Cover Page
Cover Page - shares shares in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jul. 26, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-35406 | |
Entity Address, Address Line One | 5200 Illumina Way | |
Entity Address, City or Town | San Diego | |
Entity Address, State or Province | CA | |
Entity Registrant Name | Illumina Inc | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 33-0804655 | |
Entity Address, Postal Zip Code | 92122 | |
City Area Code | 858 | |
Local Phone Number | 202-4500 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | ILMN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 147 | |
Entity Central Index Key | 0001110803 | |
Current Fiscal Year End Date | --12-29 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 1,943 | $ 1,144 |
Short-term investments | 1,230 | 2,368 |
Accounts receivable, net | 470 | 514 |
Inventory | 420 | 386 |
Prepaid expenses and other current assets | 93 | 78 |
Total current assets | 4,156 | 4,490 |
Property and equipment, net | 854 | 1,075 |
Operating lease right-of-use assets | 558 | |
Goodwill | 824 | 831 |
Intangible assets, net | 162 | 185 |
Deferred tax assets, net | 69 | 70 |
Other assets | 350 | 308 |
Total assets | 6,973 | 6,959 |
Current liabilities: | ||
Accounts payable | 139 | 184 |
Accrued liabilities | 473 | 513 |
Long-term debt, current portion | 1,107 | |
Total current liabilities | 612 | 1,804 |
Operating lease liabilities | 698 | |
Long-term debt | 1,120 | 890 |
Other long-term liabilities | 211 | 359 |
Redeemable noncontrolling interests | 0 | 61 |
Stockholders’ equity: | ||
Common stock | 2 | 2 |
Additional paid-in capital | 3,436 | 3,290 |
Accumulated other comprehensive income (loss) | 5 | (1) |
Retained earnings | 3,594 | 3,083 |
Treasury stock, at cost | (2,705) | (2,616) |
Total Illumina stockholders’ equity | 4,332 | 3,758 |
Noncontrolling interests | 87 | |
Total stockholders’ equity | 4,332 | 3,845 |
Total liabilities and stockholders’ equity | $ 6,973 | $ 6,959 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2019 | Jul. 01, 2018 | |
Revenue: | ||||
Total revenue | $ 838 | $ 830 | $ 1,684 | $ 1,612 |
Cost of revenue: | ||||
Amortization of acquired intangible assets | 10 | 9 | 19 | 17 |
Total cost of revenue | 265 | 255 | 527 | 499 |
Gross profit | 573 | 575 | 1,157 | 1,113 |
Operating expense: | ||||
Research and development | 166 | 151 | 335 | 288 |
Selling, general and administrative | 202 | 197 | 412 | 380 |
Total operating expense | 368 | 348 | 747 | 668 |
Income from operations | 205 | 227 | 410 | 445 |
Other income (expense): | ||||
Interest income | 20 | 11 | 43 | 16 |
Interest expense | (15) | (11) | (30) | (22) |
Other income, net | 136 | 5 | 157 | 14 |
Total other income, net | 141 | 5 | 170 | 8 |
Income before income taxes | 346 | 232 | 580 | 453 |
Provision for income taxes | 53 | 32 | 63 | 56 |
Consolidated net income | 293 | 200 | 517 | 397 |
Add: Net loss attributable to noncontrolling interests | 3 | 9 | 12 | 20 |
Net income attributable to Illumina stockholders | $ 296 | $ 209 | $ 529 | $ 417 |
Earnings per share attributable to Illumina stockholders: | ||||
Basic (in dollars per share) | $ 2.01 | $ 1.42 | $ 3.60 | $ 2.84 |
Diluted (in dollars per share) | $ 1.99 | $ 1.41 | $ 3.56 | $ 2.82 |
Shares used in computing earnings per share: | ||||
Basic (in shares) | 147 | 147 | 147 | 147 |
Diluted (in shares) | 149 | 148 | 149 | 148 |
Product revenue | ||||
Revenue: | ||||
Total revenue | $ 704 | $ 673 | $ 1,372 | $ 1,301 |
Cost of revenue: | ||||
Cost of revenue | 196 | 181 | 378 | 355 |
Service and other revenue | ||||
Revenue: | ||||
Total revenue | 134 | 157 | 312 | 311 |
Cost of revenue: | ||||
Cost of revenue | $ 59 | $ 65 | $ 130 | $ 127 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2019 | Jul. 01, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Consolidated net income | $ 293 | $ 200 | $ 517 | $ 397 |
Unrealized gain on available-for-sale debt securities, net of deferred tax | 3 | 6 | ||
Total consolidated comprehensive income | 296 | 200 | 523 | 397 |
Add: Comprehensive loss attributable to noncontrolling interests | 3 | 9 | 12 | 20 |
Comprehensive income attributable to Illumina stockholders | $ 299 | $ 209 | $ 535 | $ 417 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Treasury Stock | Noncontrolling Interests |
Beginning balance (in shares) at Dec. 31, 2017 | 191 | 44 | |||||
Beginning balance at Dec. 31, 2017 | $ 2,749 | $ 2 | $ 2,833 | $ (1) | $ 2,256 | $ (2,341) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 207 | 208 | (1) | ||||
Issuance of common stock, net of repurchases | 8 | 21 | $ (13) | ||||
Share-based compensation | 48 | 48 | |||||
Adjustment to the carrying value of redeemable noncontrolling interests | (5) | (5) | |||||
Contributions from noncontrolling interest owners | 61 | 61 | |||||
Issuance of subsidiary shares in business combination | 5 | 5 | |||||
Ending balance (in shares) at Apr. 01, 2018 | 191 | 44 | |||||
Ending balance at Apr. 01, 2018 | 3,073 | $ 2 | 2,897 | (1) | 2,464 | $ (2,354) | 65 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 207 | 209 | (2) | ||||
Issuance of common stock, net of repurchases | (1) | 1 | $ (2) | ||||
Share-based compensation | 50 | 50 | |||||
Vesting of redeemable equity awards | (1) | (1) | |||||
Adjustment to the carrying value of redeemable noncontrolling interests | (8) | (8) | |||||
Contributions from noncontrolling interest owners | 31 | 31 | |||||
Ending balance (in shares) at Jul. 01, 2018 | 191 | 44 | |||||
Ending balance at Jul. 01, 2018 | 3,351 | $ 2 | 2,939 | (1) | 2,673 | $ (2,356) | 94 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 196 | 199 | (3) | ||||
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax | (1) | (1) | |||||
Issuance of common stock, net of repurchases | (83) | 23 | $ (106) | ||||
Share-based compensation | 47 | 47 | |||||
Vesting of redeemable equity awards | (1) | (1) | |||||
Adjustment to the carrying value of redeemable noncontrolling interests | (8) | (8) | |||||
Issuance of convertible senior notes, net of tax impact | 93 | 93 | |||||
Ending balance (in shares) at Sep. 30, 2018 | 191 | 44 | |||||
Ending balance at Sep. 30, 2018 | 3,594 | $ 2 | 3,093 | (2) | 2,872 | $ (2,462) | 91 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 206 | 210 | (4) | ||||
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax | 1 | 1 | |||||
Issuance of common stock, net of repurchases (in shares) | 1 | (1) | |||||
Issuance of common stock, net of repurchases | (153) | 1 | $ (154) | ||||
Share-based compensation | 48 | 48 | |||||
Adjustment to the carrying value of redeemable noncontrolling interests | 148 | 148 | |||||
Cumulative-effect adjustment from adoption of ASU | 1 | 1 | |||||
Ending balance (in shares) at Dec. 30, 2018 | 192 | 45 | |||||
Ending balance at Dec. 30, 2018 | 3,845 | $ 2 | 3,290 | (1) | 3,083 | $ (2,616) | 87 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 231 | 233 | (2) | ||||
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax | 3 | 3 | |||||
Issuance of common stock, net of repurchases | (59) | 27 | $ (86) | ||||
Share-based compensation | 51 | 51 | |||||
Vesting of redeemable equity awards | (1) | (1) | |||||
Adjustment to the carrying value of redeemable noncontrolling interests | 18 | 18 | |||||
Cumulative-effect adjustment from adoption of ASU | (18) | (18) | |||||
Ending balance (in shares) at Mar. 31, 2019 | 192 | 45 | |||||
Ending balance at Mar. 31, 2019 | 4,070 | $ 2 | 3,385 | 2 | 3,298 | $ (2,702) | 85 |
Beginning balance (in shares) at Dec. 30, 2018 | 192 | 45 | |||||
Beginning balance at Dec. 30, 2018 | 3,845 | $ 2 | 3,290 | (1) | 3,083 | $ (2,616) | 87 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax | 6 | ||||||
Ending balance (in shares) at Jun. 30, 2019 | 193 | 45 | |||||
Ending balance at Jun. 30, 2019 | 4,332 | $ 2 | 3,436 | 5 | 3,594 | $ (2,705) | 0 |
Beginning balance (in shares) at Mar. 31, 2019 | 192 | 45 | |||||
Beginning balance at Mar. 31, 2019 | 4,070 | $ 2 | 3,385 | 2 | 3,298 | $ (2,702) | 85 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 295 | 296 | (1) | ||||
Unrealized gain (loss) on available-for-sale debt securities, net of deferred tax | 3 | 3 | |||||
Issuance of common stock, net of repurchases (in shares) | 1 | ||||||
Issuance of common stock, net of repurchases | 0 | 3 | $ (3) | ||||
Share-based compensation | 48 | 48 | |||||
Adjustment to the carrying value of redeemable noncontrolling interests | (2) | (2) | |||||
Deconsolidation of Helix | (82) | 2 | (84) | ||||
Ending balance (in shares) at Jun. 30, 2019 | 193 | 45 | |||||
Ending balance at Jun. 30, 2019 | $ 4,332 | $ 2 | $ 3,436 | $ 5 | $ 3,594 | $ (2,705) | $ 0 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jul. 01, 2018 | |
Cash flows from operating activities: | ||
Consolidated net income | $ 517 | $ 397 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 76 | 65 |
Amortization of intangible assets | 20 | 19 |
Share-based compensation expense | 99 | 98 |
Accretion of debt discount | 27 | 16 |
Deferred income taxes | 6 | (22) |
Unrealized gains on marketable equity securities | (104) | |
Payment of accreted debt discount | (84) | |
Gains on deconsolidation | (54) | |
Other | (5) | (6) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 46 | 12 |
Inventory | (36) | (28) |
Prepaid expenses and other current assets | (11) | 1 |
Operating lease right-of-use assets and liabilities, net | (3) | |
Other assets | (11) | (5) |
Accounts payable | (43) | 1 |
Accrued liabilities | (87) | 17 |
Other long-term liabilities | (12) | (15) |
Net cash provided by operating activities | 341 | 550 |
Cash flows from investing activities: | ||
Maturities of available-for-sale securities | 1,204 | 556 |
Purchases of available-for-sale securities | (393) | (1,137) |
Sales of available-for-sale securities | 386 | 332 |
Purchases of property and equipment | (103) | (167) |
Deconsolidation of Helix cash | (29) | |
Proceeds from deconsolidation of GRAIL | 15 | |
Net purchases of strategic investments | (13) | (9) |
Net cash paid for acquisitions | (100) | |
Net cash provided by (used in) investing activities | 1,067 | (525) |
Cash flows from financing activities: | ||
Payments on financing obligations | (550) | (2) |
Common stock repurchases | (63) | |
Taxes paid related to net share settlement of equity awards | (26) | (15) |
Proceeds from issuance of common stock | 30 | 22 |
Contributions from noncontrolling interest owners | 92 | |
Net cash (used in) provided by financing activities | (609) | 97 |
Effect of exchange rate changes on cash and cash equivalents | (3) | |
Net increase in cash and cash equivalents | 799 | 119 |
Cash and cash equivalents at beginning of period | 1,144 | 1,225 |
Cash and cash equivalents at end of period | 1,943 | $ 1,344 |
Supplemental cash flow information: | ||
Cash paid for operating lease liabilities | $ 42 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Interim financial results are not necessarily indicative of results anticipated for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Annual Report on Form 10-K for the fiscal year ended December 30, 2018 , from which the prior year balance sheet information herein was derived. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expense, and related disclosure of contingent assets and liabilities. Actual results could differ from those estimates. The unaudited condensed consolidated financial statements include our accounts, our wholly-owned subsidiaries, majority-owned or controlled companies, and variable interest entities (VIEs) for which we are the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results for the interim periods presented. We evaluate our ownership, contractual and other interests in entities that are not wholly-owned to determine if these entities are VIEs, and, if so, whether we are the primary beneficiary of the VIE. In determining whether we are the primary beneficiary of a VIE and therefore required to consolidate the VIE, we apply a qualitative approach that determines whether we have both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses of, or the rights to receive benefits from, the VIE that could potentially be significant to that VIE. We continuously perform this assessment, as changes to existing relationships or future transactions may result in the consolidation or deconsolidation of a VIE. Effective April 25, 2019, we deconsolidated the financial statements of Helix Holdings I, LLC (Helix). See note “2. Balance Sheet Account Details” for further details. We use the equity method to account for investments through which we have the ability to exercise significant influence, but not control, over the investee. Such investments are recorded in other assets, and our share of net income or loss is recognized on a one quarter lag in other income, net. Fiscal Year Our fiscal year is the 52 or 53 weeks ending the Sunday closest to December 31, with quarters of 13 or 14 weeks ending the Sunday closest to March 31, June 30, September 30, and December 31. The three and six months ended June 30, 2019 and July 1, 2018 were both 13 and 26 weeks, respectively. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Significant Accounting Policies During the three and six months ended June 30, 2019 , there were no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended December 30, 2018 , except as described below. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on the balance sheet as lease liabilities with corresponding right-of-use assets and to disclose key information about leasing arrangements. We adopted Topic 842 on its effective date in the first quarter of 2019 using a modified retrospective approach by recognizing a cumulative-effect adjustment to retained earnings as of December 31, 2018. We elected the available package of practical expedients upon adoption, which allowed us to carry forward our historical assessment of whether existing agreements contained a lease and the classification of our existing operating leases. We continue to report our financial position as of December 30, 2018 under the former lease accounting standard (Topic 840) in our condensed consolidated balance sheet. The following table summarizes the impact of Topic 842 on our condensed consolidated balance sheet upon adoption on December 31, 2018 (in millions): December 31, 2018 (unaudited) Pre-adoption Adoption Impact Post-adoption ASSETS Prepaid expenses and other current assets $ 78 $ (8 ) $ 70 Property and equipment, net 1,075 (241 ) 834 Operating lease right-of-use assets — 579 579 Deferred tax assets, net 70 6 76 Total assets $ 1,223 $ 336 $ 1,559 LIABILITIES AND STOCKHOLDERS’ EQUITY Accrued liabilities $ 513 $ 36 $ 549 Operating lease liabilities — 722 722 Long-term debt 1,107 (269 ) 838 Other long-term liabilities 359 (135 ) 224 Retained earnings 3,083 (18 ) 3,065 Total liabilities and stockholders’ equity $ 5,062 $ 336 $ 5,398 The adoption impact summarized above was primarily due to the recognition of operating lease liabilities with corresponding right-of-use assets based on the present value of our remaining minimum lease payments, and the derecognition of existing fixed assets and financing obligations related to build-to-suit leasing arrangements that, under Topic 840, did not qualify for sale-leaseback accounting. The difference between these amounts, net of deferred tax, was recorded as a cumulative-effect adjustment to retained earnings. Accounting Pronouncements Pending Adoption In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments , which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. We expect to adopt the standard on its effective date in the first quarter of 2020 using a modified retrospective approach. We currently do not expect the adoption to have a material impact on our consolidated financial statements. Revenue Recognition Our revenue is generated primarily from the sale of products and services. Product revenue primarily consists of sales of instruments and consumables used in genetic analysis. Service and other revenue primarily consists of revenue generated from genotyping and sequencing services and instrument service contracts. We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment; and payment is typically due within 60 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer’s acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from genotyping and sequencing services is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expenses when incurred as the amortization period for such costs, if capitalized, would have been one year or less. We regularly enter into contracts with multiple performance obligations. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. Most performance obligations are generally satisfied within a short time frame, approximately three to six months after the contract execution date. As of June 30, 2019 , the aggregate amount of the transaction price allocated to remaining performance obligations was $1,146 million , of which approximately 67% is expected to be converted to revenue in the next twelve months, approximately 13% in the following twelve months, and the remainder thereafter. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone selling price using average selling prices over a rolling 12 -month period coupled with an assessment of current market conditions. If the product or service has no history of sales or if the sales volume is not sufficient, we rely upon prices set by management, adjusted for applicable discounts. Contract liabilities, which consist of deferred revenue and customer deposits, as of June 30, 2019 and December 30, 2018 were $201 million and $206 million , respectively, of which the short-term portions of $167 million and $175 million , respectively, were recorded in accrued liabilities and the remaining long-term portions were recorded in other long-term liabilities. Revenue recorded during the three and six months ended June 30, 2019 included $42 million and $106 million of previously deferred revenue that was included in contract liabilities as of December 30, 2018 . Contract assets as of June 30, 2019 and December 30, 2018 were not material. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. The following table represents revenue by source (in millions): Three Months Ended June 30, July 1, Sequencing Microarray Total Sequencing Microarray Total Consumables $ 497 $ 74 $ 571 $ 460 $ 85 $ 545 Instruments 129 4 133 124 4 128 Total product revenue 626 78 704 584 89 673 Service and other revenue 102 32 134 106 51 157 Total revenue $ 728 $ 110 $ 838 $ 690 $ 140 $ 830 Six Months Ended June 30, July 1, Sequencing Microarray Total Sequencing Microarray Total Consumables $ 978 $ 149 $ 1,127 $ 882 $ 173 $ 1,055 Instruments 234 11 245 237 9 246 Total product revenue 1,212 160 1,372 1,119 182 1,301 Service and other revenue 215 97 312 202 109 311 Total revenue $ 1,427 $ 257 $ 1,684 $ 1,321 $ 291 $ 1,612 Revenue related to our previously consolidated VIE, Helix, is included in sequencing service and other revenue up to April 25, 2019, the date of Helix’s deconsolidation. The following table represents revenue by geographic area, based on region of destination (in millions): Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, Americas $ 476 $ 466 $ 949 $ 906 Europe, Middle East, and Africa 208 202 418 396 Greater China (1) 97 107 185 185 Asia-Pacific 57 55 132 125 Total revenue $ 838 $ 830 $ 1,684 $ 1,612 ____________________________________ (1) Region includes revenue from China, Taiwan, and Hong Kong. Earnings per Share Basic earnings per share attributable to Illumina stockholders is computed based on the weighted average number of common shares outstanding during the period. Diluted earnings per share attributable to Illumina stockholders is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Up to April 25, 2019, the date of Helix’s deconsolidation, per-share earnings of Helix were included in the consolidated basic and diluted earnings per share computations based on our share of Helix’s securities. Potentially dilutive common shares consist of shares issuable under convertible senior notes and equity awards. Convertible senior notes have a dilutive impact when the average market price of our common stock exceeds the applicable conversion price of the respective notes. Potentially dilutive common shares from equity awards are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercise of equity awards and the average amount of unrecognized compensation expense for equity awards are assumed to be used to repurchase shares. The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in millions): Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, Weighted average shares outstanding 147 147 147 147 Effect of potentially dilutive common shares from: Convertible senior notes 1 — 1 — Equity awards 1 1 1 1 Weighted average shares used in calculating diluted earnings per share 149 148 149 148 |
Balance Sheet Account Details
Balance Sheet Account Details | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Account Details | Balance Sheet Account Details Short-term investments Our short-term investments are primarily available-for-sale debt securities that consisted of the following (in millions): June 30, 2019 December 30, 2018 Amortized Cost Gross Unrealized Gains Estimated Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Debt securities in government sponsored entities $ 26 $ — $ 26 $ 21 $ — $ — $ 21 Corporate debt securities 553 4 557 1,060 — (2 ) 1,058 U.S. Treasury securities 488 2 490 1,250 1 (1 ) 1,250 Total $ 1,067 $ 6 $ 1,073 $ 2,331 $ 1 $ (3 ) $ 2,329 Realized gains and losses are determined based on the specific identification method and are reported in interest income. Contractual maturities of available-for-sale debt securities, as of June 30, 2019 , were as follows (in millions): Estimated Fair Value Due within one year $ 516 After one but within five years 557 Total $ 1,073 We have the ability, if necessary, to liquidate any of our cash equivalents and short-term investments to meet our liquidity needs in the next 12 months. Accordingly, those investments with contractual maturities greater than one year from the date of purchase are classified as short-term on the accompanying condensed consolidated balance sheets. Strategic Investments We have strategic investments in privately held companies (non-marketable equity securities) and companies that have completed initial public offerings (marketable equity securities). Our marketable equity securities are measured at fair value. As of June 30, 2019 and December 30, 2018 , the fair value of our marketable equity securities, included in short-term investments, totaled $157 million and $39 million , respectively. Total unrealized gains on our marketable equity securities, included in other income, net, were $102 million and $104 million for the three and six months ended June 30, 2019, respectively. Our non-marketable equity securities without readily determinable market values are initially measured at cost and adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment. As of June 30, 2019 and December 30, 2018 , the aggregate carrying amounts of our non-marketable equity investments without readily determinable fair values, included in other assets, were $217 million and $231 million , respectively. One of our non-marketable equity investments is a VIE for which we have concluded that we are not the primary beneficiary, and therefore, we do not consolidate this VIE in our consolidated financial statements. We have determined our maximum exposure to loss, as a result of our involvement with the VIE, to be the carrying value of our investment, which was $189 million as of June 30, 2019 and December 30, 2018 . We invest in a venture capital investment fund (the Fund) with a capital commitment of $100 million that is callable through April 2026 , of which $57 million remained callable as of June 30, 2019 . Our investment in the Fund is accounted for as an equity-method investment. The carrying amounts of the Fund, included in other assets, were $47 million and $29 million as of June 30, 2019 and December 30, 2018 , respectively. In July 2019, we invested in a second venture capital investment fund with a maximum capital commitment of up to $160 million that is callable through July 2029. Revenue recognized from transactions with our strategic investees was $18 million and $34 million , respectively, for the three and six months ended June 30, 2019 and $36 million and $72 million , respectively, for the three and six months ended July 1, 2018 . Inventory Inventory consisted of the following (in millions): June 30, December 30, Raw materials $ 124 $ 117 Work in process 271 218 Finished goods 25 51 Total inventory $ 420 $ 386 Property and Equipment Property and equipment, net consisted of the following (in millions): June 30, December 30, Leasehold improvements $ 596 $ 567 Machinery and equipment 400 382 Computer hardware and software 263 217 Furniture and fixtures 47 45 Buildings 44 285 Construction in progress 59 100 Total property and equipment, gross 1,409 1,596 Accumulated depreciation (555 ) (521 ) Total property and equipment, net $ 854 $ 1,075 Property and equipment, net included non-cash expenditures of $18 million and $42 million for the six months ended June 30, 2019 and July 1, 2018 , respectively, which were excluded from the condensed consolidated statements of cash flows. Such non-cash expenditures included $16 million recorded under build-to-suit lease accounting for the six months ended July 1, 2018 . As of December 30, 2018, property and equipment, net included $241 million of project construction costs paid or reimbursed by our landlord related to our build-to-suit leases that did not qualify for sale-leaseback accounting under Topic 840. Upon adoption of Topic 842 on December 31, 2018, we derecognized the Buildings related to our build-to-suit leasing arrangements and began to account for these leases as operating leases. See note “1. Basis of Presentation and Summary of Significant Accounting Policies” for further details on the adoption impact of Topic 842. Leases We lease approximately 2.5 million square feet of office, lab, and manufacturing facilities under various non-cancellable operating lease agreements (real estate leases). Our real estate leases have remaining lease terms of 1 to 20 years, which represent the non-cancellable periods of the leases and include extension options that we determined are reasonably certain to be exercised. We exclude extension options that are not reasonably certain to be exercised from our lease terms, ranging from 6 months to 20 years. Our lease payments consist primarily of fixed rental payments for the right to use the underlying leased assets over the lease terms as well as payments for common-area-maintenance and administrative services. We often receive customary incentives from our landlords, such as reimbursements for tenant improvements and rent abatement periods, which effectively reduce the total lease payments owed for these leases. Operating lease right-of-use assets and liabilities on our condensed consolidated balance sheets represent the present value of our remaining lease payments over the remaining lease terms. We do not allocate lease payments to non-lease components; therefore, fixed payments for common-area-maintenance and administrative services are included in our operating lease right-of-use assets and liabilities. We use our incremental borrowing rate to calculate the present value of our lease payments, as the implicit rates in our leases are not readily determinable. As of June 30, 2019 , the maturities of our operating lease liabilities were as follows (in millions): Remaining Lease Payments 2019 $ 35 2020 82 2021 81 2022 83 2023 85 Thereafter 619 Total remaining lease payments (1) 985 Less: imputed interest (243 ) Total operating lease liabilities 742 Less: current portion (44 ) Long-term operating lease liabilities $ 698 Weighted-average remaining lease term 11.5 years Weighted-average discount rate 4.6 % ____________________________________ (1) Total remaining lease payments exclude $53 million of legally binding minimum lease payments for leases signed but not yet commenced. The components of our lease costs included in our condensed consolidated statements of income were as follows (in millions): Three Months Ended Six Months Ended June 30, 2019 June 30, 2019 Operating lease costs $ 21 $ 43 Sublease income (3 ) (6 ) Total lease costs $ 18 $ 37 Operating lease costs consist of the fixed lease payments included in our operating lease liabilities and are recorded on a straight-line basis over the lease terms. We sublease certain real estate to third parties and this sublease income is also recorded on a straight-line basis. Goodwill We test the carrying value of goodwill in accordance with accounting rules on impairment of goodwill, which require us to estimate the fair value of each reporting unit annually, or when impairment indicators exist, and compare such amounts to their respective carrying values to determine if an impairment is required. We performed the annual assessment for goodwill impairment in the second quarter of 2019, noting no impairment. Changes to goodwill during the six months ended June 30, 2019 were as follows (in millions): Goodwill Balance as of December 30, 2018 $ 831 Helix deconsolidation (7 ) Balance as of June 30, 2019 $ 824 Derivatives We are exposed to foreign exchange rate risks in the normal course of business. We enter into foreign exchange contracts to manage foreign currency risks related to monetary assets and liabilities that are denominated in currencies other than the U.S. dollar. These foreign exchange contracts are carried at fair value in other current assets or accrued liabilities and are not designated as hedging instruments. Changes in the value of the derivatives are recognized in other income, net, along with the remeasurement gain or loss on the foreign currency denominated assets or liabilities. As of June 30, 2019 , we had foreign exchange forward contracts in place to hedge exposures in the euro, Japanese yen, Australian dollar, Canadian dollar, Singapore dollar, and British pound. As of June 30, 2019 and December 30, 2018 , the total notional amounts of outstanding forward contracts in place for foreign currency purchases were $256 million and $122 million , respectively. Accrued Liabilities Accrued liabilities consisted of the following (in millions): June 30, December 30, Contract liabilities, current portion $ 167 $ 175 Accrued compensation expenses 132 193 Accrued taxes payable 66 82 Operating lease liabilities, current portion 44 — Other, including warranties 64 63 Total accrued liabilities $ 473 $ 513 Warranties We generally provide a one -year warranty on instruments. Additionally, we provide a warranty on consumables through the expiration date, which generally ranges from six to twelve months after the manufacture date. At the time revenue is recognized, an accrual is established for estimated warranty expenses based on historical experience as well as anticipated product performance. We periodically review the warranty reserve for adequacy and adjust the warranty accrual, if necessary, based on actual experience and estimated costs to be incurred. Warranty expense is recorded as a component of cost of product revenue. Changes in the reserve for product warranties during the three and six months ended June 30, 2019 and July 1, 2018 were as follows (in millions): Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, Balance at beginning of period $ 16 $ 16 $ 19 $ 17 Additions charged to cost of product revenue 6 6 9 12 Repairs and replacements (6 ) (7 ) (12 ) (14 ) Balance at end of period $ 16 $ 15 $ 16 $ 15 Deconsolidation of Helix In July 2015, we obtained a 50% voting equity ownership interest in Helix. We determined that we had unilateral power over one of the activities that most significantly impacts the economic performance of Helix through its contractual arrangements and, as a result, we were deemed to be the primary beneficiary of Helix and were required to consolidate Helix. On April 25, 2019, we entered into an agreement to sell our interest in, and relinquish control over, Helix. As part of the agreement, (i) Helix repurchased all outstanding equity interests previously issued to us in exchange for a contingent value right, (ii) we ceased having a controlling financial interest in Helix, including unilateral power over one of the activities that most significantly impacts the economic performance of Helix, (iii) we were relieved of any potential obligation to redeem certain noncontrolling interests, and (iv) we no longer have representation on Helix’s board of directors. As a result, we deconsolidated Helix’s financial statements effective April 25, 2019 and recorded a gain on deconsolidation of $39 million in other income, net. The gain on deconsolidation includes (i) the contingent value right received from Helix for its repurchase of our ownership interest, recorded at its fair value of $30 million , (ii) the derecognition of the carrying amounts of Helix’s assets and liabilities, and (iii) the derecognition of the noncontrolling interests related to Helix. The operations of Helix, up to the date of deconsolidation, are included in the accompanying condensed consolidated statements of income for the three and six months ended June 30, 2019 and July 1, 2018. During these periods, we absorbed 50% of Helix’s losses. The contingent value right entitles us to receive consideration in an amount dependent upon the outcome of future financing and/or liquidity events related to Helix and has a term of seven years . We elected the fair value option to measure the contingent value right, which is included in other assets. During the three months ended June 30, 2019, the fair value measurement resulted in a $3 million unrealized loss, included in other income, net. The fair value of the contingent value right is derived using a Monte Carlo simulation. Significant estimates and assumptions required for this valuation include, but are not limited to, probabilities related to the timing and outcome of future financing and/or liquidity events and an assumption regarding collectibility. These unobservable inputs, which represent a Level 3 measurement, are supported by little or no market activity and reflect our own assumptions in measuring fair value. Concurrent with the agreement to sell all of our outstanding equity interests, we also amended our long-term supply and license agreements with Helix, including the discounted supply terms. Because these agreements were entered into concurrently, we consider them to be one arrangement with multiple elements, as defined under the respective authoritative accounting guidance. We determined that each of the elements, which include the contingent value right and services to be provided in accordance with the long-term supply and license agreements, were at, or approximated, fair value on a stand-alone basis. Therefore, none of the deconsolidation gain was allocated to these elements. Redeemable Noncontrolling Interests The activity of the redeemable noncontrolling interests during the six months ended June 30, 2019 was as follows (in millions): Redeemable Noncontrolling Interests Balance as of December 30, 2018 $ 61 Vesting of redeemable equity awards 1 Net loss attributable to noncontrolling interests (9 ) Adjustment down to the redemption value (16 ) Release of potential obligation to noncontrolling interests (37 ) Balance as of June 30, 2019 $ — |
Pending Acquisition
Pending Acquisition | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Pending Acquisition | Pending Acquisition On November 1, 2018, we entered into an Agreement and Plan of Merger (the Merger Agreement) to acquire Pacific Biosciences of California, Inc. (PacBio) for an all-cash price of approximately $1.2 billion (or $8.00 per share). The transaction, which is now expected to close in Q4 2019, is subject to certain customary closing conditions, including the receipt of certain required antitrust approvals. The Merger Agreement contains certain termination rights and provides that, upon termination of the Merger Agreement under specified circumstances, including but not limited to, a termination of the Merger Agreement in connection with PacBio accepting a superior offer or due to the withdrawal by PacBio’s board of directors of its recommendation of the merger, PacBio will pay us a cash termination fee of $43 million . In certain other circumstances related to antitrust approvals, we may be required to pay PacBio a termination fee of $98 million assuming the other closing conditions not related to antitrust or competition laws have been satisfied. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 and December 30, 2018 (in millions): June 30, 2019 December 30, 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds (cash equivalents) $ 1,631 $ — $ — $ 1,631 $ 832 $ — $ — $ 832 Debt securities in government-sponsored entities — 26 — 26 — 21 — 21 Corporate debt securities — 557 — 557 — 1,058 — 1,058 U.S. Treasury securities 490 — — 490 1,250 — — 1,250 Marketable equity securities 157 — — 157 39 — — 39 Contingent value right — — 27 27 — — — — Deferred compensation plan assets — 44 — 44 — 34 — 34 Total assets measured at fair value $ 2,278 $ 627 $ 27 $ 2,932 $ 2,121 $ 1,113 $ — $ 3,234 Liabilities: Deferred compensation plan liability $ — $ 42 $ — $ 42 $ — $ 33 $ — $ 33 |
Debt and Other Commitments
Debt and Other Commitments | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt and Other Commitments | Debt and Other Commitments Summary of debt obligations Debt obligations consisted of the following (dollars in millions): June 30, December 30, 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 (147 ) (175 ) Net carrying amount of liability component of convertible senior notes 1,120 1,725 Obligations under financing leases — 269 Other — 3 Less: current portion — (1,107 ) Long-term debt $ 1,120 $ 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) $ 1,658 $ 2,222 Weighted-average remaining amortization period of discount on the liability component of convertible senior notes 3.7 years 3.9 years Convertible Senior Notes 0% Convertible Senior Notes due 2023 (2023 Notes) On August 21, 2018, we issued $750 million aggregate principal amount of convertible senior notes due 2023 (2023 Notes). The 2023 Notes mature on August 15, 2023, and the implied estimated effective rate of the liability component of the Notes was 3.7% , assuming no conversion option. The 2023 Notes will be convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election, based on an initial conversion rate, subject to adjustment, of 2.1845 shares of common stock per $1,000 principal amount of notes (which represents an initial conversion price of approximately $457.77 per share of common stock), only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2018 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price in effect on each applicable trading day; (2) during the five business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2023 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if we call any or all of the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events described in the indenture. Regardless of the foregoing circumstances, the holders may convert their notes on or after May 15, 2023 until August 11, 2023. We may redeem for cash all or any portion of the 2023 Notes, at our option, on or after August 20, 2021 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect (currently $595.10 ) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus any accrued and unpaid special interest to, but excluding, the redemption date. The 2023 Notes were not convertible as of June 30, 2019 and had no dilutive impact during the six months ended June 30, 2019 . If the 2023 Notes were converted as of June 30, 2019 , the if-converted value would not exceed the principal amount. 0.5% Convertible Senior Notes due 2021 (2021 Notes) In June 2014, we issued $517 million aggregate principal amount of 2021 Notes. The 2021 Notes mature on June 15, 2021, and the implied estimated effective rates of the liability component of the Notes was 3.5% , assuming no conversion option. The 2021 Notes will be convertible into cash, shares of common stock, or a combination of cash and shares of common stock, at our election, based on an initial conversion rate, subject to adjustment, of 3.9318 shares per $1,000 principal amount of the notes (which represents an initial conversion price of approximately $254.34 per share), only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending September 30, 2014 (and only during such calendar quarter), if the last reported sale price of our common stock for 20 or more trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 130% of the applicable conversion price in effect on the last trading day of the immediately preceding calendar quarter; (2) during the 5 business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price per 2021 Notes for each day of such measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified events described in the indenture for the 2021 Notes. Regardless of the foregoing circumstances, the holders of the 2021 Notes may convert their notes on or after March 15, 2021 until June 11, 2021. The potential dilutive impact of the 2021 Notes has been included in our calculation of diluted earnings per share for the three and six months ended June 30, 2019 . If the 2021 Notes were converted as of June 30, 2019 , the if-converted value would exceed the principal amount by $182 million . 0% Convertible Senior Notes due 2019 (2019 Notes) In June 2014, we issued $633 million aggregate principal amount of 2019 Notes, and the implied estimated effective rate of the liability component of the Notes was 2.9% , assuming no conversion option. The 2019 Notes were convertible into cash, shares of common stock, or a combination of common stock, at our election, based on conversion rates as defined in the indenture. The 2019 Notes matured on June 15, 2019, by which time the principal had been converted and was repaid in cash. The excess of the conversion value over the principal amount was paid in shares of common stock. The following table summarizes information about the conversion of the 2019 Notes during the six months ended June 30, 2019 (in millions): 2019 Notes Cash paid for principal of notes converted $ 633 Conversion value over principal amount, paid in shares of common stock $ 153 Number of shares of common stock issued upon conversion 0.4 Obligations under financing leases As of December 30, 2018, obligations under financing leases of $269 million represented project construction costs paid or reimbursed by our landlord related to our build-to-suit leases that did not qualify for sale-leaseback accounting under Topic 840. Upon adoption of Topic 842 on December 31, 2018, we derecognized the remaining financing obligations for our build-to-suit leasing arrangements and began to account for these leases as operating leases. See note “1. Basis of Presentation and Summary of Significant Accounting Policies” for further details on the adoption of Topic 842. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity As of June 30, 2019 , approximately 4.9 million shares remained available for future grants under the 2015 Stock Plan. Restricted Stock Restricted stock activity for the six months ended June 30, 2019 was as follows (units in thousands): Restricted Stock Units (RSU) Performance Stock Units (PSU)(1) RSU PSU Outstanding at December 30, 2018 1,840 660 $ 227.00 $ 196.99 Awarded 52 (42 ) $ 305.68 $ 258.92 Vested (65 ) — $ 195.44 — Cancelled (83 ) (49 ) $ 215.41 $ 167.43 Outstanding at June 30, 2019 1,744 569 $ 231.06 $ 194.97 ______________________________________ (1) The number of units reflect the estimated number of shares to be issued at the end of the performance period. Stock Options Stock option activity during the six months ended June 30, 2019 was as follows: Options (in thousands) Weighted-Average Exercise Price Outstanding at December 30, 2018 192 $ 54.52 Exercised (85 ) $ 49.82 Outstanding and exercisable at June 30, 2019 107 $ 58.26 ESPP The price at which common stock is purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first day of the offering period or purchase date, whichever is lower. During the six months ended June 30, 2019 , approximately 0.1 million shares were issued under the ESPP. As of June 30, 2019 , there were approximately 13.6 million shares available for issuance under the ESPP. Share Repurchases On February 6, 2019, our Board of Directors authorized a new share repurchase program, which supersedes all prior and available repurchase authorizations, to repurchase $550 million of outstanding common stock. The repurchases may be completed under a 10b5-1 plan or at management’s discretion. During the six months ended June 30, 2019 , we repurchased 0.2 million shares for approximately $63 million . Authorizations to repurchase approximately $488 million of our common stock remained available as of June 30, 2019 . Share-based Compensation Share-based compensation expense reported in our condensed consolidated statements of income was as follows (in millions): Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, Cost of product revenue $ 5 $ 4 $ 10 $ 8 Cost of service and other revenue 1 1 2 2 Research and development 16 15 34 30 Selling, general and administrative 26 30 53 58 Share-based compensation expense before taxes 48 50 99 98 Related income tax benefits (11 ) (11 ) (21 ) (21 ) Share-based compensation expense, net of taxes $ 37 $ 39 $ 78 $ 77 The assumptions used for the specified reporting periods and the resulting estimates of weighted-average fair value per share for stock purchased under the Employee Stock Purchase Plan (ESPP) during the six months ended June 30, 2019 were as follows: Employee Stock Purchase Rights Risk-free interest rate 1.89% - 2.56% Expected volatility 30% - 38% Expected term 0.5 - 1.0 year Expected dividends 0 % Weighted-average grant-date fair value per share $ 71.48 As of June 30, 2019 , approximately $372 million of total unrecognized compensation cost related to restricted stock and ESPP shares issued to date was expected to be recognized over a weighted-average period of approximately 2.1 years . |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Legal Proceedings We are involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property, employment, and contractual matters. In connection with these matters, we assess, on a regular basis, the probability and range of possible loss based on the developments in these matters. A liability is recorded in the consolidated financial statements if it is believed to be probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. We regularly review outstanding legal matters to determine the adequacy of the liabilities accrued and related disclosures in consideration of many factors, which include, but are not limited to, past history, scientific and other evidence, and the specifics and status of each matter. We may change our estimates if our assessment of the various factors changes and the amount of ultimate loss may differ from our estimates, resulting in a material effect on our business, financial condition, results of operations, and/or cash flows. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective tax rate may vary from the U.S. federal statutory tax rate due to the change in the mix of earnings in tax jurisdictions with different statutory rates, benefits related to tax credits, and the tax impact of non-deductible expenses and other permanent differences between income before income taxes and taxable income. The effective tax rates for the three and six months ended June 30, 2019 were 15.4% and 10.8% , respectively. For the three and six months ended June 30, 2019 , the decrease from the U.S. federal statutory tax rate of 21% was primarily attributable to the mix of earnings in jurisdictions with lower statutory tax rates than the U.S. federal statutory tax rate, such as in Singapore and the United Kingdom. For the six months ended June 30, 2019, the decrease from the U.S. federal statutory tax rate was also attributable to a discrete tax benefit related to uncertain tax positions recorded in Q1 2019 and excess tax benefits related to share-based compensation. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information We report segment information based on the management approach. This approach designates the internal reporting used by the Chief Operating Decision Maker (CODM) for making decisions and assessing performance as the source of our reportable segments. The CODM allocates resources and assesses the performance of each operating segment using information about its revenue and income (loss) from operations. Based on the information used by the CODM, we have determined we have one reportable segment, Core Illumina, which relates to Illumina’s core operations. Prior to the Helix deconsolidation on April 25, 2019, our reportable segments included both Core Illumina and Helix. Core Illumina : Core Illumina’s products and services serve customers in the research, clinical and applied markets, and enable the adoption of a variety of genomic solutions. Core Illumina includes all of our operations, excluding the results of our previously consolidated VIE Helix. Helix: Helix was established to enable individuals to explore their genetic information by providing affordable sequencing and database services for consumers through third-party partners, driving the creation of an ecosystem of consumer applications. Helix was deconsolidated on April 25, 2019. See note “2. Balance Sheet Account Details” for further details. Management evaluates the performance of our reportable segments based upon income (loss) from operations. We do not allocate expenses between segments. Core Illumina sells products and provides services to Helix in accordance with contractual agreements between the entities. The following table presents the operating performance of each reportable segment (in millions): Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, Revenue: Core Illumina $ 838 $ 829 $ 1,684 $ 1,612 Helix — 3 1 6 Elimination of intersegment revenue — (2 ) (1 ) (6 ) Consolidated revenue $ 838 $ 830 $ 1,684 $ 1,612 Income (loss) from operations: Core Illumina $ 211 $ 246 $ 433 $ 484 Helix (6 ) (20 ) (24 ) (41 ) Elimination of intersegment earnings — 1 1 2 Consolidated income from operations $ 205 $ 227 $ 410 $ 445 The following table presents the total assets of each reportable segment (in millions): June 30, December 30, Core Illumina $ 6,973 $ 6,912 Helix — 154 Elimination of intersegment assets — (107 ) Consolidated total assets $ 6,973 $ 6,959 |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. |
Consolidation | The unaudited condensed consolidated financial statements include our accounts, our wholly-owned subsidiaries, majority-owned or controlled companies, and variable interest entities (VIEs) for which we are the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results for the interim periods presented. |
Variable Interest Entities | We evaluate our ownership, contractual and other interests in entities that are not wholly-owned to determine if these entities are VIEs, and, if so, whether we are the primary beneficiary of the VIE. In determining whether we are the primary beneficiary of a VIE and therefore required to consolidate the VIE, we apply a qualitative approach that determines whether we have both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses of, or the rights to receive benefits from, the VIE that could potentially be significant to that VIE. We continuously perform this assessment, as changes to existing relationships or future transactions may result in the consolidation or deconsolidation of a VIE. |
Equity Method Investments | We use the equity method to account for investments through which we have the ability to exercise significant influence, but not control, over the investee. Such investments are recorded in other assets, and our share of net income or loss is recognized on a one quarter lag in other income, net. |
Fiscal Year | Our fiscal year is the 52 or 53 weeks ending the Sunday closest to December 31, with quarters of 13 or 14 weeks ending the Sunday closest to March 31, June 30, September 30, and December 31. |
Reclassifications | Certain prior period amounts have been reclassified to conform to the current period presentation. |
Recently Adopted Accounting Pronouncements and Accounting Pronouncements Pending Adoption | Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on the balance sheet as lease liabilities with corresponding right-of-use assets and to disclose key information about leasing arrangements. We adopted Topic 842 on its effective date in the first quarter of 2019 using a modified retrospective approach by recognizing a cumulative-effect adjustment to retained earnings as of December 31, 2018. We elected the available package of practical expedients upon adoption, which allowed us to carry forward our historical assessment of whether existing agreements contained a lease and the classification of our existing operating leases. We continue to report our financial position as of December 30, 2018 under the former lease accounting standard (Topic 840) in our condensed consolidated balance sheet. The following table summarizes the impact of Topic 842 on our condensed consolidated balance sheet upon adoption on December 31, 2018 (in millions): December 31, 2018 (unaudited) Pre-adoption Adoption Impact Post-adoption ASSETS Prepaid expenses and other current assets $ 78 $ (8 ) $ 70 Property and equipment, net 1,075 (241 ) 834 Operating lease right-of-use assets — 579 579 Deferred tax assets, net 70 6 76 Total assets $ 1,223 $ 336 $ 1,559 LIABILITIES AND STOCKHOLDERS’ EQUITY Accrued liabilities $ 513 $ 36 $ 549 Operating lease liabilities — 722 722 Long-term debt 1,107 (269 ) 838 Other long-term liabilities 359 (135 ) 224 Retained earnings 3,083 (18 ) 3,065 Total liabilities and stockholders’ equity $ 5,062 $ 336 $ 5,398 The adoption impact summarized above was primarily due to the recognition of operating lease liabilities with corresponding right-of-use assets based on the present value of our remaining minimum lease payments, and the derecognition of existing fixed assets and financing obligations related to build-to-suit leasing arrangements that, under Topic 840, did not qualify for sale-leaseback accounting. The difference between these amounts, net of deferred tax, was recorded as a cumulative-effect adjustment to retained earnings. Accounting Pronouncements Pending Adoption In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments , which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. We expect to adopt the standard on its effective date in the first quarter of 2020 using a modified retrospective approach. We currently do not expect the adoption to have a material impact on our consolidated financial statements. |
Revenue Recognition | Our revenue is generated primarily from the sale of products and services. Product revenue primarily consists of sales of instruments and consumables used in genetic analysis. Service and other revenue primarily consists of revenue generated from genotyping and sequencing services and instrument service contracts. We recognize revenue when control of our products and services is transferred to our customers in an amount that reflects the consideration we expect to receive from our customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. We consider a performance obligation satisfied once we have transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. Revenue from product sales is recognized generally upon delivery to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs upon shipment; and payment is typically due within 60 days from invoice. In instances where right of payment or transfer of title is contingent upon the customer’s acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenue from instrument service contracts is recognized as the services are rendered, typically evenly over the contract term. Revenue from genotyping and sequencing services is recognized when earned, which is generally at the time the genotyping or sequencing analysis data is made available to the customer. Revenue is recorded net of discounts, distributor commissions, and sales taxes collected on behalf of governmental authorities. Employee sales commissions are recorded as selling, general and administrative expenses when incurred as the amortization period for such costs, if capitalized, would have been one year or less. We regularly enter into contracts with multiple performance obligations. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. Most performance obligations are generally satisfied within a short time frame, approximately three to six months after the contract execution date. As of June 30, 2019 , the aggregate amount of the transaction price allocated to remaining performance obligations was $1,146 million , of which approximately 67% is expected to be converted to revenue in the next twelve months, approximately 13% in the following twelve months, and the remainder thereafter. The contract price is allocated to each performance obligation in proportion to its standalone selling price. We determine our best estimate of standalone selling price using average selling prices over a rolling 12 -month period coupled with an assessment of current market conditions. If the product or service has no history of sales or if the sales volume is not sufficient, we rely upon prices set by management, adjusted for applicable discounts. Contract liabilities, which consist of deferred revenue and customer deposits, as of June 30, 2019 and December 30, 2018 were $201 million and $206 million , respectively, of which the short-term portions of $167 million and $175 million , respectively, were recorded in accrued liabilities and the remaining long-term portions were recorded in other long-term liabilities. Revenue recorded during the three and six months ended June 30, 2019 included $42 million and $106 million of previously deferred revenue that was included in contract liabilities as of December 30, 2018 . Contract assets as of June 30, 2019 and December 30, 2018 were not material. In certain markets, products and services are sold to customers through distributors. In most sales through distributors, the product is delivered directly to customers by us. The terms of sales transactions through distributors are consistent with the terms of direct sales to customers. |
Earnings per Share | Basic earnings per share attributable to Illumina stockholders is computed based on the weighted average number of common shares outstanding during the period. Diluted earnings per share attributable to Illumina stockholders is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Up to April 25, 2019, the date of Helix’s deconsolidation, per-share earnings of Helix were included in the consolidated basic and diluted earnings per share computations based on our share of Helix’s securities. Potentially dilutive common shares consist of shares issuable under convertible senior notes and equity awards. Convertible senior notes have a dilutive impact when the average market price of our common stock exceeds the applicable conversion price of the respective notes. Potentially dilutive common shares from equity awards are determined using the average share price for each period under the treasury stock method. In addition, proceeds from exercise of equity awards and the average amount of unrecognized compensation expense for equity awards are assumed to be used to repurchase shares. |
Strategic Investments | We have strategic investments in privately held companies (non-marketable equity securities) and companies that have completed initial public offerings (marketable equity securities). Our marketable equity securities are measured at fair value. As of June 30, 2019 and December 30, 2018 , the fair value of our marketable equity securities, included in short-term investments, totaled $157 million and $39 million , respectively. Total unrealized gains on our marketable equity securities, included in other income, net, were $102 million and $104 million for the three and six months ended June 30, 2019, respectively. Our non-marketable equity securities without readily determinable market values are initially measured at cost and adjusted to fair value for observable transactions for identical or similar investments of the same issuer or impairment. As of June 30, 2019 and December 30, 2018 , the aggregate carrying amounts of our non-marketable equity investments without readily determinable fair values, included in other assets, were $217 million and $231 million , respectively. One of our non-marketable equity investments is a VIE for which we have concluded that we are not the primary beneficiary, and therefore, we do not consolidate this VIE in our consolidated financial statements. We have determined our maximum exposure to loss, as a result of our involvement with the VIE, to be the carrying value of our investment, which was $189 million as of June 30, 2019 and December 30, 2018 . |
Derivatives | We are exposed to foreign exchange rate risks in the normal course of business. We enter into foreign exchange contracts to manage foreign currency risks related to monetary assets and liabilities that are denominated in currencies other than the U.S. dollar. These foreign exchange contracts are carried at fair value in other current assets or accrued liabilities and are not designated as hedging instruments. Changes in the value of the derivatives are recognized in other income, net, along with the remeasurement gain or loss on the foreign currency denominated assets or liabilities. |
Warranties | We generally provide a one -year warranty on instruments. Additionally, we provide a warranty on consumables through the expiration date, which generally ranges from six to twelve months after the manufacture date. At the time revenue is recognized, an accrual is established for estimated warranty expenses based on historical experience as well as anticipated product performance. We periodically review the warranty reserve for adequacy and adjust the warranty accrual, if necessary, based on actual experience and estimated costs to be incurred. Warranty expense is recorded as a component of cost of product revenue. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Impact of Topic 842 | The following table summarizes the impact of Topic 842 on our condensed consolidated balance sheet upon adoption on December 31, 2018 (in millions): December 31, 2018 (unaudited) Pre-adoption Adoption Impact Post-adoption ASSETS Prepaid expenses and other current assets $ 78 $ (8 ) $ 70 Property and equipment, net 1,075 (241 ) 834 Operating lease right-of-use assets — 579 579 Deferred tax assets, net 70 6 76 Total assets $ 1,223 $ 336 $ 1,559 LIABILITIES AND STOCKHOLDERS’ EQUITY Accrued liabilities $ 513 $ 36 $ 549 Operating lease liabilities — 722 722 Long-term debt 1,107 (269 ) 838 Other long-term liabilities 359 (135 ) 224 Retained earnings 3,083 (18 ) 3,065 Total liabilities and stockholders’ equity $ 5,062 $ 336 $ 5,398 |
Disaggregation of Revenue from External Customers | The following table represents revenue by source (in millions): Three Months Ended June 30, July 1, Sequencing Microarray Total Sequencing Microarray Total Consumables $ 497 $ 74 $ 571 $ 460 $ 85 $ 545 Instruments 129 4 133 124 4 128 Total product revenue 626 78 704 584 89 673 Service and other revenue 102 32 134 106 51 157 Total revenue $ 728 $ 110 $ 838 $ 690 $ 140 $ 830 Six Months Ended June 30, July 1, Sequencing Microarray Total Sequencing Microarray Total Consumables $ 978 $ 149 $ 1,127 $ 882 $ 173 $ 1,055 Instruments 234 11 245 237 9 246 Total product revenue 1,212 160 1,372 1,119 182 1,301 Service and other revenue 215 97 312 202 109 311 Total revenue $ 1,427 $ 257 $ 1,684 $ 1,321 $ 291 $ 1,612 Revenue related to our previously consolidated VIE, Helix, is included in sequencing service and other revenue up to April 25, 2019, the date of Helix’s deconsolidation. The following table represents revenue by geographic area, based on region of destination (in millions): Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, Americas $ 476 $ 466 $ 949 $ 906 Europe, Middle East, and Africa 208 202 418 396 Greater China (1) 97 107 185 185 Asia-Pacific 57 55 132 125 Total revenue $ 838 $ 830 $ 1,684 $ 1,612 ____________________________________ (1) Region includes revenue from China, Taiwan, and Hong Kong. |
Summary of Calculation of Weighted Average Shares used to Calculate Basic and Diluted Earnings Per Share, Earnings Per Share | The following table presents the calculation of weighted average shares used to calculate basic and diluted earnings per share (in millions): Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, Weighted average shares outstanding 147 147 147 147 Effect of potentially dilutive common shares from: Convertible senior notes 1 — 1 — Equity awards 1 1 1 1 Weighted average shares used in calculating diluted earnings per share 149 148 149 148 |
Balance Sheet Account Details (
Balance Sheet Account Details (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Short-term Investments | Our short-term investments are primarily available-for-sale debt securities that consisted of the following (in millions): June 30, 2019 December 30, 2018 Amortized Cost Gross Unrealized Gains Estimated Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Debt securities in government sponsored entities $ 26 $ — $ 26 $ 21 $ — $ — $ 21 Corporate debt securities 553 4 557 1,060 — (2 ) 1,058 U.S. Treasury securities 488 2 490 1,250 1 (1 ) 1,250 Total $ 1,067 $ 6 $ 1,073 $ 2,331 $ 1 $ (3 ) $ 2,329 |
Summary of Contractual Maturities of Available-for-sale Debt Securities | Contractual maturities of available-for-sale debt securities, as of June 30, 2019 , were as follows (in millions): Estimated Fair Value Due within one year $ 516 After one but within five years 557 Total $ 1,073 |
Summary of Inventory | Inventory consisted of the following (in millions): June 30, December 30, Raw materials $ 124 $ 117 Work in process 271 218 Finished goods 25 51 Total inventory $ 420 $ 386 |
Summary of Property and Equipment | Property and equipment, net consisted of the following (in millions): June 30, December 30, Leasehold improvements $ 596 $ 567 Machinery and equipment 400 382 Computer hardware and software 263 217 Furniture and fixtures 47 45 Buildings 44 285 Construction in progress 59 100 Total property and equipment, gross 1,409 1,596 Accumulated depreciation (555 ) (521 ) Total property and equipment, net $ 854 $ 1,075 |
Summary of Leases | As of June 30, 2019 , the maturities of our operating lease liabilities were as follows (in millions): Remaining Lease Payments 2019 $ 35 2020 82 2021 81 2022 83 2023 85 Thereafter 619 Total remaining lease payments (1) 985 Less: imputed interest (243 ) Total operating lease liabilities 742 Less: current portion (44 ) Long-term operating lease liabilities $ 698 Weighted-average remaining lease term 11.5 years Weighted-average discount rate 4.6 % ____________________________________ (1) Total remaining lease payments exclude $53 million of legally binding minimum lease payments for leases signed but not yet commenced. |
Components of Lease Costs | The components of our lease costs included in our condensed consolidated statements of income were as follows (in millions): Three Months Ended Six Months Ended June 30, 2019 June 30, 2019 Operating lease costs $ 21 $ 43 Sublease income (3 ) (6 ) Total lease costs $ 18 $ 37 |
Summary of Changes to Goodwill | Changes to goodwill during the six months ended June 30, 2019 were as follows (in millions): Goodwill Balance as of December 30, 2018 $ 831 Helix deconsolidation (7 ) Balance as of June 30, 2019 $ 824 |
Summary of Accrued Liabilities | Accrued liabilities consisted of the following (in millions): June 30, December 30, Contract liabilities, current portion $ 167 $ 175 Accrued compensation expenses 132 193 Accrued taxes payable 66 82 Operating lease liabilities, current portion 44 — Other, including warranties 64 63 Total accrued liabilities $ 473 $ 513 |
Summary of Changes in Reserve for Product Warranties | Changes in the reserve for product warranties during the three and six months ended June 30, 2019 and July 1, 2018 were as follows (in millions): Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, Balance at beginning of period $ 16 $ 16 $ 19 $ 17 Additions charged to cost of product revenue 6 6 9 12 Repairs and replacements (6 ) (7 ) (12 ) (14 ) Balance at end of period $ 16 $ 15 $ 16 $ 15 |
Summary of Activity of Redeemable Noncontrolling Interests | The activity of the redeemable noncontrolling interests during the six months ended June 30, 2019 was as follows (in millions): Redeemable Noncontrolling Interests Balance as of December 30, 2018 $ 61 Vesting of redeemable equity awards 1 Net loss attributable to noncontrolling interests (9 ) Adjustment down to the redemption value (16 ) Release of potential obligation to noncontrolling interests (37 ) Balance as of June 30, 2019 $ — |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Summary of Hierarchy for Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis as of June 30, 2019 and December 30, 2018 (in millions): June 30, 2019 December 30, 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Money market funds (cash equivalents) $ 1,631 $ — $ — $ 1,631 $ 832 $ — $ — $ 832 Debt securities in government-sponsored entities — 26 — 26 — 21 — 21 Corporate debt securities — 557 — 557 — 1,058 — 1,058 U.S. Treasury securities 490 — — 490 1,250 — — 1,250 Marketable equity securities 157 — — 157 39 — — 39 Contingent value right — — 27 27 — — — — Deferred compensation plan assets — 44 — 44 — 34 — 34 Total assets measured at fair value $ 2,278 $ 627 $ 27 $ 2,932 $ 2,121 $ 1,113 $ — $ 3,234 Liabilities: Deferred compensation plan liability $ — $ 42 $ — $ 42 $ — $ 33 $ — $ 33 |
Debt and Other Commitments (Tab
Debt and Other Commitments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Debt Obligations | Debt obligations consisted of the following (dollars in millions): June 30, December 30, 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 (147 ) (175 ) Net carrying amount of liability component of convertible senior notes 1,120 1,725 Obligations under financing leases — 269 Other — 3 Less: current portion — (1,107 ) Long-term debt $ 1,120 $ 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) $ 1,658 $ 2,222 Weighted-average remaining amortization period of discount on the liability component of convertible senior notes 3.7 years 3.9 years |
Schedule of Debt Conversions | The following table summarizes information about the conversion of the 2019 Notes during the six months ended June 30, 2019 (in millions): 2019 Notes Cash paid for principal of notes converted $ 633 Conversion value over principal amount, paid in shares of common stock $ 153 Number of shares of common stock issued upon conversion 0.4 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Summary of Restricted Stock Activity and Related Information, Restricted Stock | Restricted stock activity for the six months ended June 30, 2019 was as follows (units in thousands): Restricted Stock Units (RSU) Performance Stock Units (PSU)(1) RSU PSU Outstanding at December 30, 2018 1,840 660 $ 227.00 $ 196.99 Awarded 52 (42 ) $ 305.68 $ 258.92 Vested (65 ) — $ 195.44 — Cancelled (83 ) (49 ) $ 215.41 $ 167.43 Outstanding at June 30, 2019 1,744 569 $ 231.06 $ 194.97 ______________________________________ (1) The number of units reflect the estimated number of shares to be issued at the end of the performance period. |
Summary of Restricted Stock Activity and Related Information, Performance Units | Restricted stock activity for the six months ended June 30, 2019 was as follows (units in thousands): Restricted Stock Units (RSU) Performance Stock Units (PSU)(1) RSU PSU Outstanding at December 30, 2018 1,840 660 $ 227.00 $ 196.99 Awarded 52 (42 ) $ 305.68 $ 258.92 Vested (65 ) — $ 195.44 — Cancelled (83 ) (49 ) $ 215.41 $ 167.43 Outstanding at June 30, 2019 1,744 569 $ 231.06 $ 194.97 ______________________________________ (1) The number of units reflect the estimated number of shares to be issued at the end of the performance period. |
Summary of Stock Option Activity Under all Stock Option Plans | Stock option activity during the six months ended June 30, 2019 was as follows: Options (in thousands) Weighted-Average Exercise Price Outstanding at December 30, 2018 192 $ 54.52 Exercised (85 ) $ 49.82 Outstanding and exercisable at June 30, 2019 107 $ 58.26 |
Summary of Share-based Compensation Expense for all Stock Awards | Share-based compensation expense reported in our condensed consolidated statements of income was as follows (in millions): Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, Cost of product revenue $ 5 $ 4 $ 10 $ 8 Cost of service and other revenue 1 1 2 2 Research and development 16 15 34 30 Selling, general and administrative 26 30 53 58 Share-based compensation expense before taxes 48 50 99 98 Related income tax benefits (11 ) (11 ) (21 ) (21 ) Share-based compensation expense, net of taxes $ 37 $ 39 $ 78 $ 77 |
Summary of Assumptions used to Estimate the Weighted-Average Fair Value Per Share for Stock Purchase under the Employee Stock Purchase Plan | The assumptions used for the specified reporting periods and the resulting estimates of weighted-average fair value per share for stock purchased under the Employee Stock Purchase Plan (ESPP) during the six months ended June 30, 2019 were as follows: Employee Stock Purchase Rights Risk-free interest rate 1.89% - 2.56% Expected volatility 30% - 38% Expected term 0.5 - 1.0 year Expected dividends 0 % Weighted-average grant-date fair value per share $ 71.48 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Summary of Operating Performance and Assets by Segment | The following table presents the operating performance of each reportable segment (in millions): Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, Revenue: Core Illumina $ 838 $ 829 $ 1,684 $ 1,612 Helix — 3 1 6 Elimination of intersegment revenue — (2 ) (1 ) (6 ) Consolidated revenue $ 838 $ 830 $ 1,684 $ 1,612 Income (loss) from operations: Core Illumina $ 211 $ 246 $ 433 $ 484 Helix (6 ) (20 ) (24 ) (41 ) Elimination of intersegment earnings — 1 1 2 Consolidated income from operations $ 205 $ 227 $ 410 $ 445 The following table presents the total assets of each reportable segment (in millions): June 30, December 30, Core Illumina $ 6,973 $ 6,912 Helix — 154 Elimination of intersegment assets — (107 ) Consolidated total assets $ 6,973 $ 6,959 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies - Summary of Impact of Topic 842 (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 30, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid expenses and other current assets | $ 93 | $ 70 | $ 78 |
Property and equipment, net | 854 | 834 | 1,075 |
Operating lease right-of-use assets | 558 | 579 | |
Deferred tax assets, net | 69 | 76 | 70 |
Total assets | 1,559 | ||
Accrued liabilities | 473 | 549 | 513 |
Total operating lease liabilities | 742 | 722 | |
Long-term debt | 838 | ||
Other long-term liabilities | 211 | 224 | 359 |
Retained earnings | $ 3,594 | 3,065 | $ 3,083 |
Total liabilities and stockholders’ equity | 5,398 | ||
ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid expenses and other current assets | (8) | ||
Property and equipment, net | (241) | ||
Operating lease right-of-use assets | 579 | ||
Deferred tax assets, net | 6 | ||
Total assets | 336 | ||
Accrued liabilities | 36 | ||
Total operating lease liabilities | 722 | ||
Long-term debt | (269) | ||
Other long-term liabilities | (135) | ||
Retained earnings | (18) | ||
Total liabilities and stockholders’ equity | 336 | ||
Pre-adoption | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Prepaid expenses and other current assets | 78 | ||
Property and equipment, net | 1,075 | ||
Deferred tax assets, net | 70 | ||
Total assets | 1,223 | ||
Accrued liabilities | 513 | ||
Long-term debt | 1,107 | ||
Other long-term liabilities | 359 | ||
Retained earnings | 3,083 | ||
Total liabilities and stockholders’ equity | $ 5,062 |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | Dec. 30, 2018 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Contract liability | $ 201 | $ 201 | $ 206 |
Contract liabilities, current portion | 167 | 167 | $ 175 |
Revenue recognized, previously deferred | $ 42 | $ 106 | |
Minimum | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Product or service delivery period | 3 months | ||
Maximum | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Product or service delivery period | 6 months |
Basis of Presentation and Sum_6
Basis of Presentation and Summary of Significant Accounting Policies - Narrative - Revenue, Remaining Performance Obligation (Details) $ in Millions | Jun. 30, 2019USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 1,146 |
Percent of remaining performance obligation | 67.00% |
Expected timing of remaining performance obligation | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Percent of remaining performance obligation | 13.00% |
Expected timing of remaining performance obligation | 12 months |
Basis of Presentation and Sum_7
Basis of Presentation and Summary of Significant Accounting Policies - Recently Adopted Accounting Principles (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2019 | Jul. 01, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 838 | $ 830 | $ 1,684 | $ 1,612 |
Americas | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 476 | 466 | 949 | 906 |
Europe, Middle East, and Africa | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 208 | 202 | 418 | 396 |
Greater China | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 97 | 107 | 185 | 185 |
Asia-Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 57 | 55 | 132 | 125 |
Sequencing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 728 | 690 | 1,427 | 1,321 |
Microarray | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 110 | 140 | 257 | 291 |
Total product revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 704 | 673 | 1,372 | 1,301 |
Total product revenue | Sequencing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 626 | 584 | 1,212 | 1,119 |
Total product revenue | Microarray | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 78 | 89 | 160 | 182 |
Consumables | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 571 | 545 | 1,127 | 1,055 |
Consumables | Sequencing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 497 | 460 | 978 | 882 |
Consumables | Microarray | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 74 | 85 | 149 | 173 |
Instruments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 133 | 128 | 245 | 246 |
Instruments | Sequencing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 129 | 124 | 234 | 237 |
Instruments | Microarray | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 4 | 4 | 11 | 9 |
Service and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 134 | 157 | 312 | 311 |
Service and other revenue | Sequencing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 102 | 106 | 215 | 202 |
Service and other revenue | Microarray | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 32 | $ 51 | $ 97 | $ 109 |
Basis of Presentation and Sum_8
Basis of Presentation and Summary of Significant Accounting Policies - Summary of Calculation of Weighted Average Shares used to Calculate Basic and Diluted Earnings Per Share (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2019 | Jul. 01, 2018 | |
Weighted average shares used to calculate basic and diluted earnings per share | ||||
Weighted average shares outstanding | 147 | 147 | 147 | 147 |
Effect of potentially dilutive common shares from: | ||||
Convertible senior notes | 1 | 1 | ||
Equity awards | 1 | 1 | 1 | 1 |
Weighted average shares used in calculating diluted earnings per share | 149 | 148 | 149 | 148 |
Balance Sheet Account Details -
Balance Sheet Account Details - Summary of Short-term Investments (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 30, 2018 |
Available-for-sale debt securities: | ||
Amortized Cost | $ 1,067 | $ 2,331 |
Gross Unrealized Gains | 6 | 1 |
Gross Unrealized Losses | (3) | |
Estimated Fair Value | 1,073 | 2,329 |
Debt securities in government sponsored entities | ||
Available-for-sale debt securities: | ||
Amortized Cost | 26 | 21 |
Estimated Fair Value | 26 | 21 |
Corporate debt securities | ||
Available-for-sale debt securities: | ||
Amortized Cost | 553 | 1,060 |
Gross Unrealized Gains | 4 | |
Gross Unrealized Losses | (2) | |
Estimated Fair Value | 557 | 1,058 |
U.S. Treasury securities | ||
Available-for-sale debt securities: | ||
Amortized Cost | 488 | 1,250 |
Gross Unrealized Gains | 2 | 1 |
Gross Unrealized Losses | (1) | |
Estimated Fair Value | $ 490 | $ 1,250 |
Balance Sheet Account Details_2
Balance Sheet Account Details - Summary of Contractual Maturities of Available-for-sale Debt Securities (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 30, 2018 |
Estimated Fair Value | ||
Due within one year | $ 516 | |
After one but within five years | 557 | |
Total | $ 1,073 | $ 2,329 |
Balance Sheet Account Details_3
Balance Sheet Account Details - Narrative - Strategic Investments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2019 | Jul. 01, 2018 | Jul. 30, 2019 | Dec. 30, 2018 | |
Schedule of Investments [Line Items] | ||||||
Marketable equity securities | $ 157 | $ 157 | $ 39 | |||
Marketable equity securities unrealized gains | 102 | 104 | ||||
Carrying value of investment | 189 | 189 | 189 | |||
Remaining capital commitment | 57 | 57 | ||||
Other Assets | ||||||
Schedule of Investments [Line Items] | ||||||
Strategic equity investments, without readily determinable fair values | 217 | 217 | 231 | |||
Equity method investments | 47 | 47 | $ 29 | |||
Investee | ||||||
Schedule of Investments [Line Items] | ||||||
Revenue from transactions with strategic investees | 18 | $ 36 | 34 | $ 72 | ||
Venture Capital Investment Fund (the Fund) | ||||||
Schedule of Investments [Line Items] | ||||||
Commitment in new venture capital investment fund | $ 100 | $ 100 | ||||
Second Venture Capital Investment Fund | Subsequent Event | ||||||
Schedule of Investments [Line Items] | ||||||
Commitment in new venture capital investment fund | $ 160 |
Balance Sheet Account Details_4
Balance Sheet Account Details - Summary of Inventory (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 30, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 124 | $ 117 |
Work in process | 271 | 218 |
Finished goods | 25 | 51 |
Total inventory | $ 420 | $ 386 |
Balance Sheet Account Details_5
Balance Sheet Account Details - Summary of Property and Equipment (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 30, 2018 |
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | $ 1,409 | $ 1,596 | |
Accumulated depreciation | (555) | (521) | |
Total property and equipment, net | 854 | $ 834 | 1,075 |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | 596 | 567 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | 400 | 382 | |
Computer hardware and software | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | 263 | 217 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | 47 | 45 | |
Buildings | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | 44 | 285 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment, gross | $ 59 | $ 100 |
Balance Sheet Account Details_6
Balance Sheet Account Details - Narrative - Property and Equipment (Details) - USD ($) $ in Millions | 6 Months Ended | |||
Jun. 30, 2019 | Jul. 01, 2018 | Dec. 31, 2018 | Dec. 30, 2018 | |
Property, Plant and Equipment [Line Items] | ||||
Non-cash expenditures included in capital expenditures | $ 18 | $ 42 | ||
Property and equipment, net | $ 854 | $ 834 | $ 1,075 | |
Construction In Progress And Build to Suit Lease Liability | ||||
Property, Plant and Equipment [Line Items] | ||||
Non-cash expenditures included in capital expenditures | $ 16 | |||
ASU 2016-02 | ||||
Property, Plant and Equipment [Line Items] | ||||
Property and equipment, net | $ (241) |
Balance Sheet Account Details_7
Balance Sheet Account Details - Narrative - Leases (Details) ft² in Millions | 6 Months Ended |
Jun. 30, 2019ft² | |
Lessee, Lease, Description [Line Items] | |
Leased office space (in square feet) | 2.5 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 1 year |
Terms of extension options | 6 months |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 20 years |
Terms of extension options | 20 years |
Balance Sheet Account Details_8
Balance Sheet Account Details - Summary of Leases (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
2019 | $ 35 | |
2020 | 82 | |
2021 | 81 | |
2022 | 83 | |
2023 | 85 | |
Thereafter | 619 | |
Total remaining lease payments | 985 | |
Less: imputed interest | (243) | |
Total operating lease liabilities | 742 | $ 722 |
Less: current portion | (44) | |
Long-term operating lease liabilities | $ 698 | |
Weighted-average remaining lease term | 11 years 6 months | |
Weighted-average discount rate | 4.60% | |
Lease payments for leases not yet commenced | $ 53 |
Balance Sheet Account Details_9
Balance Sheet Account Details - Summary of Lease Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Operating lease costs | $ 21 | $ 43 |
Sublease income | (3) | (6) |
Total lease costs | $ 18 | $ 37 |
Balance Sheet Account Detail_10
Balance Sheet Account Details - Summary of Changes in Goodwill (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 831 |
Helix deconsolidation | (7) |
Goodwill, ending balance | $ 824 |
Balance Sheet Account Detail_11
Balance Sheet Account Details - Narrative - Derivatives (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 30, 2018 |
Not Designated as Hedging Instrument | Foreign Exchange Forward | ||
Derivative [Line Items] | ||
Derivative, notional amount | $ 256 | $ 122 |
Balance Sheet Account Detail_12
Balance Sheet Account Details - Summary of Accrued Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 30, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Contract liabilities, current portion | $ 167 | $ 175 | |
Accrued compensation expenses | 132 | 193 | |
Accrued taxes payable | 66 | 82 | |
Operating lease liabilities, current portion | 44 | ||
Other, including warranties | 64 | 63 | |
Total accrued liabilities | $ 473 | $ 549 | $ 513 |
Balance Sheet Account Detail_13
Balance Sheet Account Details - Narrative - Warranties (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Instruments | |
Product Warranty Liability [Line Items] | |
Warranty period | 1 year |
Consumables | Minimum | |
Product Warranty Liability [Line Items] | |
Warranty period | 6 months |
Consumables | Maximum | |
Product Warranty Liability [Line Items] | |
Warranty period | 12 months |
Balance Sheet Account Detail_14
Balance Sheet Account Details - Summary of Changes in Reserve for Product Warranties (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2019 | Jul. 01, 2018 | |
Reserve for product warranties [Roll Forward] | ||||
Balance at beginning of period | $ 16 | $ 16 | $ 19 | $ 17 |
Additions charged to cost of product revenue | 6 | 6 | 9 | 12 |
Repairs and replacements | (6) | (7) | (12) | (14) |
Balance at end of period | $ 16 | $ 15 | $ 16 | $ 15 |
Balance Sheet Account Detail_15
Balance Sheet Account Details - Narrative - Deconsolidation of Helix (Details) - USD ($) $ in Millions | 3 Months Ended | 4 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Apr. 25, 2019 | Jun. 30, 2019 | Dec. 30, 2018 | Jul. 31, 2015 | |
Variable Interest Entity [Line Items] | |||||
Gains on deconsolidation | $ 54 | ||||
Helix Holdings I, LLC | |||||
Variable Interest Entity [Line Items] | |||||
Gains on deconsolidation | $ 39 | ||||
Contingent value right | $ 30 | ||||
Contingent Value Right, Terms | 7 years | ||||
Unrealized losses from contingent value right | $ 3 | ||||
Helix Holdings I, LLC | Variable Interest Entity, Primary Beneficiary | |||||
Variable Interest Entity [Line Items] | |||||
Equity ownership interest percentage | 50.00% | ||||
Noncontrolling Interest, Loss Percentage Attributable to Parent | 50.00% | 50.00% |
Balance Sheet Account Detail_16
Balance Sheet Account Details - Summary of Activity of Redeemable Noncontrolling Interests (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Increase (Decrease) in Redeemable Noncontrolling Interests [Roll Forward] | |
Balance as of December 30, 2018 | $ 61 |
Vesting of redeemable equity awards | 1 |
Net loss attributable to noncontrolling interests | (9) |
Adjustment down to the redemption value | (16) |
Release of potential obligation to noncontrolling interests | (37) |
Balance as of June 30, 2019 | $ 0 |
Pending Acquisition (Details)
Pending Acquisition (Details) - Pacific Biosciences of California, Inc (PacBio) $ / shares in Units, $ in Millions | Nov. 01, 2018USD ($)$ / shares |
Business Acquisition [Line Items] | |
Expected business acquisition total consideration | $ 1,200 |
Expected share price (in dollars per share) | $ / shares | $ 8 |
Potential fee paid to Illumina if contract terminates | $ 43 |
Potential fee paid by Illumina if contract terminates | $ 98 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Hierarchy for Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 30, 2018 |
Assets: | ||
Available-for-sale securities | $ 1,073 | $ 2,329 |
Marketable equity securities | 157 | 39 |
Debt securities in government sponsored entities | ||
Assets: | ||
Available-for-sale securities | 26 | 21 |
Corporate debt securities | ||
Assets: | ||
Available-for-sale securities | 557 | 1,058 |
U.S. Treasury securities | ||
Assets: | ||
Available-for-sale securities | 490 | 1,250 |
Fair Value, Measurements, Recurring | ||
Assets: | ||
Marketable equity securities | 157 | 39 |
Contingent value right | 27 | |
Deferred compensation plan assets | 44 | 34 |
Total assets measured at fair value | 2,932 | 3,234 |
Liabilities: | ||
Deferred compensation plan liability | 42 | 33 |
Fair Value, Measurements, Recurring | Debt securities in government sponsored entities | ||
Assets: | ||
Available-for-sale securities | 26 | 21 |
Fair Value, Measurements, Recurring | Corporate debt securities | ||
Assets: | ||
Available-for-sale securities | 557 | 1,058 |
Fair Value, Measurements, Recurring | U.S. Treasury securities | ||
Assets: | ||
Available-for-sale securities | 490 | 1,250 |
Fair Value, Measurements, Recurring | Money market funds (cash equivalents) | ||
Assets: | ||
Money market funds (cash equivalents) | 1,631 | 832 |
Fair Value, Measurements, Recurring | Level 1 | ||
Assets: | ||
Marketable equity securities | 157 | 39 |
Total assets measured at fair value | 2,278 | 2,121 |
Fair Value, Measurements, Recurring | Level 1 | U.S. Treasury securities | ||
Assets: | ||
Available-for-sale securities | 490 | 1,250 |
Fair Value, Measurements, Recurring | Level 1 | Money market funds (cash equivalents) | ||
Assets: | ||
Money market funds (cash equivalents) | 1,631 | 832 |
Fair Value, Measurements, Recurring | Level 2 | ||
Assets: | ||
Deferred compensation plan assets | 44 | 34 |
Total assets measured at fair value | 627 | 1,113 |
Liabilities: | ||
Deferred compensation plan liability | 42 | 33 |
Fair Value, Measurements, Recurring | Level 2 | Debt securities in government sponsored entities | ||
Assets: | ||
Available-for-sale securities | 26 | 21 |
Fair Value, Measurements, Recurring | Level 2 | Corporate debt securities | ||
Assets: | ||
Available-for-sale securities | 557 | $ 1,058 |
Fair Value, Measurements, Recurring | Level 3 | ||
Assets: | ||
Contingent value right | 27 | |
Total assets measured at fair value | $ 27 |
Debt and Other Commitments - Su
Debt and Other Commitments - Summary of Debt Obligations (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Dec. 30, 2018 | Aug. 21, 2018 | Jun. 29, 2014 | |
Debt Instrument [Line Items] | ||||
Obligations under financing leases | $ 269 | |||
Other | 3 | |||
Less: current portion | (1,107) | |||
Long-term debt | $ 1,120 | 890 | ||
Convertible Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Unamortized discount of liability component of convertible senior notes | (147) | (175) | ||
Net carrying amount of liability component of convertible senior notes | 1,120 | 1,725 | ||
Carrying value of equity component, net of debt issuance cost | $ 213 | $ 287 | ||
Weighted-average remaining amortization period of discount on the liability component of convertible senior notes | 3 years 8 months 12 days | 3 years 10 months 24 days | ||
Level 2 | Convertible Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Fair value of convertible senior notes outstanding (Level 2) | $ 1,658 | $ 2,222 | ||
2023 | Convertible Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount of notes outstanding | 750 | 750 | $ 750 | |
2021 | Convertible Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount of notes outstanding | $ 517 | 517 | $ 517 | |
2019 | Convertible Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Principal amount of notes outstanding | $ 633 | $ 633 |
Debt and Other Commitments - Na
Debt and Other Commitments - Narrative (Details) - Convertible Senior Notes $ / shares in Units, $ in Millions | Aug. 21, 2018USD ($)day$ / shares | Jun. 29, 2014USD ($)day$ / shares | Jun. 30, 2019USD ($) | Dec. 30, 2018USD ($) |
2023 | ||||
Debt Instrument [Line Items] | ||||
Stated rate | 0.00% | |||
Principal amount of notes outstanding | $ | $ 750 | $ 750 | $ 750 | |
Effective interest rate used to measure fair value of convertible senior note | 3.70% | |||
Conversion rate | 0.0021845 | |||
Conversion price (in dollars per share) | $ / shares | $ 457.77 | |||
Threshold common stock trading days | 20 | |||
Threshold consecutive common stock trading days | 30 | |||
Threshold percentage of common stock price trigger | 130.00% | |||
Threshold note trading days | 5 | |||
Threshold consecutive note trading days | 10 | |||
Threshold percentage of note price trigger | 98.00% | |||
Convertible stock price trigger (in dollars per share) | $ / shares | $ 595.10 | |||
2021 | ||||
Debt Instrument [Line Items] | ||||
Stated rate | 0.50% | |||
Principal amount of notes outstanding | $ | $ 517 | $ 517 | 517 | |
Effective interest rate used to measure fair value of convertible senior note | 3.50% | |||
Conversion rate | 0.0039318 | |||
Conversion price (in dollars per share) | $ / shares | $ 254.34 | |||
Threshold common stock trading days | 20 | |||
Threshold consecutive common stock trading days | 30 | |||
Threshold percentage of common stock price trigger | 130.00% | |||
Threshold note trading days | 5 | |||
Threshold consecutive note trading days | 10 | |||
Threshold percentage of note price trigger | 98.00% | |||
If-converted value in excess of principal | $ | $ 182 | |||
2019 | ||||
Debt Instrument [Line Items] | ||||
Stated rate | 0.00% | |||
Principal amount of notes outstanding | $ | $ 633 | $ 633 | ||
Effective interest rate used to measure fair value of convertible senior note | 2.90% |
Debt and Other Commitments - _2
Debt and Other Commitments - Summary of Debt Conversions (Details) - 2019 shares in Millions, $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($)shares | |
Short-term Debt [Line Items] | |
Cash paid for principal of notes converted | $ 633 |
Conversion value over principal amount, paid in shares of common stock | $ 153 |
Number of shares of common stock issued upon conversion (in shares) | shares | 0.4 |
Debt and Other Commitments - _3
Debt and Other Commitments - Narrative - Obligations Under Financing Leases (Details) $ in Millions | Dec. 30, 2018USD ($) |
Debt Disclosure [Abstract] | |
Obligations under financing leases | $ 269 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) shares in Millions | Jun. 30, 2019shares |
2015 Stock Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares available for issuance (in shares) | 4.9 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Restricted Stock Activity and Related Information (Details) shares in Thousands | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Restricted Stock Units (RSU) | |
Stock Units | |
Outstanding at period start (in shares) | shares | 1,840 |
Awarded (in shares) | shares | 52 |
Vested (in shares) | shares | (65) |
Cancelled (in shares) | shares | (83) |
Outstanding at period end (in shares) | shares | 1,744 |
Weighted-Average Exercise Price | |
Outstanding at period start (in dollars per share) | $ / shares | $ 227 |
Awarded (in dollars per share) | $ / shares | 305.68 |
Vested (in dollars per share) | $ / shares | 195.44 |
Cancelled (in dollars per share) | $ / shares | 215.41 |
Outstanding at period end (in dollars per share) | $ / shares | $ 231.06 |
Performance Stock Units (PSU) | |
Stock Units | |
Outstanding at period start (in shares) | shares | 660 |
Awarded (in shares) | shares | (42) |
Cancelled (in shares) | shares | (49) |
Outstanding at period end (in shares) | shares | 569 |
Weighted-Average Exercise Price | |
Outstanding at period start (in dollars per share) | $ / shares | $ 196.99 |
Awarded (in dollars per share) | $ / shares | 258.92 |
Cancelled (in dollars per share) | $ / shares | 167.43 |
Outstanding at period end (in dollars per share) | $ / shares | $ 194.97 |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of Stock Option Activity Under all Stock Option Plans (Details) shares in Thousands | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Options | |
Outstanding at period start (in shares) | shares | 192 |
Exercised (in shares) | shares | (85) |
Outstanding at period end (in shares) | shares | 107 |
Options, Exercisable (in shares) | shares | 107 |
Weighted-Average Exercise Price | |
Outstanding at period start (in dollars per share) | $ / shares | $ 54.52 |
Exercised (in dollars per share) | $ / shares | 49.82 |
Outstanding at period end (in dollars per share) | $ / shares | 58.26 |
Weighted-Average Exercise Price, Options, Exercisable (in dollars per share) | $ / shares | $ 58.26 |
Stockholders' Equity - Narrat_2
Stockholders' Equity - Narrative - Employee Stock Purchase Plan (Details) - ESPP - Employee Stock shares in Millions | 6 Months Ended |
Jun. 30, 2019shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Specified percentage of the fair market value of the common stock on the first or last day of the offering period whichever is lower at which stock is purchased | 85.00% |
Total shares issued under the ESPP (in shares) | 0.1 |
Shares available for issuance (in shares) | 13.6 |
Stockholders' Equity - Narrat_3
Stockholders' Equity - Narrative - Share Repurchases (Details) - USD ($) shares in Millions, $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Feb. 06, 2019 | |
Class of Stock [Line Items] | ||
Common stock repurchases | $ 63 | |
Common Stock | ||
Class of Stock [Line Items] | ||
Stock repurchase program, authorized amount | $ 550 | |
Repurchased common stock (in shares) | 0.2 | |
Common stock repurchases | $ 63 | |
Dollar amount remaining in authorized stock repurchase program | $ 488 |
Stockholders' Equity - Summar_3
Stockholders' Equity - Summary of Share-based Compensation Expense for all Stock Awards (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jul. 01, 2018 | Jun. 30, 2019 | Jul. 01, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before taxes | $ 48 | $ 50 | $ 99 | $ 98 |
Related income tax benefits | (11) | (11) | (21) | (21) |
Share-based compensation expense, net of taxes | 37 | 39 | 78 | 77 |
Cost of product revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before taxes | 5 | 4 | 10 | 8 |
Cost of service and other revenue | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before taxes | 1 | 1 | 2 | 2 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before taxes | 16 | 15 | 34 | 30 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense before taxes | $ 26 | $ 30 | $ 53 | $ 58 |
Stockholders' Equity - Summar_4
Stockholders' Equity - Summary of Assumptions Used to Estimate the Weighted Average Fair Value Per Share (Details) $ / shares in Units, $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($)$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized compensation cost related to stock options, restricted stock, and ESPP shares granted to date | $ | $ 372 |
Weighted-average period of unrecognized compensation cost related to stock options, restricted stock, and ESPP shares granted to date | 2 years 1 month 6 days |
Employee Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility, minimum | 30.00% |
Expected volatility, maximum | 38.00% |
Expected dividends | 0.00% |
Weighted-average fair value per share (in dollars per share) | $ / shares | $ 71.48 |
Minimum | Employee Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 1.89% |
Expected term | 6 months |
Maximum | Employee Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 2.56% |
Expected term | 1 year |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 15.40% | 10.80% |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($) | Jul. 01, 2018USD ($) | Jun. 30, 2019USD ($)segment | Jul. 01, 2018USD ($) | Dec. 30, 2018USD ($) | |
Segment Reporting Information [Line Items] | |||||
Number of reportable segments | segment | 1 | ||||
Revenue | $ 838 | $ 830 | $ 1,684 | $ 1,612 | |
Income (loss) from operations | 205 | 227 | 410 | 445 | |
Assets | 6,973 | 6,973 | $ 6,959 | ||
Operating Segments | Core Illumina | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 838 | 829 | 1,684 | 1,612 | |
Income (loss) from operations | 211 | 246 | 433 | 484 | |
Assets | 6,973 | 6,973 | 6,912 | ||
Operating Segments | Helix | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 3 | 1 | 6 | ||
Income (loss) from operations | $ (6) | (20) | (24) | (41) | |
Assets | 154 | ||||
Elimination of intersegment | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | (2) | (1) | (6) | ||
Income (loss) from operations | $ 1 | $ 1 | $ 2 | ||
Assets | $ (107) |