
the Independent Surveyor’s written decision shall be final and binding on the parties in the absence of manifest error or fraud;
|
8.2.8
|
the costs of the Independent Surveyor shall be borne equally by the Landlord and the Tenant or in such different proportion as the Independent Surveyor shall direct; and
|
8.2.9
|
in the event that there is also a dispute between the Landlord and GPEL on any such matter, the parties agree that the same Independent Surveyor may determine both disputes and the above procedure shall be adapted accordingly.
|
9
|
TERMINATION
|
10
|
THE WORKS
|
11
|
MEASUREMENT OF THE DEMISED PREMISES
|
12
|
GRANT OF THE LEASE AND ISSUE OF THE SIDE LETTER
|
13
|
FORM OF THE LEASE
|
13.3.1
|
for the period from and including the Term Commencement Date to but excluding the Rent Commencement Date the sum of one peppercorn per annum;
|
13.3.2
|
if the Certificate Date is not achieved on or before the Works Target Date then the Rent Commencement Date shall be delayed by one additional day for each whole day after the Works Target Date that the Certificate Date is delayed for the first 60 days and by two additional days for each whole day from and including the sixty-first day thereafter until such time as the Certificate Date occurs.
|
14
|
OPTION TO CALL FOR THE LEASE
|
14.1.1
|
BioMed Realty Trust, Inc.’s investment grade corporate credit rating in the Standard & Poor’s Rating Services is downgraded to below a triple “B” minus (BBB-) rating; or
|
14.1.2
|
BioMed Realty Trust, Inc. is no longer the sole general partner of the Landlord’s Guarantor;
|
14.3.1
|
the Landlord will grant and the Tenant will accept from the Landlord the Lease on the Completion Date;
|
14.3.2
|
the term of the Lease shall be 22 years from and including the Term Commencement Date;
|
14.3.3
|
the Lease shall include an unconditional Tenant’s right to determine the Lease if the Tenant terminates this Agreement under clause 20.6 and/or 20.7; and
|
14.3.4
|
the obligation to pay the rents reserved by clause 2.3 and any sums payable under clause 3.3 of the Lease shall not commence until 10 working days after the Certificate Date save in respect of the obligation to pay the Yearly Rent reserved by clause 2.3.1 of the Lease which shall commence on the Rent Commencement Date.
|
15
|
LIMITATIONS ON LANDLORD’S LIABILITY
|
16
|
CONFIDENTIALITY
|
16.1.1
|
where disclosure is required by the rules and regulations of The Stock Exchange and/or the United States Securities and Exchange Commission and/or pursuant to an order of the Court a request from a duly authorised government authority or any duty imposed by law on either party;
|
16.1.2
|
to any professional or other advisor of such party;
|
16.1.3
|
to the extent necessary to enable protection of the Tenant’s interest in the Demised Premises at the Land Registry in accordance with clause 17; and/or
|
16.1.4
|
where necessary to comply with any other provisions of this Agreement.
|
16.3.1
|
law;
|
16.3.2
|
existing contractual obligations;
|
16.3.3
|
any securities exchange or regulatory or governmental body to which any of the parties is subject or submits, wherever situated, including (without limitation) The Stock Exchange or The Panel on Takeovers and Mergers, whether or not the requirement has the force of law provided that any such announcement shall only be made after consultation with the other parties.
|
17
|
REGISTRATION OF THE AGREEMENT AT LAND REGISTRY
|
17.2.1
|
the Tenant will immediately apply to Land Registry in form UN2 for the removal of such unilateral notice if this Agreement is rescinded by either party;
|
17.2.2
|
the Landlord will not apply to Land Registry for the cancellation of such unilateral notice while this Agreement subsists but the Tenant will not object to any such application by the Landlord if this Agreement is rescinded by either party; and
|
17.2.3
|
unless obliged to do so by law neither the Tenant nor the Landlord will supply either the original or a copy of this Agreement to Land Registry whether with such application for a unilateral notice or otherwise.
|
18
|
PPD1 BUILDING
|
19
|
REGISTRATIONS
|
19.1.1
|
the registered proprietor of title CB263298 applies to the Land Registry as soon as possible after the date of this Agreement to amend the restriction at entry 3 of the proprietorship register of title number CB197761 (official copies dated 19 February 2015) to refer to Paragraph 2, Part 2 of the Schedule;
|
19.1.2
|
the Landlord’s Solicitors submit to the Land Registry, within the priority period afforded to it prior to completion of the Superior Lease, an application to register the Superior Lease together with the Landlord’s Land Registry Certificates and the SDLT Certificate relating to the Superior Lease (the “
Application
”);
|
19.1.3
|
the Landlord’s Solicitors shall send to the Tenant’s Solicitors a copy of the notification of completion of the Application together with the official copy entries of the Landlord’s title to the Superior Lease within ten Working Days of completion of the same; and
|
19.1.4
|
the Landlord’s Solicitors deal with all Land Registry requisitions raised in connection with the Application within any time limit specified by the Land Registry and in any case within the priority period obtained prior to completion, and, to the extent this is not possible, to apply for an extension to such date.
|
19.2.1
|
provided that the Tenant provides a signed Deed of Covenant to the Landlord on the Completion Date use reasonable endeavours to procure that the registered proprietor of title number CB263298 or its conveyancer provides to the Tenant as soon as possible thereafter the Tenant’s Land Registry Certificates;
|
19.2.2
|
provide such other assistance as is reasonably required by the Tenant (at the cost of the Tenant) to assist with the registration of the Lease.
|
20
|
TERMINATION
|
20.1
|
Tenant Breach or Insolvency
|
20.1.1
|
For the purposes of this clause an event of default occurs if:
|
(a)
|
the Tenant does not pay any sums due to the Landlord within 56 days after they become due under this Agreement and fails to make within ten working days of receipt of a written notice issued under clause 34 requiring the Tenant to make payment of the same;
|
(b)
|
the Tenant is in substantial breach of any of its other obligations in this Agreement which:
|
(i)
|
is not capable of remedy; or
|
(ii)
|
if the breach is capable of remedy has not been remedied after receipt of notice from the Landlord (copied to the Guarantor) specifying the particular breach complained of requiring the Tenant to remedy the breach within 20 working
|
(iii)
|
any event happens which would entitle the Landlord to re- enter upon the Demised Premises (whether or not after notice) if the Lease had actually been granted; or
|
(c)
|
the Tenant suffers an Insolvency Event.
|
20.1.2
|
On the occurrence of an event of default in relation to the Tenant the Landlord shall in addition to any other rights or remedies it may have, give the Guarantor 28 days’ notice of its intention to terminate this Agreement (which notice shall state the nature of the event of default, the total sums due to the Landlord which the Tenant has not paid to the date of the notice and any other sums which may become due following the issue of such notice (such sums being the “
Outstanding Sums
” for the purposes of sub- clause 20.3.1)) (“
Notice
”) and subject to clause 20.2 may on the expiry of that: (i) 28 day period; or (ii) the applicable time period under sub-clause 20.1.1; whichever is the later (provided it is prior to the grant of Lease) rescind this Agreement with immediate effect by giving notice to the Tenant to that effect.
|
20.2.1
|
Should the Guarantor receive a Notice issued under sub-clause 20.1.2, the Guarantor shall within 28 days of such Notice, be obliged to serve a notice on the Landlord which either confirms that the Guarantor will not step-in to this Agreement or, if the Guarantor intends to step into this Agreement, a notice which:
|
(a)
|
acknowledges that the Guarantor is assuming all the obligations of the Tenant under this Agreement; and
|
(b)
|
undertakes to the Landlord to discharge all payments due to the Landlord under this Agreement and which shall then remain outstanding.
|
20.2.2
|
On service of a Step-In Notice this Agreement shall continue in full force and effect as if no right to determination on the part of the Landlord had arisen and in all respects as if the Agreement had been made between the Landlord and the Guarantor to the exclusion of the Tenant.
|
20.3.1
|
If the Guarantor services a Step-In Notice, on the date of service of the Step-In Notice the Guarantor shall pay to the Landlord the Outstanding
|
(a)
|
execute and deliver to the Landlord a deed of variation (in a form to be agreed between the parties acting reasonably) varying this Agreement with the sole effect that the Guarantor assumes all obligations of the Tenant under this Agreement (including liability for all Outstanding Sums) and all losses, costs, sums and expenses which the Landlord is obliged to pay the Contractor, Consultants and/or the Commissioning Engineer and any other third parties due to the event of default; and
|
(b)
|
if the Landlord so requires, execute a deed of variation (in a form to be agreed between the parties acting reasonably) varying the appointment of the Commissioning Engineer with the sole effect that the Guarantor assumes all obligations of the Tenant under such appointment (including liability for all sums due to the Commissioning Engineer which the Tenant has not paid in full);
|
20.3.2
|
Any dispute or difference between the parties arising from or connected with this clause 20 shall be referred for determination in accordance with clause 23.
|
20.3.3
|
Should the Guarantor require its appointee to step-in to this Agreement in accordance with this clause 20 in its place, the Landlord shall accept a Step-In Notice issued by the Guarantor’s appointee provided that the appointee is a Qualifying Person (as defined in the Lease) and provided also that the Guarantor has previously paid to the Landlord the Outstanding Sums due on the date of the service of the Step-In Notice and the Guarantor shall continue to act as Guarantor for such appointee entity on the terms set out in this Agreement.
|
20.4.1
|
the Landlord and the Landlord’s Guarantor each suffers an Insolvency Event; or
|
20.4.2
|
the Landlord or, if the Landlord has suffered an Insolvency Event, the Landlord’s Guarantor, without reasonable cause wholly or substantially suspends the carrying out and completion of the Works and fails to procure the recommencement of the carrying out and completion of the Works within 20 working days of receipt of a Notice from the Tenant to do so;
|
20.5.1
|
If this Agreement is lawfully determined under this clause 20 or under clause 9:
|
(a)
|
the Tenant’s interest in and the rights in relation to the Demised Premises will terminate and all fixtures in it may be retained by the Landlord without conferring any right on the Tenant to compensation or allowance but;
|
(b)
|
the parties will retain all rights and remedies for breach of this Agreement before the rescission and/or termination;
|
(c)
|
the Tenant shall immediately cancel all entries relating to this Agreement registered against the Landlord’s title; and
|
(d)
|
clause 16 (Confidentiality) shall remain binding.
|
20.5.2
|
If this Agreement is lawfully determined by the Landlord under clause 20.1 (for Tenant’s breach or insolvency), then without prejudice to the Landlord’s rights and remedies as referred to in sub-clause 20.5.1(b) the Tenant shall be liable to the Landlord for all sums the Landlord properly and reasonably incurs in connection with:
|
(a)
|
procuring the removal of the relevant parts of the Tenant’s Works and any and all Tenant’s Variations which are reasonably necessary to enable the Landlord to let the Demised Premises to a third party to a shell finish (but excluding any change which such third party may require);
|
(b)
|
any claim by the
Consultants
Consultant
and/or Commissioning Engineer for loss of profit and/or loss of opportunity and any other losses the
Consultants
Consultant
and/or Commissioning Engineer may claim in connection with Tenant’s Works not being carried out and completed under the Building Contract;
|
(c)
|
any claim by the Contractor under the Building Contract in connection with procuring the removal of the relevant Tenant’s Works and Tenant’s Variations referred to in sub-clause 20.5.2(a) above including but not limited to any loss of profit and/or loss of opportunity and any other losses the Contractor may claim and/or be entitled to in accordance with the Building Contract (and whether such entitlement is determined in accordance with the Building Contract or settled between the Landlord and the Contractor) in connection with Tenant’s Works not being carried out and completed under the Building Contract PROVIDED ALWAYS that in
|
20.5.3
|
If this Agreement is lawfully determined by the Tenant under:
|
(a)
|
clause 9; or
|
(b)
|
clause 20.6 (Internal Area); or
|
(c)
|
or clause 20.7 (
Works Long Stop Date
Option to Terminate
) or
|
(d)
|
sub-clause 20.4.1 or 20.4.2 (Landlord’s breach or insolvency);
|
20.7
|
Works Long Stop Date
|
20.7
|
Option to Terminate
|
20.8
|
Termination will be without prejudice to the rights of each party in respect of any earlier breach of this Agreement or any provisions that expressly survive termination of this Agreement.
|
20.9
|
All notices are to be given in accordance with clause 34.
|
21
|
ACKNOWLEDGEMENT
|
21.1
|
GPEL’s freehold title to the Array Land has been deduced to the Tenant’s Solicitors before the date of this Agreement.
|
21.2
|
The Tenant acknowledges that the Landlord’s title to the Demised Premises is not registered at the date hereof but has been granted out of GPEL’s title immediately prior to the execution of this Agreement.
|
21.3
|
The Tenant is deemed to have full knowledge of the Landlord’s title and is not entitled to raise any objection, enquiry or requisition in relation to it save in respect of anything arising from pre-completion searches and enquiries.
|
21.4
|
The Tenant acknowledges that:
|
21.4.1
|
it enters into this Agreement on the basis of the replies of the relevant authorities to its enquiries and the legal due diligence that it has carried out;
|
21.4.2
|
it has visually inspected the Demised Premises in their current state and has formed its own view as to their suitability for the Tenant’s use and occupation;
|
21.4.3
|
GPEL’s and the Landlord’s written replies to formal preliminary enquiries raised through the Landlord’s Solicitors are the only authorised statements by or on behalf of the Landlord made in connection with the proposed lease;
|
21.5
|
Save as to the Landlord’s obligation under sub-paragraph 3.2.9 of Schedule 1 Part 1, the Landlord does not warrant or make any representation that upon Practical Completion any or all of the Works will be suitable for the Tenant’s purposes.
|
21.6
|
Save as to the Landlord’s obligation under sub-paragraph 3.2.9 of Schedule 1 Part 1, nothing contained or implied in this Agreement shall be or be taken to be and save as aforesaid there is expressly excluded any representation, warranty or undertaking by or on behalf of the Landlord in relation to the Demised Premises’ fitness and/or suitability for the Tenant’s or any other purpose.
|
21.7
|
To the extent that the Tenant is placing reliance on any other statement made by or on behalf of the Landlord, whether in answer to formal preliminary enquiries or otherwise, express written notice of the fact, referring to this clause, has been given to the Landlord’s Solicitors and acknowledged by them in writing as being reliable.
|
21.8
|
The parties acknowledge that this Agreement constitutes the entire agreement between the parties concerning its subject matter and has set out in it or incorporates all the terms which the parties have expressly agreed so that any agreement or arrangement entered into contemporaneously is collateral to it and is not part of it.
|
21.9
|
The Landlord shall use reasonable endeavours to secure a surrender of the Nursery Lease as soon as practicable after the date hereof and will demolish all buildings situated on the Nursery Site.
|
22
|
MATTERS AFFECTING THE DEMISED PREMISES
|
22.1
|
The Landlord shall grant the Lease to the Tenant free from encumbrances other than:
|
22.1.1
|
any matters, other than financial charges, contained or referred to in the entries or records made in registers maintained by HM Land Registry under: title number CB197761 as at 19 February 2015, 11:14:46; title number CB355946 as at 19 February 2015, 11:13:13; and title number CB194676 as at 10 November 2014, 11:53:07;
|
22.1.2
|
the Landlord’s title which is to be registered including the terms of the Superior Lease and anything to which it is subject;
|
22.1.3
|
all matters contained or referred to in the Lease;
|
22.1.4
|
any matters discoverable by a visual inspection of the Demised Premises before the date of this Agreement;
|
22.1.5
|
any matters which the Landlord does not and could not reasonably know about;
|
22.1.6
|
any matters, other than financial charges, disclosed or which would have been disclosed by the searches and enquiries that a prudent tenant would have made before entering into this Agreement;
|
22.1.7
|
public requirements;
|
22.1.8
|
any matters which are, or (where the Lease will not be registered) would be, unregistered interests which override first registration under Schedule 1 to the Land Registration Act 2002; and
|
22.1.9
|
any matters disclosed in the replies to enquiries raised by the Tenant’s Solicitors and answered by the Landlord’s Solicitors and by GPEL.
|
22.2
|
The Tenant is deemed to have full knowledge of the matters referred to in clause 22.1 and shall not raise any enquiry, objection, requisition or claim in respect of any of them.
|
22.3
|
Standard Conditions 3.1.1, 3.1.2, 3.1.3, 3.2.1, 3.3 and 6.6.3 do not apply to this Agreement.
|
23
|
DISPUTES
|
23.1
|
If there is a dispute or difference between the parties other than as to planning where clause 7 shall apply, or the parties are unable to agree a matter required or contemplated by this Agreement, either party may notify the other that there is a dispute or difference by serving a written notice to that effect on the other party (the
|
23.2
|
If the dispute or difference is not resolved within five working days of service of any Dispute Notice under clause 23.1 for any reason whatever, including (but not limited to) the failure or refusal of either party to participate in the procedure set out in clause 23.1, the dispute or difference may be referred to the Tenant’s Executive and the Landlord’s Executive (together the “
Panel
”) for unanimous resolution.
|
23.3
|
If a dispute or difference is referred to the Panel under clause 23.2, the members of the Panel shall promptly meet (in person or by conference call or equivalent contemporaneous communication) and use reasonable endeavours acting in good faith to unanimously resolve the dispute or difference by discussion.
|
23.4
|
Either Party may give notice at any time of its intention to refer the matter as a dispute or difference to an Adjudicator.
|
23.5
|
If a dispute or difference arising under or in connection with this Agreement is referred to an Adjudicator in accordance with clause 23.4, the then current rules of the Technology and Construction Solicitors’ Association shall apply.
|
23.6
|
Where the appointed Adjudicator dies refuses to act or is unable to act or fails to proceed with reasonable speed to discharge his duties the Parties shall either agree a replacement Adjudicator or, if the Parties cannot so agree, shall ask the President for the time being of the Technology and Construction Solicitors’ Association to select a replacement Adjudicator.
|
23.7
|
Any dispute or difference shall be subject to and referred to the non-exclusive jurisdiction of the English Courts and shall be formally determined by legal proceedings which may review and revise any matter and any decision of any adjudicator relating to such dispute. This Agreement shall be governed by and construed in accordance with English law.
|
24
|
NO DEMISE
|
25
|
NON-MERGER
|
26
|
CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999
|
27
|
GOVERNING LAW
|
28
|
CAPITAL ALLOWANCES
|
28.1
|
The Landlord and the Tenant agree that:
|
28.1.1
|
the Landlord will be solely entitled to claim capital allowances in respect of the Tenant’s Works Allowance; and
|
28.1.2
|
the Tenant will be solely entitled to claim capital allowances in respect of the Tenant’s Contribution.
|
28.2
|
The Tenant will not claim and will use all reasonable endeavours to procure that no person (including without limitation its successor in title and assigns) will claim capital allowances on the Tenant’s Works Allowance and will give and procure that its professional advisors will give the Landlord all proper assistance and information that the Landlord might reasonably require in order to claim capital allowances on the Tenant’s Works Allowance.
|
28.3
|
The Landlord will not claim and will use all reasonable endeavours to procure that no person (including without limitation its successor in title and assigns) will claim capital allowances on the Tenant’s Contribution and will give and procure that its professional advisors will give the Tenant all proper assistance and information that the Tenant might reasonably require in order to claim capital allowances on the Tenant’s Contribution.
|
29
|
VAT
|
29.1
|
Any consideration paid or given for taxable supplies for goods or services under or in connection with this Agreement is to be treated as exclusive of VAT. The recipient of any such supply is, in addition to the consideration for the supply, to pay to the supplier an amount equal to any VAT which is chargeable in respect of the supply in question on the later of:
|
29.1.1
|
the day on which the consideration for the supply is paid or given; and
|
29.1.2
|
production of a proper VAT invoice.
|
29.2
|
If any amount paid by either party to the other in respect of VAT pursuant to this Agreement is subsequently found to have been paid in error the recipient of such payment shall:
|
29.2.1
|
if it has not yet been included in a VAT accounting period which has closed, repay such amount promptly to the other party; or
|
29.2.2
|
if it has been included in a VAT accounting period which has closed, use reasonable endeavours to obtain repayment of it as soon as possible and promptly on receiving any repayment of it shall pay to the other party the amount received.
|
30
|
INTEREST
|
31
|
CIS
|
31.1
|
Each of the Landlord and the Tenant shall comply with the Construction Industry Scheme (insofar as the same applies to any rights or obligations of the parties under this Agreement).
|
31.2
|
Where the Tenant is required to make a payment (not being a payment falling within Part 4 of the Regulations) to the Landlord under this Agreement, the Tenant, as contractor, shall verify, in accordance with paragraph 6 of the Regulations, whether the Landlord is registered for gross payment or for payment under deduction or is not registered under Chapter 3 Part 3 of the FA 2004, and shall, once it has so verified, make the payment to the Landlord subject to the following:
|
31.2.1
|
if the Landlord is registered for gross payment under section 63(2) of the FA 2004, the Tenant shall make the payment to the Landlord without any deduction;
|
31.2.2
|
if the Landlord is not registered under section 63(2) of the FA 2004 for gross payment under section 63(2) of the FA 2004, the Tenant shall make the payment to the Landlord, subject to the deduction of the relevant percentage in accordance with section 61 of the FA 2004 and the Regulations.
|
31.3
|
In the event of any conflict between this clause 31 and any other term of this Agreement, the provisions of this clause 31 shall prevail.
|
32
|
GUARANTEE (TENANT)
|
32.1
|
The Guarantor and the Tenant jointly and severally agree with the Landlord that the Guarantor will join in and execute the counterpart of the Lease.
|
32.2
|
In consideration of the Landlord (at the request of the Guarantor) entering into this Agreement with the Tenant and the Guarantor, the Guarantor hereby covenants with the Landlord as a primary obligation:
|
32.2.1
|
to indemnify the Landlord against reasonably foreseeable Loss sustained by the Landlord due to the Tenant suffering an Insolvency Event or any breach by the Tenant of this Agreement (including (where applicable) but not limited to all sums identified in sub-clause 20.5.2) (save that the Guarantor shall owe no greater liability and/or no greater duty to the Landlord than the Tenant owes to the Landlord);
|
32.2.2
|
(without prejudice to the generality of the foregoing) that if the Tenant fails to accept and execute a counterpart of the Lease in accordance with this Agreement, the Guarantor will if so required by the Landlord accept and execute a counterpart of the Lease as if the Guarantor had been the Tenant; and
|
32.2.3
|
the Guarantor shall be released from its covenant as a primary obligation and all of its liabilities under this Agreement on the date the Tenant and the Guarantor executes the Lease under clause 12 of this Agreement or the Certificate Date, whichever is the later.
|
32.3
|
The Guarantor’s obligations contained in clause 32.2 shall apply notwithstanding:
|
32.3.1
|
any failure or delay of the Landlord in taking steps to enforce compliance with this Agreement by the Tenant or the Guarantor;
|
32.3.2
|
any failure of the Landlord to pursue any other remedy before proceeding against the Guarantor;
|
32.3.3
|
any time which may be given by the Landlord to the Tenant or the Guarantor;
|
32.3.4
|
any variation of the terms of this Agreement; or
|
32.3.5
|
any other matter which, but for this provision, would cause the guarantee contained in clause 32.2 to be released, wholly or in part, other than a release executed as a deed by the Landlord.
|
32.4
|
If any of the persons comprising the Guarantor (in the case of an individual) dies or becomes bankrupt or enters into any composition with his creditors, or (in the case of a corporation) enters into liquidation or otherwise ceases to exist, the Tenant shall, if the Landlord so requests, procure at the Tenant’s expense that some other person reasonably acceptable to the Landlord executes and delivers to the Landlord a deed in such form as the Landlord’s Solicitors reasonably require by which that other person shall covenant with the Landlord to be bound by provisions identical to those contained in this clause 32. References in this Agreement to the Guarantor shall thereafter be construed for all purposes as including references to that other person.
|
33
|
GUARANTEE (LANDLORD)
|
33.1
|
In consideration of the Tenant (at the request of the Landlord’s Guarantor) entering into this Agreement with the Landlord and the Landlord’s Guarantor, the Landlord’s Guarantor hereby covenants with the Tenant as a primary obligation:
|
33.1.1
|
to guarantee the due and punctual performance by the Landlord of the Landlord’s duties and obligations to the Tenant under this Agreement and to indemnify the Tenant against reasonably foreseeable Loss sustained by the Tenant due to the Landlord suffering an Insolvency Event or to any breach by the Landlord of this Agreement (including (where applicable) but not limited to all sums identified in clause 20.5.3) (save that the Landlord’s Guarantor shall owe no greater liability and/or no greater duty to the Tenant than the Landlord owes to the Tenant);
|
33.1.2
|
(without prejudice to the generality of the foregoing) that the Landlord’s Guarantor will procure that the Landlord executes the Lease in accordance with this Agreement; and
|
33.1.3
|
the Landlord’s Guarantor shall be released from its covenant as a primary obligation and all of its liabilities under this Agreement on the date the Landlord executes the Lease under clause 12 of this Agreement or the Certificate Date, whichever is the later.
|
33.2
|
The Landlord’s Guarantor’s obligations contained in clause 33.1 shall apply notwithstanding:
|
33.2.1
|
any failure or delay of the Tenant in taking steps to enforce compliance with this Agreement by the Landlord or the Landlord’s Guarantor;
|
33.2.2
|
any failure of the Tenant to pursue any other remedy before proceeding against the Landlord’s Guarantor;
|
33.2.3
|
any time which may be given by the Tenant to the Landlord or the Landlord’s Guarantor;
|
33.2.4
|
any variation of the terms of this Agreement; or
|
33.2.5
|
any other matter which, but for this provision, would cause the guarantee contained in clause 33.1 to be released, wholly or in part, other than a release executed as a deed by the Tenant.
|
33.3
|
If any of the persons comprising the Landlord’s Guarantor (in the case of an individual) dies or becomes bankrupt or enters into any composition with his creditors, or (in the case of a corporation) enters into liquidation or otherwise ceases to exist, the Landlord shall, if the Tenant so requests, procure at the Landlord’s expense that some other person reasonably acceptable to the Tenant executes and delivers to the Tenant a deed in such form as the Tenant’s Solicitors reasonably require by which that other person shall covenant with the Tenant to be bound by provisions identical to those contained in this clause 33. References in this Agreement to the Landlord’s Guarantor shall thereafter be construed for all purposes as including references to that other person.
|
34
|
NOTICES
|
34.1
|
Any demand or notice to be served on any party under this Agreement shall be validly served if sent in writing and by an internationally recognised overnight courier.
|
34.2
|
Any demand or notice sent by post will be conclusively treated as having been served 48 hours after posting.
|
34.3
|
The provisions for postal service set out in this clause are not to prevent any other effective form of service save that service by email shall not be permitted.
|
34.4
|
Notices to:
|
34.4.1
|
the Landlord shall be marked for the attention of Real Estate Legal Department, Granta Park JCo 1 Limited, 17190 Bernardo Center Drive, San Diego CA 92128 and shall be copied by email to RealEstate.LegalReview@biomedrealty.com.
|
34.4.2
|
the Tenant shall be marked for the attention of Illumina, Inc Attn: General Counsel 5200 Illumina Way, San Diego, CA 92122 and Illumina Cambridge Attn: General Manager at the address written above with a copy to Illumina, Inc Attn: Director of Real Estate 5200 Illumina way, San Diego, CA 92122 and to the Tenant’s Solicitors marked for the attention of Sarah Elliott.
|
35
|
OPINION LETTERS
|
35.1
|
On the Completion Date:
|
35.1.1
|
The Landlord shall provide a dated opinion letter from Ogier (or such other Jersey law firm as it may instruct) in the form given on the date of this Agreement and attached at Schedule 9 in connection with the Lease;
|
35.1.2
|
The Tenant shall provide a dated opinion letter from Potter Anderson Corroon (or such other Delaware law firm as it may instruct) in the form given on the date of this Agreement and attached at Schedule 9 in connection with the Lease.
|
35.2
|
On the date that the Landlord provides a Collateral Warranty from the Consultants in accordance with paragraph 17.1 of Schedule 1 Part 1 the Landlord shall also provide a dated opinion letter from Ogier (or such other Jersey law firm as it may instruct) in the form given on the date of this Agreement and attached at Schedule 9 in connection with the appointments of the Consultants.
|
35.3
|
On the date that the Landlord provides a Collateral Warranty from the Contractor in accordance with paragraph 17.2 of Schedule 1 Part 1 the Landlord shall also provide a dated opinion letter from Ogier (or such other Jersey law firm as it may instruct) in the form given on the date of this Agreement and attached at Schedule 9 in connection with the Building Contract.
|
1.
|
This Reaffirmation of Release of Claims (“Reaffirmation”) is being executed by Christian Henry (“Executive”), pursuant to the Separation Agreement and General Release of All Claims (“Separation Agreement”) previously signed by Executive and Illumina, Inc. (the “Company”).
This Reaffirmation may not be signed by Executive until the Separation Date as defined and referenced in the Separation Agreement
.
|
2.
|
In consideration for the benefits and payments specified in the Separation Agreement, all of which he is not otherwise entitled to receive, Executive hereby reaffirms his agreement to all of the terms and conditions of that Separation Agreement, including his agreement to release any and all claims, known or unknown, against Released Parties, as that term is defined therein. Specifically, Executive unconditionally, irrevocably and absolutely releases and discharges the Company and any parent and subsidiary corporations, divisions and other affiliated entities of the Company, past and present, as well as its respective past and present Executives, officers, directors, agents, attorneys, successors and assigns (collectively, “Released Parties”), from all claims related in any way to the transactions or occurrences between them to date to the fullest extent permitted by law including, but not limited to, any losses, liabilities, claims, demands and causes of action, known or unknown, suspected or unsuspected, arising directly or indirectly out of or in any way connected with Executive’s employment with the Company, or the conclusion of Executive’s employment. This release is intended to have the broadest possible application and includes, but is not limited to, any tort, contract, common law, constitutional or other statutory claims, as well as alleged violations of the California Labor Code, Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act of 1967, all as amended, and all claims for attorneys’ fees, costs and expenses. However, this release shall not apply to claims for workers’ compensation benefits, unemployment insurance benefits, or any other claims that, by statute, cannot lawfully be waived by this Agreement.
|
6.
|
Executive acknowledges that he has received all compensation and expense reimbursements owed to him by the Company, including, but not limited to, all salary, bonuses, commissions, equity grants and accrued but unused vacation.
|
|
|
|
|
|
Name of Subsidiary
|
|
Jurisdiction
|
|
Doing Business As
|
|
||||
Advanced Liquid Logic Inc.
|
|
Delaware
|
|
Advanced Liquid Logic Inc.
|
BlueGnome, Ltd.
|
|
United Kingdom
|
|
BlueGnome, Ltd.
|
Epicentre Technologies Corporation
|
|
Wisconsin
|
|
Epicentre Biotechnologies
|
GenoLogics Life Science Software Inc.
|
|
Canada
|
|
GenoLogics Life Science Software Inc.
|
Illumina Australia Pty. Ltd.
|
|
Australia
|
|
Illumina Australia Pty. Ltd.
|
Illumina Brasil Produtos de Biotecnologia Ltda.
|
|
Brazil
|
|
Illumina Brazil
|
Illumina Cambridge, Ltd.
|
|
United Kingdom
|
|
Illumina Cambridge, Ltd.
|
Illumina Canada, Inc.
|
|
Canada
|
|
Illumina Canada, Inc.
|
Illumina France Holding Sarl
|
|
France
|
|
Illumina France Holding Sarl
|
Illumina France Sarl
|
|
France
|
|
Illumina France Sarl
|
Illumina GmbH
|
|
Germany
|
|
Illumina GmbH
|
Illumina Hong Kong Limited
|
|
Hong Kong
|
|
Illumina Hong Kong Limited
|
Illumina Iceland ehf
|
|
Iceland
|
|
Illumina Iceland ehf
|
Illumina Italy S.r.l.
|
|
Italy
|
|
Illumina Italy S.r.l.
|
Illumina K.K. Japan
|
|
Japan
|
|
Illumina K.K. Japan
|
Illumina Netherlands B.V.
|
|
Netherlands
|
|
Illumina Netherlands B.V.
|
Illumina New Zealand Limited
|
|
New Zealand
|
|
Illumina New Zealand Limited
|
Illumina Singapore Pte. Ltd.
|
|
Singapore
|
|
Illumina Singapore Pte. Ltd
|
Illumina Trading (Shanghai) Co., Ltd.
|
|
China
|
|
Illumina Trading (Shanghai) Co., Ltd.
|
Illumina Switzerland GmbH
|
|
Switzerland
|
|
Illumina Switzerland GmbH
|
Illumina Europe Limited
|
|
United Kingdom
|
|
Illumina Europe Limited
|
Illumina Denmark ApS
|
|
Denmark
|
|
Illumina Denmark ApS
|
Illumina Productos de Espana, S.L.U.
|
|
Spain
|
|
Illumina Productos de Espana, S.L.U.
|
Illumina AB
|
|
Sweden
|
|
Illumina AB
|
NextBio
|
|
California
|
|
NextBio
|
Verinata Health, Inc.
|
|
Delaware
|
|
Verinata Health, Inc.
|
(1)
|
Registration Statements (Form S-3 Nos. 333-111496, 333-125100, 333-134012, 333-144953, 333-145408 and 333-168395) of Illumina, Inc.,
|
(2)
|
Registration Statement (Form S-4 No. 333-139111) of Illumina, Inc., and
|
(3)
|
Registration Statements (Form S-8 Nos. 333-42866, 333-69058, 333-88808, 333-104190, 333-114633, 333-124074, 333-125133, 333-129611, 333-134399, 333-140416, 333-147389, 333-151265, 333-159662, 333-168393, 333-188037, 333-190322 and 333-206215) of Illumina, Inc.;
|
1
|
|
I have reviewed this Annual Report on Form 10-K of Illumina, Inc.;
|
|
|
|
|
|
2
|
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
|
|
|
3
|
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
|
|
|
4
|
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
|
|
|
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
|
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
|
|
|
|
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
|
|
|
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
|
|
|
5
|
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
|
|
|
|
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
|
|
|
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
By:
|
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/s/ F
RANCIS
A.
DE
S
OUZA
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Francis A. deSouza
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President and Chief Executive Officer
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1
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I have reviewed this Annual Report on Form 10-K of Illumina, Inc.;
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2
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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;
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3
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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;
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4
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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:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5
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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):
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a)
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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
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b)
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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.
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By:
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/s/ S
AM
A. S
AMAD
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Sam A. Samad
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Senior Vice President and Chief Financial Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ FRANCIS A. DESOUZA
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Francis A. deSouza
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President and Chief Executive Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ S
AM
A. S
AMAD
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Sam A. Samad
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Senior Vice President and Chief Financial Officer
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