Fourth quarter 2015 results:
- Revenue of
$592 million , a 15% increase compared to$512 million in the fourth quarter of 2014, and an increase of 19% on a constant currency basis - GAAP net income attributable to
Illumina stockholders for the quarter of$104 million , or$0.70 per diluted share, compared to$153 million , or$1.03 per diluted share, for the fourth quarter of 2014 - Non-GAAP net income attributable to
Illumina stockholders for the quarter of$121 million , or$0.81 per diluted share, compared to$129 million , or$0.87 per diluted share, for the fourth quarter of 2014 (see the table entitled “Itemized Reconciliation Between GAAP and Non-GAAP Net Income Attributable to Illumina Stockholders” for a reconciliation of these GAAP and non-GAAP financial measures) - Cash flow from operations of
$240 million and free cash flow of$205 million for the quarter
Gross margin in the fourth quarter of 2015 was 69.4% compared to 75.1% in the prior year period. Excluding the effect of non-cash stock compensation expense, amortization of acquired intangible assets, legal contingencies, and impairments, non-GAAP gross margin was 71.7% for the fourth quarter of 2015 compared to 72.3% in the prior year period.
Research and development (R&D) expenses for the fourth quarter of 2015 were
Selling, general and administrative (SG&A) expenses for the fourth quarter of 2015 were
Depreciation and amortization expenses were
Fiscal 2015 results:
- Revenue of
$2,220 million , a 19% increase compared to$1,861 million in fiscal 2014, and an increase of 23% on a constant currency basis - GAAP net income attributable to
Illumina stockholders of$462 million , or$3.10 per diluted share, compared to$353 million , or$2.37 per diluted share, in fiscal 2014 - Non-GAAP net income attributable to
Illumina stockholders of$495 million , or$3.32 per diluted share, compared to$407 million , or$2.74 per diluted share, in fiscal 2014 (see the table entitled “Itemized Reconciliation Between GAAP and Non-GAAP Net Income Attributable to Illumina Stockholders” for a reconciliation of these GAAP and non-GAAP financial measures) - Cash flow from operations of
$660 million and free cash flow of$517 million for the fiscal year
Gross margin for fiscal 2015 was 69.8% compared to 69.7% in the prior year. Excluding the effect of non-cash stock compensation expense, amortization of acquired intangible assets, legal contingencies, and impairments, non-GAAP gross margin was 72.4% for fiscal 2015 compared to 71.7% in the prior year.
Research and development (R&D) expenses for fiscal 2015 were
Selling, general and administrative (SG&A) expenses for fiscal 2015 were
“We closed 2015 with strong momentum as fourth quarter orders and revenue exceeded our expectations,” stated
Updates since our last earnings release:
- Announced the formation of GRAIL, a new company to enable asymptomatic cancer screening through the development of a pan-cancer screening test
- Launched the MiniSeq System, a flexible benchtop sequencer priced at $49,500, and cost-efficient to run, which will allow virtually any laboratory to adopt next-generation sequencing (NGS), regardless of sample volume
- Launched Infinium XT, a 96-sample BeadChip offering laboratories the ability to perform genotyping on larger numbers of samples
- Previewed Project Firefly, a highly-reliable, easy-to-use NGS platform available in the second half of 2017 that will minimize hands-on time for both library preparation and sequencing
- Launched EpiSeq™, an NGS service for epidemiological monitoring and control of healthcare-associated infections, in partnership with bioMérieux
- Entered into partnership with
Bio-Rad Laboratories, Inc. to develop an NGS workflow for single-cell analysis - Entered into a collaboration with Novogene to develop clinical applications in the fields of reproductive health and oncology based on Illumina’s NGS technology
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.
For fiscal 2016, the Company is projecting approximately 16% revenue growth, assuming current exchange rates, and non-GAAP earnings per diluted share attributable to
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 such as stock compensation expense, amortization of acquired intangible assets, non-cash interest expense associated with the company’s convertible debt instruments that may be settled in cash, and others that are listed in the itemized reconciliations between GAAP and non-GAAP financial measures included in this press release. Management believes that presentation of operating results that excludes these items 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) the application of generally accepted accounting principles, which are highly complex and involve many subjective assumptions, estimates, and judgments, together with other factors detailed in our filings with the
About
Illumina, Inc. | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
(In thousands) | ||||||||||
January 3, | December 28, | |||||||||
2016 | 2014 | |||||||||
ASSETS | (unaudited) | |||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 768,770 | $ | 636,154 | ||||||
Short-term investments | 617,450 | 702,217 | ||||||||
Accounts receivable, net | 385,529 | 289,458 | ||||||||
Inventory | 270,777 | 191,144 | ||||||||
Deferred tax assets, current portion | — | 40,786 | ||||||||
Prepaid expenses and other current assets | 54,297 | 29,844 | ||||||||
Total current assets | 2,096,823 | 1,889,603 | ||||||||
Property and equipment, net | 342,694 | 265,264 | ||||||||
Goodwill | 752,629 | 724,904 | ||||||||
Intangible assets, net | 273,621 | 314,500 | ||||||||
Deferred tax assets, long-term portion | 134,515 | 49,848 | ||||||||
Other assets | 87,465 | 95,521 | ||||||||
Total assets | $ | 3,687,747 | $ | 3,339,640 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 139,226 | $ | 82,626 | ||||||
Accrued liabilities | 396,339 | 335,276 | ||||||||
Long-term debt, current portion | 74,929 | 304,256 | ||||||||
Total current liabilities | 610,494 | 722,158 | ||||||||
Long-term debt | 1,015,649 | 986,780 | ||||||||
Other long-term liabilities | 180,505 | 167,904 | ||||||||
Redeemable noncontrolling interests | 32,546 | — | ||||||||
Stockholders’ equity | 1,848,553 | 1,462,798 | ||||||||
Total liabilities and stockholders’ equity | $ | 3,687,747 | $ | 3,339,640 | ||||||
Illumina, Inc. | ||||||||||||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||||||||
2016 | 2014 | 2016 | 2014 | |||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Product revenue | $ | 497,922 | $ | 450,329 | $ | 1,890,633 | $ | 1,619,511 | ||||||||||||||||
Service and other revenue | 93,626 | 62,050 | 329,129 | 241,847 | ||||||||||||||||||||
Total revenue | 591,548 | 512,379 | 2,219,762 | 1,861,358 | ||||||||||||||||||||
Cost of revenue: | ||||||||||||||||||||||||
Cost of product revenue (a) | 130,775 | 93,069 | 490,812 | 431,920 | ||||||||||||||||||||
Cost of service and other revenue (a) | 39,561 | 23,757 | 133,850 | 92,355 | ||||||||||||||||||||
Amortization of acquired intangible assets | 10,853 | 10,616 | 45,810 | 39,373 | ||||||||||||||||||||
Total cost of revenue | 181,189 | 127,442 | 670,472 | 563,648 | ||||||||||||||||||||
Gross profit | 410,359 | 384,937 | 1,549,290 | 1,297,710 | ||||||||||||||||||||
Operating expense: | ||||||||||||||||||||||||
Research and development (a) | 114,347 | 142,947 | 401,527 | 388,055 | ||||||||||||||||||||
Selling, general and administrative (a) | 147,251 | 122,173 | 524,657 | 466,283 | ||||||||||||||||||||
Legal contingencies | 4,000 | (82,043 | ) | 19,000 | (74,338 | ) | ||||||||||||||||||
Headquarter relocation | 436 | 1,281 | (2,611 | ) | 5,638 | |||||||||||||||||||
Acquisition related expense (gain), net | 325 | (2,304 | ) | (6,124 | ) | (2,639 | ) | |||||||||||||||||
Total operating expense | 266,359 | 182,054 | 936,449 | 782,999 | ||||||||||||||||||||
Income from operations | 144,000 | 202,883 | 612,841 | 514,711 | ||||||||||||||||||||
Other expense, net | (8,993 | ) | (10,822 | ) | (29,699 | ) | (65,953 | ) | ||||||||||||||||
Income before income taxes | 135,007 | 192,061 | 583,142 | 448,758 | ||||||||||||||||||||
Provision for income taxes | 32,143 | 38,781 | 125,752 | 95,407 | ||||||||||||||||||||
Consolidated net income | 102,864 | 153,280 | 457,390 | 353,351 | ||||||||||||||||||||
Add: Net loss attributable to noncontrolling interests | 1,613 | — | 4,169 | — | ||||||||||||||||||||
Net income attributable to Illumina stockholders | $ | 104,477 | $ | 153,280 | $ | 461,559 | $ | 353,351 | ||||||||||||||||
Earnings per share attributable to Illumina stockholders: | ||||||||||||||||||||||||
Basic | $ | 0.72 | $ | 1.08 | $ | 3.19 | $ | 2.61 | ||||||||||||||||
Diluted | $ | 0.70 | $ | 1.03 | $ | 3.10 | $ | 2.37 | ||||||||||||||||
Shares used in computing earnings per common share: | ||||||||||||||||||||||||
Basic | 145,963 | 142,342 | 144,826 | 135,553 | ||||||||||||||||||||
Diluted | 148,952 | 148,657 | 149,069 | 148,977 | ||||||||||||||||||||
(a) Includes total stock-based compensation expense for stock-based awards: | ||||||||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||||||||
2016 | 2014 | 2016 | 2014 | |||||||||||||||||||||
Cost of product revenue | $ | 2,829 | $ | 2,635 | $ | 9,841 | $ | 9,451 | ||||||||||||||||
Cost of service and other revenue | 366 | 324 | 1,609 | 1,204 | ||||||||||||||||||||
Research and development | 10,849 | 11,837 | 42,001 | 50,880 | ||||||||||||||||||||
Selling, general and administrative | 21,445 | 23,666 | 79,142 | 91,016 | ||||||||||||||||||||
Stock-based compensation expense before taxes | $ | 35,489 | $ | 38,462 | $ | 132,593 | $ | 152,551 | ||||||||||||||||
Illumina, Inc. | ||||||||||||||||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||||||||
2016 | 2014 | 2016 | 2014 | |||||||||||||||||||||
Net cash provided by operating activities (a) | $ | 240,378 | $ | 140,549 | $ | 659,596 | $ | 501,271 | ||||||||||||||||
Net cash provided by (used in) investing activities | 229,398 | (332,783 | ) | (106,146 | ) | (406,624 | ) | |||||||||||||||||
Net cash (used in) provided by financing activities (a) | (253,141 | ) | 202 | (418,762 | ) | (166,748 | ) | |||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 606 | (1,709 | ) | (2,072 | ) | (3,382 | ) | |||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 217,241 | (193,741 | ) | 132,616 | (75,483 | ) | ||||||||||||||||||
Cash and cash equivalents, beginning of period | 551,529 | 829,895 | 636,154 | 711,637 | ||||||||||||||||||||
Cash and cash equivalents, end of period | $ | 768,770 | $ | 636,154 | $ | 768,770 | $ | 636,154 | ||||||||||||||||
Calculation of free cash flow: | ||||||||||||||||||||||||
Net cash provided by operating activities (a) | $ | 240,378 | $ | 140,549 | $ | 659,596 | $ | 501,271 | ||||||||||||||||
Purchases of property and equipment | (35,486 | ) | (34,832 | ) | (142,847 | ) | (105,996 | ) | ||||||||||||||||
Free cash flow (b) | $ | 204,892 | $ | 105,717 | $ | 516,749 | $ | 395,275 | ||||||||||||||||
(a) Net cash provided by operating activities excludes excess tax benefit related to stock-based compensation of
(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 EARNINGS PER SHARE ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS: | ||||||||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||||||||
2016 | 2014 | 2016 | 2014 | |||||||||||||||||||||
GAAP earnings per share attributable to Illumina stockholders - diluted | $ | 0.70 | $ | 1.03 | $ | 3.10 | $ | 2.37 | ||||||||||||||||
Amortization of acquired intangible assets | 0.09 | 0.08 | 0.35 | 0.32 | ||||||||||||||||||||
Non-cash interest expense (a) | 0.06 | 0.07 | 0.26 | 0.26 | ||||||||||||||||||||
Legal contingencies (b) | 0.03 | (0.40 | ) | 0.13 | (0.24 | ) | ||||||||||||||||||
Contingent compensation expense (c) | — | — | — | 0.03 | ||||||||||||||||||||
Headquarter relocation | — | 0.01 | (0.02 | ) | 0.04 | |||||||||||||||||||
Loss on extinguishment of debt | — | — | 0.03 | 0.21 | ||||||||||||||||||||
Acquisition related expense (gain), net (d) | — | (0.02 | ) | (0.04 | ) | (0.02 | ) | |||||||||||||||||
Cost-method investment gain, net (e) | — | — | (0.10 | ) | (0.03 | ) | ||||||||||||||||||
Tax benefit related to cost-sharing arrangement (f) | — | — | (0.17 | ) | — | |||||||||||||||||||
Incremental non-GAAP tax (expense) benefit (g) | (0.07 | ) | 0.10 | (0.22 | ) | (0.20 | ) | |||||||||||||||||
Non-GAAP earnings per share attributable to Illumina stockholders - diluted (h) | $ | 0.81 | $ | 0.87 | $ | 3.32 | $ | 2.74 | ||||||||||||||||
Shares used in calculating non-GAAP diluted earnings per share attributable to Illumina stockholders | 148,952 | 148,657 | 149,069 | 148,815 | ||||||||||||||||||||
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP NET INCOME ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS: | ||||||||||||||||||||||||
GAAP net income attributable to Illumina stockholders | $ | 104,477 | $ | 153,280 | $ | 461,559 | $ | 353,351 | ||||||||||||||||
Amortization of acquired intangible assets | 12,376 | 12,203 | 51,829 | 48,165 | ||||||||||||||||||||
Non-cash interest expense (a) | 8,705 | 10,099 | 38,589 | 38,154 | ||||||||||||||||||||
Legal contingencies (b) | 4,000 | (59,483 | ) | 19,000 | (35,931 | ) | ||||||||||||||||||
Contingent compensation expense (c) | 685 | 433 | 934 | 4,265 | ||||||||||||||||||||
Headquarter relocation | 436 | 1,281 | (2,611 | ) | 5,638 | |||||||||||||||||||
Loss on extinguishment of debt | 325 | — | 4,062 | 31,360 | ||||||||||||||||||||
Acquisition related expense (gain), net (d) | 325 | (2,304 | ) | (6,124 | ) | (2,639 | ) | |||||||||||||||||
Cost-method investment gain, net (e) | (119 | ) | — | (15,601 | ) | (4,427 | ) | |||||||||||||||||
Impairments (i) | — | (485 | ) | — | (485 | ) | ||||||||||||||||||
Tax benefit related to cost-sharing arrangement (f) | (56 | ) | — | (24,813 | ) | — | ||||||||||||||||||
Incremental non-GAAP tax (expense) benefit (g) | (10,584 | ) | 13,925 | (31,621 | ) | (30,234 | ) | |||||||||||||||||
Non-GAAP net income attributable to Illumina stockholders (h) | $ | 120,570 | $ | 128,949 | $ | 495,203 | $ | 407,217 | ||||||||||||||||
ITEMIZED RECONCILIATION BETWEEN GAAP AND NON-GAAP DILUTED NUMBER OF SHARES ATTRIBUTABLE TO ILLUMINA STOCKHOLDERS: | ||||||||||||||||||||||||
Weighted average shares used in calculation of GAAP diluted earnings per share | 148,952 | 148,657 | 149,069 | 148,977 | ||||||||||||||||||||
Weighted average dilutive potential common shares issuable of redeemable convertible senior notes | — | — | — | (162 | ) | |||||||||||||||||||
Weighted average shares used in calculation of non-GAAP diluted earnings per share attributable to Illumina stockholders | 148,952 | 148,657 | 149,069 | 148,815 | ||||||||||||||||||||
(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 in fiscal 2015 represent charges related to patent litigation. Legal contingencies in fiscal 2014 primarily represent a gain related to the settlement of our patent litigation with
(c) Contingent compensation expense relates to contingent payments for post-combination services associated with an acquisition.
(d) Acquisition related expense (gain), net consists of changes in fair value of contingent consideration and transaction related costs.
(e) Cost-method investment gain, net consists primarily of gains on disposition of investments partially offset by impairment charges on other investments.
(f) Tax benefit related to cost-sharing arrangement refers to the exclusion of stock compensation from prior period cost-sharing charges as a result of a recent tax court ruling.
(g) Incremental non-GAAP tax (expense) benefit reflects the tax impact related to the non-GAAP adjustments listed above.
(h) Non-GAAP net income attributable to
(i) Impairments in fiscal 2014 consisted of a gain on an asset sale associated with a non-core product line discontinued in 2013, partially offset by an intangible asset impairment.
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 | Years Ended | |||||||||||||||||||||||||||||||||||||||||||
January 3, | December 28, | January 3, | December 28, | |||||||||||||||||||||||||||||||||||||||||
2016 | 2014 | 2016 | 2014 | |||||||||||||||||||||||||||||||||||||||||
GAAP gross profit | $ | 410,359 | 69.4 | % | $ | 384,937 | 75.1 | % | $ | 1,549,290 | 69.8 | % | $ | 1,297,710 | 69.7 | % | ||||||||||||||||||||||||||||
Stock-based compensation expense | 3,195 | 0.5 | % | 2,959 | 0.6 | % | 11,450 | 0.5 | % | 10,655 | 0.6 | % | ||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 10,853 | 1.8 | % | 10,616 | 2.1 | % | 45,810 | 2.1 | % | 39,373 | 2.1 | % | ||||||||||||||||||||||||||||||||
Legal contingencies (a) | — | — | (26,240 | ) | (5.1 | )% | — | — | (10,393 | ) | (0.6 | )% | ||||||||||||||||||||||||||||||||
Impairments (b) | — | — | (2,000 | ) | (0.4 | )% | — | — | (2,000 | ) | (0.1 | )% | ||||||||||||||||||||||||||||||||
Non-GAAP gross profit (c) | $ | 424,407 | 71.7 | % | $ | 370,272 | 72.3 | % | $ | 1,606,550 | 72.4 | % | $ | 1,335,345 | 71.7 | % | ||||||||||||||||||||||||||||
GAAP research and development expense | $ | 114,347 | 19.3 | % | $ | 142,947 | 27.9 | % | $ | 401,527 | 18.1 | % | $ | 388,055 | 20.8 | % | ||||||||||||||||||||||||||||
Stock-based compensation expense | (10,849 | ) | (1.8 | )% | (11,837 | ) | (2.3 | )% | (42,001 | ) | (1.9 | )% | (50,880 | ) | (2.7 | )% | ||||||||||||||||||||||||||||
Contingent compensation expense (d) | (83 | ) | — | (433 | ) | (0.1 | )% | (127 | ) | — | (1,509 | ) | (0.1 | )% | ||||||||||||||||||||||||||||||
Legal contingencies (a) | — | — | (48,800 | ) | (9.5 | )% | — | — | (48,800 | ) | (2.6 | )% | ||||||||||||||||||||||||||||||||
Impairments (b) | — | — | (1,515 | ) | (0.3 | )% | — | — | (1,515 | ) | (0.1 | )% | ||||||||||||||||||||||||||||||||
Non-GAAP research and development expense | $ | 103,415 | 17.5 | % | $ | 80,362 | 15.7 | % | $ | 359,399 | 16.2 | % | $ | 285,351 | 15.3 | % | ||||||||||||||||||||||||||||
GAAP selling, general and administrative expense | $ | 147,251 | 24.9 | % | $ | 122,173 | 23.8 | % | $ | 524,657 | 23.6 | % | $ | 466,283 | 25.1 | % | ||||||||||||||||||||||||||||
Stock-based compensation expense | (21,445 | ) | (3.6 | )% | (23,666 | ) | (4.6 | )% | (79,142 | ) | (3.5 | )% | (91,016 | ) | (4.9 | )% | ||||||||||||||||||||||||||||
Amortization of acquired intangible assets | (1,523 | ) | (0.3 | )% | (1,587 | ) | (0.3 | )% | (6,019 | ) | (0.3 | )% | (8,792 | ) | (0.6 | )% | ||||||||||||||||||||||||||||
Contingent compensation expense (d) | (602 | ) | (0.1 | )% | — | — | (807 | ) | — | (2,756 | ) | (0.1 | )% | |||||||||||||||||||||||||||||||
Non-GAAP selling, general and administrative expense | $ | 123,681 | 20.9 | % | $ | 96,920 | 18.9 | % | $ | 438,689 | 19.8 | % | $ | 363,719 | 19.5 | % | ||||||||||||||||||||||||||||
GAAP operating profit | $ | 144,000 | 24.3 | % | $ | 202,883 | 39.6 | % | $ | 612,841 | 27.6 | % | $ | 514,711 | 27.7 | % | ||||||||||||||||||||||||||||
Stock-based compensation expense | 35,489 | 6.0 | % | 38,462 | 7.5 | % | 132,593 | 5.9 | % | 152,551 | 8.2 | % | ||||||||||||||||||||||||||||||||
Amortization of acquired intangible assets | 12,376 | 2.1 | % | 12,203 | 2.4 | % | 51,829 | 2.4 | % | 48,165 | 2.6 | % | ||||||||||||||||||||||||||||||||
Legal contingencies (a) | 4,000 | 0.7 | % | (59,483 | ) | (11.6 | )% | 19,000 | 0.9 | % | (35,931 | ) | (1.9 | )% | ||||||||||||||||||||||||||||||
Contingent compensation expense (d) | 685 | 0.1 | % | 433 | 0.1 | % | 934 | — | 4,265 | 0.2 | % | |||||||||||||||||||||||||||||||||
Headquarter relocation | 436 | 0.1 | % | 1,281 | 0.2 | % | (2,611 | ) | (0.1 | )% | 5,638 | 0.2 | % | |||||||||||||||||||||||||||||||
Acquisition related expense (gain), net (e) | 325 | 0.1 | % | (2,304 | ) | (0.4 | )% | (6,124 | ) | (0.3 | )% | (2,639 | ) | (0.1 | )% | |||||||||||||||||||||||||||||
Impairments (b) | — | — | (485 | ) | (0.1 | )% | — | — | (485 | ) | — | |||||||||||||||||||||||||||||||||
Non-GAAP operating profit (c) | $ | 197,311 | 33.4 | % | $ | 192,990 | 37.7 | % | $ | 808,462 | 36.4 | % | $ | 686,275 | 36.9 | % | ||||||||||||||||||||||||||||
GAAP other expense, net | $ | (8,993 | ) | (1.5 | )% | $ | (10,822 | ) | (2.1 | )% | $ | (29,699 | ) | (1.3 | )% | $ | (65,953 | ) | (3.5 | )% | ||||||||||||||||||||||||
Non-cash interest expense (f) | 8,705 | 1.5 | % | 10,099 | 2.0 | % | 38,589 | 1.7 | % | 38,154 | 2.0 | % | ||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | 325 | — | — | — | 4,062 | 0.2 | % | 31,360 | 1.7 | % | ||||||||||||||||||||||||||||||||||
Cost-method investment gain, net (g) | (119 | ) | — | — | — | (15,601 | ) | (0.7 | )% | (4,427 | ) | (0.2 | )% | |||||||||||||||||||||||||||||||
Non-GAAP other expense, net (c) | $ | (82 | ) | — | $ | (723 | ) | (0.1 | )% | $ | (2,649 | ) | (0.1 | )% | $ | (866 | ) | — | ||||||||||||||||||||||||||
(a) Legal contingencies in fiscal 2015 represent charges related to patent litigation. Legal contingencies recorded in fiscal 2014 primarily represent a gain related to the settlement of our patent litigation with
(b) Impairments in fiscal 2014 consisted of a gain recorded in cost of sales on an asset sale associated with a non-core product line discontinued in 2013, partially offset by an intangible asset impairment recorded in research and development expense.
(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, 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 an acquisition.
(e) Acquisition related expense (gain), net consists of changes in fair value of contingent consideration and transaction related costs.
(f) Non-cash interest expense is calculated in accordance with the authoritative accounting guidance for convertible debt instruments that may be settled in cash.
(g) Cost-method investment gain, net consists primarily of gains on disposition of investments partially offset by impairment charges on other investments.
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
Fiscal Year 2016 | ||||
Gross margin | ||||
Non-GAAP gross margin | 73% | |||
Amortization of acquired intangible assets | (2)% | |||
GAAP gross margin | 71% | |||
Operating margin | ||||
Non-GAAP operating margin (a) | 33% | |||
Stock-based compensation expense | (6)% | |||
Amortization of acquired intangible assets | (2)% | |||
GAAP operating margin | 25% | |||
Diluted earnings per share attributable to Illumina stockholders | ||||
Non-GAAP diluted earnings per share attributable to Illumina stockholders | $3.55 - $3.65 | |||
Amortization of acquired intangible assets | (0.32) | |||
Non-cash interest expense (b) | (0.20) | |||
Contingent compensation (c) | (0.02) | |||
Headquarter relocation (d) | (0.01) | |||
Incremental non-GAAP tax expense (e) | 0.19 | |||
GAAP diluted earnings per share attributable to Illumina stockholders | $3.19 - $3.29 | |||
(a) Operating margin implied at the mid-point of guidance provided for non-GAAP diluted earnings per share.
(b) Non-cash interest expense is calculated in accordance with the authoritative accounting guidance for convertible debt instruments that may be settled in cash.
(c) Contingent compensation expense relates to contingent payments for post-combination services associated with an acquisition.
(d) Headquarter relocation represents accretion of interest expense on lease exit liability and changes in estimate of such liability.
(e) Incremental non-GAAP tax expense reflects the tax impact related to the non-GAAP adjustments listed above.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160202006638/en/
Source:
Illumina, Inc.
Investors:
Rebecca Chambers
858.255.5243
rchambers@illumina.com
or
Media:
Eric Endicott
858.882.6822
pr@illumina.com