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☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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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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Title of each class
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Trading Symbol(s)
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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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ILMN
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The NASDAQ Global Select Market
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BUSINESS & MARKET INFORMATION
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PAGE
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MANAGEMENT’S DISCUSSION & ANALYSIS
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CONSOLIDATED FINANCIAL STATEMENTS
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OTHER KEY INFORMATION
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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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•
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our expectations regarding the launch of new products or services;
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•
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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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•
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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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•
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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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•
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challenges inherent in developing, manufacturing, and launching new products and services, including expanding manufacturing operations and reliance on third-party suppliers for critical components;
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•
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the timing and mix of customer orders among our products and services;
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•
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the impact of recently launched or pre-announced products and services on existing products and services;
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•
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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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•
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our ability to manufacture robust instrumentation and consumables;
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•
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our ability to identify and acquire technologies, and integrate them into our products or businesses successfully;
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•
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our expectations and beliefs regarding prospects and growth for the business and its markets;
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•
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the assumptions underlying our critical accounting policies and estimates;
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•
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our assessments and estimates that determine our effective tax rate;
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•
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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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•
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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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•
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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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BUSINESS & MARKET INFORMATION
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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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1,193,000
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|
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Office, Lab, Manufacturing, and Distribution
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2020 – 2031
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San Francisco Bay Area, CA
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464,000
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|
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Office, Lab, and Manufacturing
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2025 – 2033
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Singapore *
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395,000
|
|
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Office, Lab, Manufacturing, and Distribution
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2020 – 2025
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Cambridge, United Kingdom
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187,000
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|
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Office, Lab, and Manufacturing
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2020 – 2039
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Madison, WI
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133,000
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Office, Lab, and Manufacturing
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2033
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China
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55,000
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|
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Office and Lab
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2021 – 2025
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Eindhoven, the Netherlands
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42,000
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Office and Distribution
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2020
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Other
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62,000
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|
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Office
|
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2020 – 2025
|
|
•
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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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•
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availability, quality, and price relative to competing products and services;
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•
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scientists’ and customers’ opinions of the utility of new products or services;
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•
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citation of new products or services in published research;
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•
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regulatory trends and approvals;
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•
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our ability to acquire or otherwise gain access to third party technologies, products, or businesses; and
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•
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general trends in life sciences research and applied markets.
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•
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we may be required to relinquish important rights, including intellectual property, marketing and distribution rights;
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•
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we may disagree with our partners as to rights to intellectual property, the direction of research programs, or commercialization activities;
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•
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Our revenues may be lower than if we were to develop and commercialize such products ourselves;
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•
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a collaboration partner could develop and market a product that is competitive with either products developed under the collaboration or other of our products, either independently or in collaboration with others, including our competitors;
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•
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our partners could become unable or less willing to expend their resources in support of our collaboration;
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•
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collaborations could expose us to additional regulatory risks; and
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•
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we may be unsuccessful at managing multiple simultaneous collaborations.
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•
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not experimental or investigational;
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•
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medically necessary;
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•
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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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•
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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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lengthy, expensive, and time and resource-intensive regulatory review processes, the outcomes of which can be unpredictable;
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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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•
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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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•
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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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•
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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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lack of consistency, and unexpected changes, in legislative or regulatory requirements of foreign countries into which we sell our products;
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•
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increased risk of governmental and regulatory scrutiny and investigations;
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•
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the burden of complying with a wide variety of foreign laws, regulations, and legal standards;
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•
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operating in locations with a higher incidence of corruption and fraudulent business practices;
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•
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import and export requirements, tariffs, taxes, and other trade barriers;
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•
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weak or no protection of intellectual property rights;
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•
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possible enactment of laws regarding the management of and access to data and public networks and websites;
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•
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potential negative impact of a global health crisis, such as the outbreak of a serious infectious disease, to our commercial or manufacturing operations, including the loss of productivity from our own workforce and consequences of any restrictions on the movement of people or materials;
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•
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possible future limitations on foreign-owned businesses;
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•
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significant taxes; and
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•
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other factors beyond our control, including political, social and economic instability, and security concerns in general.
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December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
|
January 1,
2017 |
|
January 3,
2016 |
||||||||||
In millions
|
|
||||||||||||||||||
Cash, cash equivalents and short-term investments
|
$
|
3,414
|
|
|
$
|
3,512
|
|
|
$
|
2,145
|
|
|
$
|
1,559
|
|
|
$
|
1,386
|
|
Total assets
|
$
|
7,316
|
|
|
$
|
6,959
|
|
|
$
|
5,257
|
|
|
$
|
4,281
|
|
|
$
|
3,688
|
|
Short-term debt
|
—
|
|
|
$
|
1,107
|
|
|
$
|
10
|
|
|
$
|
2
|
|
|
$
|
75
|
|
|
Long-term debt
|
$
|
1,141
|
|
|
$
|
890
|
|
|
$
|
1,182
|
|
|
$
|
1,056
|
|
|
$
|
1,016
|
|
Redeemable noncontrolling interests
|
—
|
|
|
$
|
61
|
|
|
$
|
220
|
|
|
$
|
44
|
|
|
$
|
33
|
|
|
Total stockholders’ equity
|
$
|
4,613
|
|
|
$
|
3,845
|
|
|
$
|
2,749
|
|
|
$
|
2,270
|
|
|
$
|
1,849
|
|
|
2019
|
|
2018
|
||||||||||||
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
$
|
322.32
|
|
|
$
|
268.62
|
|
|
$
|
256.64
|
|
|
$
|
207.51
|
|
Second Quarter
|
$
|
369.00
|
|
|
$
|
300.35
|
|
|
$
|
293.15
|
|
|
$
|
225.82
|
|
Third Quarter
|
$
|
380.76
|
|
|
$
|
263.30
|
|
|
$
|
372.61
|
|
|
$
|
274.66
|
|
Fourth Quarter
|
$
|
336.63
|
|
|
$
|
279.76
|
|
|
$
|
371.91
|
|
|
$
|
271.00
|
|
In thousands, except price per share
|
Total Number
of Shares
Purchased |
|
Average Price Paid per Share |
|
Total Number of
Shares Purchased as Part of Publicly Announced Programs |
|
Approximate Dollar
Value of Shares that May Yet Be Purchased Under the Programs |
||||||
First Quarter
|
210
|
|
|
$
|
297.38
|
|
|
210
|
|
|
$
|
487,500
|
|
Second Quarter
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
487,500
|
|
|
Third Quarter
|
687
|
|
|
$
|
289.47
|
|
|
687
|
|
|
$
|
288,756
|
|
Fourth Quarter (1)
|
208
|
|
|
$
|
300.03
|
|
|
208
|
|
|
$
|
226,200
|
|
Total
|
1,105
|
|
|
$
|
292.97
|
|
|
1,105
|
|
|
$
|
226,200
|
|
In thousands, except price per share
|
Total Number
of Shares
Purchased |
|
Average Price Paid per Share |
|
Total Number of
Shares Purchased as Part of Publicly Announced Programs |
|
Approximate Dollar
Value of Shares that May Yet Be Purchased Under the Programs |
||||||
September 30, 2019 - October 27, 2019
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
288,756
|
|
|
October 28, 2019 - November 24, 2019
|
208
|
|
|
$
|
300.03
|
|
|
208
|
|
|
$
|
226,200
|
|
November 25, 2019 - December 29, 2019
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
226,200
|
|
|
Total
|
208
|
|
|
$
|
300.03
|
|
|
208
|
|
|
$
|
226,200
|
|
MANAGEMENT’S DISCUSSION & ANALYSIS
|
•
|
Management’s Overview and Outlook. High level discussion of our operating results and significant known trends that affect our business.
|
•
|
Results of Operations. Detailed discussion of our revenues and expenses.
|
•
|
Liquidity and Capital Resources. Discussion of key aspects of our consolidated statements of cash flows, changes in our financial position, and our financial commitments.
|
•
|
Contractual Obligations. Tabular disclosure of known contractual obligations as of December 29, 2019.
|
•
|
Critical Accounting Policies and Estimates. Discussion of significant changes we believe are important to understanding the assumptions and judgments underlying our consolidated financial statements.
|
•
|
Quantitative and Qualitative Disclosure about Market Risk. Discussion of our financial instruments’ exposure to market risk.
|
•
|
Recent Accounting Pronouncements. Summary of recent accounting pronouncements applicable to our consolidated financial statements.
|
•
|
Off-Balance Sheet Arrangements. We have no off-balance sheet arrangements.
|
•
|
Revenue increased 6% in 2019 to $3.5 billion compared to $3.3 billion in 2018 primarily due to increased sequencing consumables revenue and revenue from development and licensing agreements, partially offset by a decline in microarray revenue due to weakness in the direct-to-consumer (DTC) market. We expect our revenue to continue to increase in 2020, although we anticipate ongoing weakness in the DTC market. We are continuing to monitor and assess the effects of the coronavirus outbreak on our commercial and manufacturing operations, including any impact on our revenue in 2020.
|
•
|
Gross profit as a percentage of revenue (gross margin) was 69.6% in 2019 compared to 69.0% in 2018. The gross margin increase was driven primarily by an increase in revenue from development and licensing agreements as well as an increase in sequencing consumables as a percentage of total revenue, which generate higher gross margins, partially offset by lower average selling prices on instruments and consumables and lower volumes in our service business. Our gross margin in future periods will depend on several factors, including: market conditions that may impact our pricing; sales mix changes among consumables, instruments, services, and development and licensing revenue; product mix changes between established products and new products; excess and obsolete inventories; royalties; our cost structure for manufacturing operations relative to volume; and product support obligations.
|
•
|
Income from operations as a percentage of revenue increased to 27.8% in 2019 compared to 26.5% in 2018 primarily due to increased revenue, improved gross margins, and a decrease in operating expenses as a percentage of revenue. We expect our operating expenses to continue to grow on an absolute basis in 2020.
|
•
|
Our effective tax rate was 11.4% and 12.5% in 2019 and 2018, respectively. In 2019, the variance from the U.S. federal statutory tax rate of 21% was primarily attributable to the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore and the United Kingdom, discrete tax benefits related to uncertain tax positions, and tax benefits related to share-based compensation.
|
•
|
We ended 2019 with cash, cash equivalents, and short-term investments totaling $3.4 billion, of which approximately $547 million was held by our foreign subsidiaries.
|
|
2019
|
|
2018
|
|
2017
|
|||
Revenue:
|
|
|
|
|
|
|
|
|
Product revenue
|
82.7
|
%
|
|
82.5
|
%
|
|
83.2
|
%
|
Service and other revenue
|
17.3
|
|
|
17.5
|
|
|
16.8
|
|
Total revenue
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
Cost of product revenue
|
22.6
|
|
|
22.1
|
|
|
24.7
|
|
Cost of service and other revenue
|
6.8
|
|
|
7.8
|
|
|
7.6
|
|
Amortization of acquired intangible assets
|
1.0
|
|
|
1.1
|
|
|
1.3
|
|
Total cost of revenue
|
30.4
|
|
|
31.0
|
|
|
33.6
|
|
Gross profit
|
69.6
|
|
|
69.0
|
|
|
66.4
|
|
Operating expense:
|
|
|
|
|
|
|
|
|
Research and development
|
18.3
|
|
|
18.7
|
|
|
19.8
|
|
Selling, general and administrative
|
23.5
|
|
|
23.8
|
|
|
24.6
|
|
Total operating expense
|
41.8
|
|
|
42.5
|
|
|
44.4
|
|
Income from operations
|
27.8
|
|
|
26.5
|
|
|
22.0
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest income
|
2.1
|
|
|
1.3
|
|
|
0.7
|
|
Interest expense
|
(1.5
|
)
|
|
(1.7
|
)
|
|
(1.3
|
)
|
Other income, net
|
3.2
|
|
|
0.7
|
|
|
16.5
|
|
Total other income, net
|
3.8
|
|
|
0.3
|
|
|
15.9
|
|
Income before income taxes
|
31.6
|
|
|
26.8
|
|
|
37.9
|
|
Provision for income taxes
|
3.6
|
|
|
3.3
|
|
|
13.3
|
|
Consolidated net income
|
28.0
|
|
|
23.5
|
|
|
24.6
|
|
Add: Net loss attributable to noncontrolling interests
|
0.3
|
|
|
1.3
|
|
|
1.8
|
|
Net income attributable to Illumina stockholders
|
28.3
|
%
|
|
24.8
|
%
|
|
26.4
|
%
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||||||||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|
2017
|
|
Change
|
|
% Change
|
||||||||||||
Consumables
|
$
|
2,392
|
|
|
$
|
2,177
|
|
|
$
|
215
|
|
|
10
|
%
|
|
$
|
1,771
|
|
|
$
|
406
|
|
|
23
|
%
|
Instruments
|
537
|
|
|
572
|
|
|
(35
|
)
|
|
(6
|
)
|
|
518
|
|
|
54
|
|
|
10
|
|
|||||
Total product revenue
|
2,929
|
|
|
2,749
|
|
|
180
|
|
|
7
|
|
|
2,289
|
|
|
460
|
|
|
20
|
|
|||||
Service and other revenue
|
614
|
|
|
584
|
|
|
30
|
|
|
5
|
|
|
463
|
|
|
121
|
|
|
26
|
|
|||||
Total revenue
|
$
|
3,543
|
|
|
$
|
3,333
|
|
|
$
|
210
|
|
|
6
|
%
|
|
$
|
2,752
|
|
|
$
|
581
|
|
|
21
|
%
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||||||||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|
2017
|
|
Change
|
|
% Change
|
||||||||||||
Gross profit
|
$
|
2,467
|
|
|
$
|
2,300
|
|
|
$
|
167
|
|
|
7
|
%
|
|
$
|
1,826
|
|
|
$
|
474
|
|
|
26
|
%
|
Gross margin
|
69.6
|
%
|
|
69.0
|
%
|
|
|
|
|
|
66.4
|
%
|
|
|
|
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||||||||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|
2017
|
|
Change
|
|
% Change
|
||||||||||||
Research and development
|
$
|
647
|
|
|
$
|
623
|
|
|
$
|
24
|
|
|
4
|
%
|
|
$
|
546
|
|
|
$
|
77
|
|
|
14
|
%
|
Selling, general and administrative
|
835
|
|
|
794
|
|
|
41
|
|
|
5
|
|
|
674
|
|
|
120
|
|
|
18
|
|
|||||
Total operating expense
|
$
|
1,482
|
|
|
$
|
1,417
|
|
|
$
|
65
|
|
|
5
|
%
|
|
$
|
1,220
|
|
|
$
|
197
|
|
|
16
|
%
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||||||||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|
2017
|
|
Change
|
|
% Change
|
||||||||||||
Interest income
|
$
|
75
|
|
|
$
|
44
|
|
|
$
|
31
|
|
|
70
|
%
|
|
$
|
19
|
|
|
$
|
25
|
|
|
132
|
%
|
Interest expense
|
(52
|
)
|
|
(57
|
)
|
|
5
|
|
|
(9
|
)
|
|
(37
|
)
|
|
(20
|
)
|
|
54
|
|
|||||
Other income, net
|
110
|
|
|
24
|
|
|
86
|
|
|
358
|
|
|
455
|
|
|
(431
|
)
|
|
(95
|
)
|
|||||
Total other income, net
|
$
|
133
|
|
|
$
|
11
|
|
|
$
|
122
|
|
|
1,109
|
%
|
|
$
|
437
|
|
|
$
|
(426
|
)
|
|
(97
|
)%
|
|
2019 - 2018
|
|
2018 - 2017
|
||||||||||||||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|
2017
|
|
Change
|
|
% Change
|
||||||||||||
Income before income taxes
|
$
|
1,118
|
|
|
$
|
894
|
|
|
$
|
224
|
|
|
25
|
%
|
|
$
|
1,043
|
|
|
$
|
(149
|
)
|
|
(14
|
)%
|
Provision for income taxes
|
128
|
|
|
112
|
|
|
16
|
|
|
14
|
|
|
365
|
|
|
(253
|
)
|
|
(69
|
)
|
|||||
Consolidated net income
|
$
|
990
|
|
|
$
|
782
|
|
|
$
|
208
|
|
|
27
|
%
|
|
$
|
678
|
|
|
$
|
104
|
|
|
15
|
%
|
Effective tax rate
|
11.4
|
%
|
|
12.5
|
%
|
|
|
|
|
|
35.0
|
%
|
|
|
|
|
•
|
support of commercialization efforts related to our current and future products;
|
•
|
acquisitions of equipment and other fixed assets for use in our current and future manufacturing and research and development facilities;
|
•
|
the continued advancement of research and development efforts;
|
•
|
potential strategic acquisitions and investments;
|
•
|
potential repayment of debt obligations;
|
•
|
the expansion needs of our facilities, including costs of leasing and building out additional facilities; and
|
•
|
repurchases of our outstanding common stock.
|
•
|
our ability to successfully commercialize and further develop our technologies and create innovative products in our markets;
|
•
|
scientific progress in our research and development programs and the magnitude of those programs;
|
•
|
competing technological and market developments; and
|
•
|
the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings.
|
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by operating activities
|
$
|
1,051
|
|
|
$
|
1,142
|
|
|
$
|
875
|
|
Net cash provided by (used in) investing activities
|
745
|
|
|
(1,813
|
)
|
|
(214
|
)
|
|||
Net cash (used in) provided by financing activities
|
(897
|
)
|
|
594
|
|
|
(176
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(1
|
)
|
|
(4
|
)
|
|
5
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
898
|
|
|
$
|
(81
|
)
|
|
$
|
490
|
|
|
|
Payments Due by Period(1)
|
||||||||||||||||||
|
|
|
|
Less Than
|
|
|
|
|
|
More Than
|
||||||||||
In millions
|
|
Total
|
|
1 Year
|
|
1 – 3 Years
|
|
3 – 5 Years
|
|
5 Years
|
||||||||||
Debt obligations(2)
|
|
$
|
1,271
|
|
|
$
|
2
|
|
|
$
|
519
|
|
|
$
|
750
|
|
|
$
|
—
|
|
Operating lease liabilities(3)
|
|
970
|
|
|
77
|
|
|
168
|
|
|
171
|
|
|
554
|
|
|||||
U.S. Tax Reform transition tax(4)
|
|
87
|
|
|
—
|
|
|
17
|
|
|
70
|
|
|
—
|
|
|||||
Amounts due under executive deferred compensation plan
|
|
46
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
2,374
|
|
|
$
|
125
|
|
|
$
|
704
|
|
|
$
|
991
|
|
|
$
|
554
|
|
(1)
|
The table excludes $79 million of uncertain tax positions and $211 million of capital commitments for our venture capital investment funds, as the timing and amounts of settlement remained uncertain as of December 29, 2019. This table also excludes payments totaling $132 million due to PacBio associated with the termination of the merger agreement on January 2, 2020. See note “9. Income Taxes,” note “7. Supplemental Balance Sheet Details,” and note “3. Intangible Assets, Goodwill, and Acquisitions” in the Consolidated Financial Statements section of this report for additional information.
|
(2)
|
Debt obligations include the principal amount of our convertible senior notes due 2021 and 2023, as well as interest payments to be made under the notes. Although these notes mature in 2021 and 2023, 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. Debt and Other Commitments” in the Consolidated Financial Statements section of this report for further discussion.
|
(3)
|
Operating lease liabilities exclude $44 million of legally binding minimum lease payments for leases signed but not yet commenced.
|
(4)
|
U.S. Tax Reform transition tax includes the remaining portion of the one-time tax on earnings of certain foreign subsidiaries which we elected to pay in installments in accordance with the Tax Cuts and Jobs Act enacted on December 22, 2017.
|
CONSOLIDATED FINANCIAL STATEMENTS
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
Page
|
Valuation of Inventory
|
|
Description of the Matter
|
The Company's inventories totaled $359 million as of December 29, 2019. As explained in Note 1 to the consolidated financial statements, the Company assesses the valuation of inventory each reporting period. Obsolete inventory or inventory in excess of management's estimated usage requirement is written down to its estimated net realizable value if those balances are determined to be less than cost.
Auditing management's estimates for excess and obsolete inventory involved subjective auditor judgment because the estimates rely on a number of factors that are affected by market and economic conditions outside the Company's control. In particular, the excess and obsolete inventory calculations are sensitive to significant assumptions, including product life cycles, quality issues, historical experience, and usage forecasts.
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated and tested the design and operating effectiveness of internal controls over the Company's excess and obsolete inventory valuation process, including management's assessment of the assumptions stated above and data underlying the excess and obsolete inventory valuation.
Our audit procedures included, among others, evaluating the significant assumptions stated above and the accuracy and completeness of the underlying data management used to value excess and obsolete inventory. We compared the balance of on-hand inventories to usage forecasts and historical usage and evaluated adjustments to forecasted usage for specific product considerations, such as new product introductions, technological changes or alternative uses. We also assessed the historical accuracy of management's estimates and performed sensitivity analyses over the significant assumptions to evaluate the changes in the excess and obsolete inventory estimates that would result from changes in the underlying assumptions.
|
|
December 29,
2019 |
|
December 30,
2018 |
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
2,042
|
|
|
$
|
1,144
|
|
Short-term investments
|
1,372
|
|
|
2,368
|
|
||
Accounts receivable, net
|
573
|
|
|
514
|
|
||
Inventory
|
359
|
|
|
386
|
|
||
Prepaid expenses and other current assets
|
105
|
|
|
78
|
|
||
Total current assets
|
4,451
|
|
|
4,490
|
|
||
Property and equipment, net
|
889
|
|
|
1,075
|
|
||
Operating lease right-of-use assets
|
555
|
|
|
—
|
|
||
Goodwill
|
824
|
|
|
831
|
|
||
Intangible assets, net
|
145
|
|
|
185
|
|
||
Deferred tax assets, net
|
64
|
|
|
70
|
|
||
Other assets
|
388
|
|
|
308
|
|
||
Total assets
|
$
|
7,316
|
|
|
$
|
6,959
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
149
|
|
|
$
|
184
|
|
Accrued liabilities
|
516
|
|
|
513
|
|
||
Long-term debt, current portion
|
—
|
|
|
1,107
|
|
||
Total current liabilities
|
665
|
|
|
1,804
|
|
||
Operating lease liabilities
|
695
|
|
|
—
|
|
||
Long-term debt
|
1,141
|
|
|
890
|
|
||
Other long-term liabilities
|
202
|
|
|
359
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Redeemable noncontrolling interests
|
—
|
|
|
61
|
|
||
Stockholders’ equity:
|
|
|
|
|
|||
Preferred stock, $0.01 par value, 10 million shares authorized; no shares issued and outstanding at December 29, 2019 and December 30, 2018
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 320 million shares authorized; 194 million shares issued and 147 million outstanding at December 29, 2019; 192 million shares issued and 147 million outstanding at December 30, 2018
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
3,560
|
|
|
3,290
|
|
||
Accumulated other comprehensive income (loss)
|
5
|
|
|
(1
|
)
|
||
Retained earnings
|
4,067
|
|
|
3,083
|
|
||
Treasury stock, 47 million shares and 45 million shares at cost at December 29, 2019 and December 30, 2018, respectively
|
(3,021
|
)
|
|
(2,616
|
)
|
||
Total Illumina stockholders’ equity
|
4,613
|
|
|
3,758
|
|
||
Noncontrolling interests
|
—
|
|
|
87
|
|
||
Total stockholders’ equity
|
4,613
|
|
|
3,845
|
|
||
Total liabilities and stockholders’ equity
|
$
|
7,316
|
|
|
$
|
6,959
|
|
|
Years Ended
|
||||||||||
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
||||||
Revenue:
|
|
|
|
|
|
|
|
|
|||
Product revenue
|
$
|
2,929
|
|
|
$
|
2,749
|
|
|
$
|
2,289
|
|
Service and other revenue
|
614
|
|
|
584
|
|
|
463
|
|
|||
Total revenue
|
3,543
|
|
|
3,333
|
|
|
2,752
|
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|||
Cost of product revenue
|
802
|
|
|
738
|
|
|
679
|
|
|||
Cost of service and other revenue
|
240
|
|
|
260
|
|
|
208
|
|
|||
Amortization of acquired intangible assets
|
34
|
|
|
35
|
|
|
39
|
|
|||
Total cost of revenue
|
1,076
|
|
|
1,033
|
|
|
926
|
|
|||
Gross profit
|
2,467
|
|
|
2,300
|
|
|
1,826
|
|
|||
Operating expense:
|
|
|
|
|
|
|
|
|
|||
Research and development
|
647
|
|
|
623
|
|
|
546
|
|
|||
Selling, general and administrative
|
835
|
|
|
794
|
|
|
674
|
|
|||
Total operating expense
|
1,482
|
|
|
1,417
|
|
|
1,220
|
|
|||
Income from operations
|
985
|
|
|
883
|
|
|
606
|
|
|||
Other income (expense):
|
|
|
|
|
|
|
|
|
|||
Interest income
|
75
|
|
|
44
|
|
|
19
|
|
|||
Interest expense
|
(52
|
)
|
|
(57
|
)
|
|
(37
|
)
|
|||
Other income, net
|
110
|
|
|
24
|
|
|
455
|
|
|||
Total other income, net
|
133
|
|
|
11
|
|
|
437
|
|
|||
Income before income taxes
|
1,118
|
|
|
894
|
|
|
1,043
|
|
|||
Provision for income taxes
|
128
|
|
|
112
|
|
|
365
|
|
|||
Consolidated net income
|
990
|
|
|
782
|
|
|
678
|
|
|||
Add: Net loss attributable to noncontrolling interests
|
12
|
|
|
44
|
|
|
48
|
|
|||
Net income attributable to Illumina stockholders
|
$
|
1,002
|
|
|
$
|
826
|
|
|
$
|
726
|
|
Net income attributable to Illumina stockholders for earnings per share
|
$
|
1,002
|
|
|
$
|
826
|
|
|
$
|
725
|
|
Earnings per share attributable to Illumina stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
6.81
|
|
|
$
|
5.63
|
|
|
$
|
4.96
|
|
Diluted
|
$
|
6.74
|
|
|
$
|
5.56
|
|
|
$
|
4.92
|
|
Shares used in computing earnings per share:
|
|
|
|
|
|
||||||
Basic
|
147
|
|
|
147
|
|
|
146
|
|
|||
Diluted
|
149
|
|
|
149
|
|
|
148
|
|
|
|
Years Ended
|
||||||||||
|
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
||||||
Consolidated net income
|
|
$
|
990
|
|
|
$
|
782
|
|
|
$
|
678
|
|
Unrealized gain on available-for-sale debt securities, net of deferred tax
|
|
6
|
|
|
—
|
|
|
—
|
|
|||
Total consolidated comprehensive income
|
|
996
|
|
|
782
|
|
|
678
|
|
|||
Add: Comprehensive loss attributable to noncontrolling interests
|
|
12
|
|
|
44
|
|
|
48
|
|
|||
Comprehensive income attributable to Illumina stockholders
|
|
$
|
1,008
|
|
|
$
|
826
|
|
|
$
|
726
|
|
|
Illumina Stockholders
|
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
|
|
Additional
|
|
Accumulated Other
|
|
|
|
|
|
|
|
|
|
Total
|
||||||||||||||||
|
Common Stock
|
|
Paid-In
|
|
Comprehensive
|
|
Retained
|
|
Treasury Stock
|
|
Noncontrolling
|
|
Stockholders’
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Capital
|
|
(Loss) Income
|
|
Earnings
|
|
Shares
|
|
Amount
|
|
Interests
|
|
Equity
|
||||||||||||||||
Balance as of January 1, 2017
|
189
|
|
|
$
|
2
|
|
|
$
|
2,733
|
|
|
$
|
(1
|
)
|
|
$
|
1,485
|
|
|
(43
|
)
|
|
$
|
(2,022
|
)
|
|
$
|
73
|
|
|
$
|
2,270
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
726
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
719
|
|
|||||||
Issuance of common stock, net of repurchases
|
2
|
|
|
—
|
|
|
71
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(319
|
)
|
|
—
|
|
|
(248
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
164
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
164
|
|
|||||||
Adjustment to the carrying value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(136
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(136
|
)
|
|||||||
Vesting of redeemable equity awards
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||||||
Cumulative-effect adjustment from adoption of ASU 2016-09
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48
|
|
|||||||
Deconsolidation of GRAIL
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(66
|
)
|
|
(55
|
)
|
|||||||
Balance as of December 31, 2017
|
191
|
|
|
2
|
|
|
2,833
|
|
|
(1
|
)
|
|
2,256
|
|
|
(44
|
)
|
|
(2,341
|
)
|
|
—
|
|
|
2,749
|
|
|||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
826
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
816
|
|
|||||||
Issuance of common stock, net of repurchases
|
1
|
|
|
—
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(275
|
)
|
|
—
|
|
|
(229
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
193
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
193
|
|
|||||||
Adjustment to the carrying value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
127
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
127
|
|
|||||||
Vesting of redeemable equity awards
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||||
Issuance of subsidiary shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|||||||
Contributions from noncontrolling interest owners
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92
|
|
|
92
|
|
|||||||
Issuance of convertible senior notes, net of tax impact
|
—
|
|
|
—
|
|
|
93
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93
|
|
|||||||
Cumulative-effect adjustment from adoption of ASU 2016-01
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Balance as of December 30, 2018
|
192
|
|
|
2
|
|
|
3,290
|
|
|
(1
|
)
|
|
3,083
|
|
|
(45
|
)
|
|
(2,616
|
)
|
|
87
|
|
|
3,845
|
|
|||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,002
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
999
|
|
|||||||
Unrealized gain on available-for-sale debt securities, net of deferred tax
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||||
Issuance of common stock, net of repurchases
|
2
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(405
|
)
|
|
—
|
|
|
(346
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
194
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
194
|
|
|||||||
Adjustment to the carrying value of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|||||||
Deconsolidation of Helix
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
|
(82
|
)
|
|||||||
Vesting of redeemable equity awards
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||||
Cumulative-effect adjustment from adoption of ASU 2016-02, net of deferred tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
|||||||
Balance as of December 29, 2019
|
194
|
|
|
$
|
2
|
|
|
$
|
3,560
|
|
|
$
|
5
|
|
|
$
|
4,067
|
|
|
(47
|
)
|
|
$
|
(3,021
|
)
|
|
$
|
—
|
|
|
$
|
4,613
|
|
ILLUMINA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
|
|||||||||||
|
Years Ended
|
||||||||||
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|||
Consolidated net income
|
$
|
990
|
|
|
$
|
782
|
|
|
$
|
678
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|||||||||||
Depreciation expense
|
151
|
|
|
140
|
|
|
110
|
|
|||
Amortization of intangible assets
|
37
|
|
|
39
|
|
|
46
|
|
|||
Share-based compensation expense
|
194
|
|
|
193
|
|
|
164
|
|
|||
Accretion of debt discount
|
46
|
|
|
41
|
|
|
30
|
|
|||
Deferred income taxes
|
11
|
|
|
(18
|
)
|
|
81
|
|
|||
Payment of accreted debt discount
|
(84
|
)
|
|
—
|
|
|
—
|
|
|||
Unrealized gains on marketable equity securities
|
(53
|
)
|
|
(21
|
)
|
|
—
|
|
|||
Gains on deconsolidation
|
(54
|
)
|
|
—
|
|
|
(453
|
)
|
|||
Loss on Continuation Advances
|
8
|
|
|
—
|
|
|
—
|
|
|||
Impairment of intangible assets
|
—
|
|
|
—
|
|
|
23
|
|
|||
Other
|
(1
|
)
|
|
4
|
|
|
1
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(58
|
)
|
|
(105
|
)
|
|
(26
|
)
|
|||
Inventory
|
25
|
|
|
(53
|
)
|
|
(33
|
)
|
|||
Prepaid expenses and other current assets
|
(14
|
)
|
|
5
|
|
|
8
|
|
|||
Operating lease right-of-use assets and liabilities, net
|
(5
|
)
|
|
—
|
|
|
—
|
|
|||
Other assets
|
(30
|
)
|
|
(9
|
)
|
|
(5
|
)
|
|||
Accounts payable
|
(35
|
)
|
|
45
|
|
|
10
|
|
|||
Accrued liabilities
|
(44
|
)
|
|
103
|
|
|
81
|
|
|||
Other long-term liabilities
|
(33
|
)
|
|
(4
|
)
|
|
160
|
|
|||
Net cash provided by operating activities
|
1,051
|
|
|
1,142
|
|
|
875
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|||
Maturities of available-for-sale securities
|
1,387
|
|
|
860
|
|
|
321
|
|
|||
Purchases of available-for-sale securities
|
(1,010
|
)
|
|
(2,859
|
)
|
|
(742
|
)
|
|||
Sales of available-for-sale securities
|
629
|
|
|
597
|
|
|
322
|
|
|||
Purchases of property and equipment
|
(209
|
)
|
|
(296
|
)
|
|
(310
|
)
|
|||
Net purchases of strategic investments
|
(20
|
)
|
|
(15
|
)
|
|
(29
|
)
|
|||
Cash paid for Continuation Advances
|
(18
|
)
|
|
—
|
|
|
—
|
|
|||
Deconsolidation of Helix and GRAIL cash
|
(29
|
)
|
|
—
|
|
|
(52
|
)
|
|||
Proceeds from the deconsolidation of GRAIL
|
15
|
|
|
—
|
|
|
278
|
|
|||
Net cash paid for acquisitions
|
—
|
|
|
(100
|
)
|
|
—
|
|
|||
Cash paid for intangible assets
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||
Net cash provided by (used in) investing activities
|
745
|
|
|
(1,813
|
)
|
|
(214
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||
Payments on financing obligations
|
(550
|
)
|
|
(4
|
)
|
|
(9
|
)
|
|||
Net proceeds from issuance of debt
|
—
|
|
|
735
|
|
|
5
|
|
|||
Common stock repurchases
|
(324
|
)
|
|
(201
|
)
|
|
(251
|
)
|
|||
Proceeds from issuance of common stock
|
59
|
|
|
46
|
|
|
71
|
|
|||
Taxes paid related to net share settlement of equity awards
|
(82
|
)
|
|
(74
|
)
|
|
(68
|
)
|
|||
Contributions from noncontrolling interest owners
|
—
|
|
|
92
|
|
|
79
|
|
|||
Payments on acquisition-related contingent consideration liability
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Net cash (used in) provided by financing activities
|
(897
|
)
|
|
594
|
|
|
(176
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(1
|
)
|
|
(4
|
)
|
|
5
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
898
|
|
|
(81
|
)
|
|
490
|
|
|||
Cash and cash equivalents at beginning of year
|
1,144
|
|
|
1,225
|
|
|
735
|
|
|||
Cash and cash equivalents at end of year
|
$
|
2,042
|
|
|
$
|
1,144
|
|
|
$
|
1,225
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|||
Cash paid for income taxes
|
$
|
164
|
|
|
$
|
99
|
|
|
$
|
149
|
|
Cash paid for operating lease liabilities
|
$
|
84
|
|
|
$
|
—
|
|
|
$
|
—
|
|
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
|
|
December 31, 2018
|
||||||||||
In millions
|
Pre-adoption
|
|
Adoption Impact
|
|
Post-adoption
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Prepaid expenses and other current assets
|
$
|
78
|
|
|
$
|
(8
|
)
|
|
$
|
70
|
|
Property and equipment, net
|
1,075
|
|
|
(241
|
)
|
|
834
|
|
|||
Operating lease right-of-use assets
|
—
|
|
|
579
|
|
|
579
|
|
|||
Deferred tax assets, net
|
70
|
|
|
6
|
|
|
76
|
|
|||
Total assets
|
$
|
1,223
|
|
|
$
|
336
|
|
|
$
|
1,559
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||||||
Accrued liabilities
|
$
|
513
|
|
|
$
|
36
|
|
|
$
|
549
|
|
Operating lease liabilities
|
—
|
|
|
722
|
|
|
722
|
|
|||
Long-term debt
|
1,107
|
|
|
(269
|
)
|
|
838
|
|
|||
Other long-term liabilities
|
359
|
|
|
(135
|
)
|
|
224
|
|
|||
Retained earnings
|
3,083
|
|
|
(18
|
)
|
|
3,065
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
5,062
|
|
|
$
|
336
|
|
|
$
|
5,398
|
|
|
Years Ended
|
|||||||
In millions
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
|||
Weighted average shares outstanding
|
147
|
|
|
147
|
|
|
146
|
|
Effect of potentially dilutive common shares from:
|
|
|
|
|
|
|||
Equity awards
|
1
|
|
|
1
|
|
|
2
|
|
Convertible senior notes
|
1
|
|
|
1
|
|
|
—
|
|
Weighted average shares used in calculating diluted earnings per share
|
149
|
|
|
149
|
|
|
148
|
|
•
|
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
|
Buildings and leasehold improvements
|
4 to 20 years
|
Machinery and equipment
|
3 to 5 years
|
Computer hardware and software
|
3 to 9 years
|
Furniture and fixtures
|
7 years
|
2. REVENUE
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
in millions
|
Sequencing
|
|
Microarray
|
|
Total
|
|
Sequencing
|
|
Microarray
|
|
Total
|
|
Sequencing
|
|
Microarray
|
|
Total
|
||||||||||||||||||
Consumables
|
$
|
2,075
|
|
|
$
|
317
|
|
|
$
|
2,392
|
|
|
$
|
1,824
|
|
|
$
|
353
|
|
|
$
|
2,177
|
|
|
$
|
1,484
|
|
|
$
|
287
|
|
|
$
|
1,771
|
|
Instruments
|
517
|
|
|
20
|
|
|
537
|
|
|
535
|
|
|
37
|
|
|
572
|
|
|
487
|
|
|
31
|
|
|
518
|
|
|||||||||
Total product revenue
|
2,592
|
|
|
337
|
|
|
2,929
|
|
|
2,359
|
|
|
390
|
|
|
2,749
|
|
|
1,971
|
|
|
318
|
|
|
2,289
|
|
|||||||||
Service and other revenue
|
476
|
|
|
138
|
|
|
614
|
|
|
416
|
|
|
168
|
|
|
584
|
|
|
322
|
|
|
141
|
|
|
463
|
|
|||||||||
Total revenue
|
$
|
3,068
|
|
|
$
|
475
|
|
|
$
|
3,543
|
|
|
$
|
2,775
|
|
|
$
|
558
|
|
|
$
|
3,333
|
|
|
$
|
2,293
|
|
|
$
|
459
|
|
|
$
|
2,752
|
|
Based on region of destination (in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Americas (1)
|
$
|
1,970
|
|
|
$
|
1,864
|
|
|
$
|
1,585
|
|
Europe, Middle East, and Africa
|
933
|
|
|
851
|
|
|
653
|
|
|||
Greater China (2)
|
372
|
|
|
365
|
|
|
292
|
|
|||
Asia-Pacific
|
268
|
|
|
253
|
|
|
222
|
|
|||
Total revenue
|
$
|
3,543
|
|
|
$
|
3,333
|
|
|
$
|
2,752
|
|
3. INVESTMENTS AND FAIR VALUE MEASUREMENTS
|
|
December 29, 2019
|
|
December 30, 2018
|
||||||||||||||||||||||||
In millions
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Estimated
Fair Value
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||||||||
Debt securities in government-sponsored entities
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
18
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21
|
|
Corporate debt securities
|
627
|
|
|
3
|
|
|
630
|
|
|
1,060
|
|
|
—
|
|
|
(2
|
)
|
|
1,058
|
|
|||||||
U.S. Treasury securities
|
616
|
|
|
2
|
|
|
618
|
|
|
1,250
|
|
|
1
|
|
|
(1
|
)
|
|
1,250
|
|
|||||||
Total
|
$
|
1,261
|
|
|
$
|
5
|
|
|
$
|
1,266
|
|
|
$
|
2,331
|
|
|
$
|
1
|
|
|
$
|
(3
|
)
|
|
$
|
2,329
|
|
In millions
|
Estimated Fair Value
|
||
Due within one year
|
$
|
512
|
|
After one but within five years
|
754
|
|
|
Total
|
$
|
1,266
|
|
|
December 29, 2019
|
|
December 30, 2018
|
||||||||||||||||||||||||||||
In millions
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds (cash equivalents)
|
$
|
1,732
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,732
|
|
|
$
|
832
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
832
|
|
Debt securities in government-sponsored entities
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
||||||||
Corporate debt securities
|
—
|
|
|
630
|
|
|
—
|
|
|
630
|
|
|
—
|
|
|
1,058
|
|
|
—
|
|
|
1,058
|
|
||||||||
U.S. Treasury securities
|
618
|
|
|
—
|
|
|
—
|
|
|
618
|
|
|
1,250
|
|
|
—
|
|
|
—
|
|
|
1,250
|
|
||||||||
Marketable equity securities
|
106
|
|
|
—
|
|
|
—
|
|
|
106
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
39
|
|
||||||||
Contingent value right
|
—
|
|
|
—
|
|
|
29
|
|
|
29
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Continuation Advances
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Deferred compensation plan assets
|
—
|
|
|
48
|
|
|
—
|
|
|
48
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
||||||||
Total assets measured at fair value
|
$
|
2,456
|
|
|
$
|
696
|
|
|
$
|
39
|
|
|
$
|
3,191
|
|
|
$
|
2,121
|
|
|
$
|
1,113
|
|
|
$
|
—
|
|
|
$
|
3,234
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deferred compensation plan liability
|
$
|
—
|
|
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
33
|
|
4. INTANGIBLE ASSETS, GOODWILL, AND ACQUISITIONS
|
|
December 29, 2019
|
|
December 30, 2018
|
||||||||||||||||||||
In millions
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Intangibles,
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Intangibles,
Net
|
||||||||||||
Licensed technologies
|
$
|
95
|
|
|
$
|
(89
|
)
|
|
$
|
6
|
|
|
$
|
95
|
|
|
$
|
(83
|
)
|
|
$
|
12
|
|
Core technologies
|
325
|
|
|
(195
|
)
|
|
130
|
|
|
331
|
|
|
(172
|
)
|
|
159
|
|
||||||
Customer relationships
|
31
|
|
|
(27
|
)
|
|
4
|
|
|
32
|
|
|
(27
|
)
|
|
5
|
|
||||||
License agreements
|
14
|
|
|
(10
|
)
|
|
4
|
|
|
14
|
|
|
(9
|
)
|
|
5
|
|
||||||
Trade name
|
4
|
|
|
(3
|
)
|
|
1
|
|
|
9
|
|
|
(5
|
)
|
|
4
|
|
||||||
Total intangible assets, net
|
$
|
469
|
|
|
$
|
(324
|
)
|
|
$
|
145
|
|
|
$
|
481
|
|
|
$
|
(296
|
)
|
|
$
|
185
|
|
In millions
|
Estimated Annual Amortization
|
||
2020
|
$
|
29
|
|
2021
|
25
|
|
|
2022
|
21
|
|
|
2023
|
20
|
|
|
2024
|
19
|
|
|
Thereafter
|
31
|
|
|
Total
|
$
|
145
|
|
In millions
|
Goodwill
|
||
Balance as of December 31, 2017
|
$
|
771
|
|
Acquisitions
|
60
|
|
|
Balance as of December 30, 2018
|
831
|
|
|
Helix deconsolidation
|
(7
|
)
|
|
Balance as of December 29, 2019
|
$
|
824
|
|
5. DEBT AND OTHER COMMITMENTS
|
In millions
|
December 29,
2019 |
|
December 30,
2018 |
||||
Principal amount of 2023 Notes outstanding
|
$
|
750
|
|
|
$
|
750
|
|
Principal amount of 2021 Notes outstanding
|
517
|
|
|
517
|
|
||
Principal amount of 2019 Notes outstanding
|
—
|
|
|
633
|
|
||
Unamortized discount of liability component of convertible senior notes
|
(126
|
)
|
|
(175
|
)
|
||
Net carrying amount of liability component of convertible senior notes
|
1,141
|
|
|
1,725
|
|
||
Obligations under financing leases
|
—
|
|
|
269
|
|
||
Other
|
—
|
|
|
3
|
|
||
Less: current portion
|
—
|
|
|
(1,107
|
)
|
||
Long-term debt
|
$
|
1,141
|
|
|
$
|
890
|
|
Carrying value of equity component of convertible senior notes, net of debt issuance costs
|
$
|
213
|
|
|
$
|
287
|
|
Fair value of convertible senior notes outstanding (Level 2)
|
$
|
1,549
|
|
|
$
|
2,222
|
|
Weighted average remaining amortization period of discount on the liability component of convertible senior notes
|
3.2 years
|
|
|
3.9 years
|
|
In millions
|
|
||
Cash paid for principal of notes converted
|
$
|
633
|
|
Conversion value over principal amount, paid in shares of common stock
|
$
|
153
|
|
Number of shares of common stock issued upon conversion
|
0.4
|
|
In millions
|
|
||
2020
|
$
|
77
|
|
2021
|
83
|
|
|
2022
|
85
|
|
|
2023
|
86
|
|
|
2024
|
85
|
|
|
Thereafter
|
554
|
|
|
Total remaining lease payments (1)
|
970
|
|
|
Less: imputed interest
|
(230
|
)
|
|
Total operating lease liabilities
|
740
|
|
|
Less: current portion
|
(45
|
)
|
|
Long-term operating lease liabilities
|
$
|
695
|
|
Weighted-average remaining lease term
|
11.4 years
|
|
|
Weighted-average discount rate
|
4.6
|
%
|
In millions
|
Operating
Leases
|
|
Sublease
Income
|
|
Net Operating
Leases
|
|
Build-to-suit Leases
|
||||||||
2019
|
$
|
59
|
|
|
$
|
(11
|
)
|
|
$
|
48
|
|
|
$
|
18
|
|
2020
|
64
|
|
|
(11
|
)
|
|
53
|
|
|
21
|
|
||||
2021
|
61
|
|
|
(11
|
)
|
|
50
|
|
|
21
|
|
||||
2022
|
61
|
|
|
(12
|
)
|
|
49
|
|
|
22
|
|
||||
2023
|
61
|
|
|
(11
|
)
|
|
50
|
|
|
22
|
|
||||
Thereafter
|
439
|
|
|
(12
|
)
|
|
427
|
|
|
179
|
|
||||
Total minimum lease payments
|
$
|
745
|
|
|
$
|
(68
|
)
|
|
$
|
677
|
|
|
$
|
283
|
|
In millions
|
2019
|
||
Operating lease costs
|
$
|
84
|
|
Sublease income
|
(12
|
)
|
|
Total lease costs
|
$
|
72
|
|
6. STOCKHOLDERS’ EQUITY
|
|
|
Restricted
Stock Units
(RSU)
|
|
Performance
Stock Units
(PSU)(1)
|
|
Weighted-Average Grant-
Date Fair Value per Share
|
||||||||
Units in thousands
|
|
|
|
RSU
|
|
PSU
|
||||||||
Outstanding at January 1, 2017
|
|
2,293
|
|
|
460
|
|
|
$
|
141.80
|
|
|
$
|
158.66
|
|
Awarded
|
|
879
|
|
|
238
|
|
|
$
|
207.38
|
|
|
$
|
191.53
|
|
Vested
|
|
(861
|
)
|
|
(92
|
)
|
|
$
|
131.62
|
|
|
$
|
189.09
|
|
Cancelled
|
|
(226
|
)
|
|
(64
|
)
|
|
$
|
149.03
|
|
|
$
|
173.83
|
|
Outstanding at December 31, 2017
|
|
2,085
|
|
|
542
|
|
|
$
|
172.92
|
|
|
$
|
166.15
|
|
Awarded
|
|
655
|
|
|
336
|
|
|
$
|
322.04
|
|
|
$
|
232.08
|
|
Vested
|
|
(731
|
)
|
|
(188
|
)
|
|
$
|
170.50
|
|
|
$
|
176.15
|
|
Cancelled
|
|
(169
|
)
|
|
(30
|
)
|
|
$
|
172.30
|
|
|
$
|
162.54
|
|
Outstanding at December 30, 2018
|
|
1,840
|
|
|
660
|
|
|
$
|
227.00
|
|
|
$
|
196.99
|
|
Awarded
|
|
698
|
|
|
(41
|
)
|
|
$
|
313.70
|
|
|
$
|
254.52
|
|
Vested
|
|
(694
|
)
|
|
(283
|
)
|
|
$
|
205.51
|
|
|
$
|
133.11
|
|
Cancelled
|
|
(144
|
)
|
|
(65
|
)
|
|
$
|
225.48
|
|
|
$
|
181.79
|
|
Outstanding at December 29, 2019
|
|
1,700
|
|
|
271
|
|
|
$
|
271.49
|
|
|
$
|
258.66
|
|
(1)
|
The number of units reflect the estimated number of shares to be issued at the end of the performance period.
|
In millions
|
2019
|
|
2018
|
|
2017
|
||||||
Pre-tax intrinsic value of outstanding restricted stock:
|
|
|
|
|
|
||||||
RSU
|
$
|
565
|
|
|
$
|
549
|
|
|
$
|
456
|
|
PSU
|
$
|
90
|
|
|
$
|
197
|
|
|
$
|
118
|
|
|
|
|
|
|
|
||||||
Fair value of restricted stock vested:
|
|
|
|
|
|
||||||
RSU
|
$
|
210
|
|
|
$
|
125
|
|
|
$
|
113
|
|
PSU
|
$
|
38
|
|
|
$
|
33
|
|
|
$
|
17
|
|
|
Options
(in thousands)
|
|
Weighted-
Average
Exercise Price
|
|||
Outstanding at January 1, 2017
|
1,045
|
|
|
$
|
48.56
|
|
Exercised
|
(723
|
)
|
|
$
|
49.31
|
|
Outstanding at December 31, 2017
|
322
|
|
|
$
|
46.93
|
|
Exercised
|
(130
|
)
|
|
$
|
35.68
|
|
Outstanding at December 30, 2018
|
192
|
|
|
$
|
54.52
|
|
Exercised
|
(134
|
)
|
|
$
|
53.61
|
|
Outstanding and exercisable at December 29, 2019
|
58
|
|
|
$
|
56.65
|
|
In millions
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of product revenue
|
$
|
19
|
|
|
$
|
16
|
|
|
$
|
12
|
|
Cost of service and other revenue
|
4
|
|
|
3
|
|
|
2
|
|
|||
Research and development
|
66
|
|
|
60
|
|
|
51
|
|
|||
Selling, general and administrative
|
105
|
|
|
114
|
|
|
99
|
|
|||
Share-based compensation expense, before taxes
|
194
|
|
|
193
|
|
|
164
|
|
|||
Related income tax benefits
|
(41
|
)
|
|
(39
|
)
|
|
(48
|
)
|
|||
Share-based compensation expense, net of taxes
|
$
|
153
|
|
|
$
|
154
|
|
|
$
|
116
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Risk-free interest rate
|
1.88% - 2.56%
|
|
|
1.22% - 2.45%
|
|
|
0.50% - 1.22%
|
|
|||
Expected volatility
|
30% - 38%
|
|
|
29% - 39%
|
|
|
29% - 44%
|
|
|||
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
|
$
|
75.47
|
|
|
$
|
61.59
|
|
|
$
|
46.81
|
|
7. SUPPLEMENTAL BALANCE SHEET DETAILS
|
in millions
|
December 29,
2019 |
|
December 30,
2018 |
||||
Trade accounts receivable, gross
|
$
|
575
|
|
|
$
|
516
|
|
Allowance for doubtful accounts
|
(2
|
)
|
|
(2
|
)
|
||
Total accounts receivable, net
|
$
|
573
|
|
|
$
|
514
|
|
in millions
|
December 29,
2019 |
|
December 30,
2018 |
||||
Raw materials
|
$
|
108
|
|
|
$
|
117
|
|
Work in process
|
225
|
|
|
218
|
|
||
Finished goods
|
26
|
|
|
51
|
|
||
Total inventory
|
$
|
359
|
|
|
$
|
386
|
|
in millions
|
December 29,
2019 |
|
December 30,
2018 |
||||
Leasehold improvements
|
$
|
622
|
|
|
$
|
567
|
|
Machinery and equipment
|
401
|
|
|
382
|
|
||
Computer hardware and software
|
272
|
|
|
217
|
|
||
Furniture and fixtures
|
45
|
|
|
45
|
|
||
Buildings
|
44
|
|
|
285
|
|
||
Construction in progress
|
73
|
|
|
100
|
|
||
Total property and equipment, gross
|
1,457
|
|
|
1,596
|
|
||
Accumulated depreciation
|
(568
|
)
|
|
(521
|
)
|
||
Total property and equipment, net
|
$
|
889
|
|
|
$
|
1,075
|
|
in millions
|
December 29,
2019 |
|
December 30,
2018 |
||||
Contract liabilities, current portion
|
$
|
167
|
|
|
$
|
175
|
|
Accrued compensation expenses
|
154
|
|
|
193
|
|
||
Accrued taxes payable
|
86
|
|
|
82
|
|
||
Operating lease liabilities, current portion
|
45
|
|
|
—
|
|
||
Other, including warranties (a)
|
64
|
|
|
63
|
|
||
Total accrued liabilities
|
$
|
516
|
|
|
$
|
513
|
|
in millions
|
|
||
Balance as of January 1, 2017
|
$
|
13
|
|
Additions charged to cost of revenue
|
26
|
|
|
Repairs and replacements
|
(22
|
)
|
|
Balance as of December 31, 2017
|
17
|
|
|
Additions charged to cost of revenue
|
27
|
|
|
Repairs and replacements
|
(25
|
)
|
|
Balance as of December 30, 2018
|
19
|
|
|
Additions charged to cost of revenue
|
20
|
|
|
Repairs and replacements
|
(25
|
)
|
|
Balance as of December 29, 2019
|
$
|
14
|
|
in millions
|
|
||
Balance as of January 1, 2017
|
$
|
44
|
|
Amount released from escrow
|
79
|
|
|
Vesting of redeemable equity awards
|
13
|
|
|
Net loss attributable to noncontrolling interests
|
(41
|
)
|
|
Adjustment up to the redemption value
|
136
|
|
|
Deconsolidation of GRAIL
|
(11
|
)
|
|
Balance as of December 31, 2017
|
$
|
220
|
|
Vesting of redeemable equity awards
|
2
|
|
|
Net loss attributable to noncontrolling interests
|
(34
|
)
|
|
Adjustment down to the redemption value
|
(127
|
)
|
|
Balance as of December 30, 2018
|
61
|
|
|
Vesting of redeemable equity awards
|
1
|
|
|
Net loss attributable to noncontrolling interests
|
(9
|
)
|
|
Adjustment down to the redemption value
|
(16
|
)
|
|
Release of potential obligation to noncontrolling interests
|
(37
|
)
|
|
Balance as of December 29, 2019
|
$
|
—
|
|
in millions
|
December 29,
2019 |
|
December 30,
2018 |
||||
Foreign currency translation adjustments
|
$
|
1
|
|
|
$
|
1
|
|
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax
|
4
|
|
|
(2
|
)
|
||
Total accumulated other comprehensive income (loss)
|
$
|
5
|
|
|
$
|
(1
|
)
|
8. LEGAL PROCEEDINGS
|
9. INCOME TAXES
|
In millions
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
242
|
|
|
$
|
54
|
|
|
$
|
458
|
|
Foreign
|
876
|
|
|
840
|
|
|
585
|
|
|||
Total income before income taxes
|
$
|
1,118
|
|
|
$
|
894
|
|
|
$
|
1,043
|
|
In millions
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
32
|
|
|
$
|
47
|
|
|
$
|
259
|
|
State
|
7
|
|
|
15
|
|
|
21
|
|
|||
Foreign
|
84
|
|
|
68
|
|
|
51
|
|
|||
Total current provision
|
123
|
|
|
130
|
|
|
331
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|||
Federal
|
1
|
|
|
—
|
|
|
36
|
|
|||
State
|
(1
|
)
|
|
(16
|
)
|
|
—
|
|
|||
Foreign
|
5
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Total deferred expense (benefit)
|
5
|
|
|
(18
|
)
|
|
34
|
|
|||
Total tax provision
|
$
|
128
|
|
|
$
|
112
|
|
|
$
|
365
|
|
In millions
|
2019
|
|
2018
|
|
2017
|
||||||
Tax at federal statutory rate
|
$
|
235
|
|
|
$
|
188
|
|
|
$
|
365
|
|
State, net of federal benefit
|
18
|
|
|
13
|
|
|
19
|
|
|||
Research and other credits
|
(37
|
)
|
|
(23
|
)
|
|
(12
|
)
|
|||
Change in valuation allowance
|
(2
|
)
|
|
(12
|
)
|
|
12
|
|
|||
Impact of foreign operations
|
(57
|
)
|
|
(59
|
)
|
|
(130
|
)
|
|||
Investments in consolidated variable interest entities
|
(5
|
)
|
|
9
|
|
|
(3
|
)
|
|||
Impact of U.S. Tax Reform
|
—
|
|
|
11
|
|
|
150
|
|
|||
Stock compensation
|
(20
|
)
|
|
(24
|
)
|
|
(41
|
)
|
|||
Other
|
(4
|
)
|
|
9
|
|
|
5
|
|
|||
Total tax provision
|
$
|
128
|
|
|
$
|
112
|
|
|
$
|
365
|
|
In millions
|
December 29,
2019 |
|
December 30,
2018 |
||||
Deferred tax assets:
|
|
|
|
|
|
||
Net operating losses
|
$
|
21
|
|
|
$
|
26
|
|
Tax credits
|
63
|
|
|
63
|
|
||
Other accruals and reserves
|
12
|
|
|
28
|
|
||
Stock compensation
|
20
|
|
|
20
|
|
||
Deferred rent
|
—
|
|
|
30
|
|
||
Cost sharing adjustment
|
21
|
|
|
21
|
|
||
Other amortization
|
16
|
|
|
13
|
|
||
Obligations under financing leases
|
—
|
|
|
70
|
|
||
Operating lease liabilities
|
158
|
|
|
—
|
|
||
Investments
|
2
|
|
|
1
|
|
||
Other
|
45
|
|
|
28
|
|
||
Total gross deferred tax assets
|
358
|
|
|
300
|
|
||
Valuation allowance on deferred tax assets
|
(13
|
)
|
|
(15
|
)
|
||
Total deferred tax assets
|
345
|
|
|
285
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
||
Purchased intangible amortization
|
(27
|
)
|
|
(32
|
)
|
||
Convertible debt
|
(30
|
)
|
|
(41
|
)
|
||
Property and equipment
|
(47
|
)
|
|
(94
|
)
|
||
Operating lease right-of-use assets
|
(111
|
)
|
|
—
|
|
||
Investments
|
(62
|
)
|
|
(45
|
)
|
||
Other
|
(5
|
)
|
|
(3
|
)
|
||
Total deferred tax liabilities
|
(282
|
)
|
|
(215
|
)
|
||
Deferred tax assets, net
|
$
|
63
|
|
|
$
|
70
|
|
In millions
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
||||||
Balance at beginning of year
|
$
|
88
|
|
|
$
|
79
|
|
|
$
|
65
|
|
Increases related to prior year tax positions
|
1
|
|
|
1
|
|
|
2
|
|
|||
Decreases related to prior year tax positions
|
—
|
|
|
(1
|
)
|
|
—
|
|
|||
Increases related to current year tax positions
|
12
|
|
|
12
|
|
|
14
|
|
|||
Decreases related to lapse of statute of limitations
|
(22
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|||
Balance at end of year
|
$
|
79
|
|
|
$
|
88
|
|
|
$
|
79
|
|
10. EMPLOYEE BENEFIT PLANS
|
11. SEGMENTS AND GEOGRAPHIC DATA
|
In millions
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
3,543
|
|
|
$
|
3,334
|
|
|
$
|
2,754
|
|
Consolidated VIEs
|
1
|
|
|
10
|
|
|
6
|
|
|||
Eliminations
|
(1
|
)
|
|
(11
|
)
|
|
(8
|
)
|
|||
Consolidated revenue
|
$
|
3,543
|
|
|
$
|
3,333
|
|
|
$
|
2,752
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
186
|
|
|
$
|
175
|
|
|
$
|
153
|
|
Consolidated VIEs
|
3
|
|
|
6
|
|
|
6
|
|
|||
Eliminations
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|||
Consolidated depreciation and amortization
|
$
|
188
|
|
|
$
|
179
|
|
|
$
|
156
|
|
|
|
|
|
|
|
||||||
Income (loss) from operations:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
1,008
|
|
|
$
|
970
|
|
|
$
|
696
|
|
Consolidated VIEs
|
(24
|
)
|
|
(90
|
)
|
|
(92
|
)
|
|||
Eliminations
|
1
|
|
|
3
|
|
|
2
|
|
|||
Consolidated income from operations
|
$
|
985
|
|
|
$
|
883
|
|
|
$
|
606
|
|
In millions
|
December 29,
2019 |
|
December 30,
2018 |
|
December 31,
2017 |
||||||
Total assets:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
7,316
|
|
|
$
|
6,912
|
|
|
$
|
5,223
|
|
Consolidated VIEs
|
—
|
|
|
154
|
|
|
45
|
|
|||
Eliminations
|
—
|
|
|
(107
|
)
|
|
(11
|
)
|
|||
Consolidated total assets
|
$
|
7,316
|
|
|
$
|
6,959
|
|
|
$
|
5,257
|
|
|
|
|
|
|
|
||||||
Capital expenditures:
|
|
|
|
|
|
||||||
Core Illumina
|
$
|
209
|
|
|
$
|
294
|
|
|
$
|
306
|
|
Consolidated VIEs
|
—
|
|
|
2
|
|
|
4
|
|
|||
Consolidated capital expenditures
|
$
|
209
|
|
|
$
|
296
|
|
|
$
|
310
|
|
In millions
|
December 29,
2019 |
|
December 30,
2018 |
||||
United States
|
$
|
696
|
|
|
$
|
907
|
|
Singapore
|
112
|
|
|
96
|
|
||
United Kingdom
|
62
|
|
|
62
|
|
||
Other countries
|
19
|
|
|
10
|
|
||
Total
|
$
|
889
|
|
|
$
|
1,075
|
|
12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
|
In millions (except per share amounts)
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue
|
$
|
846
|
|
|
$
|
838
|
|
|
$
|
907
|
|
|
$
|
953
|
|
Gross profit
|
$
|
584
|
|
|
$
|
573
|
|
|
$
|
648
|
|
|
$
|
662
|
|
Consolidated net income
|
$
|
224
|
|
|
$
|
293
|
|
|
$
|
234
|
|
|
$
|
239
|
|
Net income attributable to Illumina stockholders
|
$
|
233
|
|
|
$
|
296
|
|
|
$
|
234
|
|
|
$
|
239
|
|
Earnings per share attributable to Illumina stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.58
|
|
|
$
|
2.01
|
|
|
$
|
1.59
|
|
|
$
|
1.63
|
|
Diluted
|
$
|
1.57
|
|
|
$
|
1.99
|
|
|
$
|
1.58
|
|
|
$
|
1.61
|
|
2018
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
782
|
|
|
$
|
830
|
|
|
$
|
853
|
|
|
$
|
867
|
|
Gross profit
|
$
|
538
|
|
|
$
|
575
|
|
|
$
|
597
|
|
|
$
|
590
|
|
Consolidated net income
|
$
|
197
|
|
|
$
|
200
|
|
|
$
|
188
|
|
|
$
|
198
|
|
Net income attributable to Illumina stockholders
|
$
|
208
|
|
|
$
|
209
|
|
|
$
|
199
|
|
|
$
|
210
|
|
Earnings per share attributable to Illumina stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.42
|
|
|
$
|
1.42
|
|
|
$
|
1.35
|
|
|
$
|
1.43
|
|
Diluted
|
$
|
1.41
|
|
|
$
|
1.41
|
|
|
$
|
1.33
|
|
|
$
|
1.41
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit
|
|
|
|
|
|
|
|
|
|
Filing
|
|
Filed
|
|
Number
|
|
Exhibit Description
|
|
Form
|
|
File Number
|
|
Exhibit
|
|
Date
|
|
Herewith
|
|
2.1
|
|
|
8-K
|
|
001-35406
|
|
2.1
|
|
|
11/5/2018
|
|
|
|
2.2
|
|
|
8-K
|
|
001-35406
|
|
10.1
|
|
|
9/26/2019
|
|
|
|
2.3
|
|
|
8-K
|
|
001-35406
|
|
10.1
|
|
|
1/2/2020
|
|
|
|
3.1
|
|
|
10-Q
|
|
001-35406
|
|
3.3
|
|
|
7/31/2019
|
|
|
|
3.2
|
|
|
10-Q
|
|
001-35406
|
|
3.4
|
|
|
10/25/2019
|
|
|
|
4.1
|
|
|
S-1/A
|
|
333-33922
|
|
4.1
|
|
|
7/3/2000
|
|
|
|
4.2
|
|
|
8-K
|
|
001-35406
|
|
4.1
|
|
|
6/11/2014
|
|
|
|
4.3
|
|
|
8-K
|
|
001-35406
|
|
4.2
|
|
|
6/11/2014
|
|
|
|
4.4
|
|
|
10-Q
|
|
001-35406
|
|
4.1
|
|
|
10/29/2014
|
|
|
|
4.5
|
|
|
8-K
|
|
001-35406
|
|
4.1
|
|
|
8/21/2018
|
|
|
|
+10.1
|
|
|
10-Q
|
|
000-30361
|
|
10.55
|
|
|
7/25/2008
|
|
|
|
+10.2
|
|
|
10-K
|
|
000-30361
|
|
10.33
|
|
|
2/26/2009
|
|
|
|
+10.3
|
|
|
10-K
|
|
000-30361
|
|
10.34
|
|
|
2/26/2009
|
|
|
|
+10.4
|
|
|
10-K
|
|
001-35406
|
|
10.4
|
|
|
2/24/2012
|
|
|
|
+10.5
|
|
|
10-K
|
|
000-30361
|
|
10.7
|
|
|
2/26/2010
|
|
|
10.6
|
|
|
10-Q
|
|
000-30361
|
|
10.5
|
|
|
5/3/2007
|
|
|
|
+10.7
|
|
|
8-K
|
|
000-30361
|
|
99.3
|
|
|
11/26/2007
|
|
|
|
+10.7
|
|
|
8-K
|
|
000-30361
|
|
99.4
|
|
|
11/26/2007
|
|
|
|
+10.8
|
|
|
8-K
|
|
000-30361
|
|
99.5
|
|
|
11/26/2007
|
|
|
|
+10.9
|
|
|
10-K
|
|
000-30361
|
|
10.25
|
|
|
2/26/2009
|
|
|
|
+10.10
|
|
|
10-K
|
|
000-30361
|
|
10.26
|
|
|
2/26/2009
|
|
|
|
+10.11
|
|
|
10-K
|
|
001-35406
|
|
10.11
|
|
|
2/13/2018
|
|
|
|
+10.12
|
|
|
10-K
|
|
001-35406
|
|
10.12
|
|
|
2/13/2018
|
|
|
|
10.13
|
|
|
10-Q
|
|
000-30361
|
|
10.41
|
|
|
5/3/2007
|
|
|
|
10.14
|
|
|
10-Q
|
|
000-30361
|
|
10.42
|
|
|
5/3/2007
|
|
|
|
10.15
|
|
|
10-Q
|
|
001-35406
|
|
10.1
|
|
|
5/3/2012
|
|
|
|
10.16
|
|
|
10-K
|
|
001-35406
|
|
10.23
|
|
|
2/18/2015
|
|
|
|
10.17
|
|
|
10-K
|
|
001-35406
|
|
10.24
|
|
|
2/18/2015
|
|
|
|
10.18
|
|
|
10-K
|
|
001-35406
|
|
10.18
|
|
|
2/13/2018
|
|
|
|
+10.19
|
|
|
14D-9
|
|
005-60457
|
|
99(e)(6)
|
|
|
2/7/2012
|
|
|
|
10.20
|
|
|
10-K
|
|
001-35406
|
|
10.26
|
|
|
2/18/2015
|
|
|
|
10.21
|
|
|
10-K
|
|
001-35406
|
|
10.27
|
|
|
2/18/2015
|
|
|
|
10.22
|
|
|
10-K
|
|
001-35406
|
|
10.22
|
|
|
2/13/2018
|
|
|
10.23
|
|
|
10-K
|
|
001-35406
|
|
10.23
|
|
|
2/13/2018
|
|
|
|
10.24
|
|
|
10-K
|
|
001-35406
|
|
10.24
|
|
|
2/13/2018
|
|
|
|
10.25
|
|
|
|
|
|
|
|
|
|
|
X
|
||
10.26
|
|
|
|
|
|
|
|
|
|
|
X
|
||
10.27
|
|
|
10-Q
|
|
001-35406
|
|
10.1
|
|
|
7/31/2015
|
|
|
|
10.28
|
|
|
10-K
|
|
001-35406
|
|
10.29
|
|
|
3/2/2016
|
|
|
|
10.29
|
|
|
10-K
|
|
001-35406
|
|
10.30
|
|
|
3/2/2016
|
|
|
|
10.30
|
|
|
10-K
|
|
001-35406
|
|
10.28
|
|
|
2/14/2017
|
|
|
|
10.31
|
|
|
10-K
|
|
001-35406
|
|
10.29
|
|
|
2/14/2017
|
|
|
|
10.32
|
|
|
10-K
|
|
001-35406
|
|
10.30
|
|
|
2/14/2017
|
|
|
|
10.33
|
|
|
10-Q
|
|
001-35406
|
|
10.10
|
|
|
4/25/2018
|
|
|
|
+10.34
|
|
|
|
|
|
|
|
|
|
|
X
|
||
21.1
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
23.1
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
24.1
|
|
Power of Attorney (included on the signature page)
|
|
|
|
|
|
|
|
|
|
|
X
|
31.1
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
|
X
|
32.2
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|
|
|
|
|
|
|
|
|
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
|
|
104
|
|
Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101
|
|
|
|
|
|
|
|
|
|
X
|
+
|
|
Management contract or corporate plan or arrangement
|
|
|
Page
|
PART I
|
||
Item 1B
|
Unresolved Staff Comments
|
None
|
Item 4
|
Mine Safety Disclosures
|
Not Applicable
|
|
|
|
PART II
|
||
Item 9
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
None
|
Item 9B
|
Other Information
|
None
|
|
|
|
PART III
|
||
|
|
|
PART IV
|
||
|
|
ILLUMINA, INC.
|
|
|
|
|
|
By
|
/s/ FRANCIS A. DESOUZA
|
|
|
Francis A. deSouza
President and Chief Executive Officer
|
/s/ FRANCIS A. DESOUZA
|
|
President, Chief Executive Officer, and Director
(Principal Executive Officer)
|
|
February 10, 2020
|
Francis A. deSouza
|
|
|
|
|
|
|
|
|
|
/s/ SAM A. SAMAD
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
February 10, 2020
|
Sam A. Samad
|
|
|
|
|
|
|
|
|
|
/s/ KAREN MCGINNIS
|
|
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
|
|
February 10, 2020
|
Karen McGinnis
|
|
|
|
|
|
|
|
|
|
/s/ JAY T. FLATLEY
|
|
Chairman of the Board of Directors
|
|
February 10, 2020
|
Jay T. Flatley
|
|
|
|
|
|
|
|
|
|
/s/ FRANCES ARNOLD
|
|
Director
|
|
February 10, 2020
|
Frances Arnold
|
|
|
|
|
|
|
|
|
|
/s/ CAROLINE D. DORSA
|
|
Director
|
|
February 10, 2020
|
Caroline D. Dorsa
|
|
|
|
|
|
|
|
|
|
/s/ ROBERT S. EPSTEIN
|
|
Director
|
|
February 10, 2020
|
Robert S. Epstein
|
|
|
|
|
|
|
|
|
|
/s/ SCOTT GOTTLIEB
|
|
Director
|
|
February 10, 2020
|
Scott Gottlieb, M.D.
|
|
|
|
|
|
|
|
|
|
/s/ GARY S. GUTHART
|
|
Director
|
|
February 10, 2020
|
Gary S. Guthart, Ph.D.
|
|
|
|
|
|
|
|
|
|
/s/ PHILIP W. SCHILLER
|
|
Director
|
|
February 10, 2020
|
Philip W. Schiller
|
|
|
|
|
|
|
|
|
|
/s/ SUSAN E. SIEGEL
|
|
Director
|
|
February 10, 2020
|
Susan E. Siegel
|
|
|
|
|
|
|
|
|
|
/s/ JOHN W. THOMPSON
|
|
Director
|
|
February 10, 2020
|
John W. Thompson
|
|
|
|
|
1.
|
Section 2.1 is deleted in its entirety and replaced with the following:
|
2.
|
Section 2.3 of the Agreement is deleted in its entirety and replaced with the following:
|
3.
|
Section 2.8(a) of the Agreement is deleted in its entirety and replaced with the following:
|
4.
|
Section 5.1(b) of the Agreement is deleted in its entirety and replaced with the following:
|
ILLUMINA
|
|
SEQUENOM
|
||
By:
|
/s/ Jeff Eidel
|
|
By:
|
/s/ Michael Minahan
|
Name:
|
Jeff Eidel
|
|
Name:
|
Michael Minahan
|
Title:
|
VP, Corporate & Business Development
|
|
Title:
|
Sr VP
|
Date:
|
3/15/2018
|
|
Date:
|
3/15/2018
|
1.
|
The definition of “Authorized Lab” is deleted in its entirety and replaced with:
|
2.
|
Section 3.2(c)(i) is deleted in its entirety and replaced with:
|
3.
|
Schedule 1 is deleted in its entirety and replaced with the attached new Schedule 1. For clarity, Schedule 1A and 1B remain unchanged.
|
ILLUMINA
|
SEQUENOM
|
|||
By:
|
/s/ Jeffrey S. Eidel
|
|
By:
|
/s/ Michael F Minahan
|
Name:
|
Jeffrey S. Eidel
|
|
Name:
|
Michael F. Minahan
|
Title:
|
Head of Corporate & Business Development
|
|
Title:
|
Sr. Vice President & General Manager
|
Date:
|
4/12/2019
|
|
Date:
|
4/12/2019
|
Name of Subsidiary
|
|
Jurisdiction
|
|
Doing Business As
|
|
||||
Advanced Liquid Logic Inc.
|
|
Delaware
|
|
Advanced Liquid Logic Inc.
|
Edico Genome Corp.
|
|
Delaware
|
|
Edico Genome Corp.
|
BlueGnome, Ltd.
|
|
United Kingdom
|
|
BlueGnome, Ltd.
|
Epicentre Technologies Corporation
|
|
Wisconsin
|
|
Epicentre Biotechnologies
|
Conexio Genomics Pty Ltd.
|
|
Australia
|
|
Conexio Genomics Pty Ltd.
|
FC Ops Corp.
|
|
Delaware
|
|
FC Ops Corp.
|
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 (China) Scientific Co Ltd
|
|
China
|
|
Illumina China (Scientific) Co Ltd
|
Illumina US Manufacturing Operations, Inc.
|
|
Delaware
|
|
Illumina US Manufacturing Operations, Inc.
|
Illumina France Holding Sarl
|
|
France
|
|
Illumina France Holding Sarl
|
Illumina France Sarl
|
|
France
|
|
Illumina France Sarl
|
Illumina Finland Oy
|
|
Finland
|
|
Illumina Finland Oy
|
Illumina GmbH
|
|
Germany
|
|
Illumina GmbH
|
Illumina Hong Kong Limited
|
|
Hong Kong
|
|
Illumina Hong Kong Limited
|
Illumina Iceland ehf
|
|
Iceland
|
|
Illumina Iceland ehf
|
Illumina India Biotechnology Private Limited
|
|
India
|
|
Illumina India Biotechnology Private Limited
|
Illumina Ireland Commercial Limited
|
|
Ireland
|
|
Illumina Ireland Commercial Limited
|
Illumina Korea Ltd.
|
|
Republic of Korea
|
|
Illumina Korea Ltd.
|
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 Norway AS
|
|
Norway
|
|
Illumina Norway AS
|
Illumina New Zealand Limited
|
|
New Zealand
|
|
Illumina New Zealand Limited
|
Illumina Rus
|
|
Russia
|
|
Illumina Rus
|
Illumina Singapore Pte. Ltd.
|
|
Singapore
|
|
Illumina Singapore Pte. Ltd
|
Illumina Shanghai (Trading) Co., Ltd.
|
|
China
|
|
Illumina Shanghai (Trading) Co., Ltd.
|
Illumina Shanghai (Trading) Co Ltd Beijing Branch
|
|
China
|
|
Illumina Shanghai (Trading) Co Ltd Beijing Branch
|
Illumina Switzerland GmbH
|
|
Switzerland
|
|
Illumina Switzerland GmbH
|
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
|
Illumina Belgium BVBA
|
|
Belgium
|
|
Illumina Belgium BVBA
|
thromboDx BV
|
|
Netherlands
|
|
thromboDx BV
|
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:
|
|
/s/ FRANCIS A. DESOUZA
|
|
|
|
Francis A. deSouza
|
|
|
|
President and Chief Executive Officer
|
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:
|
|
/s/ SAM A. SAMAD
|
|
|
|
Sam A. Samad
|
|
|
|
Senior Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
By:
|
|
/s/ FRANCIS A. DESOUZA
|
|
|
|
Francis A. deSouza
|
|
|
|
President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
By:
|
|
/s/ SAM A. SAMAD
|
|
|
|
Sam A. Samad
|
|
|
|
Senior Vice President and Chief Financial Officer
|