Substantially Raises Fiscal Year 2014 Guidance
Third quarter 2014 results:
- Revenue of
$481 million , a 35% increase compared to$357 million in the third quarter of 2013 - GAAP net income for the quarter of
$93 million , or$0.63 per diluted share, compared to$31 million , or$0.22 per diluted share, for the third quarter of 2013 - Non-GAAP net income for the quarter of
$114 million , or$0.77 per diluted share, compared to$63 million , or$0.45 per diluted share, for the third quarter of 2013 (see the table entitled “Itemized Reconciliation Between GAAP and Non-GAAP Net Income” for a reconciliation of these GAAP and non-GAAP financial measures) - Cash flow from operations of
$146 million and free cash flow of$117 million for the quarter
Gross margin in the third quarter of 2014 was 69.5% compared to 58.8% in the prior year period; the prior year period included impairment charges of
Research and development (R&D) expenses for the third quarter of 2014 were
Selling, general and administrative (SG&A) expenses for the third quarter of 2014 were
Depreciation and amortization expenses were
“Illumina experienced tremendous momentum in the third quarter, with strong shipments in HiSeq X, NextSeq and MiSeq, as well as the associated consumables, resulting in record financial results,” stated
Updates since our last earnings release:
- Announced the launch of the HiSeq X™ HD v2 Reagent Kit for use on the HiSeq X Ten Sequencing System and the HiSeq® Rapid v2 Reagent Kit for use on the HiSeq 2500 Sequencing System
- Announced a £78 million deal with Genomics England to sequence 100,000 human genomes
- Announced the formation of the
Actionable Genome Consortium , alongside world-renowned cancer centers, in an effort to recommend standards for applying NGS to cancer tumors - Entered into strategic partnerships with
AstraZeneca , Janssen, andSanofi to develop a universal NGS-based oncology test system - Announced the selection of
Encoded Genomics, Inc. ,EpiBiome, Inc. , andXcell Biosciences Inc. to the inaugural class of theIllumina Accelerator - Launched new BaseSpace® apps developed with AB SCIEX to bring together proteomics and next-generation sequencing capabilities
- Further strengthened Illumina’s Board of Directors with the appointment of
Jeff Huber , Senior Vice President atGoogle, Inc.
Financial outlook and guidance
The non-GAAP financial guidance discussed below reflects certain pro forma adjustments to assist in analyzing and assessing our core operational performance. Please see our Reconciliation of Non-GAAP Financial Guidance included in this release for a reconciliation of the GAAP and non-GAAP financial measures.
As a result of strong year-to-date results, the Company has increased its full year 2014 guidance to revenue growth of approximately 30% year-over-year and non-GAAP earnings per fully diluted share of
Quarterly conference call information
The conference call will begin at
A replay of the conference call will be available from
Statement regarding use of non-GAAP financial measures
The Company reports non-GAAP results for diluted net income per share, net income, gross margins, operating expenses, operating margins, other income, and free cash flow in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
The Company’s financial measures under GAAP include substantial charges related to stock compensation expense, legal contingencies, amortization of acquired intangible assets, non-cash interest expense associated with the Company’s convertible debt instruments that may be settled in cash, acquisition related expense, and others that are listed in the itemized reconciliations between GAAP and non-GAAP financial measures included in this press release. Per share amounts also include, through the first quarter of 2014, the double dilution associated with the accounting treatment of the Company’s 0.625% convertible senior notes and the corresponding call option overlay. Management believes that presentation of operating results that excludes these items and per share double dilution provides useful supplemental information to investors and facilitates the analysis of the Company’s core operating results and comparison of operating results across reporting periods. Management also believes that this supplemental non-GAAP information is therefore useful to investors in analyzing and assessing the Company’s past and future operating performance.
The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.
Use of forward-looking statements
This release contains projections, information about our financial outlook, earnings guidance, and other forward-looking statements that involve risks and uncertainties. These forward-looking statements are based on our expectations as of the date of this release and may differ materially from actual future events or results. Among the important factors that could cause actual results to differ materially from those in any forward-looking statements are (i) our ability to further develop and commercialize our instruments and consumables and to deploy new products, services, and applications, and expand the markets, for our technology platforms; (ii) our ability to manufacture robust instrumentation and consumables; (iii) our ability to successfully identify and integrate acquired technologies, products, or businesses; (iv) our expectations and beliefs regarding future conduct and growth of the business and the markets in which we operate; (v) challenges inherent in developing, manufacturing, and launching new products and services; and (vi) our ability to maintain our revenue levels and profitability during periods of research funding reduction or uncertainty and adverse economic and business conditions, together with other factors detailed in our filings with the
About
| Illumina, Inc. | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| (In thousands) | ||||||
| September 28, | December 29, | |||||
| 2014 | 2013 | |||||
| ASSETS | (unaudited) | |||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 829,895 | $ | 711,637 | ||
| Short-term investments | 441,532 | 453,966 | ||||
| Accounts receivable, net | 276,675 | 238,946 | ||||
| Inventory | 199,298 | 154,099 | ||||
| Deferred tax assets, current portion | 101,930 | 36,076 | ||||
| Prepaid expenses and other current assets | 57,624 | 22,811 | ||||
| Total current assets | 1,906,954 | 1,617,535 | ||||
| Property and equipment, net | 247,643 | 202,666 | ||||
| Goodwill | 724,887 | 723,061 | ||||
| Intangible assets, net | 299,345 | 331,173 | ||||
| Deferred tax assets, long-term portion | 39,729 | 88,480 | ||||
| Other assets | 59,648 | 56,091 | ||||
| Total assets | $ | 3,278,206 | $ | 3,019,006 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 96,069 | $ | 73,655 | ||
| Accrued liabilities | 304,133 | 219,120 | ||||
| Accrued legal contingencies | 155,080 | — | ||||
| Long-term debt, current portion | 301,119 | 29,288 | ||||
| Total current liabilities | 856,401 | 322,063 | ||||
| Long-term debt | 979,836 | 839,305 | ||||
| Long-term legal contingencies | — | 132,933 | ||||
| Other long-term liabilities | 167,656 | 191,221 | ||||
| Conversion option subject to cash settlement | — | 282 | ||||
| Stockholders’ equity | 1,274,313 | 1,533,202 | ||||
| Total liabilities and stockholders’ equity | $ | 3,278,206 | $ | 3,019,006 | ||
| Illumina, Inc. | ||||||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product revenue | $ | 416,163 | $ | 318,603 | $ | 1,169,182 | $ | 928,270 | ||||||||
| Service and other revenue | 64,467 | 38,197 | 179,797 | 105,582 | ||||||||||||
| Total revenue | 480,630 | 356,800 | 1,348,979 | 1,033,852 | ||||||||||||
| Cost of revenue: | ||||||||||||||||
| Cost of product revenue (a) | 113,103 | 119,954 | 338,851 | 308,082 | ||||||||||||
| Cost of service and other revenue (a) | 23,909 | 17,643 | 68,598 | 48,732 | ||||||||||||
| Amortization of acquired intangible assets | 9,677 | 9,263 | 28,757 | 24,397 | ||||||||||||
| Total cost of revenue | 146,689 | 146,860 | 436,206 | 381,211 | ||||||||||||
| Gross profit | 333,941 | 209,940 | 912,773 | 652,641 | ||||||||||||
| Operating expense: | ||||||||||||||||
| Research and development (a) | 85,082 | 70,957 | 245,108 | 200,015 | ||||||||||||
| Selling, general and administrative (a) | 119,888 | 95,617 | 344,110 | 269,391 | ||||||||||||
| Legal contingencies | 7,705 | — | 7,705 | 115,369 | ||||||||||||
| Acquisition related expense (gain), net | 903 | (3,942 | ) | (335 | ) | (5,846 | ) | |||||||||
| Headquarter relocation | 870 | 518 | 4,357 | (232 | ) | |||||||||||
| Unsolicited tender offer related expense | — | 1,326 | — | 13,621 | ||||||||||||
| Total operating expense | 214,448 | 164,476 | 600,945 | 592,318 | ||||||||||||
| Income from operations | 119,493 | 45,464 | 311,828 | 60,323 | ||||||||||||
| Other expense, net | (7,050 | ) | (8,317 | ) | (55,131 | ) | (21,378 | ) | ||||||||
| Income before income taxes | 112,443 | 37,147 | 256,697 | 38,945 | ||||||||||||
| Provision for (benefit from) income taxes | 18,954 | 5,790 | 56,626 | (5,702 | ) | |||||||||||
| Net income | $ | 93,489 | $ | 31,357 | $ | 200,071 | $ | 44,647 | ||||||||
| Net income per basic share | $ | 0.66 | $ | 0.25 | $ | 1.50 | $ | 0.36 | ||||||||
| Net income per diluted share | $ | 0.63 | $ | 0.22 | $ | 1.34 | $ | 0.32 | ||||||||
| Shares used in calculating basic net income per share | 141,142 | 125,465 | 133,290 | 124,532 | ||||||||||||
| Shares used in calculating diluted net income per share | 147,512 | 140,601 | 149,084 | 138,630 | ||||||||||||
| (a) Includes total stock-based compensation expense for stock-based awards: | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Cost of product revenue | $ | 2,572 | $ | 1,524 | $ | 6,816 | $ | 4,410 | ||||||||
| Cost of service and other revenue | 311 | 233 | 880 | 544 | ||||||||||||
| Research and development | 14,589 | 9,561 | 39,043 | 26,521 | ||||||||||||
| Selling, general and administrative | 27,197 | 16,091 | 67,350 | 44,605 | ||||||||||||
| Stock-based compensation expense before taxes | $ | 44,669 | $ | 27,409 | $ | 114,089 | $ | 76,080 | ||||||||
| Illumina, Inc. | ||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net cash provided by operating activities (a) | $ | 145,605 | $ | 83,136 | $ | 360,722 | $ | 259,582 | ||||||||
| Net cash (used in) provided by investing activities | (44,231 | ) | (101,295 | ) | (73,841 | ) | 81,161 | |||||||||
| Net cash provided by (used in) financing activities (a) | 55,495 | (75,053 | ) | (166,950 | ) | (82,275 | ) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (2,195 | ) | 1,437 | (1,673 | ) | (613 | ) | |||||||||
| Net increase (decrease) in cash and cash equivalents | 154,674 | (91,775 | ) | 118,258 | 257,855 | |||||||||||
| Cash and cash equivalents, beginning of period | 675,221 | 783,611 | 711,637 | 433,981 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 829,895 | $ | 691,836 | $ | 829,895 | $ | 691,836 | ||||||||
| Calculation of free cash flow: | ||||||||||||||||
| Net cash provided by operating activities (a) | $ | 145,605 | $ | 83,136 | $ | 360,722 | $ | 259,582 | ||||||||
| Purchases of property and equipment | (28,828 | ) | (18,930 | ) | (71,164 | ) | (51,905 | ) | ||||||||
| Free cash flow (b) | $ | 116,777 | $ | 64,206 | $ | 289,558 | $ | 207,677 | ||||||||
| (a) Net cash provided by operating activities excludes excess tax benefit related to stock-based compensation of $102.6 million in the first three quarters of 2014, of which $25.3 million was recorded in Q3, and $27.2 million in the first three quarters of 2013, of which $12.4 million was recorded in Q3. Net cash used in financing activities reflects the excess tax benefit as a corresponding in-flow in the respective periods. | ||||||||||||||||
| (b) Free cash flow, which is a non-GAAP financial measure, is calculated as net cash provided by operating activities reduced by purchases of property and equipment. Free cash flow is useful to management as it is one of the metrics used to evaluate our performance and to compare us with other companies in our industry. However, our calculation of free cash flow may not be comparable to similar measures used by other companies. | ||||||||||||||||
| Illumina, Inc. | ||||||||||||||||
| Results of Operations - Non-GAAP | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME PER SHARE: | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| GAAP net income per share - diluted | $ | 0.63 | $ | 0.22 | $ | 1.34 | $ | 0.32 | ||||||||
| Pro forma impact of weighted average shares (a) | — | 0.01 | — | 0.01 | ||||||||||||
| Adjustments to net income: | ||||||||||||||||
| Legal contingencies (b) | 0.09 | 0.03 | 0.16 | 0.93 | ||||||||||||
| Amortization of acquired intangible assets | 0.08 | 0.09 | 0.24 | 0.23 | ||||||||||||
| Non-cash interest expense (c) | 0.07 | 0.07 | 0.19 | 0.20 | ||||||||||||
| Cost-method investment related gain | (0.03 | ) | — | (0.03 | ) | (0.04 | ) | |||||||||
| Acquisition related expense (gain), net (d) | 0.01 | (0.03 | ) | — | (0.04 | ) | ||||||||||
| Headquarter relocation (e) | 0.01 | — | 0.03 | — | ||||||||||||
| Contingent compensation expense (f) | — | 0.02 | 0.03 | 0.06 | ||||||||||||
| Loss on extinguishment of debt | — | — | 0.21 | — | ||||||||||||
| Unsolicited tender offer related expense | — | 0.01 | — | 0.10 | ||||||||||||
| Inventory revaluation adjustment (g) | — | — | — | — | ||||||||||||
| Impairments | — | 0.18 | — | 0.18 | ||||||||||||
| Incremental non-GAAP tax expense (h) | (0.09 | ) | (0.15 | ) | (0.30 | ) | (0.60 | ) | ||||||||
| Non-GAAP net income per share - diluted (i) | $ | 0.77 | $ | 0.45 | $ | 1.87 | $ | 1.35 | ||||||||
| Shares used in calculating non-GAAP diluted net income per share | 147,512 | 139,573 | 148,868 | 137,579 | ||||||||||||
| ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME: | ||||||||||||||||
| GAAP net income | $ | 93,489 | $ | 31,357 | $ | 200,071 | $ | 44,647 | ||||||||
| Legal contingencies (b) | 12,889 | 4,299 | 23,552 | 127,780 | ||||||||||||
| Amortization of acquired intangible assets | 11,264 | 12,853 | 35,962 | 31,789 | ||||||||||||
| Non-cash interest expense (c) | 9,890 | 9,103 | 28,055 | 27,221 | ||||||||||||
| Cost-method investment related gain | (4,427 | ) | — | (4,427 | ) | (6,113 | ) | |||||||||
| Acquisition related expense (gain), net (d) | 903 | (3,942 | ) | (335 | ) | (5,846 | ) | |||||||||
| Headquarter relocation (e) | 870 | 518 | 4,357 | (232 | ) | |||||||||||
| Contingent compensation expense (f) | 496 | 2,444 | 3,832 | 8,124 | ||||||||||||
| Loss on extinguishment of debt | — | 44 | 31,360 | 555 | ||||||||||||
| Unsolicited tender offer related expense | — | 1,326 | — | 13,621 | ||||||||||||
| Inventory revaluation adjustment (g) | — | — | — | 458 | ||||||||||||
| Impairments | — | 25,214 | — | 25,214 | ||||||||||||
| Incremental non-GAAP tax expense (h) | (11,723 | ) | (20,370 | ) | (44,159 | ) | (82,059 | ) | ||||||||
| Non-GAAP net income (i) | $ | 113,651 | $ | 62,846 | $ | 278,268 | $ | 185,159 | ||||||||
| ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP DILUTED NUMBER OF SHARES: | ||||||||||||||||
| Weighted average shares used in calculation of GAAP diluted net income per share | 147,512 | 140,601 | 149,084 | 138,630 | ||||||||||||
| Weighted average dilutive potential common shares issuable of redeemable convertible senior notes (a) | — | (1,028 | ) | (216 | ) | (1,051 | ) | |||||||||
| Weighted average shares used in calculation of non-GAAP diluted net income per share | 147,512 | 139,573 | 148,868 | 137,579 | ||||||||||||
| (a) Pro forma impact of weighted average shares includes the impact of double dilution associated with the accounting treatment of the Company’s outstanding convertible debt and the corresponding call option overlay. | ||||||||||||||||
| (b) Legal contingencies represent charges recorded based on estimated damages for patent litigations, including a judgment associated with the patent litigation brought by Syntrix Biosystems, Inc., or Syntrix. Illumina continues to believe that Syntrix’s claims are without merit and are not supported by the law or facts. Accordingly, on December 3, 2013, Illumina filed an appeal to the court challenging the judgment. | ||||||||||||||||
| (c) Non-cash interest expense is calculated in accordance with the authoritative accounting guidance for convertible debt instruments that may be settled in cash. | ||||||||||||||||
| (d) Acquisition related expense (gain), net consists primarily of net gains from changes in fair value of contingent consideration and transaction related costs. | ||||||||||||||||
| (e) Headquarter relocation for the first three quarters of 2014 consisted of accretion of interest expense on lease exit liability and changes in estimates of such liability. Headquarter relocation for the first three quarters of 2013 included a Q2 gain on lease exit liability as a result of a change in estimate, offset by accretion of interest expense on such liability. | ||||||||||||||||
| (f) Contingent compensation expense relates to contingent payments for post-combination services associated with prior period acquisitions. | ||||||||||||||||
| (g) The Company recorded $0.5 million in cost of goods sold in Q1 2013 for the amortization of inventory revaluation costs in conjunction with the acquisition of Verinata Health, Inc. | ||||||||||||||||
| (h) Incremental non-GAAP tax expense reflects the tax impact related to the non-GAAP adjustments listed above. | ||||||||||||||||
| (i) Non-GAAP net income and diluted net income per share exclude the effect of the pro forma adjustments as detailed above. Non-GAAP net income and diluted net income per share are key drivers of our core operating performance and major factors in management’s bonus compensation each year. Management has excluded the effects of these items in these measures to assist investors in analyzing and assessing our past and future core operating performance. | ||||||||||||||||
| Illumina, Inc. | ||||||||||||||||||||||||||||
| Results of Operations - Non-GAAP (continued) | ||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||
| ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP RESULTS OF OPERATIONS AS A PERCENT OF REVENUE: | ||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
| September 28, | September 29, | September 28, | September 29, | |||||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||
| GAAP gross profit | $ | 333,941 | 69.5 | % | $ | 209,940 | 58.8 | % | $ | 912,773 | 67.7 | % | $ | 652,641 | 63.1 | % | ||||||||||||
| Stock-based compensation expense | 2,883 | 0.6 | % | 1,757 | 0.5 | % | 7,696 | 0.6 | % | 4,954 | 0.5 | % | ||||||||||||||||
| Amortization of acquired intangible assets | 9,677 | 2.0 | % | 9,263 | 2.6 | % | 28,757 | 2.0 | % | 24,397 | 2.4 | % | ||||||||||||||||
| Legal contingencies (a) | 5,184 | 1.1 | % | 4,299 | 1.2 | % | 15,847 | 1.2 | % | 12,411 | 1.2 | % | ||||||||||||||||
| Impairments | — | — | 25,214 | 7.1 | % | — | — | 25,214 | 2.4 | % | ||||||||||||||||||
| Inventory revaluation adjustment (b) | — | — | — | — | — | — | 458 | — | ||||||||||||||||||||
| Non-GAAP gross profit (c) | $ | 351,685 | 73.2 | % | $ | 250,473 | 70.2 | % | $ | 965,073 | 71.5 | % | $ | 720,075 | 69.6 | % | ||||||||||||
| Research and development expense | $ | 85,082 | 17.7 | % | $ | 70,957 | 19.9 | % | $ | 245,108 | 18.2 | % | $ | 200,015 | 19.3 | % | ||||||||||||
| Stock-based compensation expense | (14,589 | ) | (3.0 | )% | (9,561 | ) | (2.7 | )% | (39,043 | ) | (2.9 | )% | (26,521 | ) | (2.6 | )% | ||||||||||||
| Contingent compensation expense (d) | (496 | ) | (0.1 | )% | (107 | ) | — | (1,076 | ) | (0.1 | )% | (432 | ) | — | ||||||||||||||
| Non-GAAP research and development expense | $ | 69,997 | 14.6 | % | $ | 61,289 | 17.2 | % | $ | 204,989 | 15.2 | % | $ | 173,062 | 16.7 | % | ||||||||||||
| Selling, general and administrative expense | $ | 119,888 | 24.9 | % | $ | 95,617 | 26.8 | % | $ | 344,110 | 25.5 | % | $ | 269,391 | 26.1 | % | ||||||||||||
| Stock-based compensation expense | (27,197 | ) | (5.7 | )% | (16,091 | ) | (4.5 | )% | (67,350 | ) | (5.0 | )% | (44,605 | ) | (4.3 | )% | ||||||||||||
| Amortization of acquired intangible assets | (1,587 | ) | (0.2 | )% | (3,590 | ) | (1.0 | )% | (7,205 | ) | (0.5 | )% | (7,392 | ) | (0.8 | )% | ||||||||||||
| Contingent compensation expense (d) | — | — | (2,337 | ) | (0.7 | )% | (2,756 | ) | (0.2 | )% | (7,692 | ) | (0.7 | )% | ||||||||||||||
| Non-GAAP selling, general and administrative expense | $ | 91,104 | 19.0 | % | $ | 73,599 | 20.6 | % | $ | 266,799 | 19.8 | % | $ | 209,702 | 20.3 | % | ||||||||||||
| GAAP operating profit | $ | 119,493 | 24.9 | % | $ | 45,464 | 12.7 | % | $ | 311,828 | 23.1 | % | $ | 60,323 | 5.8 | % | ||||||||||||
| Stock-based compensation expense | 44,669 | 9.3 | % | 27,409 | 7.7 | % | 114,089 | 8.5 | % | 76,080 | 7.4 | % | ||||||||||||||||
| Legal contingencies (a) | 12,889 | 2.7 | % | 4,299 | 1.2 | % | 23,552 | 1.7 | % | 127,780 | 12.4 | % | ||||||||||||||||
| Amortization of acquired intangible assets | 11,264 | 2.3 | % | 12,853 | 3.6 | % | 35,962 | 2.7 | % | 31,789 | 3.1 | % | ||||||||||||||||
| Acquisition related expense (gain), net (e) | 903 | 0.2 | % | (3,942 | ) | (1.1 | )% | (335 | ) | — | (5,846 | ) | (0.6 | )% | ||||||||||||||
| Headquarter relocation (f) | 870 | 0.2 | % | 518 | 0.1 | % | 4,357 | 0.3 | % | (232 | ) | — | ||||||||||||||||
| Contingent compensation expense (d) | 496 | 0.1 | % | 2,444 | 0.7 | % | 3,832 | 0.3 | % | 8,124 | 0.8 | % | ||||||||||||||||
| Unsolicited tender offer related expense | — | — | 1,326 | 0.4 | % | — | — | 13,621 | 1.3 | % | ||||||||||||||||||
| Inventory revaluation adjustment (b) | — | — | — | — | — | — | 458 | — | ||||||||||||||||||||
| Impairments | — | — | 25,214 | 7.1 | % | — | — | 25,214 | 2.4 | % | ||||||||||||||||||
| Non-GAAP operating profit (c) | $ | 190,584 | 39.7 | % | $ | 115,585 | 32.4 | % | $ | 493,285 | 36.6 | % | $ | 337,311 | 32.6 | % | ||||||||||||
| GAAP other expense, net | $ | (7,050 | ) | (1.5 | )% | $ | (8,317 | ) | (2.3 | )% | $ | (55,131 | ) | (4.1 | )% | $ | (21,378 | ) | (2.1 | )% | ||||||||
| Non-cash interest expense (g) | 9,890 | 2.1 | % | 9,103 | 2.6 | % | 28,055 | 2.1 | % | 27,221 | 2.6 | % | ||||||||||||||||
| Cost-method investment related gain | (4,427 | ) | (0.9 | )% | — | — | (4,427 | ) | (0.3 | )% | (6,113 | ) | (0.6 | )% | ||||||||||||||
| Loss on extinguishment of debt | — | — | 44 | (0.1 | )% | 31,360 | 2.3 | % | 555 | 0.1 | % | |||||||||||||||||
| Non-GAAP other (expense) income, net (c) | $ | (1,587 | ) | (0.3 | )% | $ | 830 | 0.2 | % | $ | (143 | ) | — | $ | 285 | — | ||||||||||||
|
| ||||||||||||||||||||||||||||
| (a) Legal contingencies represent charges recorded based on estimated damages for patent litigations, including a judgment associated with the patent litigation brought by Syntrix Biosystems, Inc., or Syntrix. Illumina continues to believe that Syntrix’s claims are without merit and are not supported by the law or facts. Accordingly, on December 3, 2013, Illumina filed an appeal to the court challenging the judgment. | ||||||||||||||||||||||||||||
| (b) The Company recorded $0.5 million in cost of goods sold in Q1 2013 for the amortization of inventory revaluation costs in conjunction with the acquisition of Verinata Health, Inc. | ||||||||||||||||||||||||||||
| (c) Non-GAAP gross profit, included within non-GAAP operating profit, is a key measure of the effectiveness and efficiency of manufacturing processes, product mix and the average selling prices of the Company’s products and services. Non-GAAP operating profit, and non-GAAP other (expense) income, net, exclude the effects of the pro forma adjustments as detailed above. Management has excluded the effects of these items in these measures to assist investors in analyzing and assessing past and future core operating performance. | ||||||||||||||||||||||||||||
| (d) Contingent compensation expense relates to contingent payments for post-combination services associated with prior period acquisitions. | ||||||||||||||||||||||||||||
| (e) Acquisition related expense (gain), net consists primarily of net gains from changes in fair value of contingent consideration and transaction related costs. | ||||||||||||||||||||||||||||
| (f) Headquarter relocation for the first three quarters of 2014 consisted of accretion of interest expense on lease exit liability and changes in estimates of such liability. Headquarter relocation for the first three quarters of 2013 included a Q2 gain on lease exit liability as a result of a change in estimate, offset by accretion of interest expense on such liability. | ||||||||||||||||||||||||||||
| (g) Non-cash interest expense is calculated in accordance with the authoritative accounting guidance for convertible debt instruments that may be settled in cash. | ||||||||||||||||||||||||||||
| Illumina, Inc. | ||
| Reconciliation of Non-GAAP Financial Guidance | ||
| The Company’s future performance and financial results are subject to risks and uncertainties, and actual results could differ materially from the guidance set forth below. Some of the factors that could affect the Company’s financial results are stated above in this press release. More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended December 29, 2013, and the Company’s Forms 10-Q for the fiscal quarters ended March 30, 2014 and June 29, 2014. The Company assumes no obligation to update any forward-looking statements or information. | ||
| Fiscal Year 2014 | ||
| Diluted net income per share | ||
| Non-GAAP diluted net income per share | $2.63 – $2.65 | |
| Amortization of acquired intangible assets | (0.20) | |
| Non-cash interest expense (a) | (0.16) | |
| Loss on extinguishment of debt | (0.16) | |
| Legal contingencies (b) | (0.12) | |
| Cost-method investment gain (c) | 0.02 | |
| Contingent compensation expense (d) | (0.02) | |
| Headquarter relocation (e) | (0.02) | |
| GAAP diluted net income per share | $1.97 - $1.99 | |
| (a) Non-cash interest expense is calculated in accordance with the authoritative accounting guidance for convertible debt instruments that may be settled in cash. | ||
| (b) Legal contingencies represent charges recorded based on estimated damages for patent litigations, including a judgment associated with the patent litigation brought by Syntrix Biosystems, Inc., or Syntrix. Illumina continues to believe that Syntrix’s claims are without merit and are not supported by the law or facts. Accordingly, on December 3, 2013, Illumina filed an appeal to the court challenging the judgment. | ||
| (c) Cost-method investment gain represents additional sales proceeds received from escrow funds related to a prior year sale of investment. | ||
| (d) Contingent compensation expense relates to contingent payments for post-combination services associated with prior period acquisitions. | ||
| (e) Headquarter relocation represents accretion of interest expense on lease exit liability and changes in estimates of such liability. | ||
Source:
Illumina, Inc.
Investors:
Rebecca Chambers
858.255.5243
rchambers@illumina.com
or
Media:
Eric Endicott
858.882.6822
pr@illumina.com
