Illumina Reports Record Financial Results for Fourth Quarter and Fiscal Year 2012

Before you go, we thought you'd like these...
Before you go close icon

Illumina Reports Record Financial Results for Fourth Quarter and Fiscal Year 2012

SAN DIEGO--(BUSINESS WIRE)-- Illumina, Inc. (NAS: ILMN) today announced its financial results for the fourth quarter and fiscal year of 2012.

Fourth quarter 2012 results:

  • Revenue of $309 million, a 24% increase compared to $250 million in the fourth quarter of 2011
  • GAAP net income for the quarter of $72 million, or $0.53 per diluted share, compared to net income of $12 million, or $0.09 per diluted share, for the fourth quarter of 2011
  • Non-GAAP net income for the quarter of $57 million, or $0.42 per diluted share, compared to $44 million, or $0.35 per diluted share, for the fourth quarter of 2011 (see the table entitled "Itemized Reconciliation Between GAAP and Non-GAAP Net Income" for a reconciliation of these GAAP and non-GAAP financial measures)
  • Cash flow from operations of $79 million and free cash flow of $62 million for the quarter

Gross margin in the fourth quarter of 2012 was 65.8% compared to 68.2% in the prior year period. Excluding the effect of non-cash charges associated with stock compensation, amortization of acquired intangibles, and amortization of inventory revaluation costs, non-GAAP gross margin was 68.5% for the fourth quarter of 2012 compared to 70.2% in the prior year period.

Research and development (R&D) expenses for the fourth quarter of 2012 were $56.9 million compared to $45.5 million in the fourth quarter of 2011. R&D expenses included $8.0 million and $7.3 million of non-cash stock compensation expense in the fourth quarters of 2012 and 2011, respectively. Excluding these charges and contingent compensation expense, R&D expenses as a percentage of revenue were 15.4% compared to 15.0% in the prior year period.

Selling, general and administrative (SG&A) expenses for the fourth quarter of 2012 were $79.7 million compared to $60.9 million for the fourth quarter of 2011. SG&A expenses included $14.1 million and $12.7 million of non-cash stock compensation expense in the fourth quarters of 2012 and 2011, respectively. Excluding these charges, contingent compensation, acquired intangible asset amortization, and legal contingencies, SG&A expenses as a percentage of revenue were 19.9% compared to 20.1% in the prior year period.

GAAP net income included the impact of a pre-tax gain of $48.6 million from the sale of the Company's minority ownership interest in deCODE Genetics to Amgen, Inc.

Depreciation and amortization expenses were $18.1 million and capital expenditures were $17.1 million during the fourth quarter of 2012. The Company ended the quarter with $1.35 billion in cash, cash equivalents and short-term investments, compared to $1.19 billion as of January 1, 2012.

Fiscal 2012 results:

  • Revenue of $1.15 billion, a 9% increase over the $1.06 billion reported in fiscal 2011
  • GAAP net income of $151 million, or $1.13 per diluted share, compared to $87 million, or $0.62 per diluted share in fiscal 2011
  • Non-GAAP net income of $210 million, or $1.59 per diluted share, compared to $176 million, or $1.30 per diluted share, in fiscal 2011 (see table entitled "Itemized Reconciliation Between GAAP and Non-GAAP Net Income" for a reconciliation of these GAAP and non-GAAP financial measures)

Gross margin for fiscal 2012 was 67.4% compared to 67.2% in fiscal 2011. Excluding the effect of non-cash charges associated with stock compensation, amortization of acquired intangibles, legal contingencies, and amortization of inventory revaluation costs, non-GAAP gross margin was 69.7% for fiscal 2012 compared to 69.0% in fiscal 2011.

R&D expenses for fiscal 2012 were $231.0 million compared to $196.9 million in fiscal 2011. R&D expenses for fiscal 2012 included a one-time impairment charge of $21.4 million related to an in-process research and development asset previously acquired. R&D expenses also included $30.9 million and $32.1 million of non-cash stock compensation expense in fiscal 2012 and 2011, respectively. Excluding these charges and contingent compensation expense, R&D expenses as a percentage of revenue were 15.3% compared to 15.2% in the prior year.

SG&A expenses for fiscal 2012 were $286.0 million compared to $261.8 million in fiscal 2011. SG&A expenses included $55.4 million and $52.3 million of non-cash stock compensation expense in fiscal 2012 and 2011, respectively. Excluding these charges, contingent compensation expense, acquired intangible asset amortization, and legal contingencies, SG&A expenses as a percentage of revenue were 19.5% compared to 19.9% in the prior year.

"We are very pleased with our execution in 2012," stated Jay Flatley, President and CEO. "We ended the year with a strong performance, and made significant progress on our strategy of growing our clinical business, both organically and through acquisition. We remain optimistic about our growth prospects in 2013 and beyond, in spite of the continuing challenges of the economic environment."

Highlights since our last earnings release

  • Announced a definitive agreement to acquire Verinata Health, Inc., a leading provider of non-invasive tests for the early identification of fetal chromosomal abnormalities
  • Completed the acquisition of Moleculo Inc., which will enable the introduction of a novel library prep method and analysis algorithm to produce synthetic read lengths up to 10 Kb
  • Previewed a new, ordered array flow cell technology that will provide a significant increase in cluster density and number of reads per flow cell
  • Announced a new kit for the HiSeq® 2500 which is capable of generating up to 300 Gb in rapid mode
  • Presented an updated MiSeq® roadmap with chemistry and software enhancements to deliver 15 Gb of throughput
  • Announced Nextera® Rapid Capture Exome Kits to provide the fastest exome enrichment workflow on both the HiSeq 2500 and MiSeq
  • Launched TruSeq® DNA PCR-Free Kits, a simple, all-inclusive sample prep solution for whole-genome sequencing
  • Announced TruSeq Targeted RNA Kits for mid-plex gene expression profiling and validation
  • Announced that Caris Life Sciences has selected the MiSeq system to support Caris' evidence-based molecular profiling service
  • Announced that VWR International, LLC, will distribute Illumina's qPCR portfolio within the United States
  • Announced winners of the MiSeq grant program to accelerate original research in microbial ecology, neglected disease, and human health
  • Named Dr. Robert S. Epstein to the Board of Directors
  • Announced a favorable ruling in patent litigation against Complete Genomics, Inc.
  • Announced new grant recipients of our Agricultural Greater Good Initiative at the 21st International Plant and Animal Genome Conference
  • Repurchased $25 million of common stock under our previously announced share repurchase program

Financial outlook and guidance

The non-GAAP financial guidance discussed below excludes various one-time or specified non-cash charges. Please see our Reconciliation of Non-GAAP Financial Guidance included in this release for a reconciliation of the GAAP and Non-GAAP financial measures.

For 2013 we are projecting 15% total company revenue growth and non-GAAP earnings per fully diluted share of $1.55 to $1.62, including the pending Verinata acquisition. These projections include full year non-GAAP gross margin of approximately 70%, a pro forma tax rate of approximately 31% and stock compensation expense of approximately $115 million. Full-year weighted average diluted shares outstanding, for the measurement of pro forma amounts, is expected to be approximately 134 million shares.

Quarterly conference call information

The conference call will begin at 2:00 pm Pacific Time (5:00 pm Eastern Time) on Monday, January 28, 2013. Interested parties may listen to the call by dialing 888-679-8035 (passcode: 35493315), or, if outside North America, by dialing +1-617-213-4848 (passcode: 35493315). Individuals may access the live teleconference in the Investor Relations section of Illumina's web site under the "Company" tab at www.illumina.com.

A replay of the conference call will be available from 4:00 pm Pacific Time (7:00 pm Eastern Time) on January 28, 2013 through February 4, 2013 by dialing 888-286-8010 (passcode: 76555573), or if outside North America, by dialing +1-617-801-6888 (passcode: 76555573).

Statement regarding use of non-GAAP financial measures

The Company reports non-GAAP results for diluted net income per share, net income, gross margins, operating expenses, operating margins, other income, and free cash flow in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

The Company's financial measures under GAAP include substantial charges related to stock compensation expense, non-cash interest expense associated with the Company's convertible debt instruments that may be settled in cash, net gains related to cost-method investments, headquarter relocation expense, costs related to unsolicited tender offer for the Company's stock, impairment of in-process research and development, amortization expense related to acquired intangible assets, contingent compensation expense, restructuring charges, legal contingencies, acquisition related expense, amortization of inventory revaluation costs, and loss on extinguishment of debt. Per share amounts also include the double dilution associated with the accounting treatment of the Company's 0.625% convertible senior notes outstanding and the corresponding call option overlay. Management believes that presentation of operating results that excludes these items and per share double dilution provides useful supplemental information to investors and facilitates the analysis of the Company's core operating results and comparison of operating results across reporting periods. Management also believes that this supplemental non-GAAP information is therefore useful to investors in analyzing and assessing the Company's past and future operating performance.

The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non-GAAP results are presented in the tables of this release.

Use of forward-looking statements

This release contains projections, information about our financial outlook, earnings guidance, and other forward-looking statements that involve risks and uncertainties. These forward-looking statements are based on our expectations as of the date of this release and may differ materially from actual future events or results. Among the important factors that could cause actual results to differ materially from those in any forward-looking statements are (i) our ability to develop and commercialize further our sequencing, array, PCR, and consumables technologies and to deploy new products and applications, and expand the markets, for our technology platforms; (ii) our ability to manufacture robust instrumentation and consumables; (iii) our expectations and beliefs regarding future conduct and growth of the business and the markets in which we operate; (iv) challenges inherent in developing, manufacturing, and launching new products and services; and (v) our ability to maintain our revenue and profitability during periods of research funding reduction or uncertainty and adverse economic and business conditions, including as a result of slowing economic growth in the United States or worldwide, together with other factors detailed in our filings with the Securities and Exchange Commission, including our most recent filings on Forms 10-K and 10-Q, or in information disclosed in public conference calls, the date and time of which are released beforehand. We undertake no obligation, and do not intend, to update these forward-looking statements, to review or confirm analysts' expectations, or to provide interim reports or updates on the progress of the current financial quarter.

About Illumina

Illumina (www.illumina.com) is a leading developer, manufacturer, and marketer of life science tools and integrated systems for the analysis of genetic variation and function. We provide innovative sequencing and array-based solutions for genotyping, copy number variation analysis, methylation studies, gene expression profiling, and low-multiplex analysis of DNA, RNA, and protein. We also provide tools and services that are fueling advances in consumer genomics and diagnostics. Our technology and products accelerate genetic analysis research and its applications, paving the way for molecular medicine and ultimately transforming healthcare.

 
Illumina, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
   
December 30,

2012

January 1,

2012

ASSETS(unaudited)
Current assets:
Cash and cash equivalents$433,981$302,978
Short-term investments916,223886,590
Accounts receivable, net214,975173,886
Inventory, net158,718128,781
Deferred tax assets, current portion30,45123,188
Prepaid expenses and other current assets 32,700 29,196
Total current assets1,787,0481,544,619
Property and equipment, net166,167143,483
Goodwill369,327321,853
Intangible assets, net130,196106,475
Deferred tax assets, long-term portion40,18319,675
Other assets 73,164 59,735
Total assets$2,566,085$2,195,840
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$65,727$49,806
Accrued liabilities201,877177,115
Long-term debt, current portion 36,967 
Total current liabilities304,571226,921
Long-term debt805,406807,369
Other long-term liabilities134,36980,613
Conversion option subject to cash settlement3,1585,722
Stockholders' equity 1,318,581 1,075,215
Total liabilities and stockholders' equity$2,566,085$2,195,840
 
 

Illumina, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(unaudited)
       
Three Months EndedYear Ended
December 30,

2012

January 1,

2012

December 30,

2012

January 1,

2012

Revenue:
Product revenue$278,933$230,396$1,055,826$987,280
Service and other revenue 30,332 19,675  92,690 68,255 
Total revenue309,265250,0711,148,5161,055,535
Cost of Revenue:
Cost of product revenue (a)86,34869,509317,283308,228
Cost of service and other revenue (a)14,7916,94043,55226,118
Amortization of acquired intangible assets 4,479 3,036  14,153 12,091 
Total cost of revenue 105,618 79,485  374,988 346,437 
Gross profit 203,647 170,586  773,528 709,098 
Operating Expenses:
Research and development (a)56,90745,513231,025196,913
Selling, general and administrative (a)79,71560,918285,991261,843
Unsolicited tender offer related expense4,39423,136
Headquarter relocation expense2,88330,24326,32841,826
Restructuring charges888,1363,5228,136
Acquisition related expense (gain), net 314 (1,523) 2,774 919 
Total operating expenses 144,301 143,287  572,776 509,637 
Income from operations59,34627,299200,752199,461
Other income (expense), net 44,557 (7,077) 21,856 (66,416)
Income before income taxes103,90320,222222,608133,045
Provision for income taxes 32,000 8,502  71,354 46,417 
Net income$71,903$11,720 $151,254$86,628 
Net income per basic share$0.58$0.10 $1.23$0.70 
Net income per diluted share$0.53$0.09 $1.13$0.62 
Shares used in calculating basic net income per share 123,211 121,541  122,999 123,399 
Shares used in calculating diluted net income per share 135,393 124,888  133,693 138,937 
            

(a) Includes total stock-based compensation expense for stock-based awards:

 
Three Months EndedYear Ended
December 30,

2012

January 1,

2012

December 30,

2012

January 1,

2012

Cost of product revenue$1,991$1,684$7,575$6,951
Cost of service and other revenue134159461695
Research and development8,0017,29530,87932,105
Selling, general and administrative 14,050 12,678  55,409 52,341 
Stock-based compensation expense before taxes$24,176$21,816 $94,324$92,092 
 
 

Illumina, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
    
Three Months EndedYear Ended
December 30,

2012

January 1,

2012

December 30,

2012

January 1,

2012

Net cash provided by operating activities$78,876$108,300$291,873$358,140
Net cash provided by (used in) investing activities18,611(42,960)(150,012)(400,999)
Net cash (used in) provided by financing activities(6,042)7,848(10,755)97,016
Effect of exchange rate changes on cash and cash equivalents (553) (56) (103) (126)
Net increase in cash and cash equivalents90,89273,132 Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

Gift Finder Promo
More to Explore
Fri, Dec 09
Set Your Location
City, State, or Zip